<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
STERIGENICS INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 7389 95-3323502
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
4020 CLIPPER COURT
FREMONT, CALIFORNIA 94538-6540
(510) 770-9000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JAMES F. CLOUSER
CHIEF EXECUTIVE OFFICER
STERIGENICS INTERNATIONAL, INC.
4020 CLIPPER COURT
FREMONT, CALIFORNIA 94538-6540
(510) 770-9000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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CARLA S. NEWELL, ESQ. JEFFREY S. MARCUS, ESQ.
OLUFUNMILAYO B. AREWA, ESQ. HANS J. BRASSELER, ESQ.
WILLIAM A. HOLMES, ESQ. MORRISON & FOERSTER LLP
GUNDERSON DETTMER STOUGH 1290 AVENUE OF THE AMERICAS
VILLENEUVE FRANKLIN & HACHIGIAN, LLP NEW YORK, NEW YORK 10104
155 CONSTITUTION DRIVE (212) 468-8000
MENLO PARK, CALIFORNIA 94025
(415) 321-2400
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(1) PRICE(2) FEE
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Common Stock, $0.001 par value per
share........................... 2,300,000 $14.00 $32,200,000 $9757.58
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(1) Includes shares that the Underwriters have the option to purchase to cover
over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 25, 1997
2,000,000 SHARES
LOGO
COMMON STOCK
------------------------
All the 2,000,000 shares of Common Stock offered hereby are being offered
by SteriGenics International, Inc. Prior to the offering, there has been no
public market for the Common Stock of the Company. It is currently estimated
that the initial public offering price will be between $12.00 and $14.00 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price.
Application has been made to have the Common Stock approved for quotation
on the Nasdaq National Market under the symbol "STER."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" AT PAGE 6.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Company (2)
- -----------------------------------------------------------------------------------------------------
Per Share...................................... $ $ $
- -----------------------------------------------------------------------------------------------------
Total(3)....................................... $ $ $
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</TABLE>
(1) See "Underwriting."
(2) Before deducting expenses estimated at $850,000, which are payable by the
Company.
(3) Certain stockholders of the Company ("Selling Stockholders") have granted to
the Underwriters a 30-day option to purchase up to 300,000 additional shares
of Common Stock solely to cover over-allotments, if any. If all such shares
are purchased, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Stockholders will
be $ , $ , $ and $ , respectively. See "Underwriting."
------------------------
The Shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and subject
to their right to reject orders in whole or in part. It is expected that
delivery of the Common Stock will be made in New York City on or about ,
1997.
------------------------
PAINEWEBBER INCORPORATED
PIPER JAFFRAY INC.
WHEAT FIRST BUTCHER SINGER
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THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3
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The Company intends to furnish to its stockholders annual reports
containing audited consolidated financial statements, quarterly reports
containing unaudited consolidated financial statements and such other periodic
reports as the Company may determine to be appropriate or as may be required by
law.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF THE COMMON STOCK TO STABILIZE ITS
MARKET PRICE, THE PURCHASE OF THE COMMON STOCK TO COVER SYNDICATE SHORT
POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and Consolidated Financial Statements, including the Notes
thereto, appearing elsewhere in this Prospectus. This Prospectus contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results and the timing of certain events could differ materially from
those anticipated in such forward-looking statements as a result of certain
factors discussed in this Prospectus, including those set forth in "Risk
Factors." Prospective investors should consider carefully the factors discussed
in "Risk Factors." Unless otherwise indicated, all information in this
Prospectus (i) gives effect to the reincorporation of the Company in Delaware
which will occur prior to the offering, (ii) gives effect to the conversion of
all outstanding shares of convertible preferred stock into shares of Common
Stock effective upon the closing of the offering and (iii) assumes that the
Underwriters' over-allotment option will not be exercised.
THE COMPANY
SteriGenics International, Inc. ("SteriGenics" or the "Company") is a
leading provider of high quality contract sterilization services, with over 18
years of experience in the operation, design and development of Gamma
irradiation ("Gamma") facilities. The Company operates 12 Gamma facilities in
six states serving over 850 customers, predominantly in the medical products
market. In recent years, the Company has expanded into various non-medical
sterilization and processing markets. The Company's objective is to be the
leading provider of high quality contract sterilization services for
manufacturers of medical and non-medical products.
Sterilization is an essential step in the manufacturing process across a
number of industries for health, safety, regulatory and economic reasons. A
broad range of single-use, pre-packaged medical products as well as consumer
products are required under government regulations in the U.S. and many other
developed countries to be sterile or to have minimal microbial levels. In
addition, other products such as spices and herbs, cosmetics and food packaging
materials, are sterilized to improve shelf-life and address potential product
liability concerns. There are also a number of potential markets for the
sterilization of food products, including red meat, poultry, shellfish, animal
feed and fresh fruits and vegetables. The development of these potential markets
is subject to regulatory approvals and consumer acceptance of irradiated foods.
The market for commercial sterilization is divided between independent
suppliers of sterilization and processing services ("contract sterilizers") such
as the Company and certain large manufacturers that have in-house sterilization
capabilities ("captive sterilizers"). The Company estimates that the U.S. market
for contract sterilization was approximately $170 million in 1996 and that a
similar volume of product was processed by captive sterilizers. There is also a
significant market for contract sterilization services outside of the U.S.
The two primary methods of commercial sterilization are Gamma and
fumigation using ethylene oxide gas ("EtO"). The Company estimates that in 1996
40-45% of the U.S. contract sterilization market was Gamma. SteriGenics believes
that Gamma has significant advantages under normal operating conditions over EtO
including uniform dosing, predictability, shorter processing times, enhanced
flexibility, ease of handling and less environmental impact. As a result, the
use of Gamma sterilization has increased significantly over the past 10 years as
medical products manufacturers have converted the sterilization method used for
certain products from EtO to Gamma and have increasingly used radiation
compatible materials in the development of new products and packaging.
The Company has developed an integrated strategy intended to increase its
share of the existing sterilization market as well as to develop new markets.
First, the Company will seek to increase its share of the medical products
sterilization market by promoting the conversion from EtO to Gamma and from
captive to contract sterilization. Further, the Company is seeking to expand its
presence in non-medical markets, including the markets for spices and herbs,
cosmetics, food and drug packaging materials and materials processing. The
Company will also evaluate potential markets as they develop. A third element of
the
3
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Company's strategy is geographic expansion using the MiniCell, a smaller, single
cell irradiator based upon a proprietary design. The MiniCell takes
substantially less time to construct and is significantly less expensive to
construct and operate than a standard irradiation facility. The Company believes
that the economics of the MiniCell will allow the Company to serve smaller
industrial centers, both domestically and internationally, that could not
support a full-size facility. The Company is also seeking to lease MiniCells
with support services to manufacturers with high volume sterilization needs. The
Company also seeks to increase its market share by offering higher margin,
premium services such as GammaSTAT and GammaReserve, which guarantee rapid
turn-around time, and the ExCell, which provides precision dosing. SteriGenics
intends to continue to leverage its engineering and design capabilities to
continue to improve its existing processes and designs and to create and utilize
innovative designs and services. Finally, SteriGenics intends to pursue
strategic acquisitions, both domestically and internationally.
SteriGenics has over 700 customers in the medical products market including
manufacturers of health care and medical devices, pharmaceuticals, labware and
eyecare products. Sales to these customers accounted for 80% of the Company's
revenues in the fiscal year ended March 31, 1997. The Company has over 150
customers in the non-medical market producing a variety of products including
spices and herbs, cosmetics, food ingredients, food packaging, consumer products
and polymers.
The Company's principal executive offices are located at 4020 Clipper
Court, Fremont, California 94538-6540 and its telephone number is (510)
770-9000. The Company was incorporated in California on August 29, 1978 and will
be reincorporated in Delaware prior to the offering. Unless the context
otherwise requires, the term "Company" when used herein shall mean SteriGenics
International, Inc., a Delaware corporation, its California predecessor and its
subsidiaries. GammaSTAT is a registered trademark of the Company. ExCell,
GammaReserve, Gemini, MiniCell and SteriGenics are trademarks of the Company.
THE OFFERING
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Common Stock Offered by the Company.............. 2,000,000 shares
Common Stock to be Outstanding after the
Offering....................................... 6,828,769 shares(1)
Use of Proceeds.................................. To fund capital expenditures, to redeem
the Company's outstanding Series A
Preferred Stock and for working capital
and general corporate purposes.
Proposed Nasdaq National Market Symbol........... STER
</TABLE>
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(1) Based on the number of shares outstanding as of March 31, 1997. Excludes an
aggregate of 702,925 shares subject to outstanding options as of March 31,
1997 at a weighted average exercise price of $5.07 per share under the
Company's Second Amended and Restated 1986 Stock Option Plan. See
"Capitalization," "Management -- Stock Plans" and Note 5 of Notes to
Consolidated Financial Statements.
4
<PAGE> 6
SUMMARY FINANCIAL INFORMATION
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<CAPTION>
YEAR ENDED MARCH 31,
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1993 1994 1995 1996 1997
------- ------- ------- ------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................................ $21,603 $24,585 $28,661 $30,241 $ 37,668
Cost of revenues................................ 11,896 11,679 16,389 16,978 20,425
------- ------- ------- ------- -------
9,707 12,906 12,272 13,263 17,243
Costs and expenses:
General and administrative.................... 1,628 3,266 5,664 5,213 6,345
Marketing and selling......................... 1,002 1,258 1,583 1,761 2,482
Research, development and engineering......... 473 518 685 890 1,381
------- ------- ------- ------- -------
3,103 5,042 7,932 7,864 10,208
------- ------- ------- ------- -------
Income from operations.......................... 6,604 7,864 4,340 5,399 7,035
Other income (expense):
Write-down of investments in joint ventures... -- -- (3,011) -- --
Interest expense, net......................... (1,164) (916) (2,402) (1,846) (1,836)
Other income.................................. 315 256 139 47 115
------- ------- ------- ------- -------
Income (loss) before provision for income taxes,
equity in joint ventures and discontinued
operations.................................... 5,755 7,204 (934) 3,600 5,314
Provision for income taxes...................... 2,045 2,479 1,185 1,448 2,099
------- ------- ------- ------- -------
Income (loss) before equity in joint ventures
and discontinued operations................... 3,710 4,725 (2,119) 2,152 3,215
Equity in net loss of joint ventures............ (204) (720) (1,360) -- --
------- ------- ------- ------- -------
Income (loss) from continuing operations........ 3,506 4,005 (3,479) 2,152 3,215
Discontinued operations:
Income (loss) from discontinued operations.... 494 189 (115) -- --
Loss on disposition of discontinued
operations.................................. -- -- (1,173) -- --
------- ------- ------- ------- -------
Net income (loss)............................... $ 4,000 $ 4,194 $(4,767) $ 2,152 $ 3,215
======= ======= ======= ======= =======
Pro forma net income per share.................. $0.62
=======
Shares used in computing pro forma net income
per share..................................... 5,164,679
=======
OTHER OPERATING DATA:
EBITDA(1)....................................... $11,602 $12,150 $ 6,065 $13,382 $ 15,421
Capital expenditures............................ $ 9,331 $14,462 $16,549 $ 7,207 $ 18,613
</TABLE>
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<CAPTION>
AS OF MARCH 31, 1997
-----------------------
AS
ACTUAL ADJUSTED(2)
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BALANCE SHEET DATA:
Cash and cash equivalents..................................................... $ 1,957 $ 23,787
Working capital (deficit)..................................................... (3,179) 18,651
Total assets.................................................................. 91,667 113,497
Total liabilities............................................................. 59,187 59,187
Redeemable preferred stock.................................................... 1,500 --
Stockholders' equity.......................................................... 30,980 54,310
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(1) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization expense. EBITDA does not represent cash flows
as defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all the
Company's cash needs. EBITDA is a financial measure commonly used in the
Company's industry and should not be considered in isolation or as a
substitute for net income, cash flows from operating activities or other
measures of liquidity determined in accordance with generally accepted
accounting principles.
(2) As adjusted to give effect to the sale of shares of Common Stock at an
assumed initial public offering price of $13.00 per share. See "Use of
Proceeds."
5
<PAGE> 7
RISK FACTORS
These securities involve a high degree of risk. This Prospectus contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results and the timing of certain events could differ materially from
those anticipated by such forward-looking statements as a result of certain
factors discussed in this Prospectus, including the risk factors set forth
below. Prospective purchasers of the Common Stock should consider carefully the
risk factors set forth below, as well as the other information set forth in this
Prospectus, prior to investing in the Common Stock offered hereby.
UNPREDICTABILITY OF FUTURE OPERATING RESULTS; LIKELY FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS
The Company has experienced, and expects to continue to experience,
significant fluctuations in revenues and operating results from quarter to
quarter. As a result, the Company believes that period-to-period comparisons of
its operating results are not necessarily meaningful, and that such comparisons
cannot be relied upon as indicators of future performance. In addition, there
can be no assurance that the Company's revenues will grow or be sustained in
future periods or that the Company will maintain its current profitability in
the future. A significant component of such quarterly fluctuations results from
the demand by the Company's customers for Gamma sterilization services. Other
factors that could cause the Company's revenues and operating results to vary
significantly from period to period include volatility in the market for medical
devices; the ability of the Company to deliver sterilization services in a
timely and cost effective manner; the ability of the Company to expand
successfully in the non-medical sterilization services market; the timing and
size of orders from the Company's customer base; the ability of the Company to
obtain supplies of Cobalt 60 on a timely basis and at a reasonable cost;
fluctuations in currency exchange rates between the U.S. dollar and the Canadian
dollar; the costs associated with customer product being damaged as a
consequence of overdosing and other factors; changes in interest rates;
regulatory matters; seasonality associated with historical decreases in medical
procedures during the fourth calendar quarter; and litigation, acquisitions and
other extraordinary events. The Company's results of operations are also
influenced by competitive factors, including the pricing and availability of the
Company's and competing sterilization services; the acceptance of Gamma
sterilization as a means of sterilizing products as opposed to other methods of
sterilization; the ability of the Company's competitors to obtain orders from
the Company's customers; the establishment of in-house sterilization
capabilities by the Company's customers; the acquisition of the Company's
customers by entities that do not use the Company's sterilization services; the
timing of new service or technology announcements and releases by the Company
and its competitors; and the entry of new competitors into the market for
sterilization and radiation processing services. A large portion of the
Company's expenses are fixed and difficult to reduce in a short period of time.
If revenues do not meet the Company's expectations, the Company's fixed expenses
would exacerbate the effect of such a shortfall on net income.
Additional factors that have a significant impact on the Company's results
of operations are the timing of construction and commencement of operations of
new facilities. Building new facilities requires significant capital investments
in construction, equipment and Cobalt 60. In addition to incurring costs
associated with building and equipping such facilities, the Company also incurs
costs related to Cobalt 60 and higher personnel costs in the months preceding
initial operation. In the past, as a result of their own internal procedures,
customers have delayed qualification and use of new facilities until they had
been operational for a specified period of time of up to 12 months. As a result,
the Company failed to realize a portion of anticipated revenues for the facility
pending such qualification, while incurring significant start-up costs, both of
which adversely affected the Company's results of operations. See " --
Substantial Debt."
Due to these factors, as well as other unanticipated factors, it is likely
that in some future quarter the Company's operating results will be below the
expectations of public market analysts or investors. In such event, the price of
the Company's Common Stock would be materially adversely affected. See "-- No
Prior Trading Market; Potential Volatility of Stock Price," "Selected
Consolidated Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
6
<PAGE> 8
DEPENDENCE ON MEDICAL PRODUCTS CUSTOMERS
The Company derives a substantial portion of its revenues from the sale of
sterilization services to manufacturers of medical devices, labware and eyecare
products ("medical products"), and the Company expects that the sterilization of
medical products will continue to account for a significant portion of the
Company's revenues for the foreseeable future. The future success of the Company
thus depends to a considerable extent upon the continued growth of the market
for medical products. In particular, a significant aspect of the Company's
medical products business is the sterilization of single-use medical devices. As
a result, the future success of the Company depends in part on continued growth
in the market for single-use medical devices. There has recently been an
increasing focus on reusable medical devices and, therefore, there can be no
assurance that use of reusable medical devices in lieu of single-use devices
will not increase. The Company believes that continued growth in the use of
medical products depends on a number of factors, including the impact of health
reform proposals. The Company believes that government and private insurance
company efforts to contain or reduce health care costs are likely to continue.
These trends may lead to fewer medical procedures being performed or the
increased use of reusable medical devices, either of which could negatively
impact the demand for the Company's services. Loss of significant business from
medical products manufacturers, including reductions caused by large customers
establishing captive facilities, changes in such customers' competitive
position, a decision to purchase contract sterilization services from other
suppliers or a downturn in the medical products market, would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Industry Background."
COMPETITION
The market for sterilization services is intensely competitive and is
characterized by significant price competition. The Company competes with other
companies that provide Gamma sterilization services, the most significant of
which is Isomedix, Inc. ("Isomedix"). In addition, many products that can be
sterilized using Gamma can also be sterilized using either EtO or electron beam
("E-Beam") sterilization. As a result, the Company also competes with companies
that process products using EtO or E-Beam technology. Companies processing
products using EtO include Cosmed Group, Inc., Griffith Micro Science, Inc. and
Isomedix. Certain of the Company's competitors and potential competitors have
substantially greater financial, marketing, distribution, technical and other
resources than the Company or offer multiple sterilization technologies, which
may enable them to address a broader range of the sterilization requirements of
individual customers. In addition, the Company competes with manufacturers that
have or are considering establishing in-house sterilization capabilities. The
Company may also in the future face competition from suppliers of Cobalt 60
radioisotope, particularly MDS Nordion, Inc. ("Nordion"), as well as foreign
providers of sterilization services. In addition, to the extent that the Company
expands into international markets it will be faced with competition from
existing providers of sterilization in those markets.
In recent years, price competition in the sterilization services industry
has intensified. The Company may in the future face increased competition from
companies that employ new or improved technologies or that offer sterilization
services that are more effective or less costly than those developed and
marketed by the Company. Such competition could have a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company will be able to continue to compete
effectively or that the competitive pressures faced by the Company will not have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Competition."
UNCERTAINTY OF EXPANSION IN NON-MEDICAL MARKETS
While the Company has traditionally focused primarily on the medical
products market, it has recently increased its efforts in the non-medical
contract sterilization services market. The Company currently sterilizes a wide
range of food ingredients and consumer products, including cosmetics, spices and
herbs. In addition, the Company processes various industrial compounds. These
services accounted for 20% of the Company's revenues in fiscal 1997. Many of the
non-medical markets for Gamma sterilization and processing
7
<PAGE> 9
are new and emerging, and there can be no assurance that any of these markets
will develop at the anticipated rate, if at all. See "Business -- Markets and
Customers."
Approval for the irradiation of food products is regulated by the United
States Food and Drug Administration (the "FDA") and the United States Department
of Agriculture (the "USDA"). The FDA has approved radiation for the processing
of a variety of foods, including pork, poultry and fresh fruits and vegetables.
However, only limited commercial sales of irradiated food have taken place. The
FDA is currently considering a petition to approve the irradiation of fresh
packaged red meats in order to eliminate E. coli and other harmful pathogens.
Any irradiation processing of meat or poultry is also regulated by the USDA,
which requires preapproval of the irradiation process. Although the Company may
in the future seek to take advantage of opportunities to sterilize meat and
poultry products, the sterilization of fresh food products such as meat and
poultry would require significant changes in the Company's processing
techniques, including the redesign of facilities and the addition of
refrigeration capabilities. In addition, current FDA rules and regulations
require the labeling of any retail food product that is irradiated, and to date
there has been significant consumer resistance to irradiated food. As a result,
there can be no assurance that Gamma sterilization of food products will gain
public acceptance or will ultimately prove commercially feasible in the U.S. or
that the Company would undertake to expand its irradiation activities to include
meat and poultry.
RISKS RELATED TO GEOGRAPHIC EXPANSION USING THE MINICELL; RISKS RELATED TO
INTERNATIONAL OPERATIONS
A key element of the Company's strategy is to expand geographically into
smaller regional markets and internationally using the MiniCell. There can be no
assurance that manufacturers in these markets will use the Company's facilities,
that such manufacturers will pay higher sterilization prices in exchange for
lower transportation costs and a decrease in turn-around time or that the
Company will receive enough volume of product to operate such facilities on a
profitable basis. In addition, many manufacturers in these smaller markets
currently use EtO to sterilize their products and would need to convert their
products to Gamma. Failure of the Company to successfully introduce and operate
MiniCells in these new markets could materially adversely affect the Company's
business, financial condition and results of operations.
If the Company is successful in expanding into international markets, it
will be subject to a number of risks related to foreign operations, including
fluctuations in currency exchange rates, political and economic conditions in
various jurisdictions, unexpected changes in regulatory requirements, tariffs
and other trade barriers, difficulties in staffing and managing foreign
operations, longer accounts receivable payment cycles and potentially adverse
tax consequences. There can be no assurance that such factors will not have a
material adverse effect on the Company's future operations outside the U.S. In
addition, in the past the Company has been unsuccessful in its attempts to
penetrate international markets and in fiscal 1995 wrote-off a total of $3.0
million invested in joint ventures in Taiwan and Indonesia. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
UNCERTAINTIES RELATED TO MINICELL LEASING
The Company's ability to successfully lease its MiniCell will depend upon
the acceptance of the Company's technology and the concept of "in-house
outsourcing" (utilizing third party contractors to provide services within a
manufacturer's own facility) by manufacturers with high volume sterilization
needs, as well as upon the Company's ability to enter into favorable leasing
terms with potential customers. The Company has not yet leased a MiniCell, and
there can be no assurance that manufacturers will elect to lease a MiniCell in
lieu of relying on traditional in-house sterilization operations and contract
sterilization providers or that any such leases will be on terms favorable to
the Company. In addition, the leasing of the MiniCell will involve a significant
commitment of management attention and resources by prospective customers and
may require input from and approval at multiple levels of a customer's
organization. Accordingly, the Company anticipates that the MiniCell leasing
process will be subject to long sales cycles typically associated with
significant capital expenditures. Delay in or the failure to lease the MiniCell
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- The SteriGenics Approach."
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DEPENDENCE ON A SINGLE TECHNOLOGY
The Company performs all of its sterilization services using Gamma
radiation. Because of its use of a single technology, a decline in the demand
for, or the pricing of, Gamma sterilization services would have a material
adverse effect on the Company's business, financial condition and results of
operations. To remain competitive, the Company may also need to respond quickly
to technological changes and innovations in the sterilization services market,
including changes in the technologies used to perform sterilization services
that could render Gamma sterilization obsolete or noncompetitive. The Company is
also dependent upon continued consumer acceptance of the Gamma sterilization of
medical products. Failure by the Company to quickly and effectively respond to
changes in the sterilization market, including the development of new
technologies, or a significant increase in consumer resistance to products
sterilized by Gamma, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "-- Competition."
GOVERNMENT REGULATION AND STANDARDS COMPLIANCE
The Company's business is subject to various federal, state and local laws,
regulations, agency actions and court decisions. Although the Company believes
it has received all licenses and permits necessary to conduct its current
sterilization business, there can be no assurance that the Company will not be
found in violation of applicable requirements or that governmental bodies will
not seek to impose regulatory requirements not now anticipated on the Company
and its business. In addition, the long-term course of regulatory policy cannot
be predicted and, although the Company believes that all necessary regulatory
approvals have been obtained, there can be no assurance that laws and
regulations will not be applied in a manner that adversely affects the Company.
The imposition of such regulatory requirements could force the Company to alter
or cease operations of its facilities and could otherwise have a material
adverse effect on the Company's business, financial condition and results of
operations.
The design, construction, use and operation of commercial irradiation
facilities such as those operated by the Company, and byproduct materials used
in such facilities, are extensively regulated by the United States Nuclear
Regulatory Commission (the "NRC"), or in some cases by various state regulatory
agencies and authorities that undertake comparable regulatory functions from the
NRC (the "Agreement States"). In addition, the Company is subject to various
local zoning and permit rules in the construction of its facilities. The
Company's facilities are subject to regulation by additional regulatory bodies
at the federal, state and local levels, depending upon the type of product that
is being irradiated. The Company's facilities are subject to the requirements of
the FDA when irradiating medical devices, foods, cosmetics or food or drug
packaging materials. In addition, if the Company were to begin processing meat
or poultry products, it would become subject to the requirements of the Food
Safety and Inspection Service of the USDA, which would require preapproval of
the irradiation process for meat and poultry. The Company is also subject to the
requirements of other federal agencies, such as the United States Occupational
Safety and Health Administration and the United States Environmental Protection
Agency (the "EPA"). In addition, the Company is subject to the regulatory
requirements of the state and local agencies in the jurisdictions where the
various irradiation facilities are located.
In addition to extensive regulation by various governmental bodies and
agencies, the Company is subject to standards, guidelines and requirements
established by industry organizations and other non-governmental bodies, such as
the International Standards Organization ("ISO") and the Association for the
Advancement of Medical Instrumentation ("AAMI").
Changes in, or reinterpretations of, existing requirements and standards or
adoption of new requirements beyond those described below or the failure at any
time to comply with any applicable material regulations and standards could have
a material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will not incur
significant costs to comply with laws, regulations and other requirements in the
future or that such laws, regulations and other requirements will not have a
material adverse effect upon the Company's business, financial condition and
results of operations.
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NRC Regulation of Irradiation Facilities
The receipt, acquisition, ownership, transfer, possession, use,
transportation and disposal of nuclear byproduct material, as well as the
construction, operation, transfer, closure and decommissioning of commercial
irradiation facilities such as those operated by the Company, are subject to
extensive and rigorous government regulation by the NRC or, in some cases, by
the Agreement States.
Although there can be no assurance, the Company believes it has received
all licenses and permits necessary for the conduct of its business. Commercial
Gamma sterilization facilities, such as those owned or operated by the Company
are subject to both regularly scheduled and unannounced inspections by the NRC
or the Agreement States, with regard to all aspects of their operation,
recordkeeping, compliance with health and safety regulations and all aspects of
the utilization, storage, transfer, possession and transportation of regulated
byproduct materials. Noncompliance with the health and safety regulations of the
NRC and most Agreement States are generally ranked according to levels of
severity. Since 1993, the Company has received notices of violation from the NRC
and the Agreement States concerning items of noncompliance at four of its
facilities, which were not in such categories as to be of "significant
regulatory concern." The Company believes that it has taken appropriate
corrective actions in response to each such notice. In August 1996, the Company
acquired certain assets of RTI, Inc. ("RTI"). The regulatory history of the
former RTI facilities, as operated by RTI, involved, among other things, very
significant regulatory compliance problems, which involved the payment of civil
and criminal penalties by RTI, as well as a facility license suspension for a
period of approximately 80 days. As a consequence of this regulatory history,
there can be no assurance that the former RTI facilities will not be subject to
heightened regulatory scrutiny and inspections for an extended period of time.
Such heightened regulatory scrutiny and a failure by the Company to address
concerns raised from such scrutiny and inspection could result in civil
penalties or the suspension or termination of operations at one or more of the
Company's facilities or could otherwise have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
has no knowledge of any circumstances that would constitute a present
significant violation of applicable state or federal laws or regulations.
However, there can be no assurance that the Company will not in the future be
determined to be in violation of any such laws or regulations.
The terms and conditions of the Company's licenses may be revoked, amended,
revised or modified by reason of changes in the applicable laws, rules,
regulations, or agency orders. Any such action may have a material adverse
effect on the Company's business, financial condition and results of operations.
Violations of or noncompliance with applicable governmental requirements
may result in an enforcement action including, among other things, a notice of
violation, imposition of civil penalties, suspension, modification or revocation
of any applicable license, criminal prosecution, or withholding or recall of the
nuclear byproduct material held by the Company. Any such action would have a
material adverse effect on the Company's business, financial condition and
results of operations.
FDA Regulation of Irradiation Facilities
The Company's facilities are subject to the requirements of the FDA when
irradiating medical devices, foods, cosmetics and food or drug packaging
materials. Failure by the Company at any time to comply with applicable FDA
requirements could lead the FDA to institute materially adverse enforcement
actions against the Company and/or its customers, including, among other things,
warning letters, recall or seizure of products, fines, injunctions, civil
penalties, total or partial suspension of sterilization operations and criminal
prosecution. Such enforcement actions would also harm the Company's business
reputation and could cause the Company to lose customers to competitors.
Medical devices, foods, cosmetics and food or drug packaging materials must
be manufactured and processed in accordance with the FDA's Good Manufacturing
Practices ("GMP"). No assurance can be given that the FDA would find that the
Company is in compliance with applicable GMP requirements or that the Company
will be found in compliance at all times in the future.
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Irradiation is regulated by the FDA and is considered to be a food
additive. Irradiation may only be used on foods and food packaging materials in
accordance with the requirements established in the food additive regulations.
The existing food additive regulations only approve the use of irradiation for a
limited variety of foods and food packaging materials that are used during the
irradiation of foods. Food packaging materials that are irradiated prior to
filling are exempt from the premarket approval requirements, provided that the
irradiated food packaging material is still suitable for use and complies with
the applicable indirect food additive regulations. Before the Company could
expand its sterilization services to certain foods or food packaging materials,
the food additive regulations would have to be amended to include the
irradiation of foods or food packaging materials not covered by the existing
regulations. There can be no assurance that the FDA would amend the food
additive regulations or that such regulations would be amended in a timely
manner.
Standards Compliance
In addition to governmental regulation, the Company is required to comply
with various standards in order to continue to provide sterilization services to
medical products manufacturers. These standards include ISO 9002 and the
standards for sterilization set by AAMI. The Company may in the future be
required to comply with new and changing standards. There can be no assurance
that the Company will be able to comply with any new standards or that the cost
of such compliance will not have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Quality Assurance and Safety."
RISKS OF OPERATING FACILITIES USING RADIOACTIVE MATERIAL
The operation of the Company's commercial irradiation facilities involves
special risks, potential liabilities, and specific regulatory, radiological
health and safety and environmental requirements and may raise concerns with
respect to both worker safety and community reaction. Should an incident
involving unplanned exposure beyond regulatory limits to radioactive materials
occur at any of the Company's facilities, the resultant liability could be
substantial. Such an incident would also result in adverse community reaction,
which could impact the Company's ability to continue to operate any facility
involved in such an incident, as well as similar facilities. In the event any
losses or liabilities related to such an incident are underinsured or exceed
accumulated funds, or adequate recovery is not possible, the Company's business,
financial condition and results of operations would be materially adversely
affected.
Although the Company believes it has implemented extensive safety
procedures, there is potential risk that workers in the Company's facilities may
be exposed to radiation beyond regulatory limits. In addition, the Company may
encounter resistance from those in the communities where it seeks to build
additional facilities or be subject to protests or other actions in areas where
it has facilities based on perceived risk of exposure to radiation on the part
of those living in the communities surrounding the Company's facilities. Any
actual or perceived exposure to radiation as a result of the Company's
activities or a failure related to the Company's safety procedures could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company is not aware of any incidences of worker exposure to radiation
beyond regulatory limits and has not experienced any contamination related to
its use of Cobalt 60. However, in the spring of 1985, due to a temporary
shortage in Cobalt 60 supply and in response to a program by the United States
Department of Energy ("DOE"), the Company leased over 400 stainless steel
capsules of radioactive Cesium 137 ("Cesium") from the DOE for use at the
Company's Decatur, Georgia and Westerville, Ohio irradiation facilities. On June
6, 1988, the Company discovered that one or more of DOE's Cesium capsules had
leaked radioactive Cesium, which is water soluble, into the water shielding
pool, contaminating the Company's Decatur, Georgia facility. The Company no
longer uses Cesium capsules in any of its facilities, and such capsules have
generally been withdrawn from commercial use nationwide by DOE. The Company is
not aware of any ongoing environmental or other legal liabilities related to the
Cesium incident. However, there can be no assurance that unspecified third
parties, including former employees, would not in the future, assert claims
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<PAGE> 13
against the Company in connection with the contamination of the Decatur
facility. See "-- Environmental Risks."
The Cobalt 60 stored in water shielding pools at each of the Company's
facilities is double encapsulated in stainless steel. Although the water in
these pools is continuously monitored for any potential leakage and is deionized
to protect against corrosion, there can be no assurance that the stainless steel
capsules will not corrode. In 1995, the Company encountered minor corrosion in
the outer encapsulation of certain of its Cobalt 60 rods, requiring their
replacement. Since the quantity of Cobalt 60 in a facility is the key
determinant of the amount of product that can be processed, any significant
delay in the replacement of such Cobalt 60 could have a material adverse effect
on the Company's business, financial condition and results of operations. In
addition, if the Company is determined to be responsible for the corrosion, it
could be required to bear the costs of transportation and reencapsulation of the
Cobalt 60. Furthermore, such corrosion, if undetected, could result in
radioactive material being released into the water shielding pool, which could
cause contamination of the pool and potentially the related facility. Any
contamination resulting from such release and the related decontamination
process would have a material adverse effect on the Company's business,
financial condition and results of operations. See "-- Government Regulation and
Standards Compliance," "Business -- Facilities," "Business -- Quality Assurance
and Safety" and "Business -- Regulatory and Environmental Matters."
ENVIRONMENTAL RISKS
The Company's operations are subject to regulation by the EPA as well as
state and local governmental agencies. Although there can be no assurance, the
Company believes it currently maintains all licenses and permits necessary to
conduct its current business and that it is in material compliance with
applicable environmental, health and safety laws and regulations. The loss of
any of the Company's licenses or permits could force the Company to suspend or
terminate operations at one or more of its facilities or could otherwise have a
material adverse effect on the Company's business, financial condition and
results of operations.
Pursuant to an Asset Acquisition Agreement effective August 8, 1996 (the
"Asset Agreement"), the Company purchased certain assets of RTI, including
property located in Salem, New Jersey and Haw River, North Carolina and a
leasehold interest in property located in Rockaway, New Jersey (the "Rockaway
Property"). The Rockaway Property was previously owned and operated by Thiokol
Chemical Corporation ("Thiokol"), and is listed on the Superfund National
Priorities List ("NPL"). In 1992, RTI and Thiokol entered into an Administrative
Consent Order ("ACO") with the New Jersey Department of Environmental Protection
("NJDEP") requiring, among other things, implementation of a groundwater remedy
estimated to exceed $2.0 million in costs.
Under the Asset Agreement, RTI retained ownership of the Rockaway Property
and all associated environmental liabilities as of the closing date. RTI agreed
to indemnify and hold the Company harmless from and against any and all claims
which may arise directly or indirectly from any use or release of hazardous
substances on or under the leased premises as of the closing date. In addition,
the Company obtained a letter from the NJDEP stating that the NJDEP will not
institute either judicial or administrative civil proceedings against the
Company for any discharge, deposit, release or disposal of hazardous substances
or pollutants existing at the Rockaway Property, emanating therefrom, or
occurring before the closing. However, the Company is required by the NJDEP to
maintain a standby letter of credit in the amount of $500,000, contingent upon
the continued clean up efforts required of RTI. The required amount of the
letter of credit decreases over the life of the leasehold interest, and/or as
the NJDEP requires. Although there can be no assurance, the Company believes,
based on present information available to it, including the indemnification from
RTI, the ACO among RTI, Thiokol and the NJDEP, and the NJDEP's letter stating
that it will not seek recovery or remediation costs from the Company for
contamination that predates the purchase of RTI's assets, that it does not face
any significant environmental liability with respect to the Rockaway Property
that would have a material adverse effect on its business, financial condition
or results of operations.
In the spring of 1985, the Company leased over 400 stainless steel capsules
of radioactive Cesium from the DOE for use at the Company's Decatur, Georgia and
Westerville, Ohio irradiation facilities. On June 6,
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1988, the Company discovered one or more of DOE's Cesium capsules had leaked
radioactive Cesium, which is water soluble, contaminating the Company's Decatur,
Georgia facility. As a result of the contamination, the Company's Decatur
irradiation facility was completely shut down. The decontamination activities
were conducted by the DOE and its contractors, and the Company filed an
administrative claim with the DOE for damages the Company incurred as a result
of the Cesium contamination. The DOE did not pay or deny the Company's claim
within the required six month period. As a result, the Company filed suit
against the U.S. government in June 1991. Although the DOE had orally offered to
fund the costs of the cleanup, the government subsequently asserted a
substantial counterclaim against the Company alleging that the Company had been
negligent in its handling and use of the Cesium capsules. A settlement was
reached between the parties to this litigation on April 9, 1997, following a
trial and notice of appeals filed by both SteriGenics, the U.S. government and
two of its contractors. The presiding court entered a stipulation of dismissal
effective May 9, 1997. While the litigation resulted in significant expenses and
was a significant diversion of management attention, the Company is not aware of
any ongoing environmental or other legal liabilities associated with the Cesium
incident. However, there can be no assurance that unspecified third parties,
including former employees, would not, in the future, assert claims against the
Company in connection with the contamination of the Decatur facility. After the
decontamination activities were completed, final survey reports were prepared by
both a contractor for DOE and by a third party consultant on behalf of the
Georgia Department of Human Resources, which regulates such matters in Georgia,
to allow for the unrestricted use of the Decatur facility consistent with the
requirements of the Georgia Department of Human Resources. The documentation and
data prepared by such third party indicated that any residual radioactivity at
the Decatur facility was beneath that of regulatory concern to the applicable
regulatory authority. While the Company no longer uses Cesium in any of its
facilities, there can be no assurance that it will not experience any incidents
of radioactive contamination resulting from its use of Cobalt 60. See "-- Risks
of Operating Facilities Using Radioactive Materials."
RISKS RELATED TO COBALT 60 SUPPLY
To date, the Company has obtained its supply of the Cobalt 60 radioactive
isotope from three sources. The Company's primary sources of Cobalt 60 are
Nordion, a Canadian company and the world's principal source of Cobalt 60, and
PURIDEC Irradiation Technologies ("PURIDEC"), a United Kingdom company and a
subsidiary of Amersham International plc. In addition, the Company has purchased
smaller amounts of its Cobalt 60 requirements from Neutron Products Inc., a
Maryland corporation. While the Company has not experienced any shortages in
Cobalt 60 supply since the mid-1980s and has various supply contracts in place,
there can be no assurance that it will be able to obtain sufficient supplies of
Cobalt 60 from Nordion, PURIDEC or other suppliers on acceptable terms or that
it will be able to identify and qualify alternative sources. In addition, there
is no assurance that Nordion will not in the future become a competitor of the
Company in the delivery of sterilization services, which could result in a
decrease in the availability of Cobalt 60 from Nordion. If interruptions in the
supply or increases in the price of Cobalt 60 were to occur for any reason,
including a decision by any of the Company's suppliers to decrease or
discontinue supplies of Cobalt 60 to the Company, trade restrictions with Canada
or the United Kingdom, political unrest, labor disputes or other factors, the
Company's business, financial condition and results of operations would be
materially adversely affected. Since the Company pays for Cobalt 60 primarily in
Canadian dollars, and the Canadian dollar is currently trading at levels
significantly lower than it has in recent years, the Company's results of
operations may be adversely affected by fluctuations in currency exchange rates.
In addition, the availability and price of Cobalt 60 to the Company and its
suppliers is dependent in part on the political situation in countries with
large deposits of Cobalt 59 (the material that is processed into Cobalt 60),
such as the Democratic Republic of Congo and the republics of the former Soviet
Union. Such countries have recently experienced political unrest. In addition,
since mined Cobalt 59 must be converted into Cobalt 60 in nuclear reactors, the
supply of Cobalt 60 to the Company's suppliers is dependent upon the
availability of nuclear reactors to convert Cobalt 59 to Cobalt 60. An
interruption in the Company's supply of Cobalt 60 or significant increase in the
price the Company is required to pay for Cobalt 60 would have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Cobalt 60."
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RISKS OF BUSINESS INTERRUPTION
Any prolonged disruption in the operations at any of the Company's
facilities, whether due to technical or labor difficulties, regulatory action,
destruction of or damage to any facility or other reasons, would have a material
adverse effect on the Company's business, financial condition and results of
operations. This risk is increased since customers generally seek to have their
products sterilized within a 300 mile radius of their production or distribution
facilities. The Company is also susceptible to natural disasters, including
earthquakes, hurricanes and tornadoes, as well as other catastrophic events such
as fire. Furthermore, if additional capacity is required as a result of
unplanned increases in demand for the Company's services, the Company may suffer
delays and increased costs in establishing other facilities or increasing
production at existing facilities that could adversely affect customer
relationships, cause a loss of market opportunities and have a material adverse
effect on the Company's business, financial condition and results of operations.
In addition, the failure to effectively implement any design or process changes
could disrupt the sterilization process, which could also adversely affect
customer relationships, cause a loss of market opportunities and have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Facilities."
MANAGING GROWTH; POTENTIAL ACQUISITIONS
The Company has recently experienced a period of revenue growth and an
expansion in the number of its employees, the scope of its operating and
financial systems and the geographic area of its operations. This growth has
resulted in and may continue to result in new and increased responsibilities for
management personnel and has placed additional demands upon the Company's
management, operating and financial systems and resources. In order to
successfully integrate its expanded operations and to manage future growth, if
any, the Company will be required to implement new and expanded business and
financial systems, procedures and controls, and to improve its accounting and
other internal management systems. There can be no assurance that the Company's
systems, procedures, controls and staffing will be successfully managed or will
be adequate to successfully support the Company's operations. Failure to manage
any future growth properly would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company may in the future undertake acquisitions that could present
challenges to the Company's management, such as integrating and incorporating
new operations, technologies and personnel. If the Company's management is
unable to effectively manage these challenges, the Company's business, financial
condition and results of operations could be materially adversely affected.
Furthermore, there can be no assurance that any acquisitions will result in
increased revenue or positively impact the Company's profitability. Moreover,
any new acquisition, depending on its size, could result in the use of a
significant portion of the Company's available cash or the acquisition of
additional debt or, if such acquisition is made utilizing the Company's
securities, could result in significant dilution to the Company's stockholders.
The Company does not currently have any understandings, commitments or
agreements with respect to any potential acquisition or corporate partnering
arrangements. While it is an element of the Company's strategy to pursue
strategic acquisitions, the Company believes that the number of potential
acquisition candidates in the domestic market is limited. Therefore, there can
be no assurance that the Company will successfully complete any such
transaction.
SUBSTANTIAL DEBT
As of March 31, 1997, the Company's total consolidated liabilities were
$59.2 million, of which $41.5 million represents long-term debt (including
current portion), its total consolidated assets were $91.7 million and its total
stockholders' equity was $31.0 million. The Company's substantial level of debt
presents the risk that the Company might not generate sufficient cash to service
the Company's indebtedness, including its Industrial Revenue Bonds ("IRBs"), or
that its debt level could limit its ability to finance an acquisition and
develop additional projects, to compete effectively or to operate successfully
under adverse economic conditions. As of March 31, 1997, the Company had $31.5
million of tax-free IRBs outstanding with interest rates as of March 31, 1997 of
3.6% and 3.7% and $750,000 of tax-free IRBs with a fixed interest
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rate of 10.0%. The Company expects to issue a tax-free IRB in the amount of $5.0
million to finance its new Fort Worth, Texas facility. The maximum aggregate
amount of tax-free IRBs that the Company may issue is $40.0 million. Once the
Company has issued the maximum amount of tax-free IRBs, it will be required to
obtain any additional financing through higher cost funding sources. Each of the
Company's IRBs is collateralized by certain assets of the Company. See
"Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 3 of Notes to the Consolidated Financial Statements.
DEPENDENCE ON KEY PERSONNEL
The Company's progress to date has been highly dependent upon the skills of
its key technical and management personnel, many of whom would be difficult to
replace. To reach its future business objectives, the Company will need to hire
additional qualified personnel in the areas of sales, engineering and
management. There can be no assurance that the Company will be able to hire such
personnel, as the Company must compete with other companies, academic
institutions, government entities and other agencies. The number of persons with
experience in the Gamma sterilization industry is limited, and as a result,
competition for such personnel is intense. There can be no assurance that the
Company can retain such personnel or that it can attract or retain other highly
qualified personnel in the future. The Company does not maintain key person life
insurance on any of its personnel. The loss of any of the Company's senior
management, facilities managers or other key research, regulatory, technical or
sales and marketing personnel, particularly if lost to competitors, or the
failure of any key employee to perform well in his or her current position,
could have a material adverse effect on the Company's business, financial
condition and results of operations. In particular, the loss of James F.
Clouser, the Company's Chief Executive Officer and President, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Employees" and "Management."
FINANCIAL EXPOSURE TO PRODUCT LIABILITY CLAIMS
The Company faces the risk of financial exposure to product liability
claims alleging that the Company's failure to adequately perform its services
resulted in adverse effects. While the Company's customers are responsible for
determining the appropriate dosage of radiation their products should receive,
the Company is required to certify that such dose level was achieved. There can
be no assurance that the Company will not be held liable for damages that are
alleged to result from improper dosing or incorrect dosage instructions received
from a customer. The Company currently maintains product liability insurance
with a claims limit of $5.0 million per claim and $5.0 million in the aggregate.
However, there can be no assurance that the Company will avoid significant
product liability claims and attendant adverse publicity. Furthermore, there can
be no assurance that the Company's product liability insurance is adequate or
that such insurance coverage will remain available at acceptable costs. A
successful claim brought against the Company in excess of its insurance coverage
could have a material adverse effect on the Company's business, financial
condition and results of operations. Additionally, adverse product liability
actions could negatively affect market acceptance of the Company's services and
the Company's ability to obtain and maintain regulatory approval for its
products.
CONTROL BY EXISTING STOCKHOLDERS
Upon completion of the offering, the Company's officers, directors and
principal stockholders, and certain of their affiliates, will beneficially own
74.0 percent of the Company's outstanding Common Stock (approximately 69.7
percent assuming the Underwriter's over-allotment option is exercised in full).
Such concentration of ownership may have the effect of delaying or preventing a
change in control of the Company. Additionally, these stockholders will have
significant influence over the election of directors of the Company. This
concentration of ownership may allow significant influence and control over
decisions by the Board of Directors and corporate actions. See "Principal
Stockholders."
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NEED FOR ADDITIONAL CAPITAL
The Company requires substantial working capital to fund its business,
particularly for capital expenditures, including the construction of its
facilities and acquisition of Cobalt 60. The Company believes that the net
proceeds from the offering, together with existing cash balances, funds expected
to be generated from operations and available credit facilities, will be
adequate to fund its operations at least through the end of fiscal 1999. There
can be no assurance, however, that the Company will not require additional debt
or equity financing during such period or thereafter. Further, there can be no
assurance that additional financing, if required, will be available to the
Company on acceptable terms, if at all. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate its planned expansion,
research, development and engineering programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its technologies or other assets. Accordingly, the
inability to obtain or difficulty in obtaining such financing could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY
The Company relies on a combination of copyright and trade secret
protection and nondisclosure agreements to protect its proprietary rights. In
addition, the Company has a U.S. patent application pending on its MiniCell.
There can be no assurance, however, that patent and copyright law and trade
secret protection will be adequate to deter misappropriation of its technology,
that any patents issued to the Company will not be challenged, invalidated or
circumvented, that the rights granted thereunder will provide competitive
advantages to the Company, or that the claims under any patent application will
be allowed. Furthermore, there can be no assurance that others will not
independently develop similar processes or designs, duplicate the Company's
processes or design around any patents issued to the Company. The Company may be
subject to or may initiate interference proceedings in the United States Patent
and Trademark Office, which can demand significant financial and management
resources. The process of seeking patent protection can be time consuming and
expensive and there can be no assurance that patents will be issued from
currently pending or future applications or that any new patents that may be
issued will be sufficient in scope or strength to provide meaningful protection
or any commercial advantage to the Company.
The Company may in the future receive communications from third parties
asserting that the Company is infringing certain patents and other intellectual
property rights of others or seeking indemnification against such alleged
infringement. No assurance can be given that any of these claims will not result
in protracted and costly litigation, that damages for infringement will not be
assessed or that should it be necessary or desirable to obtain a license
relating to one or more of the Company's services or current or future
technologies, the Company will be able to do so on commercially reasonable terms
or at all.
NO PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE
Prior to the offering, there has been no public market for the Common Stock
of the Company, and there can be no assurance that an active trading market will
develop or, if one does develop, that it will be maintained. The initial public
offering price of the Common Stock offered hereby will be determined through
negotiations among the Company and the representatives of the Underwriters, and
may not be indicative of future market prices. There can be no assurance that
the market price of the Common Stock will not be highly volatile or that it will
not decline below the initial public offering price. Factors such as variations
in the Company's financial results, comments by securities analysts, changes in
earnings estimates by securities analysts, fluctuations in the stock prices of
the Company's competitors, the Company's ability to successfully sell its
services in the U.S. and overseas, any loss of key management, adverse
regulatory actions or decisions, evidence regarding the safety or efficacy of
Gamma radiation sterilization activities, announcements of extraordinary events
such as litigation or acquisitions, announcements of technical innovations or
changes in pricing policies by the Company or its competitors, the development
of in-house sterilization capabilities by manufacturers, changing government
regulations or industry standards and developments with respect to FDA or NRC or
other government regulations, developments with respect to patents or other
proprietary rights or
16
<PAGE> 18
public concern as to the safety of sterilization services performed by the
Company, as well as changes in the market for medical products and general
economic, political and market conditions, may have a significant effect on the
market price of the Company's Common Stock. In addition, stock markets have
experienced extreme price and volume trading volatility in recent years. This
volatility has had a substantial effect on the market prices of securities of
many companies for reasons frequently unrelated or disproportionate to the
operating performance of the specific companies. These broad market fluctuations
may adversely affect the market price of the Company's Common Stock. See
"Underwriting."
ANTITAKEOVER EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS
Certain provisions of the Company's Certificate of Incorporation may have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire control of the Company.
The Company's Certificate of Incorporation allows the Board of Directors to
issue and determine the rights, powers and preferences of Preferred Stock
without any vote or further action by the stockholders, and certain provisions
of the Company's Certificate of Incorporation and Bylaws eliminate the right of
stockholders to act by written consent without a meeting, and specify procedures
for director nominations by stockholders and submission of other proposals for
consideration at stockholder meetings. Certain provisions of Delaware law could
also delay or make more difficult a merger, tender offer or proxy contest
involving the Company, including Section 203 of the Delaware General Corporation
Law, which prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years unless
certain conditions are met. The possible issuance of Preferred Stock, the
procedures required for director nominations and stockholder proposals and
Delaware law could have the effect of delaying, deferring or preventing a change
in control of the Company, including without limitation, discouraging a proxy
contest or making more difficult the acquisition of a substantial block of the
Company's Common Stock. These provisions could also limit the price that
investors might be willing to pay in the future for shares of the Company's
Common Stock. See "-- Control by Existing Stockholders" and "Description of
Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering and based on the shares outstanding as of
March 31, 1997, there will be 6,828,769 shares of Common Stock outstanding. Of
these shares, the 2,000,000 shares sold in the offering (assuming no exercise of
the Underwriters' over-allotment option) will be freely tradable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), unless purchased by "affiliates" of the Company, as that
term is defined in Rule 144 of the Securities Act. The remaining shares will be
"restricted securities" as that term is defined under Rule 144 (the "Restricted
Shares").
Of the Restricted Shares, an aggregate of 5,392,607 shares of Common Stock
(including 563,838 shares issuable upon exercise of vested stock options), will
be eligible for sale in the public market subject to Rule 144 and Rule 701 under
the Securities Act after expiration of a contractual lock-up ending 180 days
after the date of the Prospectus, unless earlier consented to, in whole, or in
part, by PaineWebber Incorporated.
The Company intends to register on a Form S-8 registration statement under
the Securities Act, during the 180-day lock-up period, a total of 2,312,686
shares of Common Stock which are subject to outstanding options or reserved for
issuance under the Company's stock option plans and stock purchase plan. As of
March 31, 1997, there were options to purchase 702,925 shares of Common Stock
outstanding of which 487,014 were vested and exercisable. See "Shares Eligible
for Future Sale."
After the offering, the holders of approximately 1,218,582 shares of Common
Stock are entitled to certain rights with respect to registration of such shares
under the Securities Act. Registration of such shares under the Securities Act
would result in such shares becoming freely tradable without restriction under
the Securities Act (except for shares purchased by affiliates of the Company)
immediately upon the effectiveness of such registration. If the holders, by
exercising their demand registration rights, cause a large number of securities
to be registered and sold in the public market, such sales could have an adverse
effect on the market price for the Common Stock. If the Company were to include
in a Company-initiated registration, any registrable securities pursuant to the
exercise of piggyback registration rights, such sales may have an adverse
17
<PAGE> 19
effect on the Company's ability to raise needed capital. See "Description of
Capital Stock -- Registration Rights."
DILUTION AND ABSENCE OF DIVIDENDS
The public offering price is substantially higher than the book value per
share of the Common Stock. Assuming a public offering price of $13.00 per share,
investors purchasing shares of Common Stock in the offering, based upon the net
tangible book value per share of Common Stock as of March 31, 1997, will incur
immediate and substantial dilution in the amount of $5.13 per share. Future
equity financings may cause further dilution to investors. The Company has never
paid dividends on its Common Stock and does not expect to pay dividends in the
foreseeable future. See "Dilution" and "Dividend Policy."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$23.3 million, at an assumed initial public offering price of $13.00 per share
and after deducting underwriting discounts and commissions and estimated
offering expenses payable by the Company.
The Company currently expects to use approximately $14.0 million of the net
proceeds of the offering for capital expenditures, including new facilities,
equipment and the purchase of additional Cobalt 60, and $1.5 million of the net
proceeds of the offering for redemption of the 15,000 shares of Series A
Preferred Stock currently outstanding. The balance of net proceeds will be used
for working capital and general corporate purposes.
The Company may also use a portion of the net proceeds to pursue strategic
acquisitions of sterilization facilities and businesses, both domestically and
internationally, although the Company does not have any agreements or
understandings with respect to any such acquisition, and no portion of net
proceeds has been allocated for any specific acquisition. Pending such uses, the
Company intends to invest the net proceeds from the offering in short-term,
government securities and other investment-grade, interest-bearing securities.
The Company estimates the net proceeds of the offering, together with existing
cash balances, funds expected to be generated from operations and available
credit facilities, will be sufficient to fund the Company's anticipated
operations at least through the end of fiscal 1999.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not expect to do so in the foreseeable future. The payment of
cash dividends on the Company's Common Stock is limited by the terms of the
Company's revolving line of credit.
18
<PAGE> 20
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997, (i) on an actual basis (ii) on a pro forma basis to reflect the
conversion of all outstanding shares of Convertible Preferred Stock into shares
of Common Stock and (iii) as adjusted to give effect to the sale of the shares
of Common Stock offered by the Company hereby, at an assumed initial public
offering price of $13.00 per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by the
Company, and the application of the estimated net proceeds therefrom as
described in "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
---------------------------------
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt, including current portion:
Borrowings under Industrial Revenue Bonds and capital
leases..................................................... $41,542 $41,542 $41,542
------- ------- -------
Series A Redeemable Preferred Stock, $0.001 par value:
100,000 shares authorized pro forma and actual; 15,000 shares
issued and outstanding, pro forma and actual; no shares
authorized, issued and outstanding, as adjusted............... 1,500 1,500 --
------- -------
Stockholders' equity:
Preferred Stock, $0.001 par value;
10,000,000 shares authorized actual; 5,000,000 shares
authorized pro forma and as adjusted; no shares issued and
outstanding, pro forma and as adjusted..................... -- -- --
Convertible Preferred Stock, Series B and C, $0.001 par value:
1,772,728 shares authorized actual; 1,772,727 shares issued
and outstanding, actual, no shares authorized, issued and
outstanding, pro forma and as adjusted..................... 2 -- --
Common Stock, $0.001 par value;
15,000,000 shares authorized; 3,056,042 issued and
outstanding actual; 30,000,000 shares authorized, pro forma
and as adjusted; 4,828,769 shares issued and outstanding,
pro forma, 6,828,769 shares issued and outstanding, as
adjusted(1)................................................ 3 5 7
Additional paid-in capital.................................... 14,727 14,727 38,055
Notes receivables from stockholders........................... (88) (88) (88)
Retained earnings............................................. 16,336 16,336 16,336
------- ------- -------
Total stockholders' equity................................. 30,980 30,980 54,310
------- ------- -------
Total capitalization.................................. $74,022 $74,022 $95,852
======= ======= =======
</TABLE>
- ---------------
(1) Excludes as of March 31, 1997 (i) 702,925 shares of Common Stock issuable
upon exercise of outstanding options and 9,761 shares of Common Stock which
remained available for option grant under the Company's Second Amended and
Restated 1986 Stock Option Plan, (ii) 1,200,000 shares of Common Stock
reserved for future issuance under the Company's 1997 Equity Incentive Plan
and (iii) 400,000 shares of Common Stock reserved for future issuance under
the Company's 1997 Employee Stock Purchase Plan. See "Management -- Stock
Plans."
19
<PAGE> 21
DILUTION
The net tangible book value of the Company at March 31, 1997 was $30.4
million or $6.30 per share of Common Stock. "Net tangible book value" per share
represents the amount of total tangible assets of the Company less its total
liabilities, divided by the total number of shares of Common Stock outstanding,
after giving effect to the conversion of the outstanding shares of Preferred
Stock (except for the 15,000 shares of Series A Preferred Stock currently
outstanding) into Common Stock upon the closing of the offering. After giving
effect to the sale of 2,000,000 shares of Common Stock offered hereby at an
assumed initial public offering price of $13.00 per share, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company, the pro forma net tangible book value of the Company as of March
31, 1997 would have been $53.8 million or $7.87 per share. This represents an
immediate increase in net tangible book value of $1.57 per share to existing
stockholders and an immediate dilution in pro forma net tangible book value of
$5.13 per share to purchasers of Common Stock in the offering.
<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $ 13.00
Net tangible book value per share before the offering..... $ 6.30
Increase per share attributable to new investors.......... 1.57
-----
Pro forma net tangible book value per share after the
offering.................................................. 7.87
------
Dilution in net tangible book value per share to purchasers
in the offering........................................... $ 5.13
======
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by new investors in the offering:
<TABLE>
<CAPTION>
TOTAL CASH
SHARES PURCHASED CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing
stockholders......... 4,828,769 70.7% $14,817,005 36.3% $ 3.07
New investors.......... 2,000,000 29.3 26,000,000 63.7 $ 13.00
--------- ----- ----------- -----
Total........ 6,828,769 100.0% $40,817,005 100.0%
========= ===== =========== =====
</TABLE>
The foregoing tables do not give effect to the exercise of any options
subsequent to March 31, 1997. At March 31, 1997, 702,925 shares of Common Stock
were issuable upon exercise of outstanding options at a weighted average
exercise price of $5.07 per share. To the extent outstanding options are
exercised, there will be further dilution to new investors. See
"Management -- Stock Plans" and Note 5 of Notes to Consolidated Financial
Statements.
20
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of March 31, 1996 and
1997 and for each of the three years in the period ended March 31, 1997 are
derived from the Consolidated Financial Statements of the Company which have
been audited by Ernst & Young LLP, independent auditors, and are included
elsewhere in this Prospectus. The selected statement of operations data for the
years ended March 31, 1993 and 1994 and the balance sheet data as of March 31,
1993, 1994 and 1995 are derived from audited Consolidated Financial Statements
not included herein. The financial data are qualified by reference to and should
be read in conjunction with the Company's Consolidated Financial Statements,
related Notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................ $21,603 $24,585 $28,661 $30,241 $ 37,668
Cost of revenues........................................ 11,896 11,679 16,389 16,978 20,425
------- ------- ------- ------- -------
9,707 12,906 12,272 13,263 17,243
Costs and expenses:
General and administrative............................ 1,628 3,266 5,664 5,213 6,345
Marketing and selling................................. 1,002 1,258 1,583 1,761 2,482
Research, development and engineering................. 473 518 685 890 1,381
------- ------- ------- ------- -------
3,103 5,042 7,932 7,864 10,208
------- ------- ------- ------- -------
Income from operations.................................. 6,604 7,864 4,340 5,399 7,035
Other income (expense):
Write-down of investments in joint ventures........... -- -- (3,011) -- --
Interest expense, net................................. (1,164) (916) (2,402) (1,846) (1,836)
Other income.......................................... 315 256 139 47 115
------- ------- ------- ------- -------
Income (loss) before provision for income taxes, equity
in joint ventures and discontinued operations......... 5,755 7,204 (934) 3,600 5,314
Provision for income taxes.............................. 2,045 2,479 1,185 1,448 2,099
------- ------- ------- ------- -------
Income (loss) before equity in joint ventures and
discontinued operations............................... 3,710 4,725 (2,119) 2,152 3,215
Equity in net loss of joint ventures.................... (204) (720) (1,360) -- --
------- ------- ------- ------- -------
Income (loss) from continuing operations................ 3,506 4,005 (3,479) 2,152 3,215
Discontinued operations:
Income (loss) from discontinued operations............ 494 189 (115) -- --
Loss on disposition of discontinued operations........ -- -- (1,173) -- --
------- ------- ------- ------- -------
Net income (loss)....................................... $ 4,000 $ 4,194 $(4,767) $ 2,152 $ 3,215
======= ======= ======= ======= =======
Pro forma net income per share.......................... $ 0.62
=======
Shares used in computing pro forma net income per
share................................................. 5,164,679
=======
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31,
---------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 914 $ 5,945 $ 1,673 $ 9,906 $ 1,957
Working capital (deficit)............................ 1,306 2,246 (3,576) 3,296 (3,179)
Total assets......................................... 47,692 66,861 74,588 84,729 91,667
Total liabilities.................................... 28,863 35,161 47,546 55,464 59,187
Redeemable preferred stock........................... 1,500 1,500 1,500 1,500 1,500
Stockholders' equity................................. 17,329 30,200 25,542 27,765 30,980
</TABLE>
21
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus. This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ materially from
those anticipated by the forward-looking statements as a result of certain
factors, including, but not limited to, those set forth in Risk Factors and
elsewhere in this Prospectus. The Company's fiscal year ends on March 31. The
fiscal year ended March 31, 1995 is referred to as fiscal 1995, the fiscal year
ended March 31, 1996 is referred to as fiscal 1996, the fiscal year ended March
31, 1997 is referred to as fiscal 1997 and the fiscal year ending March 31, 1998
is referred to as fiscal 1998.
OVERVIEW
Since its inception, SteriGenics has engaged primarily in the business of
operating, designing and developing Gamma facilities to provide contract
sterilization and radiation processing services to manufacturers of medical and
non-medical products. The Company currently operates 12 Gamma facilities in six
states. In fiscal 1995, the Company opened mega-facilities in Corona, California
and Charlotte, North Carolina. In fiscal 1997, the Company opened a
mega-facility in Gurnee, Illinois and began operating three additional
facilities in connection with its acquisition of certain assets of RTI. In
fiscal 1998, the Company began operation of its first MiniCell facility in
Hayward, California and opened its second Fort Worth, Texas facility. With the
addition of these facilities, the Company's maximum Cobalt 60 capacity has
increased from 32 million curies at the end of fiscal 1994 to a current level of
101 million curies.
In order to more effectively address its customer base, the Company has
divided its operations into two divisions: medical products and non-medical.
While the Company's primary market continues to be the sterilization of medical
products, the Company has increased its focus on the sterilization and
processing of non-medical products. The percentage of the Company's revenues
generated from the non-medical market increased from 17% in fiscal 1996 to 20%
in fiscal 1997. The Company has dedicated four of its facilities to processing
primarily non-medical products.
The Company's revenues have increased significantly from fiscal 1995 to
fiscal 1997 as the Company opened and acquired additional facilities, increased
its loaded curies of Cobalt 60 and expanded its customer base. In addition, in
recent years the Company generated incremental revenues by offering its
customers premium services such as ExCell and GammaSTAT. Revenues are recognized
upon completion of the sterilization or processing services.
The Company's cost of revenues is comprised primarily of the depreciation
of Cobalt 60, facilities and equipment; direct labor costs; facilities rental;
and costs associated with facility quality assurance personnel. Since Cobalt 60
represents a significant portion of the Company's cost of revenues, Cobalt 60
efficiency and utilization are key determinants of the Company's gross margin.
Cobalt 60 is amortized using an accelerated method (approximately 12.3% of net
book value per year), which corresponds to its natural decay rate. As the
Company periodically increases its installed capacity of Cobalt 60 in existing
facilities or when it opens a new facility, it typically has excess capacity for
some period of time which can adversely affect gross margin. Correspondingly,
since costs associated with Cobalt 60 are fixed costs, once a facility reaches
its break-even point for a given amount of Cobalt 60 there are relatively low
costs associated with incremental revenues. The Company's gross margin is also
affected by the mix of standard services and higher margin premium services such
as ExCell and GammaSTAT.
From time to time, the Company has built or expanded facilities. The cost
of construction of a facility is reflected as construction-in-progress until
start-up of the facility, at which time depreciation commences. Building new
facilities requires significant capital investments in building construction,
equipment and Cobalt 60. In addition to incurring costs associated with Cobalt
60, the Company also incurs incremental personnel costs in the months preceding
initial operation and typically incurs substantial personnel and other operating
expenses during the first several months of operations. These costs have
historically exceeded revenues during
22
<PAGE> 24
the initial months of operation. In the past, as a result of their own internal
procedures, certain customers have delayed qualification and use of a new
facility until it had been operational for periods of up to 12 months. As a
result, the Company failed to realize a portion of anticipated revenues for the
facility pending such qualification. See "Risk Factors -- Unpredictability of
Future Operating Results; Likely Fluctuations in Quarterly Operating Results."
RESULTS OF OPERATIONS
The following table provides a breakdown of the Company's consolidated
statements of operations on a percentage of revenues basis for the periods
indicated:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Revenues................................................ 100.0% 100.0% 100.0%
Cost of revenues........................................ 57.2 56.1 54.2
------ ---- -- ---- --
42.8 43.9 45.8
Costs and expenses:
General and administrative............................ 19.8 17.2 16.8
Marketing and selling................................. 5.5 5.8 6.6
Research, development and engineering................. 2.4 3.0 3.7
------ ---- -- ---- --
27.7 26.0 27.1
------ ---- -- ---- --
Income from operations.................................. 15.1 17.9 18.7
Other income (expense):
Write-down of investments in joint ventures........... (10.5) - -
Interest expense, net................................. (8.4) (6.1) (4.9)
Other income.......................................... 0.5 0.1 0.3
------ ---- -- ---- --
Income (loss) before provision for income taxes, equity
in joint ventures and discontinued operations......... (3.3) 11.9 14.1
Provision for income taxes.............................. 4.1 4.8 5.6
------ ---- -- ---- --
Income (loss) before equity in joint ventures and
discontinued operations............................... (7.4) 7.1 8.5
Equity in net loss of joint ventures.................... (4.7) - -
------ ---- -- ---- --
Income (loss) from continuing operations................ (12.1) 7.1 8.5
Discontinued operations:
Loss from discontinued operations..................... (0.4) - -
Loss on disposition of discontinued operations........ (4.1) - -
------ ---- -- ---- --
Net income (loss)....................................... (16.6%) 7.1% 8.5%
====== ====== ======
</TABLE>
FISCAL YEARS ENDED MARCH 31, 1995, 1996 AND 1997
Revenues. Revenues increased 5.5%, from $28.7 million in fiscal 1995 to
$30.2 million in fiscal 1996 and 24.6% to $37.7 million in fiscal 1997. Revenues
increased from fiscal 1995 to fiscal 1996 primarily as a result of a full year
of operations for the Company's Charlotte, North Carolina and Corona, California
facilities and increased installed capacity of Cobalt 60 in its existing
facilities, which enabled the Company to process higher volumes of products.
Revenues in fiscal 1997 increased primarily as a result of the addition of the
former RTI facilities and the Gurnee facility, increased installed capacity of
Cobalt 60 in its existing facilities which enabled the Company to process higher
volumes of products, the expansion of the Company's non-medical business and an
increase in revenues from the Company's premium services. Growth in revenue
attributable to premium services in fiscal 1997 contributed to the Company's
ability to maintain its revenues per curie despite opening new facilities. One
customer, Baxter International Inc. ("Baxter"), accounted for approximately 13%
of revenues during fiscal 1995 and 1996. No customer accounted for more than 10%
of revenues during fiscal 1997 due to a restructuring of Baxter, which resulted
in the processing volume being divided between two companies.
23
<PAGE> 25
Cost of revenues. Cost of revenues increased from $16.4 million in fiscal
1995 to $17.0 million in fiscal 1996 and $20.4 million in fiscal 1997. Gross
margin increased from 42.8% in fiscal 1995 to 43.9% in fiscal 1996 and 45.8% in
fiscal 1997. The increase in gross margin from fiscal 1995 to fiscal 1996 was
primarily attributable to greater utilization of facilities opened in fiscal
1995 that enabled the Company to leverage the fixed costs associated with such
facilities. The increase in gross margin from fiscal 1996 to fiscal 1997 was
primarily attributable to greater utilization of the Company's existing
facilities and a higher percentage of revenue attributable to premium services,
which were offset in part by the impact of the opening of the Gurnee facility
and transition of the former RTI facilities. The Company expects gross margin to
fluctuate in future periods, and that it may be negatively impacted to the
extent the Company adds facilities and continues to expand its installed
capacity of Cobalt 60.
General and administrative. General and administrative expenses decreased
8.0%, from $5.7 million in fiscal 1995 to $5.2 million in fiscal 1996 and
increased 21.7% to $6.3 million in fiscal 1997. As a percentage of revenues,
these expenses decreased from 19.8% to 17.2% and 16.8% in fiscal 1995, 1996 and
1997, respectively. The decrease from fiscal 1995 to fiscal 1996 was primarily
attributable to higher legal expenses in fiscal 1995 relating to the Company's
litigation with the DOE. The increase in absolute dollars from fiscal 1996 to
fiscal 1997 was primarily attributable to increased headcount at the facility
level as four new facilities (including the three former RTI facilities) were
added during the fiscal year and, to a lesser extent, related increases in
corporate overhead. The decrease in general and administrative expenses as a
percentage of revenue from fiscal 1996 to fiscal 1997 was primarily due to
economies of scale achieved as the Company's revenues increased, which were
offset in part by costs related to the Company's acquisition of certain assets
of RTI. The Company expects general and administrative expenses will increase in
absolute dollars as the Company adds facilities and incurs additional costs
related to being a public company.
Marketing and selling. Marketing and selling expenses increased 11.2%, from
$1.6 million in fiscal 1995 to $1.8 million in fiscal 1996 and increased 40.9%
to $2.5 million in fiscal 1997. As a percentage of revenues, these expenses
increased from 5.5% to 5.8% and 6.6% in fiscal 1995, 1996 and 1997,
respectively. The increase from fiscal 1995 to fiscal 1996 was primarily
attributable to the addition of sales and marketing personnel at the facility
level and, to a lesser extent, higher travel and advertising expenses. The
increase in fiscal 1997 was primarily attributable to increased sales and
marketing personnel at the facility and corporate level and, to a lesser extent,
higher travel and advertising expenses. Additional headcount at the corporate
level enabled the Company to focus on large national customers as well as new
non-medical markets. The Company expects marketing and selling expenses will
continue to increase in absolute dollars.
Research, development and engineering. Research, development and
engineering expenses increased 29.9%, from $685,000 in fiscal 1995 to $890,000
in fiscal 1996 and increased 55.2% to $1.4 million in fiscal 1997. As a
percentage of revenues, these expenses increased from 2.4% to 3.0% and 3.7% in
fiscal 1995, 1996 and 1997, respectively. The increase from fiscal 1995 to
fiscal 1996 is primarily attributable to salary and related expenses for
additional design and systems engineers as the Company expanded its internal
process and design engineering capabilities. The increase in fiscal 1997 was
primarily attributable to the addition of engineering personnel and, to a lesser
extent, increased travel expenses related to the installation of new systems.
The Company expects research, development and engineering expenses will continue
to increase in absolute dollars.
Investments in joint ventures. Through December 1994, the Company had
invested a total of approximately $4.7 million for 35% of the common stock of
China Biotech Corporation ("China Biotech"), a joint venture formed to provide
contract sterilization services in Taichung, Taiwan. During fiscal 1995, based
upon revised market data and issues related to the Company's minority position
in the joint venture, the Company determined that the carrying value of this
investment would not be realized. Accordingly, the Company recorded a write-down
of the carrying value of $2.2 million in fiscal 1995. The Company's investment
in China Biotech was accounted for under the equity method with losses of $1.3
million recorded through fiscal 1995. During fiscal 1996 and 1997, although
China Biotech generated losses, the Company did not record its share of these
losses as the carrying value of the investment continued to be less than its
share of the net assets of China Biotech. In January 1997, the Company sold the
majority of its holdings in China Biotech for $1.2 million, resulting in no gain
or loss.
24
<PAGE> 26
As of March 31, 1995, the Company had invested a total of approximately
$1.8 million for 35% of the common stock of PT Perkasa SteriGenics, a joint
venture formed to provide sterilization services in Indonesia. The Company's
investment in PT Perkasa SteriGenics was also accounted for under the equity
method with losses of $960,000 recorded through fiscal 1995. During fiscal 1995,
the Company decided to withdraw from its investment in PT Perkasa SteriGenics
and wrote off the remaining carrying value of its investment of $860,000 to
reflect what it believed to be a total and permanent impairment in the value of
the asset.
Interest expense, net. Net interest expense decreased 23.2% from $2.4
million in fiscal 1995 to $1.8 million in fiscal 1996 and remained relatively
unchanged at $1.8 million in fiscal 1997. The decrease from fiscal 1995 to
fiscal 1996 relates to interest charges recorded in fiscal 1995 associated with
various potential tax liabilities. Net interest expense remained relatively
unchanged from fiscal 1996 to fiscal 1997 as higher levels of borrowings were
offset by lower interest rates on tax-free IRB financing ($31.5 million at 3.6%
and 3.7% and $750,000 at a fixed interest rate of 10.0% at March 31, 1997),
which replaced higher rate bank financing and other debt. As a percentage of
revenue, interest expense decreased from 8.4% to 6.1% and 4.9% in fiscal 1995,
1996 and 1997, respectively. The maximum aggregate amount of tax-free IRBs that
the Company may issue is $40.0 million. Once the Company has issued the maximum
amount of tax-free IRBs, it will be required to obtain any additional financing
through higher cost funding sources.
Provision for income taxes. The provision for income taxes for fiscal 1995
relates primarily to unbenefited capital losses related to investments in
foreign joint ventures. In fiscal 1996 and fiscal 1997, the total provision for
income taxes differs from the statutory rate primarily due to state income taxes
and increased consecutively from fiscal 1995 as a result of the Company's
increasing profitability. The Company's net deferred tax liabilities in fiscal
1996 and fiscal 1997 relate primarily to tax depreciation taken in excess of
book depreciation.
Discontinued operations. The Company entered into the aerosol business as
an ancillary business to its sterilization of eyecare solutions in its Decatur
facility. This business was profitable until the Company was required to shut
down the irradiator at its Decatur facility due to Cesium contamination. During
fiscal 1995, the Company discontinued its manufacture and sale of aerosol saline
solution for contact lens care and sold the associated assets. During fiscal
1995 the Company recorded losses of $1.3 million associated with the disposal
and discontinuation of this operation. See "Risk Factors -- Environmental
Risks."
25
<PAGE> 27
QUARTERLY RESULTS
The following tables set forth consolidated statements of operations data
for the eight quarters in the period ended March 31, 1997. This information has
been derived from unaudited consolidated financial statements that, in the
Company's opinion, reflect all normal recurring adjustments that the Company
considers necessary for a fair presentation of the results of operations in the
quarterly periods. The data set forth should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily indicative
of results for future quarters.
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1995 1995 1995 1996 1996 1996 1996 1997
--------- ---------- --------- ---------- --------- ---------- --------- ----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............... $ 7,538 $7,239 $ 7,359 $8,105 $ 8,164 $9,863 $ 9,657 $9,984
Cost of revenues....... 4,232 4,150 4,211 4,385 4,297 4,846 5,460 5,822
------ ------ ------ ------ ------ ------ ------ ------
Gross margin........... 3,306 3,089 3,148 3,720 3,867 5,017 4,197 4,162
As a percentage of
revenues........... 43.9% 42.7% 42.8% 45.9% 47.4% 50.9% 43.5% 41.7%
Costs and expenses:
General and
administrative..... 1,209 1,264 1,356 1,384 1,417 1,820 1,527 1,581
Marketing and
selling............ 395 449 389 528 560 708 576 638
Research, development
and engineering.... 218 227 227 218 273 386 381 341
------ ------ ------ ------ ------ ------ ------ ------
1,822 1,940 1,972 2,130 2,250 2,914 2,484 2,560
------ ------ ------ ------ ------ ------ ------ ------
Income from
operations........... 1,484 1,149 1,176 1,590 1,617 2,103 1,713 1,602
As a percentage of
revenues........... 19.7% 15.9% 16.0% 19.6% 19.8% 21.4% 17.8% 16.1%
Other income (expense):
Interest expense,
net................ (514) (465) (432) (435) (459) (472) (525) (380)
Other income
(expense).......... 15 15 10 7 7 (293) 214 187
------ ------ ------ ------ ------ ------ ------ ------
Income before provision
for income taxes..... 985 699 754 1,162 1,165 1,338 1,402 1,409
Provision for income
taxes................ 394 276 293 485 461 528 539 571
------ ------ ------ ------ ------ ------ ------ ------
Net income............. $ 591 $ 423 $ 461 $ 677 $ 704 $ 810 $ 863 $ 838
====== ====== ====== ====== ====== ====== ====== ======
As a percentage of
revenues........... 7.8% 5.8% 6.3% 8.4% 8.6% 8.2% 8.9% 8.4%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Quarterly Fluctuations. Revenues increased from the first to the second
quarter of fiscal 1997, primarily as a result of the addition of the three
former RTI facilities. General and administrative expenses also increased
between these periods due to additional legal and accounting expenses incurred
in the RTI acquisition. Gross margin decreased in the third quarter of fiscal
1997 due to expenses relating to the new Gurnee facility. Gross margin decreased
from the third to the fourth quarter of fiscal 1997 as the Gurnee facility
opened and expenses increased significantly.
The Company has experienced, and expects to continue to experience,
significant fluctuations in revenues and operating results from quarter to
quarter. As a result, the Company believes that period-to-period comparisons of
its operating results are not necessarily meaningful, and that such comparisons
cannot be relied upon as indicators of future performance. In addition, there
can be no assurance that the Company's revenues will grow or be sustained in
future periods or that the Company will maintain its current profitability in
the future. A significant component of such quarterly fluctuations results from
the demand by the Company's customers for Gamma sterilization services. Other
factors that could cause the Company's revenues and operating results to vary
significantly from period to period include volatility in the market for medical
devices; the ability of the Company to deliver sterilization services in a
timely and cost effective manner; the ability of the Company to expand
successfully in the non-medical sterilization services market; the timing and
size of orders from the Company's customer base; the ability of the Company to
obtain supplies of Cobalt 60 on a timely basis and at a reasonable cost;
fluctuations in currency exchange rates between the U.S. dollar and the Canadian
dollar; the costs associated with customer product being damaged as a
consequence of overdosing
26
<PAGE> 28
and other factors; changes in interest rates; regulatory matters; seasonality
associated with historical decreases in medical procedures during the fourth
calendar quarter; and litigation, acquisitions and other extraordinary events.
Another factor that has a significant impact on the Company's results of
operations is the timing of construction and commencement of operations of new
facilities. The Company's results of operations are also influenced by
competitive factors, including the pricing and availability of the Company's and
competing sterilization services; the acceptance of Gamma sterilization as a
means of sterilizing products as opposed to other methods of sterilization; the
ability of the Company's competitors to obtain orders from the Company's
customers; the establishment of in-house sterilization capabilities by the
Company's customers; the acquisition of the Company's customers by entities that
do not use the Company's sterilization services; the timing of new service or
technology announcements and releases by the Company and its competitors; and
the entry of new competitors into the market for sterilization and radiation
processing services. A large portion of the Company's expenses are fixed and
difficult to reduce in a short period of time. If revenues do not meet the
Company's expectations, the Company's fixed expenses would exacerbate the effect
of such a shortfall on net income. See "Risk Factors -- Unpredictability of
Future Operating Results; Likely Fluctuations in Quarterly Operating Results."
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date with cash flow from
operations, capital leases, IRB and bank financing, and the private placement of
equity securities. At March 31, 1997, the Company had $2.0 million in cash and
cash equivalents and a $3.2 million working capital deficit. This working
capital deficit is a result of costs incurred in the construction of the
Company's new Fort Worth facility. The Company expects to finance the Fort Worth
facility through the issuance of a $5.0 million IRB in the second quarter of
fiscal 1998.
Net cash provided by operating activities was $8.7 million, $11.0 million
and $12.2 million in fiscal 1995, 1996 and 1997, respectively. Net cash provided
by operating activities in fiscal 1995 consisted primarily of depreciation and
amortization, a write-down of investments in joint ventures and a deferred tax
liability, which were offset in part by losses from operations and a deferred
tax asset. Net cash provided by operating activities in fiscal 1996 and fiscal
1997 was primarily attributable to net income plus depreciation and
amortization.
Net cash used in investing activities was $15.6 million, $7.6 million and
$19.1 million in fiscal 1995, 1996 and 1997, respectively, primarily
attributable to the purchase of property, plant and equipment (including Cobalt
60).
Net cash provided by (used in) financing activities was $2.6 million, $4.7
million and $(1.0) million in fiscal 1995, 1996 and 1997, respectively. Net cash
provided by financing activities in fiscal 1995 was generated primarily from the
financing of Cobalt 60 purchases from Nordion. Cash provided by financing
activities in fiscal 1996 and 1997 was generated primarily from an increase in
IRB financing ($9.0 million and $8.8 million in fiscal 1996 and 1997,
respectively) offset by the repayment of bank and Cobalt 60 financing.
Noncash financing activities included the acquisition of Cobalt 60 through
capital leases totaling $7.8 million, $2.4 million and $2.5 million in fiscal
years 1995, 1996 and 1997, respectively. These leases have terms of 15 years.
The Company has a $3.5 million revolving line of credit with a bank, with a
variable interest rate (8.5% at March 31, 1997), collateralized by certain
assets of the Company. The line of credit is payable on demand, and at March 31,
1997, no amounts were outstanding under this line of credit.
At March 31, 1997, the Company had $31.5 million in IRB financing which
bears interest at market rates (3.6% and 3.7% at March 31, 1997) and $750,000 in
IRB financing which bears interest at a fixed rate of 10.0%. For a description
of the terms of the individual IRBs, see "Business -- Leases and Financing
Terms". The IRBs are collateralized by certain assets of the Company and by
letters of credit with a bank. Following the anticipated issuance of the IRB for
the second Fort Worth facility, the Company will be able to issue only $2.7
million of additional tax-free IRBs until it reaches the maximum aggregate
tax-free IRB limit of
27
<PAGE> 29
$40.0 million. Thereafter, the Company will be required to obtain any additional
financing through higher cost funding sources. See "Risk Factors -- Substantial
Debt."
The Company had capital expenditures of $16.5 million, $7.2 million and
$18.6 million in fiscal 1995, 1996 and 1997, respectively. The Company currently
expects to make capital expenditures of $3.0 million in fiscal 1998.
SteriGenics believes that the net proceeds of the offering, together with
existing cash balances, cash expected to be generated from operations and
available credit facilities, will be sufficient to fund the Company's
anticipated capital expenditures and operations at least through the end of
fiscal 1999. There can be no assurance that the adequate sources of capital will
be available in the future or, if available, will be on terms acceptable to the
Company. See "Risk Factors -- Need for Additional Capital."
28
<PAGE> 30
BUSINESS
OVERVIEW
SteriGenics International, Inc. ("SteriGenics" or the "Company") is a
leading provider of high quality contract sterilization services, with over 18
years of experience in the operation, design and development of Gamma
irradiation ("Gamma") facilities. The Company operates 12 Gamma sterilization
facilities in six states serving over 850 customers. SteriGenics has expanded
its presence in the medical products sterilization market through the opening
and acquisition of new facilities, addition of new customers and conversion of
products of new and existing customers from ethylene oxide gas ("EtO")
sterilization to Gamma sterilization. In recent years, the Company has expanded
into various non-medical sterilization and processing markets. The Company's
objective is to be the leading provider of high quality contract sterilization
services for manufacturers of medical and non-medical products.
INDUSTRY BACKGROUND
COMMERCIAL STERILIZATION
Sterilization is an essential step in the manufacturing process across a
number of industries for health, safety, regulatory and economic reasons. A
broad range of single-use, pre-packaged medical products as well as consumer
products are required under government regulations in the U.S. and many other
developed countries to be sterile or to have minimal microbial levels. In
addition, other products such as spices and herbs, cosmetic and food packaging
material are sterilized to improve shelf-life and address potential product
liability concerns. In order to provide safe and sterile products and to comply
with applicable government regulations, manufacturers have either developed
their own in-house or "captive" sterilization capabilities or have had their
products processed by a provider of contract sterilization services. The two
primary methods of commercial sterilization are Gamma and EtO sterilization. A
third alternative, electron beam ("E-Beam") sterilization, is utilized for
certain limited market applications.
Gamma Sterilization. Gamma sterilization is accomplished by exposing
products to Cobalt 60, an isotope that emits Gamma radiation. The exposure
sterilizes the product by disrupting the DNA structure of microorganisms on or
within the product, thereby eliminating their ability to reproduce. Gamma
radiation is generated by the spontaneous decay of radioactive isotopes. Because
Cobalt 60 decays at a constant rate, its effect on exposed products is highly
predictable. While Cobalt 60 emits radioactive energy, this energy does not
cause exposed substances to become radioactive. As a result, products exposed to
Cobalt 60 have no residual radioactivity and can be safely shipped to customers
immediately after processing.
Gamma sterilization is a one-step process that does not require any
preconditioning or post-processing treatment of the product. In a typical
commercial Gamma facility, packaged products are loaded onto conveyer systems
which transport the products through an irradiation chamber or "cell." The
radiation dose applied to the product is determined by the amount of Cobalt 60
(measured in curies) in the cell, the distance from the radiation source and the
duration of exposure to the radiation source. The dose received is verified by
reading a dose monitor ("dosimeter") that is placed on product containers.
Commercial use of Gamma as a means of sterilization began in the early
1960s as several large medical products manufacturers installed irradiators at
their facilities. However, widespread use of Gamma sterilization did not occur
until the 1980s when radiation compatible plastics became readily available for
use in products and packaging materials. The use of Gamma sterilization has
increased significantly over the past 10 years as medical products manufacturers
have converted the sterilization method used for certain products from EtO to
Gamma and have increasingly used radiation compatible materials in the
development of new products.
EtO Sterilization. EtO sterilization is accomplished by exposing products
to EtO gas in a three-step process: (i) preconditioning, involving an increase
in temperature and humidity to ensure that microorganisms are active and
therefore more susceptible to the effects of gas sterilization, (ii) fumigation
of the product in a vacuum chamber and (iii) aeration of the product to allow
the gas residue to dissipate to acceptable levels.
29
<PAGE> 31
During the fumigation phase, active microorganisms that absorb a sufficient
amount of the EtO gas are killed. EtO processing requires careful monitoring and
control of numerous variables including temperature, humidity, pressure and gas
concentration. Because of these multiple variables, biological indicators need
to be placed in a number of locations within the product containers and tested
in a biological laboratory to verify the desired reduction in microbial levels.
Through the early 1980s, the volume of medical products, consumer products
and spices and herbs processed with gas fumigation steadily increased. During
this time, a large number of medical products manufacturers built EtO
sterilization chambers in their facilities. Beginning in the late 1970s, several
governmental limitations were placed on gas fumigation due to the discovery that
EtO was a mutagenic substance with possible carcinogenic properties and that
freon, a stabilizing agent mixed with EtO, was a major cause in the depletion of
the ozone layer. Increased governmental regulation eventually led to higher
costs and longer processing times for EtO sterilization. The subsequent U.S. ban
on the production and importation of freon increased the risks and costs of
handling and storing EtO since EtO is more volatile in its pure form. As a
result of these increased costs and concerns of manufacturers about worker
exposure, many manufacturers sought to outsource their sterilization processes
to contract sterilizers using either Gamma or EtO.
E-Beam Sterilization. E-Beam sterilization is accomplished by exposing a
product for a predetermined time to a high-energy electron beam. The electron
beam is produced by an accelerator that converts electricity into an electron
beam. To provide a shield from the energy produced, products are processed in a
concrete cell. Exposure to E-Beam disrupts various chemical and biological bonds
in a microorganism, rendering the exposed product sterile. The first E-Beam
sterilization system was developed in the 1950s. Although the use of E-Beam
systems has increased in recent years with the development of improved high
voltage accelerators, the use of E-Beam sterilization has been limited due to
the complexity of the machinery required, the limited ability of E-Beam to
penetrate various materials and related dosimetry problems. Poor penetration
limits the applicability of E-Beam for large scale commercial applications, such
as the sterilization of high volume medical devices. As a result, the principal
use of E-Beam to date has been in the area of materials alteration, such as
crosslinking polymers.
COMPARISON OF PRIMARY STERILIZATION TECHNOLOGIES
Gamma has a number of advantages over the use of EtO under normal operating
conditions, including uniform dosing, predictability, reduced processing times,
enhanced flexibility, ease of handling and less environmental impact. Gamma is
able to penetrate all forms of materials, including metals and glass, thereby
providing uniform dosing throughout a given container. In addition, the effect
of Gamma sterilization is inherently more predictable than the effect of EtO
sterilization since, for a given amount of Cobalt 60, time and distance from the
source are the only variables that must be controlled in the process. In
contrast, EtO sterilization requires more complex monitoring and control of
variables such as temperature, humidity pressure and gas concentration.
Furthermore, while industry average turn-around time (measured from intake of
the product to shipment back to the manufacturer) for Gamma sterilization is
three to five working days, products are typically processed using Gamma in less
than eight hours. Due to the three-step EtO process, the processing time for EtO
generally ranges from seven to 14 days, with turn-around time being slightly
longer. The significantly shorter processing time required for Gamma provides
far greater flexibility for both processors and their customers. Gamma also has
less environmental impact than EtO under normal operating conditions since there
are no chemical residuals on the sterilized product or emissions released by
either the process or the sterilized product.
One factor that has limited the use of Gamma to date has been the
compatibility of radiation with certain plastics and other materials that may
discolor, deform or become brittle when exposed to Gamma. In addition, Gamma
cannot be used to sterilize multiple product surgical kits if they contain any
item that is not Gamma compatible or medications that have not been approved by
the United States Food and Drug Administration (the "FDA") for Gamma
sterilization. However, as a result of the many benefits of Gamma, there has
been an ongoing conversion of existing products from EtO to Gamma, and new
medical products are increasingly being developed using radiation compatible
materials.
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<PAGE> 32
The following table sets forth various comparisons of Gamma and EtO:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CONSIDERATION GAMMA ETO
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Industry average turn-around 3-5 days 8-15 days
time
- ----------------------------------------------------------------------------------------------
Total processing time Less than 8 hours 7-14 days
- Preconditioning - None - 1-3 days
- Processing - Less than 8 hours - 1-2 days
- Post-processing - None - 5-10 days of aeration
- ----------------------------------------------------------------------------------------------
Product design No restrictions Limited sealed cavities
- ----------------------------------------------------------------------------------------------
Materials compatibility Must be radiation compatible Can be used on variety of
materials
- ----------------------------------------------------------------------------------------------
Product packaging Must be radiation compatible Permeable materials only
No stress placed on seals Seals must withstand pressure
and vacuum
- ----------------------------------------------------------------------------------------------
Processing variables Time Time
Distance from Cobalt 60 source Temperature
Curies of Cobalt 60 Humidity
Pressure
Gas concentration
Vacuum
- ----------------------------------------------------------------------------------------------
Post-sterilization testing Dosimeter reading at end of Biological indicators tested
for processing in
dose verification laboratory
- ----------------------------------------------------------------------------------------------
Environmental impact of No residue on product EtO residue remains on product
processing No release into the atmosphere Release of EtO during aeration
Disposal of spent Cobalt 60 Handling of flammable and
explosive EtO gas
- ----------------------------------------------------------------------------------------------
Price of services 0.1-3.0% of unit manufacturing 0.1-3.0% of unit manufacturing
cost cost
- ----------------------------------------------------------------------------------------------
</TABLE>
THE STERILIZATION AND RADIATION PROCESSING MARKET
The sterilization and radiation processing market consists of independent
suppliers of sterilization and processing services ("contract sterilizers") and
certain large manufacturers that have in-house sterilization capabilities
("captive sterilizers"). Although there are no published industry statistics and
precise numbers are difficult to determine, the Company estimates that the U.S.
market for contract sterilization and radiation processing services (including
Gamma, EtO and E-Beam) was approximately $170 million in 1996 and that a similar
volume of product was processed by captive sterilizers. Of the U.S. contract
sterilization market, the Company estimates that in 1996 approximately 40-45%
was Gamma, 50-55% was EtO and 5% was E-Beam. There is also a significant market
for sterilization services outside of the U.S. In the international market, EtO
maintains a significantly larger share of the market than Gamma.
In determining the total cost of various sterilization services,
manufacturers must consider not only the cost of the actual sterilization
services, but also the cost of transportation and cost of processing time. As a
result, manufacturers typically do not send product for sterilization beyond a
300 mile radius since the cost of transportation would likely exceed the cost of
sterilization, which typically ranges from 0.1% to 3.0% of unit manufacturing
cost for medical products. Because of these limitations, contract sterilizers
have needed to strategically locate their facilities in close proximity to their
customer base.
The Company believes there are a number of manufacturing trends that may
have a significant impact on contract providers of Gamma sterilization services.
The first trend is closer coordination between manufacturers and their suppliers
in order to reduce inventory exposure, improve the manufacturer's level of
service to its customers and to facilitate new product launches. By closely
coordinating the sterilization process with the
31
<PAGE> 33
manufacturing process, the planning of production is simplified and the number
of days of raw materials and finished goods inventory can be reduced. As a
result, manufacturers are increasingly demanding shorter turn-around times for
sterilization services. The second of such trends is the "outsourcing" of
non-core elements of the manufacturing process where services can be obtained
from third party providers on a more cost-effective basis. While several large
corporations continue to perform either all or a portion of their sterilization
in-house, the trend has been away from building in-house sterilization capacity
due to cost, safety, flexibility and regulatory issues associated with
maintaining an in-house irradiator or EtO chamber. Finally, an emerging concept
is "in-house outsourcing," utilizing third party contractors to provide services
within a manufacturer's own facility. This emerging concept has the potential to
provide the cost advantages and core-business focus of outsourcing, while also
providing benefits such as reduction of finished goods inventory, elimination of
transportation costs and greater control associated with a captive facility.
MEDICAL PRODUCTS MARKET
The medical portion of the sterilization market includes manufacturers of
single-use medical products. The types of products sterilized include items such
as syringes, needles, scalpels, dental implants, hospital packs, gloves, gowns,
bandages, cotton balls, cotton swabs, cotton gauze, cotton towels, surgical
drapes, surgical kits, suture staples, specimen bottles, intravenous tubes and
bottles, blood collection devices, drug packaging materials, orthopedic
implants, petri dishes, contact lenses, and eyecare solutions. Based upon
industry sources, the Company estimates that the U.S. market for contract
sterilization of these types of medical products was approximately $130 million
in 1996.
NON-MEDICAL MARKETS
The market for sterilization and processing of non-medical products
includes a diverse group of products. Growth in these markets is primarily being
driven by concerns over health risks and potential product liability as well as
economic considerations such as losses due to infestation and spoilage. In
addition, concerns over foodborne illnesses have contributed to an increased
awareness of the need for sterilization. While the vast majority of the
processing of non-medical products is currently done with EtO, the percentage
being processed using Gamma sterilization has increased in recent years. A
number of manufacturers have converted to Gamma sterilization for their products
since Gamma does not leave any chemical residues and is better able to penetrate
products such as spices and cosmetics which are often processed in bulk. The
following are the primary non-medical products being processed using all of the
various methods:
Spices and Herbs. Spices and herbs constitute the largest portion of the
current non-medical sterilization market. According to The American Spice Trade
Association, of the approximately 850 million pounds of spices sold in the U.S.
in 1995, approximately 300 million pounds were processed using Gamma or EtO to
extend shelf-life and/or reduce microorganisms. Examples include black pepper,
garlic, nutmeg, mustard seed, paprika and cinnamon.
Cosmetics. Cosmetics often require processing to reduce microorganisms in
either finished goods or certain cosmetic ingredients that have naturally high
microbial content. Examples include shampoo, eye make-up remover, mascara and
compounds used in lipstick.
Food Packaging Products. As the market for pre-packaged foods has grown,
increasing the shelf-life of these products has become a critical economic
issue. By reducing the microbial count in the packaging material, producers are
able to reduce the risk that microorganisms contained in the packaging material
will come into contact with the food product and reduce its shelf-life. Examples
include milk cartons and meat packaging materials.
Materials Processing. Materials processing involves the use of Gamma
irradiation to alter the physical properties of a specific material at the
molecular level. For example, irradiation is used to strengthen certain plastics
as well as to break down teflon.
32
<PAGE> 34
POTENTIAL MARKETS
According to the World Health Organization, illness due to contaminated
food is one of the most widespread health problems in the world and a cause of
reduced economic productivity. As a consequence, the Company believes that there
are a number of large potential markets for the sterilization of food products
such as red meat, poultry, shellfish, animal feed, and fresh fruit and
vegetables. The FDA has approved radiation as a safe and effective means of
processing a variety of foods including pork, poultry, fresh fruits and
vegetables. Currently, the FDA has not approved the use of radiation to control
food-borne pathogens in red meat and shellfish, although there is a petition
before the FDA to grant approval for the irradiation of red meat. The USDA would
also have to authorize the use of irradiation in the treatment of red meat, and
it would also likely require preapproval of the irradiation process. In
addition, the FDA and USDA both require any retail foods that have been
irradiated to be labeled and, to date, there has been only a minimal amount of
food processed using Gamma radiation. While there is increased interest in
evaluating food irradiation in light of the heightened public concern over
recent outbreaks of E. coli and salmonella, the development of these potential
markets is subject to regulatory approvals and consumer acceptance of irradiated
foods. In addition, if these markets do develop, facilities will have to be
built or modified to address the specific requirements of these markets.
THE STERIGENICS APPROACH
SteriGenics is a leading provider of high quality Gamma sterilization
services, with over 18 years of experience in the operation, design and
development of Gamma facilities. The Company operates 12 facilities in six
states serving over 850 customers. The Company has expanded its presence in the
medical products market through the opening of new facilities, addition of new
customers and conversion of products of new and existing customers from EtO to
Gamma sterilization. In recent years, the Company has begun to expand into
various non-medical sterilization and processing markets. While SteriGenics
expects the majority of its revenues to continue to be derived from the
processing of medical products, it believes that non-medical markets offer
significant opportunities for expansion.
SteriGenics has always strived to be the innovator in its industry,
maintaining the only internal engineering and design capability in the Gamma
sterilization market. The Company's engineering and design expertise includes
the design and development of major facets of the irradiation system, from basic
conveyor systems to proprietary software systems. This expertise has allowed the
Company to introduce several innovations to the industry including the first
multi-cell facilities designed to provide improved turn-around times, increase
processing volume and improve operational efficiencies. Other innovations
include the Gemini cell, a dual-sided irradiator that enhances processing
flexibility and increases operating efficiencies by allowing the Company to
simultaneously process products with two different dose requirements in the same
cell, and the ExCell, the industry's first automated precision dose irradiation
system. The Company has also been able to introduce service innovations
including GammaSTAT, the industry's first guaranteed variable time-based
sterilization program.
SteriGenics is continuing its leadership in providing flexible approaches
to sterilization with its recent introduction of the MiniCell. Based upon a
proprietary design, the MiniCell allows a smaller single cell irradiator to be
constructed in an existing manufacturing facility or warehouse. The Company
plans to use the MiniCell to provide contract sterilization services to smaller
regional and international markets as well as to offer an in-house outsourcing
alternative to large manufacturers that want to maintain greater control of the
sterilization process, but do not want to incur the expense and regulatory
burden of owning and operating a captive facility. The MiniCell requires
significantly less capital investment and can generally be constructed in four
to six months as opposed to the 18 to 24 month construction period that is
typical for the Company's larger facilities. The Company has installed its first
MiniCell in Hayward, California to serve the Northern California market.
33
<PAGE> 35
STRATEGY
The Company's objective is to be the leading provider of high quality
contract sterilization and processing services for manufacturers of medical and
non-medical products. Key elements of the Company's strategy include the
following:
Increase Share of Medical Products Sterilization Market. The Company is
seeking to expand its share of the medical products sterilization market through
its continued focus on Gamma sterilization, promotion of increased use of
outsourcing by manufacturers and introduction of new and innovative services
such as GammaSTAT and GammaReserve. As a key element of its focus on Gamma
sterilization, the Company actively promotes the conversion of products from EtO
to Gamma. In addition, although the Company intends to maintain its focus on
Gamma sterilization and processing, it will evaluate new technologies as they
emerge.
Expand Non-medical Business. The Company is seeking to expand its presence
in various non-medical sterilization and processing markets, such as the markets
for spices and herbs, cosmetics, food packaging and materials processing. To
effectively address these markets, the Company has created its non-medical
products division, with an independent sales and marketing organization and four
processing facilities dedicated primarily to processing non-medical products.
SteriGenics also continually monitors developments in other potential markets
such as the sterilization of poultry, red meat, shellfish, animal food and fresh
fruits and vegetables.
Exploit MiniCell Opportunity. The Company intends to use its new MiniCell
design to continue to expand geographically, primarily into smaller regional and
international markets. SteriGenics believes that the economics of the MiniCell
will allow the Company to serve smaller industrial centers which could not
support a full-size Gamma irradiation facility. The Company believes that by
offering manufacturers in these markets decreased transportation costs and
reduced total turn-around time, it has an opportunity to convert a portion of
the dollars currently spent on transportation into sterilization revenues.
The Company is also seeking to provide an in-house outsourcing alternative
by leasing MiniCells to manufacturers with high volume sterilization needs that
want to have sterilization processing capability within their own facilities.
The Company would also provide varying levels of staffing and management,
depending on customer requirements, as well as manage the Cobalt 60 in the
MiniCell. The Company believes that MiniCell leasing offers manufacturers the
cost advantages and core-business focus associated with outsourcing, while also
providing advantages of in-house facilities, including reduced costs associated
with inventory and transportation and greater control over the sterilization
process. The Company has recently introduced this program and has not yet leased
a MiniCell.
Expand Premium Services. SteriGenics seeks to differentiate itself from its
competitors by offering its customers a variety of higher margin premium
services, such as GammaSTAT, a guaranteed variable time-based service, and
ExCell precision dosing and validation services. The Company recently introduced
GammaReserve, a new service that utilizes proprietary software to allow
customers to reserve processing time on a specific day.
Leverage Leading Engineering and Design Capabilities. SteriGenics is
seeking to leverage its leading internal engineering and design capabilities to
continue to improve its existing processes and designs and to create and utilize
innovative designs and services. The Company is the only provider of Gamma
contract sterilization services with an in-house engineering and design staff.
The Company's engineering staff continually evaluates new processing methods,
equipment requirements and software options to increase operating efficiencies,
optimize Cobalt 60 utilization and improve flexibility. The Company's
engineering expertise will also play a critical role in the Company's plans to
construct and lease its MiniCells.
Pursue Strategic Acquisitions. SteriGenics intends to pursue strategic
acquisitions of sterilization facilities and businesses both domestically and
internationally. The Company began to implement this strategy with the
acquisition of certain assets of RTI Inc. ("RTI") in August 1996, which added
three facilities in the Eastern U.S. and significantly expanded the Company's
presence in certain non-medical markets. The Company does not currently have any
agreements or understandings with respect to any such acquisition.
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<PAGE> 36
SERVICES
SteriGenics offers a number of services to its customers including its
standard processing services, time-based services and value-added services such
as validation and testing. In addition, the Company is seeking to lease its
MiniCells to large medical products manufacturers or other customers with high
product volumes for installation in such customers' facilities.
STANDARD SERVICE
SteriGenics' standard service is a five working day turn-around time on the
product, which is an industry standard. The processing time of any particular
product is dependent upon several factors, including the dose required, the
density of the product and the number of curies of Cobalt 60 present in the
cell. In general, a higher dose requirement or density of material has the
effect of increasing the amount of time the product needs to be exposed to Gamma
radiation. Once these elements are determined, the Company determines the
processing time for the specified product. It is the responsibility of the
Company's customers to determine the level of microorganisms or other
contamination that exists in their respective products, as well as the dose of
Gamma radiation that will reduce such microorganisms or contamination to the
required levels. After performing sterilization services, dosimeter readings are
taken and documented to verify that the customer's dose requirements were
attained. The Company then issues a certification that the product received the
specified dosage. The fee charged for this service is dependent primarily upon
the required dose of Gamma radiation, density of the product, permissible dose
range and the volume of product to be processed.
GAMMASTAT I AND II SERVICES
GammaSTAT I and II are premium services that guarantee a turn-around time
of 23 or 48 hours, respectively. The Company does not limit the volume or type
of product to be processed. Pricing for both GammaSTAT services is at a premium
to standard service and is based upon the time (23 hours or 48 hours) in which
the customer requires the product to be processed and available for shipment.
GammaSTAT was introduced in fiscal 1996 and revenues resulting from GammaSTAT
increased significantly in fiscal 1997.
GAMMARESERVE SERVICES
GammaReserve is a premium service that utilizes proprietary software to
allow customers to reserve processing time on a specific day. The customer is
then charged for the reserved processing time whether or not it is used. The
Company began offering GammaReserve in April 1997.
EXCELL SERVICES
The ExCell is an automated precision dose irradiator. SteriGenics has an
ExCell in operation in both Charlotte, North Carolina and Corona, California.
The ExCell service can be used for several different purposes, including
production services for finished goods that require a very limited dose range,
dosage auditing to allow customers to verify their dosage requirements,
validation work and materials testing. ExCell services are offered at a premium
price based upon the nature of the service being provided.
MINICELL LEASING
The Company plans to lease MiniCells to larger medical products
manufacturers for installation in their existing facilities. SteriGenics is
offering the MiniCells pursuant to an operating lease which would include Cobalt
60 replenishment, dosimetry management and maintenance. If the customer so
desires, SteriGenics will provide operating personnel, as well as a radiation
safety officer, relieving the customer of many regulatory burdens. The monthly
lease payment will be based upon the level of service and the curies of Cobalt
60 required. The Company recently began to offer the MiniCell for lease and, to
date, no MiniCells have been leased.
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FACILITIES
The Company has a network of 12 Gamma facilities, of which eight perform
sterilization services for the medical products market. The remaining four
facilities provide services primarily to non-medical customers. These 12
facilities have an aggregate design capacity of 101 million curies of Cobalt 60.
All of the Company's medical products facilities (other than the Gurnee and
Hayward facilities) are ISO 9002 certified. The Company expects the Gurnee and
Hayward facilities to receive ISO 9002 certification upon satisfaction of the 12
month minimum operating period requirement. See "-- Quality Assurance and
Safety."
The Company's sterilization facilities are designed on stand alone sites of
various sizes and capacities. The Company has three basic types of facilities:
mega-facilities, mid-facilities and mini-facilities. Mega-facilities have three
cells and a Cobalt 60 capacity of approximately 15-20 million curies, and
mid-facilities have one cell with a Cobalt 60 capacity of approximately 8
million curies. Both mega-facilities and mid-facilities generally require 18 to
24 months to construct. Mini-facilities have one cell which can be a standard
cell or the MiniCell and a Cobalt 60 capacity of approximately 3 million curies.
All of the Company's facilities are designed to operate 24 hours a day, seven
days a week.
The Company was the first in the Gamma sterilization industry to build
multi-cell facilities with Cobalt 60 capacities in excess of 15 million curies
and has strategically placed them in markets that have a high demand for
sterilization of services. The Company believes that the number of additional
U.S. markets that can support mega-facilities, based on current market
conditions, is limited. To continue its geographic expansion, the Company has
designed the MiniCell which it believes will enable it to address smaller
regional markets and to take advantage of international opportunities.
The following table sets forth information regarding the Company's
facilities as of June 20, 1997:
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
DESIGN
CAPACITY(1) APPROXIMATE
LOCATION (IN CURIES) SQUARE FEET TYPE OF FACILITY NUMBER/TYPE OF CELLS
- -------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS FACILITIES
Corona, California (2) 19,000,000 100,000 Mega-Facility 3 cells (1 ExCell)
Hayward, California 3,000,000 25,000 Mini-Facility 1 cell (MiniCell)
Fort Worth I, Texas(2) 8,000,000 22,000 Mega-Facility(3) 1 cell
Fort Worth II, Texas(2) 6,000,000 50,000 Mega-Facility(3) 1 cell (Gemini cell)
Gurnee, Illinois 17,000,000 78,000 Mega-Facility 3 cells (will have 4 when
fully equipped)
Westerville, Ohio(2) 8,000,000 22,000 Mid-Facility 1 cell
Charlotte, North 15,000,000 64,000 Mega-Facility 2 cells (1 ExCell)
Carolina(2)
Haw River, North 3,000,000 25,000 Mini-Facility 2 cells (pallet and under-
Carolina(2)
water systems)
- -------------------------------------------------------------------------------------------------------
NON-MEDICAL FACILITIES
Tustin, California(2) 8,000,000 34,000 Mid-Facility 1 cell
Schaumburg, Illinois(2) 8,000,000 34,000 Mid-Facility 1 cell
Rockaway, New Jersey 3,000,000 25,000 Mini-Facility 1 cell (batch system)
Salem, New Jersey 3,000,000 20,000 Mini-Facility 1 cell (pallet system)
- -------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Shows maximum design capacity. The Company currently does not utilize a
substantial portion of its Cobalt 60 design capacity. See "-- Cobalt 60."
(2) ISO-9002 Certified facilities.
(3) The two Forth Worth facilities together constitute a Mega-Facility and
operate under the same license.
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The sterilization systems in each of the Company's facilities consist of
four major components: the biological shield, the source system, the conveyor
system and the safety system.
The Biological Shield. The cell where the Cobalt 60 is maintained is also
known as the "biological shield." The Company utilizes a steel reinforced
concrete cell with a ceiling and walls that are over six feet thick which
provides a complete shield from any Gamma radiation. Each cell (other than the
MiniCell) has a maze at its entrance and exit to prevent radiation from escaping
from the cell. Because of its small dimensions, the MiniCell uses a two
foot-thick lead door in lieu of the maze.
The Source System. Inside the cell, stainless steel rods containing Cobalt
60 isotope sources are positioned on source racks, which when not in use are
stored inside a shielding pool containing 20 to 30 feet of water. The water
shielding pool provides a complete shield from any Gamma radiation. Once the
sources are removed from the water, the product within the cell is exposed to
Gamma radiation.
The Conveyor System. The main operating component of the Company's
sterilization system is the conveyor system comprised of either stainless steel
or aluminum rectangular containers or totes, in which the customer's material is
placed. After being loaded, the totes are placed on specially designed three
level overhead conveyor systems used to transport customer products and
materials into the cell and around the source racks. The conveyer system passes
through the cell making periodic stops at specific locations to provide uniform
dose distribution to the product being sterilized. The conveyor system is
controlled by programmable logic controllers interconnected with diagnostic
computers that monitor all conveyor functions.
The Safety System. Each cell has separate and redundant safety systems that
the Company believes meet or exceed all applicable regulations. The safety
system is designed to prevent entry into the cell when the source racks are
exposed and to automatically lower the Cobalt 60 into the water in the event of
a system failure.
COBALT 60
The quantity of Cobalt 60 in a cell is the primary factor in determining
the amount of product that can be processed in that cell. As additional curies
of Cobalt 60 are added, processing times decrease allowing for the processing of
increased volumes of products. In addition to being the primary determinant of
capacity, Cobalt 60 also represents a substantial cost element in operating a
sterilization facility. As a result, the point at which a facility becomes
profitable depends, to a significant extent, on the amount of Cobalt 60 that is
loaded and the efficiency of the Cobalt 60 utilization. Correspondingly, since
costs associated with Cobalt 60 are fixed costs, once the break-even point is
reached for a given amount of Cobalt 60 there are relatively low costs
associated with incremental volume. Since Cobalt 60 continuously decays, the
Company generally operates its facilities 24 hours a day, seven days a week, at
a Cobalt 60 capacity which is significantly less than maximum design capacity.
As a result, the Company has the ability to significantly increase the volume of
product it can process by adding more Cobalt 60 to existing facilities.
Cobalt 60 has a useable life of approximately 20 years with the energy
level declining at approximately 12.3% of the then current capacity per year. To
account for this natural decay and to increase processing capacity, the Company
acquires additional Cobalt 60 on a regular basis. Cobalt 60 capsules are shipped
to the facility in licensed shipping containers from one of the Company's
suppliers. Each facility is equipped with a custom set of tools and equipment
designed to handle both the shipping containers and Cobalt 60 source capsules.
Specially trained corporate staff and facility personnel perform the actual
loading process. All loading work is performed underwater in a facility's source
storage pool. Each capsule loaded into a facility has a unique serial number
that is tracked by both SteriGenics and its suppliers. Because the loading
process usually takes two to three days, during which the facility is not
operational, loading is performed at each facility only once every 12 to 18
months depending on business activity. To account for the decay of Cobalt 60,
the conveyer system cycles at each facility are reset monthly.
The Company's primary suppliers of Cobalt 60 are MDS Nordion, Inc.
("Nordion"), a Canadian company, and PURIDEC Irradiation Technologies, a United
Kingdom company and a subsidiary of Amersham International plc. The Company also
purchases a smaller amount of Cobalt 60 from Neutron
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<PAGE> 39
Products, Inc., a Maryland corporation. The Company acquires Cobalt 60 from its
suppliers under a variety of purchase arrangements, capital leases and operating
leases. The Company's Cobalt 60 leases have terms of three to 15 years. All of
the Company's agreements provide for the suppliers to handle the eventual
disposal of "spent" Cobalt 60. The Company has not experienced Cobalt 60
shortages in the last decade, and based on current conditions, the Company
believes that sufficient supplies of Cobalt 60 will continue to be available for
the foreseeable future. However, there were shortages of Cobalt 60 in the
mid-1980s and there can be no assurance that the Company will not experience
shortages of Cobalt 60 in the future. Such shortages could result in a decrease
in the availability of Cobalt 60 supplies or a significant increase in the price
the Company is required to pay for Cobalt 60, which would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Risk Factors -- Risks Related to Cobalt 60 Supply."
STERIGENICS' PROCESS AND DESIGN TECHNOLOGY
The Company is the only provider of contract Gamma sterilization services
with in-house engineering and design capabilities. The Company's in-house
engineering expertise and continual interaction with its customers have enabled
it to develop technological innovations in facility and process design that have
increased the Company's Cobalt 60 efficiency and utilization to meet its market
and customer requirements.
Product Overlap Design. The Company's irradiation system utilizes a product
overlap design as opposed to the more commonly used source overlap design. In a
product overlap system, the source racks in which the Cobalt 60 is stored are
smaller in height than in a source overlap system. In a source overlap system,
the source racks extend above and below the conveyor system. The product overlap
system makes more efficient use of Cobalt 60 by moving the level at which the
product passes by the source racks, which results in greater consistency in
dosing and tighter maximum to minimum dose ratios. A product overlap design is
incorporated in nine of the Company's facilities.
Continuous Flow Technology. The standard SteriGenics conveyor system is a
continuous flow system in which the conveyer system is continuously moving the
product into and out of the cell during processing. In contrast, most
irradiation systems are batch systems, which operate by placing the number of
totes designed for the system in the cell housing the source racks and moving
the totes around the source racks. The SteriGenics continuous flow system
improves Cobalt 60 efficiency by constantly having product in the cell being
exposed to Gamma radiation. In contrast, in a batch system, the source racks are
lowered into the water shielding pool when the product inside the cell is ready
to be removed. A batch system is used in one of the Company's standard
facilities. Due to its compact design and cost considerations, the MiniCell also
uses a batch system.
Proprietary Software. The Company uses proprietary software systems to
automate product handling. These software systems handle both the actual
operation of the irradiation systems as well as the overall facility process
control. The irradiator in each facility is controlled by a programmable logic
controller system. The software designed for this purpose has been both
installed and validated for FDA purposes. This control system provides all the
critical controls for both the actual irradiator mechanism as well as all safety
systems in the irradiator. The process control software used by each facility is
an Oracle-based software system called STARS (SteriGenics Tracking and
Reservation System), which was written, tested and validated for FDA purposes by
the Company. This STARS system operates on a local area network at each facility
and is designed to provide control of all aspects of the operation from product
receiving to shipping. The STARS system also generates and tracks customer
billing and collection information.
Cell Design. The cell design innovations developed by the Company include
the MiniCell, Gemini cell and ExCell:
- MiniCell. The MiniCell, introduced in 1997, is a product overlap, batch
irradiator developed to combine the benefits of a large-scale production
system with the specialized features of a smaller batch irradiator. The
cell is constructed of three foot-thick steel and uses a two level
conveyor system. Instead of a maze, the MiniCell uses a lead door that is
two feet-thick. The computer control systems on the MiniCell are
substantially similar to the Company's larger systems, with a few
modifications to accommodate the MiniCell's conveyor system.
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<PAGE> 40
- Gemini Cell. The Gemini cell, introduced in 1996, is a double-sided cell,
allowing two separate conveyor systems to operate in the same cell on
opposite sides of the source rack. The Gemini design enables the Company
to process products with two different dose requirements in the same cell
simultaneously by varying the speeds of the two conveyor systems. The
system gives the Company additional flexibility in scheduling its
sterilization services, increases the efficiency of the Company's Cobalt
60 utilization and enhances the Company's ability to offer time-based
processing services. The Company installed its first Gemini cell in its
Gurnee, Illinois facility.
- ExCell. The ExCell, introduced in 1995, was the industry's first
automated precision dose irradiator system. The ExCell technology offers
the ability to achieve a more precise dose range than a standard
commercial irradiator. The ExCell was designed to conduct various
required audit and validation functions for medical device manufacturers.
The ExCell also enables the Company to offer customers high precision
dosing for certain dose sensitive products.
MARKETS AND CUSTOMERS
MEDICAL PRODUCTS MARKET
The medical products market is comprised of manufacturers of healthcare and
single-use medical products. The medical products division of the Company had
over 700 customers in fiscal 1997, including many of the largest manufacturers
of single-use medical products. Sales to medical products customers accounted
for 80% of the Company's revenues in fiscal 1997. The following is a
representative list of the Company's medical products customers:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------
REPRESENTATIVE CUSTOMERS
- ----------------------------------------------------------------------------------------------
Alcon Laboratories, Inc. Medical Action Industries Inc.
Allegiance Healthcare Corporation Nalge Nunc International
Allergan, Inc. Orion Life Systems, Inc.
Ansell Perry Inc. Regent Medical (a division of London
International Group, Inc.)
Aramark Cleanroom Services Inc.
Richard-Allan Medical Industries
Conco Medical Company (a division of UROHEALTH
Systems, Inc.)
ConvaTec (a division of E.R. Squibb
& Sons, Inc.) Smith & Nephew Orthopedics, Inc.
DePuy Orthopaedics, Inc. Wel Industries, Inc.
Endodent, Inc. Zimmer (a subsidiary of Bristol-Myers
Squibb Company)
Lincoln Training Center
- ----------------------------------------------------------------------------------------------
</TABLE>
NON-MEDICAL MARKET
The non-medical division of the Company provided services in fiscal 1997 to
over 150 customers producing a variety of products, including spices and herbs,
cosmetics, food ingredients, fruits and vegetable products, food packaging,
consumer products and polymers. Sales to non-medical customers accounted for
approximately 20% of the Company's revenues in fiscal 1997.
SALES AND MARKETING
The Company has separate sales and marketing groups servicing the medical
products and non-medical markets. The Company's services are sold primarily by
its direct sales force, based throughout the country. Facilities managers and
other personnel at the Company's facilities also take an active role.
SteriGenics maintains a customer service and support operation within each of
its facilities.
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<PAGE> 41
The Company's marketing of its Gamma services emphasizes technical
assistance to customers in all aspects of the sterilization process and
participation by facility and corporate staff members on technical committees
responsible for the implementation of industry standards pertaining to the
sterilization of products and materials. The Company's salespersons and senior
management draw upon their backgrounds in radiation, engineering, microbiology,
packaging, material compatibility, and regulatory compliance to provide
customers a full range of services. SteriGenics' promotional activities consist
of printed media advertising (primarily trade journals), participation in trade
shows, mailing campaigns to selected territories, addressing industry
organizations, and sponsoring promotional events. In addition, as part of its
efforts to expand its potential markets, the Company has sponsored and supported
FDA petitions related to the sterilization of various products and product
labeling.
In 1996, the Company introduced a new program to further encourage the
conversion of medical products from EtO to Gamma. Through this program the
Company provides technical assistance to customers and potential customers who
are interested in converting their products to Gamma. These technical assistance
services are provided at no charge to the customer. The conversion program has
been successful both with customers who have in-house EtO sterilization
facilities and with those using an EtO contract sterilizer. During fiscal 1997,
the first year of the program, SteriGenics converted slightly over 2 million
cubic feet of product to Gamma sterilization.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company believes its future competitive position will depend, in part,
on its ability to develop and introduce process and design innovations in Gamma
radiation systems. Research, development and engineering expenses for the fiscal
years ended March 31, 1995, 1996 and 1997, were $685,000, $890,000 and $1.4
million, respectively. The Company intends to continue to make significant
investments in research, development and engineering for the foreseeable future.
Although the Company maintains an active research, development and engineering
program to improve its process and design technology, there can be no assurance
such efforts will be successful or the Company's process and design innovations
will enable it to offer new services that will achieve customer acceptance.
Failure to develop, or introduce on a timely basis, such new process and design
technology could adversely affect the Company's business, financial condition
and results of operations. See "Risk Factors -- Competition."
QUALITY ASSURANCE AND SAFETY
The Company has quality assurance departments at both the corporate and
facility levels. The corporate quality assurance group has the primary
responsibility to structure the Company's quality system and develop all quality
policies, operating procedures and work instructions and ensure that such
policies, procedures and work instructions are in compliance with national and
international standards, federal, state and local regulations, as well as
customer requirements. The department is also responsible for monitoring quality
related activities at all locations, changes in the federal, state and local
regulatory environment, each facility's compliance with the quality system,
national standards working groups, and technical assistance to customers. At the
facility level, quality assurance personnel are given the authority and
responsibility to ensure compliance within that facility with SteriGenics'
quality policies, procedures, work instructions, and customer specifications.
Eight of SteriGenics' facilities are certified to International Standards
Organization ("ISO") 9002, Quality System -- Model for Quality Assurance in
Production, Installation and Servicing. Certification to the ISO 9002 standard
demonstrates that the Company has implemented the essential elements necessary
for an effective quality control system. The Company received its initial
certification in 1993 from Det Norske Veritas ("DNV"), an approved Quality
Registrar, and is subject to quality system surveillance audits every six months
by DNV.
The Company has implemented a number of safety procedures for its workers.
Each cell has a separate safety system designed to ensure that no individual is
exposed to the Gamma radiation. The Company believes it has redundant safety
precautions that meet or exceed all applicable safety regulations imposed by
federal regulations. Safety backup precautions also exist in the event of power
outages and natural disasters. In the
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event of a failure of electric power, the Cobalt 60 source racks are
automatically lowered into the pool on a gravity feed basis. There can be no
assurance that such safety precautions will prove effective under normal
operating conditions or in the event of a power outage or natural disaster. A
failure in safety precautions would have a material adverse effect on the
Company's business, financial condition and results of operations. See "Risk
Factors -- Risks of Operating a Facility Using Radioactive Material."
COMPETITION
The market for sterilization services is intensely competitive and is
characterized by significant price competition. The Company competes with other
companies that provide Gamma sterilization services, the most significant of
which is Isomedix, Inc. ("Isomedix"). In addition, many products that can be
sterilized using Gamma can also be sterilized using either EtO or E-Beam
sterilization. As a result, the Company also competes with companies that
process products using EtO or E-Beam technology. Companies processing products
using EtO include Cosmed Group, Inc., Griffith Micro Science, Inc. and Isomedix.
Certain of the Company's competitors and potential competitors have
substantially greater financial, marketing, distribution, technical and other
resources than the Company or offer multiple sterilization technologies, which
may enable them to address a broader range of the sterilization requirements of
individual customers. In addition, the Company competes with manufacturers that
have or are considering establishing in-house sterilization capabilities. The
Company may also in the future face competition from suppliers of Cobalt 60
radioisotope, particularly Nordion, as well as foreign providers of
sterilization services. In addition, to the extent that the Company expands into
international markets it will be faced with competition from existing providers
of sterilization in those markets.
In recent years, price competition in the sterilization services industry
has intensified. The Company may in the future face increased competition from
companies that employ new or improved technologies or that offer sterilization
services that are more effective or less costly than those developed and
marketed by the Company. Such competition could have a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company will be able to continue to compete
effectively or that the competitive pressures faced by the Company will not have
a material adverse effect on the Company's business, financial condition and
results of operations.
The Company believes that price, processing time, quality of services and
sterilization method are the primary factors upon which it competes. The Company
believes that it compares favorably on all of these factors. In order to be
successful in the future, the Company must continue to respond promptly and
effectively to the challenges of technical change and competitors' innovations.
Performance in these areas will, in turn, depend upon the Company's ability to
attract and retain highly qualified technical and sales personnel. See "Risk
Factors -- Competition."
REGULATORY AND ENVIRONMENTAL MATTERS
The design, construction, use and operation of commercial irradiation
facilities such as those operated by the Company, and byproduct materials used
in such facilities, are extensively regulated by the United States Nuclear
Regulatory Commission (the "NRC"), or in some cases by various state regulatory
agencies and authorities that undertake a comparable regulatory function from
the NRC (the "Agreement States"). In addition, the Company is subject to various
local zoning and permit rules in the construction of its facilities. The
Company's facilities are subject to regulation by additional regulatory bodies
at the federal, state and local levels, depending upon the type of product that
is being irradiated. The Company's facilities are subject to the requirements of
the FDA when irradiating foods, cosmetics or food and drug packaging materials.
In addition, if the Company were to begin processing meat or poultry products,
it would become subject to the requirements of the Food Safety and Inspection
Service of the USDA, which requires preapproval of the irradiation process for
meat and poultry. The Company is also subject to the requirements of other
federal agencies, such as the United States Occupational Safety and Health
Administration and the United States Environmental Protection Agency (the
"EPA"). In addition, the Company is subject to the regulatory requirements of
the state and local agencies in the jurisdictions where the various irradiation
facilities are located.
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In addition to extensive regulation by various governmental bodies and
agencies, the Company is subject to standard guidelines and requirements
established by industry organizations and other non-governmental bodies, such as
ISO and the Association for the Advancement of Medical Instrumentation.
Changes in, or reinterpretations of, existing requirements or adoption of
new requirements beyond those described below or the failure at any time to
comply with any applicable material regulations and standards could have a
material adverse effect on the Company's business, financial condition, and
results of operations. There can be no assurance that the Company will not incur
significant costs to comply with laws, regulations and other requirements in the
future or that such laws, regulations and other requirements will not have a
material adverse effect upon the Company's business, financial condition and
results of operations.
NRC REGULATION OF IRRADIATION FACILITIES
The receipt, acquisition, ownership, transfer, possession, use,
transportation and disposal of nuclear byproduct material, as well as the
construction, operation, transfer, closure and decommissioning of commercial
irradiation facilities such as those operated by the Company, are subject to
extensive and rigorous government regulation by the NRC or, in some cases, by
the Agreement States.
Although there can be no assurance, the Company believes it has received
all licenses and permits necessary for the conduct of its business. Commercial
irradiation facilities, such as those owned or operated by the Company are
subject to both regularly scheduled and unannounced inspections by the NRC or
the Agreement States, with regard to all aspects of their operation,
recordkeeping, compliance with health and safety regulations and all aspects of
the utilization, storage, transfer, possession and transportation of regulated
byproduct materials. Noncompliance with the health and safety regulations of the
NRC and most Agreement States are generally ranked according to levels of
severity. Since 1993, the Company has received notices of violation from the NRC
and the Agreement States concerning items of noncompliance at four of its
facilities, which were not in such categories as to be of "significant
regulatory concern." The Company believes that it has taken appropriate
corrective actions in response to each such notice. In addition, the regulatory
history of the former RTI facilities, as operated by RTI, involved very
significant regulatory compliance problems, which involved among other things,
the payment of civil and criminal penalties by RTI, as well as a facility
license suspension for a period of approximately 80 days. As a consequence of
this regulatory history, there can be no assurance that the former RTI
facilities will not be subject to heightened regulatory scrutiny and inspections
for an extended period of time. Such heightened regulatory scrutiny and a
failure by the Company to address concerns raised from such scrutiny and
inspection could result in civil penalties or the suspension or termination of
operations at one or more of the Company's facilities or could otherwise have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company has no knowledge of any circumstances which
would constitute a present significant violation of any applicable state or
federal laws or regulations. However, there can be no assurance that the Company
will not in the future be determined to be in violation of any such laws or
regulations.
The terms and conditions of the Company's licenses may be amended, revised
or modified by reason of changes in the applicable laws, rules, regulations, or
agency orders. Any such action may have a material adverse effect on the
Company's business, financial condition and results of operations.
Violations of or noncompliance with applicable governmental requirements
may result in an enforcement action including, among other things, a notice of
violation, imposition of civil penalties, suspension, modification or revocation
of any applicable license, criminal prosecution, or withholding or recall of the
nuclear byproduct material held by the Company. Any such action would have
material adverse effect on the Company's business, financial condition and
results of operations.
FDA REGULATION OF IRRADIATION FACILITIES
The Company's irradiation facilities are subject to the requirements of the
FDA when irradiating medical devices, foods, cosmetics and food or drug
packaging materials. The FDA implements the Federal Food, Drug, and Cosmetic Act
("FFDCA"), which establishes premarket approval requirements for certain drugs
and medical devices and for all food additives. In addition, the Company is
subject to inspection by the FDA
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<PAGE> 44
for compliance with the FDA's Good Manufacturing Practices ("GMP") and other
applicable FDA requirements. The FFDCA also prohibits the introduction into
interstate commerce of adulterated or misbranded drugs, medical devices, foods
and cosmetics. Products are deemed adulterated if, for example, they are
manufactured or processed in facilities that fail to comply with GMP
requirements.
Failure by the Company at any time to comply with applicable FDA
requirements could lead the FDA to institute materially adverse enforcement
actions against the Company and/or its customers, including, among other things,
warning letters, recall or seizure of products, fines, injunctions, civil
penalties, total or partial suspension of sterilization operations and criminal
prosecution. Such enforcement actions would also harm the Company's business
reputation and could cause the Company to lose customers to competitors with
better records of regulatory compliance.
Medical Device Regulation. The Company's contract sterilization of medical
devices is subject to pervasive and continuing regulation by the FDA. The FFDCA
defines a medical device, in part, as including an instrument, apparatus,
implement, machine, contrivance, implant or other similar or related article
that is intended for use in the mitigation, treatment, or prevention of disease
in man or other animals. The Company sterilizes finished devices made by other
manufacturers, who commercially distribute them.
The Company's contract sterilization activities render it a device
manufacturer for purposes of the FDA's Quality System Regulation ("QSR"), which
sets forth detailed GMP requirements. As a result, the Company is required to
adhere to the requirements of the QSR that apply to its contract sterilization
activities. The QSR revises the previous GMP regulation (which also applied to
the Company's activities) and imposes certain enhanced requirements that are
likely to increase the cost of compliance. There can be no assurance that the
FDA would find that the Company is in compliance with applicable GMP
requirements or that the Company will be found in compliance at all times in the
future. The Company may also be subject to other FDA requirements such as the
medical device reporting requirements.
Drug Regulation. Contract sterilizers used by manufacturers of aseptic
filled drug products are subject to applicable provisions of the FDA's drug
GMPs. There can be no assurance that the FDA would find that a contract
sterilizer is in compliance with applicable GMP requirements now or at any time
in the future.
Food Regulation. The FFDCA requires premarket approval for food additives.
Irradiation is regulated by the FDA and is considered to be a food additive.
Irradiation may only be used on foods and food packaging materials in accordance
with the requirements established in the food additive regulations. The existing
food additive regulations only approve the use of irradiation for a limited
variety of foods and food packaging materials that are used during the
irradiation of foods. Food packaging materials that are irradiated prior to
filling are exempt from the premarket approval requirements, provided that the
irradiated food packaging material is still suitable for use and complies with
the applicable indirect food additive regulations. Before the Company could
expand its sterilization services to certain foods or food packaging materials,
the food additive regulations would have to be amended to include the
irradiation of foods or food packaging materials not covered by the existing
regulations. There can be no assurance that the FDA would amend the food
additive regulations or that such regulations would be amended in a timely
manner. Irradiation currently is approved for use on a limited number of foods
and for disinfection of a variety of food packaging materials. Any use of food
irradiation outside of that covered in an existing food additive regulation is
prohibited.
The irradiation of foods must be conducted in accordance with the general
GMP requirements for foods. In addition, special labeling is required to appear
on foods that have been irradiated. The label and labeling of retail packages of
the irradiated food must bear an irradiated logo and a statement such as
"treated with radiation." No special labeling is required, however, on the label
of foods that contain irradiated food ingredients. For example, if a spice is
being irradiated, the irradiation logo and statement would need to appear on the
label of the spice when it is sold directly to the consumer, but no special
labeling would be required on the label of a pasta sauce that uses the
irradiated spice ingredient.
Cosmetics Regulation. Cosmetics are defined under the FFDCA as including
articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced
into, or otherwise applied to the human body or part thereof for cleansing,
beautifying, promoting attractiveness, or altering the appearance. There
currently are no
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<PAGE> 45
statutory or regulatory provisions, other than the general adulteration and
misbranding provisions, that limit the use of radiation in the processing or
labeling of cosmetics.
PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY
The Company relies on a combination of copyright and trade secret
protection and nondisclosure agreements to protect its proprietary rights. In
addition, the Company has a U.S. patent application pending on its MiniCell.
There can be no assurance, however, that patent and copyright law and trade
secret protection will be adequate to deter misappropriation of its technology,
that any patents issued to the Company will not be challenged, invalidated or
circumvented, that the rights granted thereunder will provide competitive
advantages to the Company, or that the claims under any patent application will
be allowed. Furthermore, there can be no assurance that others will not
independently develop similar processes or designs, duplicate the Company's
processes or design around any patents issued to the Company. The Company may be
subject to or may initiate interference proceedings in the United States Patent
and Trademark Office, which can demand significant financial and management
resources. The process of seeking patent protection can be time consuming and
expensive and there can be no assurance that patents will be issued from
currently pending or future applications or that any new patents that may be
issued will be sufficient in scope or strength to provide meaningful protection
or any commercial advantage to the Company.
The Company may in the future receive communications from third parties
asserting that the Company is infringing certain patents and other intellectual
property rights of others or seeking indemnification against such alleged
infringement. No assurance can be given that any of these claims will not result
in protracted and costly litigation, that damages for infringement will not be
assessed or that should it be necessary or desirable to obtain a license
relating to one or more of the Company's services or current or future
technologies, the Company will be able to do so on commercially reasonable terms
or at all.
LEASES AND FINANCING TERMS
The following is a summary of the terms for the Company's leased facilities
and financing for facilities owned by the Company. All obligations of the
Company under the Industrial Revenue Bonds ("IRBs") are secured by certain
assets of the Company and by letters of credit with a bank:
Fremont, California -- Fremont is the location of the Company's
headquarters. The building is subject to a lease with a term that expires in
July 1999.
Corona, California -- The Corona facility is subject to a lease with an
initial lease term that expires in 2004. After the initial lease term the
Company has four five-year renewal options.
Hayward, California -- The Hayward facility is subject to a lease with a
term that expires in 2001.
Tustin, California -- The Tustin facility is subject to a lease with a term
that expires in 2002. The owner of the Tustin property is Charles King &
Associates, of which Charles W. King, Jr., a director of the Company, is an
affiliate. See "Certain Transactions."
Fort Worth I, Texas -- The Fort Worth I facility is owned by the Company.
The facility was financed through the issuance of two IRBs. These IRBs were
issued in 1985 in an aggregate amount of $4.6 million, with interest payable
monthly and principal due in full in 2005. The interest rate on the IRBs adjusts
monthly, based upon market conditions. The interest rate as of March 31, 1997
was 3.6%.
Fort Worth II, Texas -- The Fort Worth II facility is owned by the Company.
The Company expects to finance this facility through the issuance of a $5.0
million IRB in the second quarter of fiscal 1998.
Schaumburg, Illinois -- The Schaumburg facility is subject to a lease with
a term that expires in 2002. The owner of the Schaumburg property is Charles
King & Associates, of which Charles W. King, Jr., a director of the Company, is
an affiliate. See "Certain Transactions."
Gurnee, Illinois -- The Gurnee facility is owned by the Company. The
facility was financed through the issuance of an IRB. The IRB was issued in 1996
in an aggregate amount of $7.8 million. The IRB has a
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<PAGE> 46
20 year maturity with an 18 year repayment schedule with interest payable
monthly. The interest rate is adjustable weekly, based upon market conditions.
The interest rate as of March 31, 1997 was 3.7%.
Westerville, Ohio -- The Westerville facility is owned by the Company. The
facility was financed through the issuance of an IRB. The IRB was issued in 1984
in an aggregate amount of $4.9 million with interest payments due monthly and
principal due in 2004. The interest rate is adjustable monthly, based upon
market conditions. The interest rate as of March 31, 1997 was 3.6%.
Charlotte, North Carolina -- The Charlotte facility is owned by the
Company. The facility was financed through the issuance of an IRB. The IRB was
issued in 1996 in the aggregate amount of $9.0 million and has a 20 year
maturity with an 18 year repayment schedule with interest payable monthly. The
interest rate is adjustable weekly, based upon market conditions. The interest
rate as of March 31, 1997 was 3.7%.
Haw River, North Carolina -- The Haw River facility is owned by the
Company. There is no debt outstanding on this facility.
Rockaway, New Jersey -- The Rockaway facility is leased from RTI. The lease
is for a 6 year period beginning in August 1996, with a 5 year renewal option
exercisable by the Company. The Company has an option to purchase the Rockaway
facility at the end of the initial lease term. See "Risk Factors --
Environmental Risks."
Salem, New Jersey -- The Salem facility is a leased facility. The facility
was financed through the issuance of an IRB. The IRB has a fixed interest rate
of 10.0% with interest payable monthly and principal repaid annually through
1999. The lease is renewable at the option of the Company for a 10 year period.
The lease is a 20 year lease and expires in the year 2016. There are no payments
due on the lease.
Decatur, Georgia -- The Decatur facility is owned by the Company. The
facility was financed through issuance of an IRB. The IRB was issued in 1985 in
the aggregate amount of $5.3 million with interest payments due monthly and
principal due in full in 2005. The interest rate is adjustable monthly, based
upon market conditions and was 3.6% as of March 31, 1997. The facility is
currently being leased to a third party. See "Risk Factors -- Environmental
Risks."
EMPLOYEES
At May 31, 1997, the Company had 275 employees. The Company believes the
success of its business will depend, in significant part, on its ability to
attract and retain such personnel. No employee of the Company is represented by
a collective bargaining agreement, nor has the Company experienced any work
stoppage. The Company considers its relations with its employees to be good. See
"Risk Factors -- Dependence on Key Personnel."
LITIGATION
The Company is not currently subject to any material legal proceedings.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- --------------------------------------------
<S> <C> <C>
James F. Clouser................... 46 President, Chief Executive Officer and
Director
Eric W. Beers...................... 37 Senior Vice President of Engineering
Donald A. Currie................... 40 Vice President of Operations (Non-medical)
Eugene C. Davis.................... 49 Vice President of Sales and Marketing
Lisa C. Foster..................... 36 Vice President of Quality Assurance
David E. Meyer..................... 46 Senior Vice President of Operations
Edward M. Miller, Jr............... 45 Vice President of Finance
Carla S. Newell.................... 37 Secretary
Charles W. King, Jr................ 62 Chairman of the Board
Walter G. Kortschak(1)............. 38 Director
Thomas F. Stephenson(1)............ 55 Director
</TABLE>
- ---------------
(1) Member of Audit Committee and Compensation Committee.
All directors hold office until the next annual meeting of the stockholders
and until their successors have been duly elected and qualified. Officers are
elected by and serve at the direction of the Board of Directors. There are no
family relationships among the directors or officers of the Company.
James F. Clouser joined SteriGenics in June 1988 as President and Chief
Executive Officer. Previously, from 1984 to 1988 he served as Chief Operating
Officer of Attain, Inc., a high technology start-up manufacturer of automatic
test equipment for semiconductor devices. Mr. Clouser has a Bachelor of Science
degree in Electrical Engineering from Pennsylvania State University, a Masters
of Business Administration degree in Finance from Wayne State University, and a
Masters of Science degree from Rochester Institute of Technology.
Eric W. Beers joined SteriGenics in February 1994 as Senior Vice President
of Engineering. Prior to joining SteriGenics, Mr. Beers held several engineering
and managerial positions with Nordion, a supplier of Cobalt 60 and irradiation
equipment, since 1980, the most recent of which was as manager of the Industrial
Irradiation Engineering Department. Mr. Beers has a degree in
Mechanical/Aeronautical Engineering from Carleton University in Canada and is a
Member of the Association of Professional Engineers of Ontario, Canada.
Donald A. Currie joined SteriGenics in March 1991 as General Manager of the
Westerville facility. In August 1994, Mr. Currie became Director of Operations
overseeing the Westerville and Schaumburg facilities and was promoted to Vice
President of Operations (Non-medical) in November 1996. Mr. Currie has a
Bachelor of Arts degree in Materials and Operations Management from Michigan
State University.
Eugene C. Davis joined SteriGenics in April 1994 as Vice President of
Quality Assurance and Regulatory Affairs. In January 1996, he became Vice
President of Sales and Marketing. From 1979 to 1993 Mr. Davis held various
positions with the Opthalmic Surgical Products Division of Optical Radiation
Corporation, an opthalmic surgical products company, the most recent of which
was Vice President of Quality Assurance. Mr. Davis has a Bachelor of Arts degree
from California State Polytechnic University at Pomona.
Lisa C. Foster joined SteriGenics in January 1989 as Quality Assurance
Manager at the Decatur facility. In February 1990, Ms. Foster transferred to the
Schaumburg facility as Quality Assurance Manager. Later that year she joined the
Corporate staff, assuming the responsibility of Corporate Quality Assurance
Manager. In April 1992, Ms. Foster was promoted to Director of Corporate Quality
Assurance and in June 1997 was promoted to Vice President of Quality Assurance.
Ms. Foster has a Bachelor of Science degree in Food and Nutrition from
Mississippi University for Women and a Masters of Science degree in Food
Chemistry from Mississippi State University.
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<PAGE> 48
David E. Meyer joined SteriGenics in November 1989 as General Manager of
the Schaumburg facility and in May 1991 was promoted to Senior Vice President of
Operations. From 1976 to 1989, Mr. Meyer held various positions with the
Barber-Greene Company, a producer of road construction equipment, most recently
that of Manufacturing Manager. Mr. Meyer has a Bachelor of Science degree in
Business Administration from Valparaiso University and a Masters of Science
degree in Management from Aurora University.
Edward M. Miller, Jr. joined SteriGenics in June 1994 as Vice President of
Finance and Assistant Secretary. Prior to joining SteriGenics, Mr. Miller served
as Vice President Finance and Corporate Secretary for Quality Technologies
Corporation, a producer of optoelectronic components, since 1990. Quality
Technologies Corporation was a subsidiary of General Instrument Corporation
until November 1990. Mr. Miller has a Bachelor of Arts degree in Finance from
Ohio University.
Carla S. Newell became the Secretary of SteriGenics in June 1994. Ms.
Newell has been a partner with the law firm of Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP ("Gunderson Dettmer") since February 1996.
Prior to that time, Ms. Newell was a member of the law firm of Gray Cary Ware &
Freidenrich. Gunderson Dettmer serves as corporate counsel to the Company.
Charles W. King, Jr., a founder of the Company, has been Chairman of the
Board of SteriGenics since its inception. Mr. King is a private investor and
real estate developer and has been a Managing Partner in Charles King &
Associates since 1965.
Walter G. Kortschak became a director of the Company in September 1993. Mr.
Kortschak is a General Partner of Summit Partners, L.P., where he has been
employed since June 1989. Summit Partners and its affiliates manage a number of
venture capital funds, including Summit Ventures III, L.P. and Summit Investors
II, L.P., which are principal stockholders of the Company. Mr. Kortschak also
serves as a director of Aspec Technology, Inc., Diamond Multimedia Systems,
Inc., HMT Technology Corporation, Mecon, Inc., and Simulation Sciences Inc. Mr.
Kortschak formerly served as a director of McAfee Associates, Inc.
Thomas F. Stephenson became a director of the Company in September 1993.
Mr. Stephenson is a General Partner of Sequoia Capital, where he has been
employed since 1988. Sequoia Capital and its affiliates manage a number of
venture capital funds, including Sequoia Capital Growth Fund and Sequoia
Technology Partners III, which are principal stockholders of the Company. Mr.
Stephenson is a director of Sequana Therapeutics and several private companies.
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<PAGE> 49
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information concerning
cash and non-cash compensation earned during the fiscal year ended March 31,
1997 by the Company's Chief Executive Officer and each of the Company's other
four highest paid executive officers whose total compensation for services in
all capacities to the Company exceeded $100,000 during such year (the "Named
Officers").
SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 1997
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------------ OPTIONS
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) (#)
- ------------------------------------------------------- ---------- --------- ------------
<S> <C> <C> <C>
James F. Clouser....................................... 179,667 89,834 --
President, Chief Executive Officer and Director
Eric W. Beers.......................................... 95,918 43,163 5,000
Senior Vice President of Engineering
Eugene C. Davis........................................ 99,105 39,642 5,000
Vice President of Sales and Marketing
David E. Meyer......................................... 96,088 48,044 5,000
Senior Vice President of Operations
Edward M. Miller, Jr................................... 96,586 19,317 5,000
Vice President of Finance
</TABLE>
STOCK OPTIONS GRANTED IN FISCAL 1997
The following table provides information concerning grants of options to
purchase the Company's Common Stock made during the fiscal year ended March 31,
1997 to the Named Officers:
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------- ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL EXERCISE APPRECIATION FOR
UNDERLYING OPTIONS PRICE PER OPTION TERM (2)
OPTIONS GRANTED TO SHARE EXPIRATION ----------------
GRANTED(#) EMPLOYEES ($)(1) DATE 5%($) 10%($)
---------- ------------ --------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
James F. Clouser................ -- -- -- -- -- --
Eric W. Beers................... 5,000 5.15 4.90 5/31/06 15,408 39,047
Eugene C. Davis................. 5,000 5.15 4.90 5/31/06 15,408 39,047
David E. Meyer.................. 5,000 5.15 4.90 5/31/06 15,408 39,047
Edward M. Miller, Jr............ 5,000 5.15 4.90 5/31/06 15,408 39,047
</TABLE>
- ---------------
(1) All options were granted at an exercise price equal to the fair market value
of the Company's Common Stock as determined by the Board of Directors of the
Company on the date of grant. The exercise price may be paid in cash, check,
promissory note or in shares of the Company's Common Stock valued at fair
market value on the exercise date. The options vest with respect to 24% of
the shares one year after the option grant date and with respect to 2% of
the shares on a monthly basis for the next 38 months.
(2) The assumed 5% and 10% rates of stock price appreciation are provided in
accordance with rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the future Common Stock
price. Actual gains, if any, on stock option exercises are dependent on the
future
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<PAGE> 50
performance of the Common Stock, overall market conditions and the option
holders' continued employment through the vesting period. This table does
not take into account any appreciation in the price of the Common Stock from
the date of grant to the current date. Unless the market price of the Common
Stock appreciates over the option term, no value will be realized from the
option grants made to the Named Officers.
OPTION EXERCISES AND FISCAL 1997 YEAR-END VALUES
No options were exercised by the Named Officers in fiscal 1997. The
following table provides the specified information concerning unexercised
options held as of March 31, 1997 by the Named Officers:
FISCAL 1997 YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT MARCH 31, 1997(#) AT MARCH 31, 1997($)(1)
-------------------- -----------------------
NAME VESTED UNVESTED VESTED UNVESTED
- ---------------------------------------------------- ------- -------- --------- --------
<S> <C> <C> <C> <C>
James F. Clouser.................................... 289,043 10,957 1,012,584 39,445
Eric W. Beers....................................... 7,900 14,600 28,440 52,560
Eugene C. Davis..................................... 6,600 13,400 23,760 48,240
David E. Meyer...................................... 21,950 10,550 77,270 37,980
Edward M. Miller, Jr................................ 10,200 17,300 36,720 62,280
</TABLE>
- ---------------
(1) Calculated by subtracting the exercise price from the estimated fair market
value of the underlying securities as of March 31, 1997 of $8.50 per share.
STOCK PLANS
1997 EQUITY INCENTIVE PLAN
The Company's 1997 Equity Incentive Plan (the "Plan") was adopted by the
Board on June 23, 1997, subject to stockholder approval. The number of shares of
Common Stock reserved for issuance under the Plan is equal to (i) 1,200,000 plus
(ii) the aggregate number of shares remaining available for grants under the
Company's Second Amended and Restated 1986 Stock Option Plan (the "Predecessor
Plan") on June 23, 1997. As of June 23, 1997, no options had been granted under
the Plan. Under the Plan, employees, non-employee members of the Board ("Outside
Directors") and consultants may be awarded options to purchase shares of Common
Stock, stock appreciation rights ("SARs"), restricted shares or stock units.
Options may be incentive stock options designed to satisfy Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or nonstatutory stock
options not designed to meet such requirements. If restricted shares or shares
issued upon the exercise of options granted under this Plan or the Predecessor
Plan are forfeited, then such shares will again become available for awards
under the Plan. If stock units, options or SARs granted under this Plan or the
Predecessor Plan are forfeited or terminate for any other reason before being
exercised, then the corresponding shares will again become available for awards
under the Plan. As of January 1 of each year, commencing with the year 1999, the
number of shares reserved for issuance under the Plan will be increased
automatically by the lesser of (i) 5% of the total number of shares of Common
Stock then outstanding or (ii) 250,000 shares.
The Plan will be administered by the Company's Compensation Committee (the
"Committee"). The Committee has the complete discretion to determine which
eligible individuals are to receive any award, determine the type, number,
vesting requirements and other features and conditions of such award, interpret
the Plan and make all other decisions relating to the operation of the Plan.
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<PAGE> 51
The exercise price for options granted under the Plan may be paid in cash
or in outstanding shares of Common Stock. Options may also be exercised by using
a cashless exercise method, a pledge of shares to a broker or promissory note.
The payment for the award of newly issued restricted shares will be made in
cash, by promissory note or the rendering of past or future services.
The Committee has the authority to modify, extend or assume outstanding
options and SARs or may accept the cancellation of outstanding options or SARs
in return for the grant of new options or SARs for the same or a different
number of shares and at the same or a different exercise price.
Each Outside Director who first becomes a member of the Board after the
date of the offering will receive a one-time option grant for 15,000 shares of
Common Stock upon taking office. Upon the conclusion of each regular annual
meeting of the Company's stockholders held in the 1998 calendar year and
thereafter, each Outside Director who will continue to serve as a Board member
will receive an option for 3,000 shares of Common Stock, except that an Outside
Director will not receive an annual grant for 3,000 shares in the same year he
or she received the one-time option grant for 15,000 shares.
The Board may decide to implement a program that allows an Outside Director
to elect to receive his or her annual retainer payments and meeting fees from
the Company in the form of cash, options, restricted shares, stock units or a
combination thereof. The number and terms of such options, restricted shares or
stock units to be granted to Outside Directors in lieu of annual retainers and
meeting fees will be calculated in a manner determined by the Board.
The Committee may determine that upon a Change in Control an award of an
option, SAR, stock units or restricted shares will become fully exercisable as
to all shares subject to such award. A Change in Control includes a merger or
consolidation of the Company after which the Company's then current stockholders
own less than 50% of the surviving corporation, sale of all or substantially all
of the assets of the Company, a proxy contest that results in replacement of
more than one-third of the directors over a 24-month period or acquisition of
30% or more of the Company's outstanding stock by a person other than a trustee
of any of the Company's employee benefit plans, a corporation owned by the
stockholders of the Company in substantially the same proportions as their stock
ownership in the Company or a person who owns stock of the Company before the
effective date of the offering. In the event of a merger or other
reorganization, outstanding options, SARs, restricted shares and stock units
will be subject to the agreement of merger or reorganization, which may provide
for the assumption of outstanding awards by the surviving corporation or its
parent, for their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting and accelerated expiration or for
settlement in cash.
The Board may amend or terminate the Plan at any time. Amendments may be
subject to stockholder approval to the extent required by applicable laws.
1997 EMPLOYEE STOCK PURCHASE PLAN
The Board adopted the Company's 1997 Employee Stock Purchase Plan (the
"Purchase Plan") on June 23, 1997, subject to stockholder approval. A total of
400,000 shares of Common Stock have been reserved for issuance under the
Purchase Plan. The Purchase Plan is intended to qualify under Section 423 of the
Code. Each calendar year, two overlapping offering periods consisting of 24
months will commence on April 1 and October 1 (except that the first offering
period will commence on the effective date of the offering and end on September
30, 1999). Each offering period contains four six-month accumulation periods,
with purchases occurring at the end of each six-month accumulation period.
However, the initial accumulation period will begin on the effective date of the
offering and end on March 31, 1998. The Purchase Plan will be administered by
the Committee. Each employee will be eligible to participate if he or she is (i)
employed by the Company for at least 20 hours per week for more than five months
per year and (ii) is an employee on the effective date of the offering or has
been employed by the Company for at least three consecutive months. The Purchase
Plan permits each eligible employee to purchase Common Stock through payroll
deductions, which may not exceed 15% of an employee's compensation, nor more
than 5,000 shares on any purchase date. The price of each share of Common Stock
purchased under the Purchase Plan will be 85% of the lower of (i) the fair
market value per share of Common Stock on the date immediately prior to the
first date of the applicable
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<PAGE> 52
accumulation period (except that in the case of the first offering period, the
price per share will be the price offered to the public in the offering) or (ii)
the date at the end of the applicable accumulation period. Employees may end
their participation in the Purchase Plan at any time during the accumulation
period, and participation ends automatically upon termination of employment with
the Company. In the event of a merger or consolidation, all offering periods and
accumulation periods will terminate and each outstanding purchase right will be
exercised. The Board may amend or terminate the Purchase Plan at any time.
However, the Board may not, without stockholder approval, increase the number of
shares of Common Stock reserved for issuance under the Purchase Plan.
COMPENSATION OF DIRECTORS
Directors receive no remuneration for serving on the Board of Directors,
although directors are reimbursed for all reasonable expenses incurred by them
in attending Board and Committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee consists of Messrs. Kortschak and Stephenson.
Neither of these individuals has at any time since the formation of the Company
been an officer or employee of the Company. No executive officer of the Company
serves as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Pursuant to the provisions of the Delaware General Corporation Law (the
"Delaware Law"), the Company has adopted provisions in its Certificate of
Incorporation which provide that directors of the Company shall not be
personally liable for monetary damages to the Company or its stockholders for a
breach of fiduciary duty as a director, except for liability as a result of (i)
a breach of the directors' duty of loyalty to the Company or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) an act related to the unlawful stock
repurchase or payment of a dividend under Section 174 of the Delaware Law and
(iv) transactions from which the director derived an improper personal benefit.
Such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission.
The Company's Certificate of Incorporation also authorizes the Company to
indemnify its officers, directors and other agents, by bylaws, agreements or
otherwise, to the fullest extent permitted under the Delaware Law. The Company
has entered into separate indemnification agreements with its officers and
directors which are, in some cases, broader than the specific indemnification
provisions contained in the Delaware Law. The indemnification agreements require
the Company, among other things, to indemnify such officers and directors
against certain liabilities that may arise by reason of their status or service
as directors or officers, to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance if available on reasonable terms.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.
51
<PAGE> 53
CERTAIN TRANSACTIONS
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
The Company has leased its Tustin, California facility since April 1980
from Charles King & Associates, an entity of which Charles W. King, Jr., a
director and major stockholder of the Company, is an affiliate. In June 1997,
the Company executed a five year lease, with a term that expires in the year
2002, that provides for payments of $19,750 per month with 3% annual rent
increases in years two through five of the lease. Lease payments were $219,000
in each of the fiscal years ended March 31, 1995, 1996 and 1997.
The Company has leased its Schaumburg, Illinois facility since January 1982
from Charles King & Associates, an entity of which Charles W. King, Jr., a
director and major stockholder of the Company, is an affiliate. In June 1997,
the Company executed a five year lease, with a term that expires in the year
2002, that provides for payments of $13,100 per month with 3% annual rent
increases in years two through five of the lease. Lease payments were $253,000
in each of the fiscal years ended March 31, 1995, 1996 and 1997.
Charles W. King, Jr. has guaranteed bank letters of credit related to six
IRBs issued by the Company for approximately $31.5 million as of March 31, 1997
for several of the Company's facilities. These IRBs have 20 year terms with
interest rates as of March 31, 1997 of 3.6% and 3.7%, adjustable based upon
market conditions. Mr. King received no consideration for the guarantee of the
IRBs.
The Company intends to use $1.5 million of the net proceeds of the offering
to redeem the 15,000 shares of Series A Preferred Stock currently outstanding.
The Charles W. King, Jr. Revocable Trust, of which Mr. King is the trustee and
beneficiary, is the sole holder of the Series A Preferred Stock. See "Use of
Proceeds."
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans between the
Company and its officers, directors, principal stockholders and their affiliates
will be approved by a majority of the Board of Directors, including a majority
of the independent and disinterested outside directors on the Board of
Directors, and will continue to be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
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<PAGE> 54
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1997, and as adjusted to
reflect the sale of the shares offered hereby, (i) by each person who is known
by the Company to own beneficially more than 5% of the Company's Common Stock,
(ii) by each of the executive officers named in the table under "Executive
Compensation" and by each of the Company's directors, and (iii) by all officers
and directors of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL(1)(2)
------------------------
NUMBER OF SHARES BEFORE THE AFTER THE
NAME AND ADDRESS BENEFICIALLY OWNED OFFERING OFFERING
- ----------------------------------------------------- ------------------ ---------- ---------
<S> <C> <C> <C>
Summit Partners, L.P.(3)............................. 736,630 15.3% 10.8%
499 Hamilton Avenue, Suite 200
Palo Alto, CA 94301
Sequoia Capital(4)................................... 368,315 7.6 5.4
3000 Sand Hill Road
Suite 280, Building 4
Palo Alto, CA 94025
Charles W. King, III Trust(5)........................ 1,006,454 20.8 14.7
c/o King Asset Management Corporation
1999 South Bascom Avenue, Suite 925
Campbell, CA 95008
Michael J. King Trust(5)............................. 1,006,454 20.8 14.7
c/o King Asset Management Corporation
1999 South Bascom Avenue, Suite 925
Campbell, CA 95008
Patricia Morley King Trust(5)........................ 1,006,454 20.8 14.7
c/o King Asset Management Corporation
1999 South Bascom Avenue, Suite 925
Campbell, CA 95008
Charles W. King, Jr. Revocable Trust(6).............. 572,000 11.8 8.4
c/o King Asset Management Corporation
1999 South Bascom Avenue, Suite 925
Campbell, CA 95008
James F. Clouser(7).................................. 289,855 5.7 4.1
Eric W. Beers(8)..................................... 8,600 * *
Eugene C. Davis(9)................................... 7,200 * *
David E. Meyer(10)................................... 22,350 * *
Edward M. Miller, Jr.(11)............................ 11,100 * *
Charles W. King, Jr.(12)............................. 572,000 11.8 8.4
Walter G. Kortschak(13).............................. 736,630 15.3 10.8
Thomas F. Stephenson(14)............................. 368,315 7.6 5.4
All Officers and Directors as a group (11
persons)(15)....................................... 2,037,288 39.3 28.3
</TABLE>
- ---------------
* Represents less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of March 31, 1997 are
deemed outstanding. Such shares, however, are not deemed outstanding for
the purposes of computing percentage ownership of each other person. The
address for each listed director and officer is c/o SteriGenics
International, Inc., 4020 Clipper Court, Fremont, California 94538. Except
as set forth in the footnotes to this table and subject to applicable
community property laws, each person has sole voting and investment power
with
53
<PAGE> 55
respect to the shares set forth opposite such person's name. Information
with respect to beneficial ownership is based upon the Company's stock
records and data supplied to the Company by the holders.
(2) Percentage ownership is based on 4,828,769 shares of Common Stock
outstanding on March 31, 1997 and 6,828,769 shares of Common Stock
outstanding after completion of the Offering. Shares owned do not include
15,000 shares of Series A Preferred Stock, all shares of which are owned by
Charles W. King, Jr. Revocable Trust and none of which are convertible into
Common Stock. See "Description of Capital Stock." Assumes no exercise of
the Underwriters' over-allotment option.
(3) Includes 727,095 and 9,535 shares of Common Stock held of record by Summit
Ventures III, L.P. and Summit Investors II, L.P., respectively.
(4) Includes 346,216 and 22,099 shares of Common Stock held of record by
Sequoia Capital Growth Fund and Sequoia Technology Partners III,
respectively.
(5) If the over-allotment option is exercised in full, the number of shares
beneficially owned by each of the Charles W. King, III Trust, the Michael
J. King Trust and the Patricia Morley King Trust will be reduced to 906,454
shares, or 13.3% of shares outstanding.
(6) Does not include 15,000 shares of Series A Preferred Stock, all shares of
which are owned by the Charles W. King, Jr., Revocable Trust and none of
which are convertible into Common Stock. Charles W. King, Jr., a director
of the Company, is the trustee and beneficiary of this trust.
(7) Includes 289,855 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of March 31, 1997.
(8) Includes 8,600 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of March 31, 1997.
(9) Includes 7,200 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of March 31, 1997.
(10) Includes 22,350 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of March 31, 1997.
(11) Includes 11,100 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of March 31, 1997.
(12) Includes 572,000 shares held by the Charles W. King, Jr. Revocable Trust.
Mr. King does not have any beneficial ownership of the Charles W. King, III
Trust, the Michael J. King Trust or the Patricia Morley King Trust.
(13) Includes 727,095 and 9,535 shares of Common Stock held of record by Summit
Ventures III, L.P. and Summit Investors II, L.P., respectively. Mr.
Kortschak, a director of the Company, is a general partner of Summit
Partners, L.P., which, with its affiliates, manages Summit Ventures III,
L.P. and Summit Investors II, L.P. (collectively, the "Summit Entities").
Mr. Kortschak disclaims beneficial ownership of shares held by the Summit
Entities, except for his pecuniary interest therein.
(14) Includes 346,216 and 22,099 shares of Common Stock held of record by
Sequoia Capital Growth Fund and Sequoia Technology Partners III,
respectively. Mr. Stephenson, a director of the Company, is a general
partner of Sequoia Partners (CF), which, with its affiliates, manages
Sequoia Capital Growth Fund and Sequoia Technology Partners III
(collectively, the "Sequoia Entities"). Mr. Stephenson disclaims beneficial
ownership of shares held by the Sequoia Entities, except for his pecuniary
interest therein.
(15) Includes 360,343 shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of March 31, 1997.
54
<PAGE> 56
DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering, the authorized capital stock of the
Company will consist of 30,000,000 shares of Common Stock, $0.001 par value, and
5,000,000 shares of Preferred Stock, $0.001 par value.
COMMON STOCK
As of March 31, 1997, there were 4,828,769 shares of Common Stock
outstanding (assuming the conversion of the Company's Convertible Preferred
Stock into 1,772,727 shares of Common Stock) that were held of record by
approximately 28 stockholders. There will be 6,828,769 shares of Common stock
outstanding (assuming no exercise of the Underwriters' over-allotment option and
assuming no exercise after March 31, 1997 of outstanding options) after giving
effect to the sale of the shares of Common Stock to the public offered hereby
and the conversion of the Company's Convertible Preferred Stock into 1,772,727
shares of Common Stock.
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding Preferred Stock, the holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. See
"Dividend Policy." In the event of the liquidation, dissolution, or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of Preferred Stock, if any, then outstanding. The Common Stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and nonassessable, and the
shares of Common Stock to be issued upon completion of this offering will be
fully paid and nonassessable.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of Convertible
Preferred Stock will convert into 1,772,727 shares of Common Stock. Thereafter,
the Board of Directors will have the authority to issue up to 5,000,000 shares
of Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series or the
designation of such series, without further vote or action by the stockholders.
The issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of Common Stock. The issuance of Preferred Stock with voting and conversion
rights may adversely affect the voting power of the holders of Common Stock,
including the loss of voting control to others. At present, the Company has no
plans to issue any of the Preferred Stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW
CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation provides that, effective upon the closing
of this offering, all stockholder actions must be effected at a duly called
meeting and not by a consent in writing. Further, provisions of the Bylaws and
the Certificate of Incorporation provide that the stockholders may amend the
Bylaws or certain provisions of the Certificate of Incorporation only with the
affirmative vote of the holders of 75% of the Company's capital stock. These
provisions of the Certificate of Incorporation and Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. These provisions are intended to enhance the likelihood of
continuity and stability in the composition of the Board of Directors and in the
policies formulated by the Board of Directors and to discourage certain types of
transactions that may involve an actual or threatened change of control of the
Company. These provisions are designed to reduce the vulnerability of the
Company to an unsolicited acquisition proposal. The provisions also are intended
to discourage certain tactics that may be used in proxy fights. However, such
provisions could have the effect of discouraging others from making tender
offers for the Company's shares and, as a
55
<PAGE> 57
consequence, they also may inhibit fluctuations in the market price of the
Company's shares that could result from actual or rumored takeover attempts.
Such provisions also may have the effect of preventing changes in the management
of the Company. See "Risk Factors -- Antitakeover Effect of Certain Charter and
Bylaw Provisions."
DELAWARE TAKEOVER STATUTE
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder;
(ii) upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock that is not owned by the interested stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
REGISTRATION RIGHTS
After this offering, the holders of approximately 1,218,582 shares of
Common Stock (the "Registrable Securities") will be entitled to certain rights
with respect to the registration of such shares under the Securities Act. Under
the terms of the agreement between the Company and the holders of such
Registrable Securities, if the company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of other security holders exercising registration rights, such holders
are entitled to notice of such registration and are entitled to include their
Registrable Securities. Additionally, such holders are also entitled to certain
demand registration rights pursuant to which they may require the Company to
file a registration statement under the Securities Act at its expense with
respect to their Registrable Securities, and the Company is required to use its
best efforts to effect such registration. Further, holders may require the
Company to file additional registration statements on Form S-3 at the Company's
expense. All of these registration rights are subject to certain conditions and
limitations, among them the right of the underwriters of an offering to limit
the number of shares included in such registration and the right of the Company
not to effect a requested registration within six months following an offering
of the Company's securities, including the offering made hereby.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock will be U.S. Stock
Transfer Corporation.
56
<PAGE> 58
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering and based on the shares outstanding as of
March 31, 1997, there will be 6,828,769 shares of Common Stock outstanding. Of
these shares, the 2,000,000 shares sold in the offering (assuming no exercise of
the underwriters' over-allotment option) will be freely tradeable without
restriction or further registration unless purchased by "affiliates" of the
Company as that term is defined in Rule 144 under the Securities Act. The
remaining shares will be "restricted securities" as that term is defined under
Rule 144 (the "Restricted Shares"). Sales of Restricted Shares in the public
market, or the availability of such shares for sale, could adversely affect the
market price of the Common Stock.
Of the Restricted Shares, an aggregate of 5,392,607 shares of Common Stock
(including 563,838 shares issuable upon exercise of vested stock options) will
be eligible for sale in the public market subject to Rule 144 and Rule 701 under
the Securities Act after expiration of a contractual lock-up ending 180 days
after the date of the Prospectus, unless earlier consented to, in whole or in
part, by PaineWebber Incorporated.
In general, under Rule 144, beginning 90 days after the date of this
Prospectus, a person (or persons whose shares are aggregated) who has
beneficially owned Restricted Shares for at least one year, including persons
who may be deemed to be "affiliates" of the Company, would be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of: (i) one percent of the number of shares of Common Stock then
outstanding (which will equal approximately 68,288 shares immediately after the
offering); or (ii) the average weekly trading volume of the Common Stock as
reported through the Nasdaq National Market during the four calendar weeks
preceding the filing of a Form 144 with respect to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about the
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days preceding a sale, and who has
beneficially owned the Restricted Shares proposed to be sold for at least two
years (including the holding period of any prior owner except an affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
Rule 701 permits resales of shares issued pursuant to certain compensatory
benefit plans and contracts and prior to the date the issuer becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), subject to certain limitations on the aggregate offering
price of a transaction and certain other conditions, commencing 90 days after
the issuer becomes subject to the reporting requirements of the Exchange Act, in
reliance upon Rule 144, but without compliance with certain restrictions,
including the holding period requirements, contained in Rule 144. In addition,
the Securities and Exchange Commission has indicated that Rule 701 will apply to
typical stock options granted by an issuer before it becomes subject to the
reporting requirements of the Exchange Act, along with the shares acquired upon
exercise of such options (including exercises after the date of this
Prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual lock-up restrictions described above, beginning
90 days after the date of this Prospectus, may be sold by persons other than
affiliates subject only to the manner of sale provisions of Rule 144 and by
affiliates under Rule 144 without compliance with its one-year minimum holding
period requirements.
The Company has agreed that it will not issue, sell or grant options to
purchase or otherwise dispose of any shares of its Common Stock or securities
convertible into or exchangeable for its Common Stock, except in connection with
the exercise of options or other rights outstanding on the date of this
Prospectus or pursuant to the Company's stock plans, for a period of 180 days
after the date of this Prospectus, without the prior written consent of
PaineWebber Incorporated.
The Company intends to register on a Form S-8 registration statement under
the Securities Act, during the 180-day lock-up period, a total of 2,312,686
shares of Common Stock which are subject to outstanding options or reserved for
issuance under the Company's stock option plans and stock purchase plan. Such
registration will permit the resale of shares so registered by non-affiliates in
the public market without restriction under the Securities Act.
57
<PAGE> 59
Prior to the offering, there has been no public market for the Common
Stock, and any sale of substantial amounts of Common Stock in the open market
may adversely affect the market price of the Common Stock offered hereby. In
addition, beginning 180 days after the date of this Prospectus, the holders of
approximately 1,218,582 shares of Common Stock are entitled to certain rights
with respect to registration of such shares under the Securities Act.
Registration of such shares under the Securities Act would result in such shares
becoming freely tradeable without restriction under the Securities Act (except
for shares purchased by affiliates of the Company) immediately upon the
effectiveness of such registration. See "Description of Capital Stock --
Registration Rights." If such holders, by exercising their demand registration
rights, cause a large number of securities to be registered and sold in the
public market, such sales could have an adverse effect on the market price for
the Common Stock. If the Company were to include in a Company-initiated
registration, any registrable securities pursuant to the exercise of piggyback
registration rights, such sales may have an adverse effect on the Company's
ability to raise needed capital.
58
<PAGE> 60
UNDERWRITING
The underwriters named below (the "Underwriters"), for whom PaineWebber
Incorporated, Piper Jaffray Inc. and Wheat, First Securities, Inc. are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions of the Underwriting Agreement among the Company, the
Selling Stockholders and the Underwriters (the "Underwriting Agreement"), to
purchase from the Company, and the Company has agreed to sell to the
Underwriters the number of shares of Common Stock set forth opposite their names
below at the price per share set forth on the cover page of this Prospectus
under "Proceeds to Company."
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
----------------------------------------------------------- ---------
<S> <C>
PaineWebber Incorporated...................................
Piper Jaffray Inc. ........................................
Wheat, First Securities, Inc...............................
Total.................................................
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the shares of Common Stock listed above are subject to
certain conditions. The Underwriters are committed to purchase all of the shares
of Common Stock offered by this Prospectus, (other than those covered by the
over-allotment option described below), if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in certain
circumstances, the purchase commitments of non-defaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public initially at the public
offering price set forth on the cover of this Prospectus and to certain dealers
at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession to other
dealers not in excess of $ per share. After the initial public offering
of the Common Stock, the public offering price, the concessions to selected
dealers and reallowance to other dealers may be changed by the Representatives.
Certain Selling Stockholders of the Company have granted the Underwriters
an option, exercisable during the 30 business day period after the date of this
Prospectus, to purchase up to an additional 300,000 shares of Common Stock at
the initial public offering price set forth on the cover page of this
Prospectus, less the underwriting discounts and commissions. To the extent the
Underwriters exercise such option, each Underwriter will become obligated,
subject to certain conditions, to purchase approximately the same percentage of
such additional shares of Common Stock as the percentage it was obligated to
purchase pursuant to the Underwriting Agreement. The Underwriters may exercise
such option only to cover over-allotments, if any, made in connection with the
offering of the shares of Common Stock offered hereby.
The Representatives have informed the Company that they do not expect the
Underwriters to confirm sales of Common Stock to any account over which they
exercise discretionary authority.
The Company, and certain Selling Stockholders of the Company, in the event
the over-allotment option is exercised, have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
The Company and each of its directors, executive officers and stockholders
holding approximately 4,702,107 shares of Common Stock have agreed not to offer,
sell, contract to sell, or grant any option to purchase or otherwise dispose of
any shares of Common Stock owned by any of them prior to the expiration of 180
days from the date of this Prospectus, except (i) for shares of Common Stock
offered hereby, (ii) with
59
<PAGE> 61
the prior written consent of PaineWebber Incorporated, (iii) in the case of
directors, executive officers and stockholders of the Company, transfers to
members of their families or trusts for the benefit of any of them who agree to
the terms of such "lock-up" agreement and (iv) in the case of the Company, for
the issuance of shares of Common Stock upon the exercise of options, or the
grant of options to purchase shares of Common Stock, under the Company's 1997
Equity Incentive Plan.
Prior to the offering, there has been no public market for the Common Stock
of the Company. The initial public offering price will be determined through
negotiations among the Company and the Representatives. Among the factors to be
considered in determining the initial public offering price, in addition to
prevailing market conditions, will be certain financial information of the
Company, the history of, and the prospect for, the Company and the industry in
which it competes, an assessment of the Company's management, its past and
present operations, the prospects for, and timing of, future revenues of the
Company, the present state of the Company's development, and the above factors
in relation to market values and various valuation measures of other companies
engaged in activities similar to the Company.
The initial public offering price set forth on the cover page of this
Prospectus should not, however, be considered an indication of the actual value
of the Common Stock. Such price is subject to change as a result of market
conditions and other factors. There can be no assurance that an active trading
market will develop for the Common Stock or that the Common Stock will trade in
the public market subsequent to the offering at or above the initial public
offering price.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the offering, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing shares of Common Stock in the open
market. The Representatives may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security before the distribution is completed.
Neither the Company nor any Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above might have on the price of the Common Stock. In addition,
neither the Company nor any of the Underwriters makes any representation that
the Representatives will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
Wheat, First Securities, Inc., a Representative, currently serves and has
in the past served as an underwriter and the remarketing agent with respect to
certain of the Company's IRBs for which it received customary compensation. See
"Business -- Leases and Financing Terms" and Note 3 of Notes to Consolidated
Financial Statements.
60
<PAGE> 62
LEGAL MATTERS
The validity of the shares offered hereby and general corporate legal
matters will be passed upon for the Company by Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP ("Gunderson Dettmer"), Menlo Park,
California. Carla S. Newell, a partner of Gunderson Dettmer, is the Secretary of
the Company. Certain legal matters relating to the sale of the shares of Common
Stock in the offering will be passed upon for the Underwriters by Morrison &
Foerster LLP, New York, New York.
EXPERTS
The consolidated financial statements of SteriGenics International, Inc. at
March 31, 1996 and 1997, and for each of the three years in the period ended
March 31, 1997, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (which term shall include any amendments
thereto) on Form S-1 under the Securities Act with respect to the Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain items of which are contained in exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement, including the exhibits
thereto, and the Consolidated Financial Statements and related Notes filed as a
part thereof. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved.
As a result of the offering, the Company will become subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended. As long as the Company is subject to such
periodic reporting and informational requirements, it will file with the
Commission all reports, proxy statements and other information required thereby.
The Registration Statement, as well as such reports and other information filed
by the Company with the Commission, may be inspected at the public reference
facilities maintained by the Commission at its principal office located at 450
Fifth Street, N.W., Washington, D.C. 20549 and at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World
Trade Center, 13th Floor New York, New York 10048. Copies of such material may
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of the site is http://www.sec.gov.
61
<PAGE> 63
STERIGENICS INTERNATIONAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Operations................................................. F-4
Consolidated Statements of Stockholders' Equity....................................... F-5
Consolidated Statements of Cash Flows................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 64
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
SteriGenics International, Inc.
We have audited the accompanying consolidated balance sheets of SteriGenics
International, Inc. as of March 31, 1996 and 1997, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended March 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of SteriGenics
International, Inc. at March 31, 1996 and 1997, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended March 31, 1997, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
San Jose, California
May 9, 1997, except Note 14 as to which the
date is , 1997
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion of
certain events as described in Note 14 to the consolidated financial statements.
/s/ Ernst & Young LLP
San Jose, California
June 20, 1997
F-2
<PAGE> 65
STERIGENICS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
MARCH 31, EQUITY AT
----------------------------- MARCH 31,
1996 1997 1997
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents:
Unrestricted...................................................... $ 9,062,328 $ 1,072,342
Restricted........................................................ 844,169 885,058
Accounts receivable, net of allowance of $242,000 in 1996 and $253,000
in 1997............................................................. 3,476,737 4,591,611
Prepaid expenses and other current assets........................... 560,243 801,404
Deferred income taxes............................................... 959,322 1,108,717
------------ ------------
Total current assets.................................................. 14,902,799 8,459,132
Property, plant and equipment, net.................................... 67,430,439 80,330,124
Other assets.......................................................... 1,146,113 2,876,281
Investment in joint venture........................................... 1,250,000 1,000
------------ ------------
Total assets.......................................................... $ 84,729,351 $ 91,666,537
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................... $ 382,031 $ 1,461,758
Income taxes payable................................................ 86,179 677,192
Accrued liabilities................................................. 6,305,238 6,096,785
Current portion of capital lease obligations........................ 2,543,965 3,152,394
Current portion of long-term debt................................... 2,289,059 250,000
------------ ------------
Total current liabilities............................................. 11,606,472 11,638,129
Capital lease obligations, less current portion....................... 7,406,387 6,139,685
Long-term debt, less current portion.................................. 27,783,641 32,000,000
Other long-term liabilities........................................... 92,703 -
Deferred income taxes................................................. 8,574,879 9,408,691
Series A redeemable preferred stock $0.001 par value:
Authorized shares -- 100,000
Issued and outstanding shares -- 15,000 in 1996 and 1997............ 1,500,000 1,500,000
Stockholders' equity:
Preferred stock, $0.001 par value:
Authorized shares -- 5,000,000 pro forma
Issued and outstanding shares -- none in 1996, 1997 and pro
forma........................................................... - - $ -
Convertible preferred stock, Series B and C, $0.001 par value:
Authorized shares -- 1,772,728
Issued and outstanding shares -- 1,772,727 in 1996 and 1997 and
none pro forma.................................................. 1,773 1,773 -
Common stock, $0.001 par value:
Authorized shares -- 15,000,000 in 1996 and 1997 and 30,000,000
pro forma
Issued and outstanding shares -- 3,056,042 in 1996 and 1997 and
4,828,769 pro forma............................................. 3,056 3,056 4,829
Additional paid-in capital.......................................... 14,726,994 14,726,994 14,726,994
Notes receivable from sale of common stock to employees............. (88,170) (88,170) (88,170)
Retained earnings................................................... 13,121,616 16,336,379 16,336,379
------------ ------------ ------------
Total stockholders' equity............................................ 27,765,269 $ 30,980,032 $30,980,032
============
------------ ------------
Total liabilities and stockholders' equity............................ $ 84,729,351 $ 91,666,537
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 66
STERIGENICS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues............................................. $28,661,287 $30,240,840 $37,668,198
Cost of revenues..................................... 16,389,018 16,977,930 20,425,350
----------- ----------- -----------
12,272,269 13,262,910 17,242,848
Costs and expenses:
General and administrative......................... 5,664,413 5,212,719 6,345,112
Marketing and selling.............................. 1,582,875 1,761,026 2,482,124
Research, development and engineering.............. 685,154 889,815 1,380,821
----------- ----------- -----------
7,932,442 7,863,560 10,208,057
----------- ----------- -----------
Income from operations............................... 4,339,827 5,399,350 7,034,791
Other income (expense):
Write-down of investments in joint ventures........ (3,011,022) -- --
Interest expense, net.............................. (2,402,336) (1,846,141) (1,836,310)
Other income....................................... 139,578 46,741 115,347
----------- ----------- -----------
Income (loss) before provision for income taxes,
equity in joint ventures and discontinued
operations......................................... (933,953) 3,599,950 5,313,828
Provision for income taxes........................... 1,185,000 1,447,888 2,099,065
----------- ----------- -----------
Income (loss) before equity in joint ventures and
discontinued operations............................ (2,118,953) 2,152,062 3,214,763
Equity in net loss of joint ventures................. (1,359,983) -- --
----------- ----------- -----------
Income (loss) from continuing operations............. (3,478,936) 2,152,062 3,214,763
Discontinued operations:
Loss from discontinued operations (net of income
tax benefit of $51,271)......................... (115,193) -- --
Loss on disposition of discontinued operations (net
of income tax benefit of $521,951).............. (1,172,694) -- --
----------- ----------- -----------
Net income (loss).................................... $(4,766,823) $ 2,152,062 $ 3,214,763
=========== =========== ===========
Pro forma net income per share....................... $ 0.62
===========
Shares used in computing pro forma net income per
share.............................................. 5,164,679
===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 67
STERIGENICS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NOTES
RECEIVABLE
CONVERTIBLE FROM SALE
PREFERRED STOCK COMMON STOCK ADDITIONAL OF COMMON TOTAL
------------------ ------------------ PAID-IN STOCK TO RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EMPLOYEES EARNINGS EQUITY
---------- ------ ---------- ------ ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1994......... 1,772,727 $1,773 3,000,120 $3,000 $14,530,307 $(71,600) $15,736,377 $30,199,857
Issuance costs related to Series
C preferred stock............. - - - - (23,440) - - (23,440)
Repurchase of options........... - - (400) - (2,000) 2,000 - -
Income tax benefit from stock
option transactions........... - - - - 132,450 - - 132,450
Net loss........................ - - - - - - (4,766,823) (4,766,823)
--------- ------ --------- ------ ----------- -------- ----------- -----------
Balance at March 31, 1995......... 1,772,727 1,773 2,999,720 3,000 14,637,317 (69,600) 10,969,554 25,542,044
Exercise of options............. - - 56,322 56 89,677 (18,570) - 71,163
Net income...................... - - - - - - 2,152,062 2,152,062
--------- ------ --------- ------ ----------- -------- ----------- -----------
Balance at March 31, 1996......... 1,772,727 1,773 3,056,042 3,056 14,726,994 (88,170) 13,121,616 27,765,269
Net income........................ - - - - - - 3,214,763 3,214,763
--------- ------ --------- ------ ----------- -------- ----------- -----------
Balance at March 31, 1997......... 1,772,727 $1,773 3,056,042 $3,056 $14,726,994 $(88,170) $16,336,379 $30,980,032
========= ====== ========= ====== =========== ======== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 68
STERIGENICS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
---------------------------------------------
1995 1996 1997
------------ ----------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Cash flows from operating activities:
Income (loss) from continuing operations....................... $ (3,478,936) $ 2,152,062 $ 3,214,763
Income (loss) from discontinued operations..................... (1,287,887) -- --
Reconciliation to net cash provided by operating activities:
Depreciation and amortization from continuing operations.... 5,879,670 7,575,835 8,271,016
Depreciation and amortization from discontinued
operations................................................ 1,365,044 -- --
Equity in net loss of joint ventures........................ 1,359,983 -- --
Write-down of investments in joint ventures................. 3,011,022 -- --
Deferred income tax liability............................... 1,860,341 519,879 833,812
Deferred income tax asset................................... (1,624,710) 665,678 (149,395)
Changes in assets and liabilities:
Accounts receivable....................................... 506,696 28,640 (1,114,874)
Prepaid expenses and other current assets................. 252,022 (104,348) (241,161)
Accounts payable and accrued liabilities.................. 119,515 172,741 1,369,584
Net assets of discontinued operations..................... 723,276 -- --
------------ ----------- ------------
Net cash provided by operating activities........................ 8,686,036 11,010,487 12,183,745
INVESTING ACTIVITIES
Purchases of property, plant and equipment -- continued
operations..................................................... (16,546,736) (7,207,495) (18,613,378)
Purchases of property, plant and equipment -- discontinued
operations..................................................... (2,205) -- --
Proceeds from sale of property -- continuing operations.......... 1,551,744 -- --
Proceeds from sale of property -- discontinued operations........ 66,008 -- --
Investments in joint ventures.................................... (590,792) -- --
Proceeds from sale of investment in joint venture................ -- -- 1,249,000
Other assets..................................................... (28,548) (369,076) (1,779,364)
------------ ----------- ------------
Net cash used in investing activities............................ (15,550,529) (7,576,571) (19,143,742)
FINANCING ACTIVITIES
Issuance costs related to Series C preferred stock............... (23,440) -- --
Exercise of stock options........................................ -- 71,163 --
Borrowings under industrial revenue bonds........................ -- 9,000,000 8,750,000
Borrowings under term loan and line of credit.................... 7,322,726 -- 2,881,619
Repayments on term loan, line of credit, industrial revenue bonds
and capital leases............................................. (4,706,987) (4,271,103) (12,620,719)
Increase in restricted cash...................................... (12,300) (51,713) (40,889)
------------ ----------- ------------
Net cash provided by (used in) financing activities.............. 2,579,999 4,748,347 (1,029,989)
------------ ----------- ------------
Net increase (decrease) in unrestricted cash and cash
equivalents.................................................... (4,284,494) 8,182,263 (7,989,986)
Unrestricted cash and cash equivalents at beginning of year...... 5,164,559 880,065 9,062,328
------------ ----------- ------------
Unrestricted cash and cash equivalents at end of year............ $ 880,065 $ 9,062,328 $ 1,072,342
============ =========== ============
NONCASH FINANCING ACTIVITIES
Assets acquired under capital leases............................. $ 7,818,369 $ 2,372,252 $ 2,508,127
Income tax benefit from stock options............................ $ 132,450 $ -- $ --
Notes receivable issued on exercise of stock options............. $ -- $ 18,570 $ --
</TABLE>
See accompanying notes.
F-6
<PAGE> 69
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
SteriGenics International, Inc. (the "Company") was incorporated in the
state of California in 1978 to perform contract sterilization services using
Gamma radiation. The Company operates Gamma sterilization facilities in several
states. In addition, the Company also manufactured, sterilized, and marketed
aerosol saline solution for contact lens care (see Note 12). During fiscal 1995,
the Company discontinued its manufacture and sale of aerosol saline solution.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, SteriGenics East Corporation,
SteriGenics International Holding Corporation Inc. and RSI Leasing, Inc.
SteriGenics East Corporation includes three facilities located along the eastern
seaboard of the United States (see Note 13). SteriGenics International Holding
Corporation Inc. holds investments in the Company's joint venture in Taiwan (see
Note 11). RSI Leasing, Inc. leases Cobalt 60 to the Company. All significant
intercompany accounts and transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates, and such
differences may be material to the financial statements.
Revenue Recognition
Revenue from contract manufacturing is recognized upon the completion of
sterilization. One customer accounted for approximately 13% of net revenue
during fiscal 1995 and 1996. No customer accounted for more than 10% of net
revenue during fiscal 1997.
Advertising Costs
Advertising costs are recorded as an expense when incurred. Advertising
costs were approximately $134,000, $191,000 and $243,000 for the years ended
March 31, 1995, 1996 and 1997, respectively. The Company does not incur any
direct response advertising costs.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity from the date of purchase of three months or less to be cash
equivalents. The Company maintains deposits with banks and invests excess cash
in a money market account. The Company has not experienced any losses on its
investments.
Financial Instruments
The estimated fair values of financial instruments approximate the carrying
values at March 31, 1996 and 1997, using available market information and
appropriate valuation methodologies. The fair value of long-term debt is
estimated using discounted cash flow analysis and the Company's current
incremental borrowing rate.
F-7
<PAGE> 70
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Risks, Uncertainties, and Significant Concentrations
The Company's trade receivables consist principally of amounts due from its
customers in the sterilization industry. The Company's trade customers are
primarily in the US. Management believes any concentration of credit risk is
substantially alleviated by the Company's credit evaluation and collection
practices. The Company generally requires no collateral. Bad debt experience and
expenses have been insignificant.
The Company's operations are dependent on its ability to obtain Cobalt 60
isotope or an equivalent radioactive material. Cobalt 60 isotope is a controlled
substance, supplied only by a limited number of vendors. If the Company is
unable to obtain adequate supplies of Cobalt 60 isotope at commercially
reasonable terms, its operations may be materially adversely affected.
Long-Lived Assets
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" (FAS 121). FAS
121 requires recognition of impairment of long-lived assets in the event the net
book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. FAS 121 is effective for the fiscal years beginning
after December 15, 1995. The adoption of FAS 121 did not have a material impact
on the Company's financial position or results of operations.
Depreciation and Amortization
Cobalt 60 isotope is amortized using an accelerated method (approximately
12.3% of net book value per year) which relates to the natural decay of the
isotope. For all other property, plant, and equipment, depreciation is computed
using the straight-line method over estimated useful lives of three to thirty
years. Amortization is included with depreciation expense in the accompanying
consolidated financial statements.
Construction-In-Progress
From time to time, the Company will build or expand facilities. The cost of
construction of these facilities is reflected as construction-in-progress until
start-up of the facility, at which time the costs are reclassified to the
appropriate fixed asset category.
Stock-Based Compensation
In fiscal 1997, the Company implemented the disclosure requirements of
Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation" (FAS 123). As permitted under FAS 123, the Company continues to
account for its employee stock option plan in accordance with the provisions of
Accounting Principals Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB Opinion No. 25) and will provide pro forma disclosures of net
income and earnings per share as if the fair value basis method prescribed by
FAS 123 had been applied in measuring employee compensation expense (see Note
5).
Net Income (Loss) Per Share
Except as noted below, net income (loss) per share is computed using the
weighted average number of shares of common stock and common equivalent shares,
when dilutive, from convertible preferred stock (using the as-if-converted
method) and from stock options (using the treasury stock method). Pursuant to
the Securities and Exchange Commission Staff Accounting Bulletins, common and
common equivalent shares issued by the Company at prices below the initial
public offering price during the twelve-month period prior to
F-8
<PAGE> 71
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the offering have been included in the calculation as if they were outstanding
for all periods presented (using the treasury stock method at an assumed initial
public offering price.)
Per share information calculated on the above noted basis is as follows:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Income (loss) from continuing
operations.............................. $ (1.15) $ .43 $ .62
Loss from discontinued operations......... (0.42) - -
---------- ---------- ----------
Net income (loss)......................... $ (1.57) $ 0.43 $ 0.62
========== ========== ==========
Shares used in computing net income (loss)
per share............................... 3,032,037 5,004,200 5,164,679
========== ========== ==========
</TABLE>
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128), which
is required to be adopted on December 31, 1997. At that time, the Company will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock options will be
excluded. The impact is not expected to increase primary earnings per share for
the year ended March 31, 1995 but is expected to increase primary earnings per
share for the years ended March 31, 1996 and 1997 to $0.70 and $1.04 per share,
respectively. The impact of FAS 128 on the calculation of fully diluted earnings
per share for these years is not expected to be material.
Pro Forma Net Income Per Share
Pro forma net income per share has been computed as described above and
also gives effect, even if antidilutive, to common equivalent shares from
convertible preferred stock that will automatically convert upon the closing of
the company's initial public offering (using the as-if-converted method).
2. BALANCE SHEET COMPONENTS
Property, plant and equipment
Property, plant and equipment at March 31 consist of:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Land.......................................... $ 1,568,397 $ 1,605,245
Buildings..................................... 7,340,648 12,091,744
Cobalt 60 isotope............................. 69,442,173 71,776,948
Furniture and fixtures........................ 2,704,230 3,932,708
Machinery and equipment....................... 18,341,205 24,846,155
Construction-in-progress...................... 6,563,966 9,016,290
----------- -----------
105,960,619 123,269,090
Accumulated depreciation and amortization..... 38,530,180 42,938,966
----------- -----------
$ 67,430,439 $ 80,330,124
=========== ===========
</TABLE>
F-9
<PAGE> 72
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Other Assets
Other assets at March 31 consist of:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Industrial revenue bond costs (net of accumulated
amortization of $406,000 in 1996 and $455,000 in
1997)............................................. $ 459,441 $ 791,477
Goodwill............................................ - 558,769
Investment in RTI Inc. (see Note 13)................ 236,000 -
Other............................................... 479,742 1,576,735
---------- ----------
1,175,183 2,926,981
Less current portion of bond costs.................. 29,070 50,700
---------- ----------
$1,146,113 $2,876,281
========== ==========
</TABLE>
Accrued Liabilities
Accrued liabilities at March 31 consist of:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Compensation........................................ $1,070,563 $1,717,429
Property tax........................................ 778,314 582,960
Legal and accounting................................ 198,469 418,463
Sales and other nonincome taxes..................... 2,088,948 1,628,539
Other............................................... 2,168,944 1,749,394
---------- ----------
$6,305,238 $6,096,785
========== ==========
</TABLE>
3. BORROWING ARRANGEMENTS
Long-term debt at March 31 consists of:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Industrial revenue bond, due in March 2005, with
interest at the contract formula rate of 3.6% at
March 31, 1997.................................. $5,250,000 $5,250,000
Industrial revenue bond, due in December 2004,
with interest at the contract formula rate of
3.6% at March 31, 1997.......................... 4,900,000 4,900,000
Industrial revenue bond, due in November 2005,
with interest at the contract formula rate of
3.6% at March 31, 1997.......................... 4,600,000 4,600,000
Industrial revenue bond, due in annual principal
installments of $500,000 beginning in March
1999, with interest at the contract formula rate
of 3.7% at March 31, 1997....................... 9,000,000 9,000,000
</TABLE>
F-10
<PAGE> 73
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Industrial revenue bond, due in annual principal
installments of $430,000 beginning in April
1999, with interest at the contract formula rate
of 3.7% at March 31, 1997....................... - 7,750,000
Industrial revenue bond, due in annual
installments of $250,000 with interest at a
fixed rate of 10.0%............................. - 750,000
Bank term loan, due in monthly installments of
$70,175, with interest at the bank's reference
rate plus 1.0% (9.25% at March 31, 1996)........ 1,052,632 -
Note payable, due in quarterly installments of
$30,442, with interest at 9.50% at March 31,
1996............................................ 306,451 -
Note payable, due in monthly installments of
$147,590, with interest at 9.75% at March 31,
1996............................................ 4,963,617 -
----------- -----------
30,072,700 32,250,000
Less current portion.............................. 2,289,059 250,000
----------- -----------
$27,783,641 $32,000,000
=========== ===========
</TABLE>
Industrial revenue bonds are collateralized by certain assets of the
Company and by letter of credit agreements with a bank, the majority of which
are guaranteed by the Chairman of the Board of Directors (who is also a
stockholder). The Company is required under certain industrial revenue bond
agreements to maintain cash reserves in the amount of the bond interest payments
due within one year. At March 31, 1996 and 1997, there were approximately
$844,000 and $885,000 recorded as restricted cash associated with the
outstanding industrial revenue bonds, respectively.
The Company has a $3,500,000 revolving line of credit with a bank, payable
on demand, with a variable interest rate of 8.5% at March 31, 1997,
collateralized by certain assets of the Company. At March 31, 1997, no amounts
were outstanding under this line of credit.
Notes payable are collateralized by the Cobalt 60 isotope to which they
relate. Certain of the notes payable by the Company contain covenants pertaining
to profitability levels and certain other financial ratios. These notes were
voluntarily paid off during fiscal 1997.
The bank term loan is subject to provisions that place restrictions on
fixed asset expenditures and require maintenance of specified net worth levels
and financial statement ratios. This loan was voluntarily paid off during fiscal
1997.
Payments of principal due on long-term debt for the five-year period from
March 31, 1997 are:
<TABLE>
<S> <C>
1998.......................................... $ 250,000
1999.......................................... 750,000
2000.......................................... 1,180,000
2001.......................................... 930,000
2002.......................................... 930,000
Thereafter.................................... 28,210,000
-----------
Total......................................... $32,250,000
===========
</TABLE>
Cash payments for interest in fiscal 1995, 1996 and 1997 were approximately
$1,395,000, $996,000 and $1,875,000, respectively.
F-11
<PAGE> 74
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. REDEEMABLE PREFERRED STOCK
Series A redeemable preferred stock is not convertible and has no voting
rights. Dividends may be declared at the discretion of the Board of Directors
and are noncumulative. In any fiscal year, dividends of $10.00 per share for
Series A preferred stock must be paid before any dividends on common stock. In
the event of liquidation, Series A stockholders are entitled to receive $100.00
per share plus all declared but unpaid dividends prior to any distribution to
the common stockholders. In the event of a merger or other reorganization, the
Series A preferred stock will be redeemed at $100.00 per share.
5. STOCKHOLDERS' EQUITY
Convertible Preferred Stock
Each share of Series B preferred stock is convertible into one share of the
Company's common stock, has voting rights, has a liquidation preference of $5.00
per share, is subordinate to the Series A preferred stock, and permits
noncumulative dividends to be declared at the discretion of the Board of
Directors. In any fiscal year, dividends of $0.50 per share for Series B
preferred stock must be paid before any dividends on common stock.
Each share of Series C preferred stock is convertible into one share of the
Company's common stock, has voting rights, has a liquidation preference of
$11.00 per share, is subordinate to the Series A and B preferred stock, and
permits noncumulative dividends to be declared at the discretion of the Board of
Directors. In any fiscal year, dividends of $1.10 per share for Series C
preferred stock must be paid before any dividends on common stock.
No dividends have been declared to date by the Board of Directors on any of
the outstanding preferred stock.
F-12
<PAGE> 75
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock Option Plans
Under the 1985 Incentive Stock Option Plan and the Second Amended and
Restated 1986 Stock Option Plans the Board of Directors may grant options to key
employees to purchase up to 1,210,000 shares of common stock at not less than
fair value on the date of grant, as determined by the Board of Directors. The
options generally vest with respect to 24% of the shares one year after the
options grant date and with respect to 2% of the shares on a monthly basis for
the next 38 months. The option term is ten years, and options expire at the end
of the term.
Activity under the option plans was as follows:
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
---------------------------
WEIGHTED
NUMBER AVERAGE PRICE
OF SHARES PER SHARE
--------- -------------
<S> <C> <C>
Balance at March 31, 1994............................ 591,458 $5.36
Granted............................................ 99,064 $9.15
Exercised.......................................... - $ -
Canceled........................................... (27,725) $7.81
-------
Balance at March 31, 1995............................ 662,797 $5.82
Granted............................................ 253,764 $4.90
Exercised.......................................... (56,322) $1.59
Canceled........................................... (221,314) $8.27
-------
Balance at March 31, 1996............................ 638,925 $4.98
Granted............................................ 97,000 $5.64
Exercised.......................................... - $ -
Canceled........................................... (33,000) $4.91
-------
Balance at March 31, 1997............................ 702,925 $5.07
=======
</TABLE>
During fiscal 1996, the Company offered all optionees the right to amend
the terms of their outstanding options to lower the exercise price to the then
fair value of $4.90 per share, and to reset the vesting schedule. Included above
are options to purchase 172,564 shares of common stock canceled and regranted
during 1996 with the amended terms.
At March 31, 1997, options outstanding under the stock option plans were as
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------- OPTIONS EXERCISABLE
WEIGHTED -----------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICE OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------------------------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$4.90-$5.00............................ 658,925 5.37 $ 4.96 477,014 $ 4.98
$6.18-$7.00............................ 44,000 8.19 6.81 10,000 6.18
------- ---- ----- ------- -----
702,925 5.54 $ 5.07 487,014 $ 5.01
======= ==== ===== ======= =====
</TABLE>
At March 31, 1996, options to purchase 433,095 shares of common stock were
exercisable at an average exercise price of $5.02 per share. At March 31, 1997
314,841 shares were available for future grant under the plans.
F-13
<PAGE> 76
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company has elected to follow APB Opinion No. 25 and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123), requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB Opinion No. 25,
when the exercise price of the Company's employee stock options equals the fair
value of the underlying stock on the date of grant, no compensation expense is
recognized.
Pro forma information regarding net income and earnings per share is
required by FAS 123 and has been determined as if the Company had accounted for
its employee stock options under the fair value method of FAS 123 using the
following weighted average assumptions for the years ended March 31:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Risk-free interest rate(%)..................................... 5.91 6.37
Dividend yield................................................. - -
Expected option life (years)................................... 3.57 3.57
</TABLE>
The Minimum Value option valuation method may be used by nonpublic
companies to value an award. In addition, option valuation models require the
input of highly subjective assumptions, including the expected option life.
Because the Company's employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of FAS 123, the Company's net income and net
income per share would have been decreased to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Pro forma net income................................ $2,076,193 $3,139,858
Pro forma net income per share...................... $0.41 $0.61
</TABLE>
The weighted average fair value of options granted in fiscal 1996 and 1997
was $0.90 and $1.10 per share, respectively.
Because FAS 123 is applicable only to options granted subsequent to March
31, 1995, its pro forma effect will not be fully reflected until the year ending
March 31, 2000.
Notes Receivable From Sale of Common Stock to Employees
At March 31, 1997, the Company had notes receivable in the amount of
$88,170 arising from the sale of common stock to employees. Such notes bear
interest at 7% to 9%, are collateralized by the related stock of the Company and
are due between April 1998 and August 2000.
F-14
<PAGE> 77
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. TAXES ON INCOME
The provision for income taxes for the years ended March 31 consists of the
following:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Federal:
Current.............................. $ 602,000 $(419,606) $1,276,373
Deferred............................. 538,000 1,717,191 614,517
---------- ---------- ----------
1,140,000 1,297,585 1,890,890
State:
Current.............................. 4,000 334,236 138,274
Deferred............................. 41,000 (183,933) 69,901
---------- ---------- ----------
45,000 150,303 208,175
---------- ---------- ----------
$1,185,000 $1,447,888 $2,099,065
========== ========== ==========
</TABLE>
The total provision for income taxes differs from the amount computed by
applying the statutory federal income tax to income before taxes as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Expected provision at 34%.............. $(317,000) $1,223,983 $1,806,702
State taxes, net of federal benefit.... 30,000 99,200 137,395
Foreign joint venture losses........... 1,338,000 - -
Other.................................. 134,000 124,705 154,968
---------- ---------- ----------
$1,185,000 $1,447,888 $2,099,065
========== ========== ==========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes. Significant components of
deferred tax assets and liabilities at March 31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Tax credit and loss carryforward................ $1,857,029 $2,530,896
Reserves and accruals........................... 1,461,013 1,626,070
Other........................................... 619,152 198,077
---------- ----------
Total deferred tax assets......................... 3,937,194 4,355,043
Deferred tax liabilities:
Depreciation.................................... 11,504,083 12,564,094
Other........................................... 48,669 90,923
---------- ----------
Total deferred tax liabilities.................... 11,552,752 12,655,017
---------- ----------
Net deferred tax liabilities...................... $7,615,558 $8,299,974
========== ==========
</TABLE>
Management has concluded that a valuation allowance against the deferred
tax assets is not required based on its assessment that current levels of
taxable income will be sufficient to realize the related tax benefits.
At March 31, 1997, the Company had federal and state alternative minimum
tax credit carryforwards of approximately $2,326,000 and $136,000, respectively,
which do not expire, and other carryforwards of
F-15
<PAGE> 78
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
approximately $173,000 expiring in fiscal 2004. Utilization of the carryforwards
may be subject to a substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code of 1986 and similar state
provisions.
Cash payments made for income taxes during fiscal 1995, 1996 and 1997 were
$942,000, $11,000 and $805,000, respectively.
7. EMPLOYEE BENEFIT PLAN
Effective February 1, 1990, the Company established a defined contribution
retirement plan with 401(k) plan features. The plan covers all employees, age 21
or older, with at least six months of service. Employees may make contributions
by a percentage reduction in their salaries of up to a statutory limit of $9,500
per year for calendar 1996. Company contributions consist of matching funds
equal to 50% of the first 5% of employee eligible earnings contributed as well
as discretionary profit sharing amounts. Effective April 1, 1996, the Company
increased the matching contribution percentage from 25% to 50%. Company
contributions were $38,000, $44,000 and $122,000 for fiscal 1995, 1996 and 1997,
respectively.
8. COMMITMENTS AND CONTINGENCIES
The Company leases a portion of its Cobalt 60 isotope under capital leases
having terms of 15 years. Assets acquired by the Company under such lease
arrangements are included on the consolidated balance sheet as follows:
<TABLE>
<CAPTION>
MARCH 31,
---------------------------
1996 1997
----------- -----------
<S> <C> <C>
Cobalt 60 isotope, at cost........................ $13,928,361 $16,389,051
Less accumulated amortization..................... 2,426,047 3,986,429
----------- -----------
$11,502,314 $12,402,622
=========== ===========
</TABLE>
The Company leases certain facilities and a portion of its Cobalt 60
isotope under noncancelable operating leases. At March 31, 1997, future minimum
lease payments under operating leases and capital leases are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
---------- ---------
<S> <C> <C>
1998............................................... $3,403,294 $1,851,748
1999............................................... 3,069,705 1,747,293
2000............................................... 1,437,627 1,156,281
2001............................................... 673,011 709,464
2002............................................... 316,343 593,620
Thereafter......................................... 1,185,799 866,320
---------- ----------
Total payments..................................... 10,085,779 $6,924,726
==========
Less amount representing interest.................. 793,700
----------
Present value of minimum lease payments............ 9,292,079
Less current portion............................... 3,152,394
----------
$6,139,685
==========
</TABLE>
F-16
<PAGE> 79
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In conjunction with the RTI Inc. Asset Acquisition Agreement (see Note 13)
the Company leases a facility in Rockaway, New Jersey and is required by the New
Jersey Department of Environmental Protection (NJDEP) to maintain a standby
letter of credit in the amount of $500,000, contingent upon the continued
environmental clean up efforts required of the property owners, RTI Inc. The
required amount of the letter of credit decreases over the life of the building
lease, and/or as the NJDEP deems required.
Additionally, RTI Inc. has the option to require the Company to purchase
the Rockaway land and buildings on the sixth anniversary of the lease
commencement date for a purchase price equal to $138,376. RTI Inc. may only
exercise the option upon receipt of proof that environmental remediation of the
property was complete to the extent that the Company would not have any material
liability for further environmental remediation and the property has been
removed from the national priorities list.
9. LITIGATION
In June 1988, management became aware that dissolved cesium 137 ("cesium")
was present in the containment pool at the Company's Decatur, Georgia
sterilization facility. As a result, the plant was closed and cesium removal and
cleanup procedures began. Since fiscal 1989, all of the Company's operations
have used Cobalt 60 isotope which management believes, due to its physical
properties, cannot cause the type of contamination experienced with cesium.
In 1991, the Company filed a suit against the U.S. Government seeking, as
amended, $280,000,000 for damages, including loss of future earnings, loss of
market value upon the sale of the Decatur facility, plant burial costs, cleanup
costs, and out-of-pocket expenses. In 1993, the government filed a counterclaim
against the Company seeking $105,000,000 for negligence, cost of cleanup,
recovery, testing of the cesium capsules, and for storage, collection, and
transportation of the capsules to the Department of Energy facilities. On
January 10, 1995, the government's counterclaim was reduced to $18,906,754 due
to the government's inability to produce documentation supporting an amount of
$105,000,000. On May 23, 1995, both of these suits were dismissed; however, both
parties filed notice of appeal. The Company's claim and the counterclaim filed
by the government went to mediation under the direction of a circuit court
mediator, and a settlement agreement was reached among the parties to this
litigation on April 9, 1997. The presiding court entered a stipulation of
dismissal effective May 9, 1997.
In the normal course of the Company's operations, it is subject to various
claims and litigation, the outcomes of which, in the opinion of management, will
not have a material adverse effect on the Company's financial position or
results of operations.
10. TRANSACTIONS WITH RELATED PARTIES AND MINORITY STOCKHOLDERS
The Company rents two sterilization facilities from its chairman on a month
to month basis (see Note 14. Subsequent Events). Rent expense attributable to
these related party leases was approximately $472,000 in each of the fiscal
years ended March 31, 1995, 1996 and 1997, as compared to total rent expense of
$1,131,000, $1,246,000 and $1,318,000 for fiscal 1995, 1996 and 1997,
respectively. The Company also leases one facility and its corporate offices
from a publicly traded real estate investment trust of which its chairman is a
minority shareholder, but neither a director nor an officer.
Included in costs and expenses are approximately $1,414,000, $1,189,000 and
$2,116,000 for fiscal 1995, 1996 and 1997, respectively, relating to payments to
a minority stockholder for administrative, maintenance and engineering services.
11. INVESTMENTS IN JOINT VENTURES
Through the end of calendar 1994, the Company had invested approximately
$4,724,000 for 35% of the common stock of China Biotech Corporation (formerly
China Nuclear Corporation), a sterilization facility in Taiwan. This investment
was accounted for under the equity method. In fiscal 1995, the Company
determined
F-17
<PAGE> 80
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
that the carrying value of this investment would not be realized through future
cash flows. Accordingly, the Company recorded a write-down of the carrying value
of $2,150,000 in that year. Losses recognized by the Company on the Taiwan joint
venture amounted to $798,999, $0 and $0 in fiscal 1995, 1996 and 1997,
respectively. During 1996 and 1997, although China Biotech generated losses, the
Company did not record its share of these losses as the carrying value of its
investment continued to be less than its share of the net assets of China
Biotech. In January 1997, the Company sold the majority of its holdings in China
Biotech for $1,249,000. No gain or loss was recorded related to this
transaction. Management fees recognized by the Company for services provided to
the Taiwan joint venture amounted to approximately $61,000, $19,000 and $0 in
fiscal 1995, 1996 and 1997, respectively.
At March 31, 1995, the Company had invested approximately $1,821,000 for
35% of the common stock of PT Perkasa SteriGenics, a sterilization facility in
Indonesia. This investment was accounted for under the equity method. Losses
recognized by the Company on the Indonesian joint venture amounted to $560,984
in fiscal 1995. During fiscal 1995, the Company decided to withdraw from its
investment in PT Perkasa SteriGenics and, accordingly, wrote off the remaining
carrying value of its investment (approximately $860,000) to reflect what it
believed to be a total and permanent impairment in the value of the asset.
12. DISCONTINUED OPERATIONS-AEROSOL BUSINESS
In August 1994, the Company sold its aerosol business to a competitor for
cash and future consideration and recorded a loss of $1,172,694 (net of tax
benefit of $521,951) during fiscal 1995 associated with the sale of the aerosol
business.
13. RTI INC. ASSET ACQUISITION AGREEMENT
On February 26, 1996, the Company, through its subsidiary SteriGenics East
Corporation, entered into an agreement to acquire certain assets and liabilities
of RTI Inc., a New York corporation and its subsidiaries that operated three
irradiation facilities along the eastern seaboard of the US. At March 31, 1996,
the Company had an initial investment of $236,000 in RTI Inc. The acquisition
was finalized in August 1996 with a net purchase price of approximately
$4,872,000 and was accounted for as a purchase. The initial investment was
applied toward the purchase price upon completion of the acquisition. The
consolidated statements of operations include the results of operations of RTI
Inc. subsequent to the acquisition date. The Company recorded approximately
$580,000 of goodwill which is being amortized over a fifteen-year period.
Accumulated amortization of goodwill is approximately $21,000 at March 31, 1997.
The following unaudited pro forma summary represents the Company's
consolidated results of operations for the two years ended March 31, 1997 as if
the acquisition of RTI Inc. had occurred at the beginning of the periods
presented and does not purport to be indicative of what would have occurred had
the acquisitions been made as of those dates or the results which may occur in
the future.
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Pro forma net revenues............................ $34,592,867 $39,980,890
Pro forma net income.............................. 1,627,419 3,147,568
Pro forma income per share........................ 0.33 0.61
</TABLE>
14. SUBSEQUENT EVENTS
In June 1997, the Company entered into operating leases with its chairman
on the two sterilization facilities previously rented on a month to month
basis. The leases expire in June 2002.
F-18
<PAGE> 81
STERIGENICS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On June 23, 1997, the Board of Directors approved the following actions:
- The filing of a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock to
the public. If the offering contemplated by this Prospectus is
consummated, all of the convertible Preferred Stock outstanding as of the
closing date will automatically be converted into an aggregate of
approximately 1,773,000 shares of common stock based on the shares of
convertible preferred stock outstanding at March 31, 1997. Unaudited pro
forma stockholders' equity at March 31, 1997, as adjusted for the
conversion of preferred stock, is disclosed on the consolidated balance
sheet.
- The adoption of the 1997 Equity Incentive Plan, subject to stockholder
approval, under which a total of 1,200,000 shares of the Company's
authorized but unissued common stock has been reserved for issuance
thereunder.
- The adoption of the 1997 Employee Stock Purchase Plan, subject to
stockholder approval, under which a total of 400,000 shares of the
Company's authorized but unissued common stock has been reserved for
issuance thereunder.
- The reincorporation of the Company in the State of Delaware, subject to
stockholder approval.
- The redemption of the Series A Redeemable Preferred Stock.
F-19
<PAGE> 82
============================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................... 3
Risk Factors................................ 6
Use of Proceeds............................. 18
Dividend Policy............................. 18
Capitalization.............................. 19
Dilution.................................... 20
Selected Consolidated Financial Data........ 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 22
Business.................................... 29
Management.................................. 46
Certain Transactions........................ 52
Principal and Selling Stockholders.......... 53
Description of Capital Stock................ 55
Shares Eligible for Future Sale............. 57
Underwriting................................ 59
Legal Matters............................... 61
Experts..................................... 61
Additional Information...................... 61
Index to Consolidated Financial
Statements................................ F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
============================================================
============================================================
2,000,000 SHARES
LOGO
COMMON STOCK
------------------------
PROSPECTUS
------------------------
PAINEWEBBER INCORPORATED
PIPER JAFFRAY INC.
WHEAT FIRST BUTCHER SINGER
------------------------
, 1997
============================================================
<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 9,758
NASD filing fee................................................... 3,720
Nasdaq National Market listing fee................................ 50,000
Printing and engraving expenses................................... 150,000
Legal fees and expenses........................................... 350,000
Accounting fees and expenses...................................... 200,000
Blue sky fees and expenses........................................ 11,000
Transfer agent fees............................................... 5,000
Miscellaneous fees and expenses................................... 70,522
--------
Total................................................... $850,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Article VII, Section 6, of the Registrant's
Bylaws provides for mandatory indemnification of its directors and officers and
permissible indemnification of employees and other agents to the maximum extent
permitted by the Delaware General Corporation Law. The Registrant's Certificate
of Incorporation provides that, pursuant to Delaware law, its directors shall
not be liable for monetary damages for breach of the directors' fiduciary duty
as directors to the Registrant and its stockholders. This provision in the
Certificate of Incorporation does not eliminate the directors' fiduciary duty,
and in appropriate circumstances equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. The Registrant has entered into
Indemnification Agreements with its officers and directors, a form of which is
attached as Exhibit 10.1 hereto and incorporated herein by reference. The
Indemnification Agreements provide the Registrant's officers and directors with
further indemnification to the maximum extent permitted by the Delaware General
Corporation Law. Reference is made to Section 6 of the Underwriting Agreement
contained in Exhibit 1.1 hereto, indemnifying officers and directors of the
Registrant against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since April 1, 1994, the Registrant has issued and sold the following
unregistered securities:
1. The Registrant has issued and sold 54,822 and 1,500 shares
(assuming no exercise of stock options after March 31, 1997) of its Common
Stock to employees pursuant to exercises under its 1985 Incentive Stock
Option Plan and Second Amended and Restated 1986 Stock Option Plan,
respectively.
II-1
<PAGE> 84
2. The Registrant has granted options to purchase an aggregate of
449,828 shares of Common Stock to employees under its Second Amended and
Restated 1986 Stock Option Plan.
The issuances of the securities set forth above were deemed to be
exempt from registration under the Securities Act in reliance upon Rule 701
promulgated thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- --------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement (preliminary form).
3.1 Certificate of Incorporation of the Registrant, as amended to date.
3.2 Form of Restated Certificate of Incorporation to be filed upon the closing of
the offering made pursuant to this Registration Statement.
3.3* Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2* Specimen Common Stock certificate.
4.3 Investors' Rights Agreement, dated September 20, 1993 among the Registrant and
the investors and the founders named therein.
5.1* Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
10.1 Form of Indemnification Agreement.
10.2 Second Amended and Restated 1986 Stock Option Plan.
10.3 1997 Equity Incentive Plan.
10.4 1997 Employee Stock Purchase Plan.
10.5 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985A ($2,150,000) -- Loan Agreement.
10.6 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985B ($2,450,000) -- Loan Agreement.
10.7 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985A ($2,150,000) -- Trust Indenture Agreement.
10.8 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985B ($2,450,000) -- Trust Indenture Agreement.
10.9 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond -- Bond Purchase Agreement.
10.10 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985A ($2,150,000) -- Reimbursement Agreement.
10.11 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985B ($2,450,000) -- Reimbursement Agreement.
10.12 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985A ($2,150,000) -- Letter of Credit.
10.13 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985B ($2,450,000) -- Letter of Credit.
10.14 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985A ($2,150,000) -- Intercreditor Agreement.
10.15 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985B ($2,450,000) -- Intercreditor Agreement.
</TABLE>
II-2
<PAGE> 85
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- --------------------------------------------------------------------------------
<S> <C>
10.16 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985A ($2,150,000) -- Pledge and Security
Agreement.
10.17 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond Series 1985B ($2,450,000) -- Pledge and Security
Agreement.
10.18 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond -- General Continuing Guarantee.
10.19 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond -- Company Security Agreement.
10.20 Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bond -- Guaranty Security Agreement.
10.21 County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds ($4,900,000) -- Loan Agreement.
10.22 County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds ($4,900,000) -- Trust Agreement.
10.23 County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds ($4,900,000) -- Letter of Credit Agreement.
10.24 County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds ($4,900,000) -- General Continuing Guaranty.
10.25 County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds ($4,900,000) -- Pledge and Security Agreement.
10.26 County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds ($4,900,000) -- Bond Purchase Agreement.
10.27 Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Indenture of Trust.
10.28 Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds Series 1996 ($9,000,000) -- Loan
Agreement.
10.29 Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Reimbursement Agreement.
10.30 Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Letter of Credit.
10.31 Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Pledge and Security Agreement.
10.32* Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Guaranty Agreement.
10.33 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Bond Purchase Agreement.
10.34 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Loan Agreement.
10.35 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Trust Indenture.
10.36 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Letter of Credit
Agreement.
</TABLE>
II-3
<PAGE> 86
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- --------------------------------------------------------------------------------
<S> <C>
10.37 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Pledge and Security
Agreement.
10.38 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Letter of Credit.
10.39 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Security Agreement.
10.40 Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds, Series 1985 ($5,250,000) -- Agreement Re: Letter of
Credit and Assignment of Collateral.
10.41 Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Loan Agreement.
10.42 Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Trust Indenture Agreement.
10.43 Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Reimbursement Agreement.
10.44* Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Letter of Credit.
10.45* Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Intercreditor Agreement.
10.46 Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Pledge and Security Agreement.
10.47 Village of Gurnee, Illinois Industrial Development Revenue Bonds, Series 1996
($7,750,000) -- Placement and Remarketing Agreement.
10.48* City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Bond Purchase Agreement.
10.49* City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Loan Agreement.
10.50 City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Letter of Credit Agreement.
10.51 City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Pledge and Security Agreement.
10.52* City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Reimbursement Agreement.
10.53 City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Trust Indenture.
10.54 City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Sublease and Security Agreement.
10.55 City of Salem Municipal Port Authority, Port Development Revenue Bonds, Series
of 1984 ($2,500,000) -- Irrevocable Letter of Credit.
10.56* Facility lease dated February 8, 1993 between SCI Lt. Partnership and the
Registrant for the Fremont corporate facility.
10.57* Facility lease dated June 25, 1997 between Charles King & Associates and the
Registrant for the Tustin facility.
10.58* Facility lease dated June 25, 1997 between Charles King & Associates and the
Registrant for the Schaumburg facility.
</TABLE>
II-4
<PAGE> 87
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- --------------------------------------------------------------------------------
<S> <C>
10.59* Facility lease dated December 2, 1991 between Galloway Industrial Properties and
the Registrant for the Westerville warehouse facility.
10.60 Facility lease dated February 8, 1993 between Aetna Investment Group and the
Registrant for the Corona facility.
10.61* Facility lease dated August 16, 1996 between SCI Ltd. Partnership and the
Registrant for the Hayward facility.
10.62* Facility lease dated August 8, 1996 between RTI Inc. and the Registrant for the
Rockaway facility.
10.63* Asset Acquisition Agreement between RTI Inc. and the Registrant effective as of
August 8, 1996.
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-8).
23.2 Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-7).
</TABLE>
- ---------------
* To be filed by amendment
(B) FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts (see page S-2)
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
consolidated financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the Registrant, the Underwriting Agreement, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
II-5
<PAGE> 88
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fremont,
State of California, on this 25th day of June 1997.
STERIGENICS INTERNATIONAL, INC.
By: /s/ JAMES F. CLOUSER
------------------------------------
James F. Clouser
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints James F. Clouser, Edward M. Miller, Jr.
and Charles W. King, Jr. and each of them, his true and lawful attorneys-in-fact
and agents with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and all post-effective amendments
thereto, and to file the same, with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<C> <S> <C>
/s/ JAMES F. CLOUSER President, Chief Executive June 25, 1997
- --------------------------------------------- Officer (Principal Executive
James F. Clouser Officer) and Director
/s/ EDWARD M. MILLER, JR. Vice President of Finance June 25, 1997
- --------------------------------------------- (Principal Financial and
Edward M. Miller, Jr. Accounting Officer)
/s/ CHARLES W. KING, JR. Chairman of the Board June 25, 1997
- ---------------------------------------------
Charles W. King, Jr.
/s/ WALTER G. KORTSCHAK Director June 25, 1997
- ---------------------------------------------
Walter G. Kortschak
/s/ THOMAS F. STEPHENSON Director June 25, 1997
- ---------------------------------------------
Thomas F. Stephenson
</TABLE>
II-7
<PAGE> 90
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
May 9, 1997 (except Note 14, as to which the date is , 1997), in the
Registration Statement (Form S-1) and related Prospectus of SteriGenics
International, Inc. to be filed with the Securities and Exchange Commission on
or about June 24, 1997 for the registration of shares of its common stock.
ERNST & YOUNG LLP
San Jose, California
, 1997
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the completion of
certain events as described in Note 14 to the consolidated financial statements.
/s/ Ernst & Young LLP
San Jose, California
June 20, 1997
II-8
<PAGE> 91
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We have audited the consolidated financial statements of SteriGenics
International, Inc. as of March 31, 1996 and 1997, and for each of the three
years in the period ended March 31, 1997, and have issued our report thereon
dated May 9, 1997 (except Note 14 as to which the date is , 1997)
(included elsewhere in this Registration Statement). Our audits also included
the financial statement schedule listed in Item 16(b) of this Registration
Statement. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, information required to be included
therein.
ERNST & YOUNG LLP
San Jose, California
, 1997
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion of
certain events as described in Note 14 to the consolidated financial statements.
/s/ Ernst & Young LLP
San Jose, California
June 20, 1997
S-1
<PAGE> 92
STERIGENICS INTERNATIONAL, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
MARCH 31, 1997
<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGE TO BALANCE AT
BEGINNING COSTS AND OTHER END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(1) OF PERIOD
- ------------------------------------------- ---------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1997 deducted from
asset account:
Allowance for doubtful accounts............ $242 $ -- $ 23 $ (12) $253
---- ---- ---- ---- ----
Year ended March 31, 1996 deducted from
asset account:
Allowance for doubtful accounts............ $ 50 $ -- $ 192 $ -- $242
---- ---- ---- ---- ----
Year ended March 31, 1995 deducted from
asset account:
Allowance for doubtful accounts............ $ 30 $ -- $ 26 $ (6) $ 50
---- ---- ---- ---- ----
</TABLE>
- ---------------
(1) Uncollectible accounts written off, net of recoveries.
S-2
<PAGE> 93
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGE
------- --------------------------------------------------------------------
<S> <C> <C>
1.1* Form of Underwriting Agreement (preliminary form).
3.1 Certificate of Incorporation of the Registrant, as amended to date.
3.2 Form of Restated Certificate of Incorporation to be filed upon the
closing of the offering made pursuant to this Registration
Statement.
3.3* Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2* Specimen Common Stock certificate.
4.3 Investors' Rights Agreement, dated September 20, 1993 among the
Registrant and the investors and the founders named therein.
5.1* Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP.
10.1 Form of Indemnification Agreement.
10.2 Second Amended and Restated 1986 Stock Option Plan.
10.3 1997 Equity Incentive Plan.
10.4 1997 Employee Stock Purchase Plan.
10.5 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985A
($2,150,000) -- Loan Agreement.
10.6 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985B
($2,450,000) -- Loan Agreement.
10.7 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985A
($2,150,000) -- Trust Indenture Agreement.
10.8 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985B
($2,450,000) -- Trust Indenture Agreement.
10.9 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond -- Bond Purchase Agreement.
10.10 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985A ($2,150,000) --
Reimbursement Agreement.
10.11 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985B ($2,450,000) --
Reimbursement Agreement.
10.12 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985A
($2,150,000) -- Letter of Credit.
10.13 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985B
($2,450,000) -- Letter of Credit.
10.14 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985A ($2,150,000) --
Intercreditor Agreement.
</TABLE>
<PAGE> 94
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGE
<S> <C> <C>
10.15 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985B ($2,450,000) --
Intercreditor Agreement.
10.16 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985A
($2,150,000) -- Pledge and Security Agreement.
10.17 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond Series 1985B
($2,450,000) -- Pledge and Security Agreement.
10.18 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond -- General Continuing Guarantee.
10.19 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond -- Company Security Agreement.
10.20 Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bond -- Guaranty Security Agreement.
10.21 County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds ($4,900,000) -- Loan Agreement.
10.22 County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds ($4,900,000) -- Trust Agreement.
10.23 County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds ($4,900,000) -- Letter of Credit Agreement.
10.24 County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds ($4,900,000) -- General Continuing Guaranty.
10.25 County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds ($4,900,000) -- Pledge and Security Agreement.
10.26 County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds ($4,900,000) -- Bond Purchase Agreement.
10.27 Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Indenture of Trust.
10.28 Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Loan Agreement.
10.29 Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Reimbursement Agreement.
10.30 Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Letter of Credit Agreement.
10.31 Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Pledge and Security Agreement.
10.32* Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bonds Series 1996
($9,000,000) -- Guaranty Agreement.
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGE
<S> <C> <C>
10.33 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Bond Purchase Agreement.
10.34 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Loan Agreement.
10.35 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Trust Indenture.
10.36 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Letter of Credit Agreement.
10.37 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Pledge and Security Agreement.
10.38 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Letter of Credit.
10.39 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Security Agreement.
10.40 Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds, Series 1985
($5,250,000) -- Agreement Re: Letter of Credit and Assignment of
Collateral.
10.41 Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Loan Agreement.
10.42 Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Indenture of Trust.
10.43 Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Reimbursement Agreement.
10.44* Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Letter of Credit.
10.45* Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Intercreditor Agreement.
10.46 Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Pledge and Security Agreement.
10.47 Village of Gurnee, Illinois Industrial Development Revenue Bonds,
Series 1996 ($7,750,000) -- Placement and Remarketing Agreement.
10.48* City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Bond Purchase Agreement.
10.49* City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Loan Agreement.
10.50 City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Letter of Credit Agreement.
10.51 City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Pledge and Security Agreement.
10.52* City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Reimbursement Agreement.
</TABLE>
<PAGE> 96
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGE
<S> <C> <C>
10.53 City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Trust Indenture.
10.54 City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Sublease and Security
Agreement.
10.55 City of Salem Municipal Port Authority, Port Development Revenue
Bonds, Series of 1984 ($2,500,000) -- Irrevocable Letter of Credit.
10.56* Facility lease dated February 8, 1993 between SCI Lt. Partnership
and the Registrant for the Fremont corporate facility.
10.57* Facility lease dated June 25, 1997 between Charles King & Associates
and the Registrant for the Tustin facility.
10.58* Facility lease dated June 25, 1997 between Charles King & Associates
and the Registrant for the Schaumburg facility.
10.59* Facility lease dated December 2, 1991 between Galloway Industrial
Properties and the Registrant for the Westerville warehouse
facility.
10.60 Facility lease dated February 8, 1993 between Aetna Investment Group
and the Registrant for the Corona facility.
10.61* Facility lease dated August 16, 1996 between SCI Ltd. Partnership
and the Registrant for the Hayward facility.
10.62* Facility lease dated August 8, 1996 between RTI Inc. and the
Registrant for the Rockaway facility.
10.63* Asset Acquisition Agreement between RTI Inc. and the Registrant
effective as of August 8, 1996.
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-8).
23.2 Consent of Counsel. Reference is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-7).
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
STERIGENICS INTERNATIONAL, INC.
(PURSUANT TO SECTIONS 242 AND 245 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
SteriGenics International, Inc., a corporation organized and
existing under and by virtue of the provisions of the General Corporation Law of
the State of Delaware (the "General Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is SteriGenics
International, Inc., and that this corporation was originally incorporated
pursuant to the General Corporation Law on May 29, 1997 under the name
SteriGenics International, Inc.
SECOND: That the Board of Directors duly adopted resolutions
proposing to amend and restate the Certificate of Incorporation of this
corporation, declaring said amendment and restatement to be advisable and in the
best interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is SteriGenics International, Inc.
ARTICLE II
The address of the registered office of this corporation in the
State of Delaware is 15 East North Street, in the City of Dover, County of Kent.
The name of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
<PAGE> 2
ARTICLE IV
The Corporation is authorized to issue two classes of shares to
be designated respectively "Preferred Stock" and "Common Stock." The total
number of shares of Preferred Stock authorized is 5,000,000. The total number of
shares of Common Stock authorized is 20,000,000. All the shares of Common Stock
and Preferred Stock shall be without par value.
The shares of Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in one or more series. The Board
of Directors is authorized, subject to Section B(6) hereof and any other rights
of any outstanding series of Preferred Stock, to determine or alter any or all
of the rights, preferences, privileges and restrictions to or imposed upon any
wholly unissued series of the shares of Preferred Stock, and to fix or alter the
number of shares comprising any such series and the designation thereof, or any
of them, and to provide for rights and terms of redemption or conversion of the
shares of any such series.
The first series of Preferred Stock shall be comprised of 100,000
shares designated as "Series A Preferred Stock." The second series of Preferred
Stock shall be comprised of 1,000,000 shares designated as "Series B Preferred
Stock." The third series of Preferred Stock shall be comprised of 772,728 shares
designated as "Series C Preferred Stock." All outstanding shares of "Preferred
Stock, Class A" shall hereinafter be known as and shall have the rights of the
"Series A Preferred Stock" and all outstanding shares of "Preferred Stock, Class
B" shall hereinafter be known as and shall have the rights of the "Series B
Preferred Stock." The Series A Preferred Stock, the Series B Preferred Stock and
the Series C Preferred Stock are hereinafter referred to collectively as the
"Preferred Stock."
A. SERIES A PREFERRED STOCK. The rights, preferences,
restrictions and other matters relating to the Series A Preferred Stock are as
follows:
1. DIVIDENDS AND DISTRIBUTIONS. The holders of the
outstanding Series A Preferred Stock shall be entitled to receive in any fiscal
year, when and as declared by the Board of Directors, out of any assets at the
time legally available therefor, dividends in cash at the rate of Ten Dollars
($10.00) per share of Series A Preferred Stock before any dividend is declared
or paid on shares of Series B Preferred Stock, Series C Preferred Stock or
Common Stock. Such dividends may be payable quarterly or otherwise as the Board
of Directors may from time to time determine. Dividends may be declared and paid
upon shares of Series B Preferred Stock, Series C Preferred Stock and Common
Stock in any fiscal year of the Corporation only if dividends shall have been
paid or declared and set apart upon all shares of Series A Preferred Stock at
the annual rates set forth herein for each quarter of such fiscal year of the
Corporation including the quarter in which such dividends upon shares of Series
B Preferred Stock, Series C Preferred Stock and Common Stock are declared. The
right to such dividends on shares of Series A Preferred Stock shall not be
cumulative and no right shall accrue to holders of shares of Series A Preferred
Stock by reason of the fact that dividends on such shares are not declared in
any prior year, nor shall any undeclared or unpaid dividend bear or accrue
interest.
2. PREFERENCE ON LIQUIDATION. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any amount is paid to
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the holders of the Series B Preferred Stock, the Series C Preferred Stock or the
Common Stock, the holders of each share of Series A Preferred Stock shall
receive an amount equal to One Hundred Dollars ($100.00) per share plus all
accrued and unpaid dividends thereon. After such payment to each holder of
Series A Preferred Stock, the remaining assets and funds of the Corporation
shall be divided and distributed among the holders of the Series B Preferred
Stock, the Series C Preferred Stock and the Common Stock pursuant to Section
B(2) of this Article IV.
3. VOTING RIGHTS. Except as otherwise provided by this
Corporation's Certificate of Incorporation or by law, the holders of the Series
A Preferred Stock shall have no voting rights, and the holders of the Series B
Preferred Stock, the Series C Preferred Stock and the Common Stock shall have
exclusive voting rights and powers of the stockholders of the Corporation,
including the exclusive right to notice of stockholders' meetings.
4. AMENDMENTS. So long as any shares of Series A Preferred
Stock are issued and outstanding, the Corporation shall not, without the
affirmative vote or written consent of the holders of at least two-thirds (2/3)
of such shares, alter or amend any rights, privileges, or preferences granted
such shares herein or create any other class of shares with rights which are, in
any respect, equal to or more advantageous to the stockholder than the rights
set forth herein.
5. REDEMPTION.
(a) REDEMPTION OBLIGATION. Upon (i) any
acquisition, consolidation or merger of this Corporation with or into any other
corporation or corporations in which the stockholders of the Corporation
immediately prior to such transaction own less than 50% of the surviving or
acquiring corporation or corporations immediately after such transaction or (ii)
any sale of all or substantially all of the assets of the Corporation (the
effective date of such consolidation, merger, reorganization or sale hereafter
shall be referred to as "Redemption Date") the Corporation shall have the right
and obligation to redeem on the terms set forth in Section A(5)(b) one hundred
percent (100%) of the Series A Preferred Stock, held by each holder of Series A
Preferred Stock, on the Redemption Date.
(b) TERMS OF REDEMPTION. Redemption pursuant to
this Section A(5) shall be for a price of One Hundred Dollars ($100.00) per
share. Redemptions pursuant to this Section A(5) shall be made by cash payments
to the redeemed stockholder on the Redemption Date.
(c) RATABLE REDEMPTION. If funds are not legally
available to the Corporation for making a redemption payment when due, the
Corporation shall make the maximum payment it is able to lawfully make, and it
shall, thereafter, from time to time, as soon as funds are legally available,
make those payments in redemption as required pursuant to this Section A(5). Any
partial payment shall be effected ratably to all holders of Series A Preferred
Stock offered to the Corporation for redemption pursuant to written notice
timely delivered to the Secretary of the Corporation. The redemption
requirements provided hereby shall be continuous, so that if on any Redemption
Date such requirements shall not be fully discharged, without
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further action by any holder of Series A Preferred Stock funds legally available
shall be applied therefor until such requirements are fully discharged.
(d) NOTICE. The Corporation shall give written
notice at least fifteen (15) days prior to the Redemption Date of its intention
to redeem Series A Preferred Stock to each holder thereof, such notice to be
addressed to each holder at the address as it appears on the stock transfer
books of the Corporation and to specify the date of redemption and the number of
shares to be redeemed. On or after the date of redemption, unless postponed or
waived as provided below, each holder of Series A Preferred Stock shall
surrender his certificate for the number of shares to be redeemed as stated in
the notice provided by the Corporation. If less than all the shares represented
by such certificates are to be redeemed, the Corporation shall issue a new
certificate for the unredeemed shares.
(e) WAIVER OR POSTPONEMENT. Notwithstanding the
foregoing, the holders of fifty-one percent (51%) or more of the total number of
outstanding shares of Series A Preferred Stock, as a group, shall have the right
to postpone the above Redemption Date for a period of six (6) months, or waive
the obligation of the Corporation to redeem any shares of Series A Preferred
Stock by written notice given to the Corporation at least five (5) days prior to
the scheduled Redemption Date. The Corporation shall not redeem the shares of
Series A Preferred Stock of any holder of Series A Preferred Stock until the
rescheduled Redemption Date, if any. The holders of Series A Preferred Stock
shall have the right to postpone or waive in the manner provided above the
obligation of the Corporation to redeem shares each time the Corporation gives
notice of redemption. In the event the holders of Series A Preferred Stock shall
postpone or waive the obligation of the Corporation to redeem their shares of
Series A Preferred Stock in the manner provided above, the Corporation shall be
deemed to postpone or waive its right to redeem the shares of Series A Preferred
Stock.
6. CONVERSION RIGHTS. The holders of Series A Preferred
Stock shall have no conversion rights.
7. EFFECT OF EXCHANGE OR ACQUISITION BY CORPORATION. Upon
any acquisition of outstanding shares of Series A Preferred Stock by the
Corporation by way of conversion to another class or series or otherwise, the
shares of Series A Preferred Stock which are so acquired shall not be reissued
and, upon such acquisition, the number of authorized shares of the Series A
Preferred Stock shall be reduced by the number of shares so acquired.
B. SERIES B AND SERIES C PREFERRED STOCK. The rights,
preferences, restrictions and other matters relating to the Series B and Series
C Preferred Stock are as follows. The rights of the Series A Preferred Stock as
set forth in Sections A(1), A(2) and A(5) shall be prior and in preference to
the rights of the Series B and Series C Preferred Stock as set forth in Sections
B(1) and B(2).
1. DIVIDENDS.
(a) SERIES B PREFERRED STOCK. The holders of
outstanding Series B Preferred Stock shall be entitled to receive in any fiscal
year, when and as declared by
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the Board of Directors, out of any assets at the time legally available
therefor, dividends in cash at the rate of $0.50 per share of Series B Preferred
Stock per annum, as adjusted for any reorganizations or stock splits,
distributions or dividends with respect to such shares, before any dividend is
paid on shares of the Series C Preferred Stock or Common Stock. Such dividends
may be payable quarterly or otherwise as the Board of Directors may from time to
time determine. The Board of Directors shall make no distributions to the
holders of the Series C Preferred Stock or Common Stock in any fiscal year
unless and until dividends shall have been paid to or declared and set apart
upon the Series B Preferred Stock at the rate per annum set forth above for each
quarter of such fiscal year, including the quarter in which such dividends upon
the Series C Preferred Stock or Common Stock are declared. The right to such
dividends on the Series B Preferred Stock shall not be cumulative and no rights
shall accrue to holders of the Series B Preferred Stock by reason of the fact
that dividends on said shares are not declared in any prior year, nor shall any
undeclared or unpaid dividends bear or accrue interest.
(b) SERIES C PREFERRED STOCK. The holders of
outstanding Series C Preferred Stock shall be entitled to receive in any fiscal
year, when and as declared by the Board of Directors, out of any assets at the
time legally available therefor, dividends in cash at the rate of $1.10 per
share of Series C Preferred Stock per annum, as adjusted for any reorganizations
or stock splits, distributions or dividends with respect to such shares, before
any dividend is paid on shares of Common Stock. Such dividends may be payable
quarterly or otherwise as the Board of Directors may from time to time
determine. The Board of Directors shall make no distributions to the holders of
Common Stock in any fiscal year unless and until dividends shall have been paid
to or declared and set apart upon the Series C Preferred Stock at the rate per
annum set forth above for each quarter of such fiscal year, including the
quarter in which such dividends upon Common Stock are declared. The right to
such dividends on the Series C Preferred Stock shall not be cumulative and no
rights shall accrue to holders of the Series C Preferred Stock by reason of the
fact that dividends on said shares are not declared in any prior year, nor shall
any undeclared or unpaid dividends bear or accrue interest.
(c) COMMON STOCK. Any dividends, other than those
paid to or declared and set apart upon the Preferred Stock, shall be distributed
ratably among the holders of Common Stock and the holders of the Series B and
Series C Preferred Stock on an as-converted basis.
2. PREFERENCE ON LIQUIDATION.
(a) MANNER OF DISTRIBUTION ON LIQUIDATION. In the
event of any liquidation, dissolution or winding up of the Corporation, either
voluntary or involuntary, distributions to the holders of the Series B Preferred
Stock, the Series C Preferred Stock and the Common Stock of the Corporation
shall be made in the following manner:
(i) Following the distribution to the
holders of Series A Preferred Stock pursuant to Section A(2) or A(5), as the
case may be, the holders of the Series B Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Series C Preferred Stock
or the
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holders of the Common Stock by reason of their ownership of such stock, $5.00
per outstanding share of Series B Preferred Stock, as adjusted for any splits,
combinations, consolidations or stock distributions or dividends with respect to
such shares and, in addition, an amount equal to all accrued or declared but
unpaid dividends on such shares of Series B Preferred Stock as provided in
Section B(1) hereof. If the assets and funds thus distributed among the holders
of the Series B Preferred Stock shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amount, then, following the
distribution to the holders of Series A Preferred Stock of all amounts due to
them pursuant to Section A(2) or A(5), as the case may be, the entire assets and
funds of the Corporation legally available for distribution shall be distributed
among the holders of the Series B Preferred Stock in proportion to their
aggregate liquidation preferences.
(ii) Following the distribution to the
holders of Series A and Series B Preferred Stock pursuant to Section A(2) or
A(5), as the case may be, and Section B(2)(a)(i), respectively, the holders of
the Series C Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their ownership of
such stock, $11.00 per outstanding share of Series C Preferred Stock, as
adjusted for any splits, combinations, consolidations or stock distributions or
dividends with respect to such shares and, in addition, an amount equal to all
accrued or declared but unpaid dividends on such shares of Series C Preferred
Stock as provided in Section B(1) hereof. If the assets and funds thus
distributed among the holders of the Series C Preferred Stock shall be
insufficient to permit the preferential amount, then, following the distribution
to the holders of Series A and Series B Preferred Stock of all amounts due to
them pursuant to Section A(2) or A(5), as the case may be, and Section
B(2)(a)(i), respectively, the entire assets and funds of the Corporation legally
available for distribution shall be distributed among the holders of the Series
C Preferred Stock in proportion to their aggregate liquidation preferences.
(iii) The holders of Common Stock shall be
entitled to receive, following the distribution to the holders of Series A,
Series B and Series C Preferred Stock pursuant to Section A(2) or Section A(5),
as the case may be, Section B(2)(a)(i) and Section B(2)(a)(ii), respectively,
the amount of $5.00 per share for each share of Common Stock, adjusted for any
splits, combinations, consolidations or stock distributions or dividends with
respect to such shares, and, in addition, an amount equal to all declared but
unpaid dividends on the Common Stock. If the assets and funds thus distributed
among the holders of Common Stock shall be insufficient to permit the payment to
such holders of the full aforesaid amount, then the entire remaining assets and
funds of the Corporation legally available for distribution shall be distributed
ratably among the holders of Common Stock in proportion to the shares of Common
Stock then held by them.
(iv) The remaining assets of the
Corporation, after payment in full to the holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Common Stock of all
amounts exclusively payable on or with respect to said shares, shall be
distributed ratably among the holders of the Common Stock and the holders of the
Series B and Series C Preferred Stock on an as-converted basis.
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(b) CHANGES IN CONTROL. The effectuation by the
Corporation of (i) an acquisition, consolidation or merger of this Corporation
with or into any other corporation or corporations unless the stockholders of
the Corporation prior to such transaction directly or indirectly control the
surviving or acquiring corporation or corporations, or (ii) the sale, transfer
or other disposition of all or substantially all of the assets of this
Corporation to a person other than a corporation or partnership controlled by
the Corporation or its stockholders, or (iii) a transaction or series of related
transactions in which more than 50% of the outstanding voting power of the
Corporation is disposed of, shall be deemed to be a liquidation, dissolution or
winding up within the meaning of this Section B(2). Notwithstanding the
foregoing, any transaction in which the holders of the Company's Series C
Preferred Stock receive securities of another corporation in exchange for such
shares of Series C Preferred Stock, and the value of the securities received by
such holders is equal to or greater than the sum of (A) the liquidation
preference of the Series C Preferred Stock as set forth in this Section B(2),
and (B) the interest on the aggregate value of such shares at the prime lending
rate at the time of such transaction as reported by Bank of America, N.T. &
S.A., compounded for each year or portion of a year that such shares of Series C
Preferred Stock were outstanding prior to such transaction, then such
transaction shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section B(2).
(c) NOTICE. In the event the Corporation shall
propose to take any action of the types described in Section B(2)(a) or (b)
hereof, the Corporation shall, within ten (10) days after the date the Board of
Directors approves such action, or twenty (20) days prior to any stockholders'
meeting called to approve such action, whichever is earlier, give each holder of
shares of Series B and Series C Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of shares of Series B Preferred
Stock, Series C Preferred Stock and Common Stock upon consummation of the
proposed action and the proposed date of delivery thereof. If any material
change in the facts set forth in the initial notice shall occur, the Corporation
shall promptly give written notice to each holder of shares of Series B and
Series C Preferred Stock of such material change. Failure to give any such
notice shall not in any way affect the validity of any such action.
(d) WAITING PERIOD. The Corporation shall not
consummate any proposed action of the types described in Section B(2)(a) or (b)
hereof before the expiration of twenty (20) days after the mailing of the
initial notice or ten (10) days after the mailing of any subsequent written
notice, whichever is later; provided that any such 20-day or 10-day period may
be shortened upon the written consent of the holders of two-thirds of the
outstanding shares of Series B and Series C Preferred Stock, voting together as
a class.
(e) NON-CASH DISTRIBUTIONS. In the event the
Corporation shall propose to take any action of the types described in Section
B(2)(a) or (b) hereof that will involve the distribution of assets other than
cash, the Board of Directors of the Corporation shall make a good faith
appraisal of the value of the assets to be distributed to the holders of shares
of Series B and Series C Preferred Stock. The Corporation shall, upon receipt of
such valuation,
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give prompt written notice of such valuation to the holders of the Series B and
Series C Preferred Stock.
3. VOTING.
(a) Except as otherwise required by law or the Certificate
of Incorporation, the shares of Series B and Series C Preferred Stock shall be
voted together with the Corporation's Common Stock at any annual or special
meeting of stockholders of the Corporation, or may act by written consent in the
same manner as the Corporation's Common Stock. With respect to all matters upon
which the holders of Series B and Series C Preferred Stock are entitled to vote,
including without limitation the matters set forth in Section B(6) hereof, each
holder of shares of Series B and Series C Preferred Stock shall be entitled to
such number of votes for the Series B and Series C Preferred Stock held by him
on the record date fixed for such meeting, or, if not record date is
established, at the date such vote is taken or on the effective date of any such
written consent, as shall be equal to the whole number of shares of the
Corporation's Common Stock into which his shares of Series B or Series C
Preferred Stock are convertible immediately after the close of business on the
record date fixed for such meeting, the date of such vote or the effective date
of such written consent.
(b) The members of the Company's Board of Directors shall
be elected as follows: (i) holders of the Series C Preferred Stock, voting as a
separate class, shall be entitled to elect two (2) members of the Board of
Directors at or pursuant to each meeting or consent of the Corporation's
stockholders for the election of directors, and to remove from office such
directors and to fill any vacancy caused by the resignation, death or removal of
such directors; and (ii) all remaining directors authorized for election at such
election of directors shall be elected by the holders of the Common Stock and
the Series B Preferred Stock voting together in accordance with Section B(3)(a)
hereof.
4. CONVERSION RIGHTS. The holders of Series B and Series C
Preferred Stock shall have conversion rights as follows:
(a) RIGHT TO CONVERT AND FORMULA FOR CONVERSION. Each
share of Series B and Series C Preferred Stock shall be convertible, at the
option of the holder thereof, at any time at the office of the Corporation or
any transfer agent for such shares, into fully paid and nonassessable shares of
Common Stock of the Corporation. The number of shares of Common Stock into which
each share of Series B Preferred Stock may be converted shall be determined by
dividing $5.00 by the Series B Conversion Price, as defined below, in effect at
the time of the conversion. The conversion price per share at which shares of
Common Stock shall be initially issuable upon conversion of any shares of Series
B Preferred Stock (the "Series B Conversion Price") shall be $5.00, subject to
adjustment as provided herein. The number of shares of Common Stock into which
each share of Series C Preferred Stock may be converted shall be determined by
dividing $11.00 by the Series C Conversion Price, as defined below, in effect at
the time of the conversion. The conversion price per share at which shares of
Common Stock shall be initially issuable upon conversion of any shares of Series
C Preferred Stock (the "Series C Conversion Price") shall be $11.00, subject to
adjustment as provided herein.
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(b) AUTOMATIC CONVERSION OF SERIES B. Each share of Series
B Preferred Stock shall be converted into Common Stock automatically in the
manner provided herein upon the earlier of (i) the written election of the
holders of eighty percent (80%) of the outstanding shares of Series B Preferred
Stock or (ii) upon the closing of the sale of the Corporation's securities
pursuant to a firm commitment underwritten public offering pursuant to an
effective registration statement on Form S-1 (or any successor form) under the
Securities Act of 1933 from which the Corporation receives gross proceeds (after
applicable discounts, commissions and expenses) of not less than $10,000,000 at
a purchase price of not less than $22.00 per share, as adjusted for stock
splits, stock dividends, reorganizations and the like.
(c) AUTOMATIC CONVERSION OF SERIES C. Each share of Series
C Preferred Stock shall be converted into Common Stock automatically in the
manner provided herein upon the earlier of (i) the written election of the
holders of two-thirds of the outstanding shares of Series C Preferred Stock or
(ii) upon the closing of the sale of the Corporation's securities pursuant to a
firm commitment underwritten public offering pursuant to an effective
registration statement on Form S-1 (or any successor form) under the Securities
Act of 1933 from which the Corporation receives gross proceeds (after applicable
discounts, commissions and expenses) of not less than $10,000,000 at a purchase
price of not less than $22.00 per share, as adjusted for stock splits, stock
dividends, reorganizations and the like.
(d) MECHANICS OF CONVERSION. Before any holder of Series B
or Series C Preferred Stock shall be entitled to convert the same into Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed in blank or accompanied by proper instruments of transfer, at the
office of the Corporation or of any transfer agent for the Series B or Series C
Preferred Stock, and shall give written notice to the Corporation at such office
that such holder elects to convert the same and shall state in writing therein
the name or names in which such holder wishes the certificate or certificates
for Common Stock to be issued. The Corporation, as soon as practicable
thereafter, shall issue and deliver at such office to such holder's nominee or
nominees, certificates for the number of full shares of Common Stock to which
such holder shall be entitled. No fractional shares of Common Stock shall be
issued by the Corporation and all such fractional shares shall be disregarded.
In lieu thereof, the Corporation shall pay in cash the fair market value of such
fractional share as determined by the Board of Directors of the Corporation.
Except as set forth above, such conversion shall be deemed to have been made as
of the date of such surrender of the Series B or Series C Preferred Stock to be
converted, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock on said date.
(e) ADJUSTMENTS FOR DIVIDENDS, SUBDIVISIONS OR
COMBINATIONS. In case the Corporation shall at any time subdivide the
outstanding Common Stock, or shall issue a Common Stock dividend on its
outstanding Common Stock, the number of shares of Common Stock issuable upon
conversion of the Series B or Series C Preferred Stock immediately prior to such
subdivision or the issuance of such stock dividend shall be proportionately
increased (with appropriate adjustments in the Series B Conversion Price and the
Series C Conversion Price), and in case the Corporation shall at any time
combine the
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outstanding Common Stock, the number of shares of Common Stock issuable upon
conversion of the Series B or Series C Preferred Stock immediately prior to such
combination shall be proportionately decreased (with appropriate adjustments in
the Series B Conversion Price and the Series C Conversion Price), effective at
the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
(f) ADJUSTMENTS FOR REORGANIZATIONS AND RECLASSIFICATIONS.
In case of any capital reorganization (other than in connection with a merger or
other reorganization in which the Corporation is not the continuing or surviving
entity) or any reclassification of the Common Stock of the Corporation, the
Series B and Series C Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of the shares of Series B or Series C Preferred Stock, as applicable,
immediately prior to such reorganization or recapitalization would have been
entitled upon such reorganization or reclassification; and, in any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of Series B and Series C Preferred
Stock, to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as reasonably may be, in relation to any share of stock or
other property thereafter deliverable upon the conversion.
(g) NOTICE. In case:
(i) the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend, or any other distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to subscribe for
or purchase any shares of stock of any class or to receive any other rights; or
(iii) the Corporation shall effect a capital
reorganization of the Corporation, reclassification of the capital stock of the
Corporation (other than a subdivision or combination of its outstanding Common
Stock), consolidation or merger of the Corporation (other than a merger or other
reorganization in which the Corporation is not the continuing or surviving
entity);
then, and in any such case, the Corporation shall cause to be mailed to the
holders of its outstanding Series B and Series C Preferred Stock, at least
twenty (20) days prior to the date hereinafter specified, a notice stating the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or such action is to be taken in connection with such
reorganization, reclassification, merger or consolidation. Failure to give such
notice shall not in any way affect the validity of any such action.
(h) RESERVE. The Corporation shall at all times reserve
and keep available, out of its authorized but unissued Common Stock, solely for
the purpose of
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effecting the conversion of the Series B and Series C Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series B
and Series C Preferred Stock from time to time outstanding. The Corporation
shall from time to time (subject to obtaining necessary director and stockholder
action), in accordance with the laws of the State of Delaware, increase the
authorized amount of its Common Stock if at any time the authorized number of
shares of Common Stock remaining unissued shall not be sufficient to permit the
conversion of all of the shares of Series B and Series C Preferred Stock at the
time outstanding.
(i) ADJUSTMENTS OF SERIES B CONVERSION PRICE FOR DILUTIVE
ISSUANCES. Upon the issuance by the Corporation of Common Stock other than
shares of Common Stock issued in connection with the Corporation's initial
public offering ("IPO Shares"), or any right or option to purchase Common Stock,
or any obligation or any shares of stock convertible into or exchangeable for
Common Stock for a consideration per share less than the Series B Conversion
Price in effect immediately prior to the time of such issue or sale, then
forthwith upon such issue or sale, the Series B Conversion Price shall be
reduced to a price calculated (to nearest cent) by dividing:
(i) an amount equal to the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Series B Conversion Price, (y) the number of
shares of Common Stock issuable upon conversion or exchange of any obligations
or of any shares of stock of the Corporation outstanding immediately prior to
such issue or sale multiplied by the then existing Series B Conversion Price and
(z) an amount equal to the aggregate consideration received by the Corporation
upon such issue or sale by,
(ii) the sum of the number of shares of Common
Stock outstanding immediately after such issuance or sale and the number of
shares of Common Stock (without taking into account any adjustment in such
number resulting from such issue or sale) issuable upon conversion or exchange
of any obligations or of any shares of stock of the Corporation outstanding
immediately after such issue or sale.
(j) ADJUSTMENTS OF SERIES C CONVERSION PRICE FOR DILUTIVE
ISSUANCES. Upon the issuance by the Corporation of Common Stock other than IPO
Shares, or any right or option to purchase Common Stock, or any obligation or
any shares of stock convertible into or exchangeable for Common Stock for a
consideration per share less than the Series C Conversion Price in effect
immediately prior to the time of such issue or sale, then forthwith upon such
issue or sale, the Series C Conversion Price shall be reduced to a price
calculated (to nearest cent) by dividing:
(i) an amount equal to the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Series C Conversion Price, (y) the number of
shares of Common Stock issuable upon conversion at exercise or exchange of any
obligations or of any shares of stock of the Corporation outstanding immediately
prior to such issue or sale multiplied by the then existing
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Series C Conversion Price and (z) an amount equal to the aggregate consideration
received by the Corporation upon such issue or sale by,
(ii) the sum of the number of shares of Common
Stock outstanding immediately after such issuance or sale and the number of
shares of Common Stock (without taking into account any adjustment in such
number resulting from such issue or sale) issuable upon conversion at exercise
or exchange of any obligations or of any shares of stock of the Corporation
outstanding immediately after such issue or sale.
(k) CALCULATION OF ISSUANCE PRICE. For purposes of
Sections B(4)(i) and (j) hereof, the following provisions shall be applicable:
(i) In the case of an issue or sale for cash of
shares of Common Stock, the consideration received by the Corporation therefor
shall be deemed to be the amount of cash received, before deducting therefrom
any commissions or expenses paid or incurred by the Corporation.
(ii) In case of the issuance (otherwise than upon
conversion or exchange of obligations or shares of stock of the Corporation) of
additional shares of Common Stock for a consideration other than cash or a
consideration partly other than cash, the amount of the consideration other than
cash received by the Corporation for such shares shall be deemed to be the value
of such consideration as reasonably determined by the Board of Directors.
(iii) In case of the issuance by the Corporation in
any manner of any rights to subscribe for or to purchase shares of Common Stock,
at a consideration per share (as computed below) less than the Series B
Conversion Price (as to the Series B Preferred Stock) or less than the Series C
Conversion Price (as to the Series C Preferred Stock) in effect immediately
prior to the date of the offering of such rights or the granting of such
options, as the case may be, the maximum number of shares of Common Stock to
which the holders of such rights or options shall be entitled to subscribe for
or purchase pursuant to such rights or options shall be deemed to be issued or
sold as of the date of the offering of such rights or the granting of such
options, as the case may be, and the minimum aggregate consideration named in
such rights or options for the shares of Common stock covered thereby, plus the
consideration, if any, received by the Corporation for such rights or options,
shall be deemed to be the consideration actually received by the Corporation (as
of the date of the offering of such rights or the granting of such options, as
the case may be) for the issuance of such shares.
(iv) In case of the issuance or issuances by the
Corporation in any manner of any obligations or of any shares of stock of the
Corporation that shall be convertible into or exchangeable for Common Stock, at
a consideration per share (as computed below) less than the applicable Series B
Conversion Price (as to the Series B Preferred Stock) or less than the Series C
Conversion Price (as to the Series C Preferred Stock) in effect immediately
prior to the date such obligation or shares are issued, the maximum number of
shares of Common Stock issuable upon the conversion or exchange of such
obligations or shares shall be deemed issued as of the date such obligations or
shares are issued, and the amount of the
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<PAGE> 13
consideration received by the Corporation for such additional shares of Common
Stock shall be deemed to be the total of (x) the amount of consideration
received by the Corporation upon the issuance of such obligations or shares, as
the case may be, plus (y) the minimum aggregate consideration, if any, other
than such obligations or shares, receivable by the Corporation upon such
conversion or exchange, except in adjustment of dividends.
(v) The amount of the consideration received by the
Corporation upon the issuance of any rights or options referred to in Section
B(4)(k)(iii) hereof or upon the issuance of any obligations or shares which are
convertible or exchangeable as described in Section B(4)(k)(iv) hereof, and the
amount of the consideration, if any, other than such obligations or shares so
convertible or exchangeable, receivable by the Corporation upon the exercise,
conversion or exchange thereof shall be determined in the same manner provided
in Section B(4)(k)(i) and B(4)(k)(ii) hereof with respect to the consideration
received by the Corporation in case of the issuance of additional shares of
Common Stock. On the expiration of any rights or options referred to in Section
B(4)(k)(iii) hereof, or the termination of any right of conversion or exchange
referred to in Section B(4)(k)(iv) hereof, the Series B Conversion Price (as to
the Series B Preferred Stock) and the Series C Conversion Price (as to the
Series C Preferred Stock) then in effect shall forthwith be readjusted to such
Series B Conversion Price or Series C Conversion Price as would have obtained
had the adjustments made upon the issuance of such option, right or convertible
or exchangeable securities been made upon the basis of the delivery of only the
number of shares of Common Stock actually delivered upon the exercise of such
rights or options or upon the conversion or exchange of such securities.
(vi) The foregoing notwithstanding, no adjustment
of the Series B Conversion Price or Series C Conversion Price shall be made as a
result of the issuance of:
-- any shares of Common Stock (or any
options, warrants or rights to purchase such shares of Common Stock)
issued or issuable to employees, officers, directors or consultants of
the Corporation with the approval of the Board of Directors of the
Corporation pursuant to any stock option plan, stock incentive or
purchase plan or agreement approved by the Board of Directors of the
Corporation;
-- any shares of Common Stock issuable
pursuant to an adjustment h any Conversion Price under subparagraphs
(e), (f), (i), (j) or (1) of this Section B(4);
-- any shares of Common Stock issued
pursuant to the exchange, conversion or exercise of any options,
warrants or other rights that have previously been incorporated into
computations hereunder on the date when such options, warrants or
rights were issued;
-- up to 1,000,000 shares of Series B
Preferred Stock;
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<PAGE> 14
-- up to 772,728 shares of Series C
Preferred Stock;
-- any shares of Common Stock issued upon
conversion of the Series B or Series C Preferred Stock; or
-- any shares of Common Stock issued in
connection with a merger, consolidation or other acquisition of another
entity by the Corporation.
(l) CONVERTED SHARES. Upon any conversion of Series B or
Series C Preferred Stock pursuant to this Section B(4) or any acquisition of
Series B or Series C Preferred Stock by the Corporation by way of conversion to
another class or series or otherwise, the shares of Series B or Series C
Preferred Stock which are so converted or acquired shall not be reissued and,
upon such conversion or acquisition, the number of authorized shares of the
class and series, if any, to which the shares of such Series B or Series C
Preferred Stock belonged shall be reduced by the number of shares so converted
or acquired.
(m) NOTICE OF ADJUSTMENT. Upon the occurrence of each
adjustment or readjustment of the conversion rights of the Series B or Series C
Preferred Stock pursuant to this Section B(4), the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series B or Series C
Preferred Stock, as applicable, a certificate setting forth such adjustment or
readjustment showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the reasonable written
request at any time of any holder of Series B or Series C Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments and (ii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of the Series B or Series C Preferred Stock.
(n) OTHER DISTRIBUTIONS. In the event the Corporation at
any time or from time to time makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive any distribution
payable in securities or other property of the Corporation other than Common
Stock and other than as otherwise adjusted in this Section B(4), then and in
each such event provision shall be made so that the holders of Series B and
Series C Preferred Stock shall receive upon conversion thereof, in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities and other property of the Corporation which they would have received
had their shares of Series B or Series C Preferred Stock been converted into
share of Common Stock on the date of such event and had they thereafter, during
the period from the date of such event to and including the date of conversion,
retained such securities and other property receivable by them as aforesaid
during such period, subject to all other adjustments called for during such
period under this Section B(4) with respect to the rights of the holders of
Series B and Series C Preferred Stock.
(o) NO IMPAIRMENT. Except as provided in Section B(6), the
Corporation will not, by amendment of its Certificate of incorporation or
through any
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<PAGE> 15
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section B(4) and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B and Series C Preferred Stock
against impairment.
5. REDEMPTION OF SERIES C PREFERRED STOCK.
(a) The Corporation shall be obligated to redeem the
Series C Preferred Stock as follows:
(i) At any time after September 30, 2000, the
holders of a majority of the then outstanding shares of Series C Preferred
Stock, voting together as a separate class, may require the Corporation to
redeem all of the outstanding Series C Preferred Stock for cash at $11.00 per
share plus all accrued or declared but unpaid dividends on such shares (the
"Redemption Price"), by giving notice (the "Exercise Notice") to the
Corporation, payable as provided below. Such Exercise Notice shall specify the
redemption date (the "Redemption Date"), which date shall be at least 60 days
from the effective date of the Exercise Notice.
(ii) The Corporation shall redeem all of the shares
of Series C Preferred Stock to be redeemed hereunder on the Redemption Date
specified in the Exercise Notice. Notwithstanding the foregoing, if, as of the
end of the quarter immediately preceding the Redemption Date, the Corporation
had a Current Ratio (as defined below) of less than one, then it shall redeem
such shares in three installments of equal amount, with the first installment on
the Redemption Date specified in the Exercise Notice, the second installment on
the first anniversary of such date and the third installment on the second
anniversary of such date. Each such installment date shall be considered a
"Redemption Date" as described herein. For purposes of this Section B(5)(a)(ii),
"Current Ratio" shall mean the Corporation's current assets divided by its
current liabilities, as determined by reference to the Corporation's financial
statements (prepared in accordance with generally accepted accounting
principles, to the extent applicable for unaudited interim financial statements,
consistent with the Corporation's historical financial statements) for the
quarter immediately preceding the Redemption Date.
(iii) At least thirty (30) but no more than sixty
(60) days prior to a Redemption Date, the Corporation shall send a notice (a
"Redemption Notice") to all holders of Series C Preferred Stock setting forth
(a) the Redemption Price for the shares to be redeemed and (b) the place at
which such holders may obtain payment of the Redemption Price upon surrender of
their share certificates. If the Corporation does not have sufficient funds
legally available to redeem all shares to be redeemed at such Redemption Date,
then it shall redeem such shares pro rata (based on the portion of the aggregate
Redemption Price payable to them) to the extent possible and shall redeem the
remaining shares to be redeemed as soon as sufficient funds are legally
available.
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<PAGE> 16
(b) On or prior to a Redemption Date, the Corporation
shall deposit the Redemption Price of all shares to be redeemed with a bank or
trust company having aggregate capital and surplus in excess of $10,000,000, as
a trust fund, with irrevocable instructions and authority to the bank or trust
company to pay, on and after such Redemption Date, the Redemption Price of the
shares to their respective holders upon the surrender of their share
certificates. The balance of any funds deposited by the Corporation pursuant to
this Section 5(b) remaining unclaimed at the expiration of one year following
such Redemption Date shall be returned to the Corporation promptly upon its
written request.
(c) On or after a Redemption Date, each holder of shares
of Series C Preferred Stock shall surrender such holder's certificates
representing such shares to the Corporation and thereupon the Redemption Price
of such shares shall be payable to the order of the person whose name appears on
such certificate or certificates as the owner thereof. From and after such
Redemption Date, unless there shall have been a default in payment of the
Redemption Price or the Corporation is unable to pay the Redemption Price due to
not having sufficient legally available funds, all dividends on the shares of
Series C Preferred Stock shall cease to accrue and all rights of the holders of
such shares as holders of Series C Preferred Stock (except the right to receive
the Redemption Price without interest upon surrender of their certificates),
shall cease and terminate with respect to such shares, provided that in the
event that shares of Series C Preferred Stock are not redeemed due to a default
in payment by the Corporation or because the Corporation does not have
sufficient legally available funds, such shares of Series C Preferred Stock
shall remain outstanding and shall be entitled to all of the rights and
preferences provided herein.
6. PROTECTIVE PROVISIONS.
(a) SERIES B PREFERRED STOCK. Except as otherwise required
by law or the Certificate of Incorporation, so long as any shares of Series B
Preferred Stock remain outstanding, the Corporation shall not:
(i) increase the authorized number of shares of
Series B Preferred Stock or alter or change any of the powers, preferences,
privileges or rights of the Series B Preferred Stock; or
(ii) create any new class or series of shares
having preferences prior to or being on a parity with the Series B Preferred
Stock as to dividends or assets; or
(iii) undertake or effect (i) any consolidation or
merger of the Corporation with or into another corporation or corporations
unless the stockholders of the Corporation directly or indirectly control the
surviving or acquiring corporation or corporations, (ii) any acquisition by or
the conveyance of all or substantially all of the assets of the Corporation to
another person other than a partnership or corporation controlled by the
Corporation or its stockholders or (iii) any transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of; or
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<PAGE> 17
(iv) make any distributions of stock of the
Corporation (i) payable in stock or in property at the election of the
stockholder, (ii) which results in the receipt of property by some stockholders
and increases the proportionate interest of other stockholders in the assets or
earnings and profits of the Corporation, (iii) which results in the receipt of
preferred stock by some common stockholders and Common Stock by other common
stockholders, (iv) solely to holders of the Preferred Stock except for
distributions to take account of stock dividends or stock splits with respect to
the Common Stock or (v) if the distribution is of preferred stock; or
(v) amend the provisions of this Section B(6)(a),
without first obtaining the approval by vote or written consent, in the manner
provided by law, of the holders of at least two-thirds of the total number of
outstanding shares of the Series B Preferred Stock voting separately as a class.
(b) SERIES C PREFERRED STOCK. Except as otherwise required
by law or the Certificate of incorporation, so long as any shares of Series C
Preferred Stock remain outstanding, the Corporation shall not:
(i) increase the authorized number of shares of
Series C Preferred Stock or alter or change any of the powers, preferences,
privileges or rights of the Series C Preferred Stock; or
(ii) create any new class or series of shares
having preferences prior to or being on a parity with the Series C Preferred
Stock as to dividends or assets; or
(iii) declare or pay a cash dividend on the Common
Stock; or
(iv) repurchase any shares of Common Stock, except
for shares subject to repurchase pursuant to employment or consulting
arrangements with the Corporation.
(v) undertake or effect (i) any consolidation or
merger of the Corporation with or into another corporation or corporations
unless the stockholders of the Corporation directly or indirectly control the
surviving or acquiring corporation or corporations, (ii) any acquisition by or
the conveyance of all or substantially all of the assets of the Corporation to
another person other than a partnership or corporation controlled by the
Corporation or its stockholders, (iii) any transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, and in which the proceeds paid in cash, securities or other
consideration to each holder of Series C Preferred Stock at the closing of any
such consolidation, merger, sale or other transaction are less than or equal to
the sum of (A) $11.00 per share and (B) interest on the aggregate value of such
shares at the prime lending rate at the time of such transaction as reported by
Bank of America, N.T.& S.A.,
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<PAGE> 18
compounded for each year or portion of a year that such shares of Series C
Preferred Stock were outstanding prior to such consolidation, merger, sale or
other transaction; or
(vi) make any distributions of stock of the
Corporation (i) payable in stock or in property at the election of the
stockholder, (ii) which results in the receipt of property by some stockholders
and increases the proportionate interest of other stockholders in the assets or
earnings and profits of the Corporation, (iii) which results in the receipt of
preferred stock by some common stockholders and Common Stock by other common
stockholders, (iv) solely to holders of the Preferred Stock exempt for
distributions to take account of stock dividends or stock splits with respect to
the Common Stock or (v) if the distribution is of preferred stock; or
(vii) amend the provisions of this Section B(6)(b),
without first obtaining the approval by vote or written consent, in the manner
provided by law, of the holders of at least two-thirds of the total number of
outstanding shares of the Series C Preferred Stock voting separately as a class.
ARTICLE V
Except as otherwise provided in this Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed from
time to time by a bylaw or amendment thereof duly adopted by the Board of
Directors or by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the
Bylaws of this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of this corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent
permitted by the General Corporation Law as it now exists or as it may hereafter
be amended, not be personally liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to this
corporation
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<PAGE> 19
or its stockholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this Article,
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of this corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or the
adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article IX, by the stockholders of this
corporation shall not apply to or adversely affect any right or protection of a
director of this corporation existing at the time of such amendment, repeal,
modification or adoption.
ARTICLE X
This corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE XI
To the fullest extent permitted by applicable law, this
corporation is authorized to provide indemnification of (and advancement of
expenses to) agents of this corporation (and any other persons to which General
Corporation Law permits this corporation to provide indemnification) through
bylaw provisions, agreements with such agents or other persons, vote of
stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law, subject only to limits created by applicable General
Corporation Law (statutory or non-statutory), with respect to actions for breach
of duty to this corporation, its stockholders, and others.
Any amendment, repeal or modification of the foregoing provisions
of this Article XI shall not adversely affect any right or protection of a
director, officer, agent, or other person existing at the time of, or increase
the liability of any director of this corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such amendment,
repeal or modification.
* * *
THIRD: The foregoing amendment and restatement was approved by
the holders of the requisite number of shares of said corporation in accordance
with Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted in
accordance with the provisions of Section 242 and 245 of the General Corporation
Law.
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IN WITNESS WHEREOF, this Restated Certificate of Incorporation
has been executed by the President and the Secretary of this corporation on this
24th day of June, 1997.
-------------------------------------------------
Edward M. Miller, Jr., Vice President of Finance
-------------------------------------------------
Carla S. Newell, Secretary
20
<PAGE> 1
EXHIBIT 3.2
SECOND AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION OF
STERIGENICS INTERNATIONAL, INC.
A DELAWARE CORPORATION
(PURSUANT TO SECTIONS 228, 242 AND 245
OF THE DELAWARE GENERAL CORPORATION LAW)
SteriGenics International, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"General Corporation Law")
DOES HEREBY CERTIFY:
FIRST: That the Corporation was originally incorporated on May
29, 1997, pursuant to the General Corporation Law.
SECOND: That the Board of Directors duly adopted resolutions
proposing to amend and restate the Amended and Restated Certificate of
Incorporation of the Corporation, declaring said amendment and restatement to be
advisable and in the best interests of the Corporation and its stockholders, and
authorizing the appropriate officers of the Corporation to solicit the consent
of the stockholders therefor, which resolution setting forth the proposed
amendment and restatement is as follows:
"RESOLVED, that the Amended and Restated Certificate of
Incorporation of the Corporation be amended and restated in its entirety as
follows:
ARTICLE I
The name of the corporation is SteriGenics International, Inc.
(the "Corporation").
ARTICLE II
The address of the registered office of the Corporation in the
State of Delaware is 15 East North Street, in the City of Dover, County of Kent.
The name of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
<PAGE> 2
ARTICLE IV
The Corporation is authorized to issue two classes of stock to
be designated common stock ("Common Stock") and preferred stock ("Preferred
Stock"). The number of shares of Common Stock authorized to be issued is Thirty
Million (30,000,000), par value $0.001 per share, and the number of Preferred
Stock authorized to be issued is Five Million (5,000,000), par value $0.001 per
share.
The Preferred Stock may be issued from time to time in one or
more series, without further stockholder approval. The Board of Directors is
hereby authorized, in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any wholly unissued series of Preferred
Stock, within the limitations and restrictions stated in this Second Amended and
Restated Certificate of Incorporation (the "Restated Certificate"), to fix or
alter the dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, or any of them, and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V
Except as otherwise provided in this Restated Certificate, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of the Corporation.
ARTICLE VI
The number of directors of the Corporation shall be fixed from
time to time by a bylaw or amendment thereof duly adopted by the Board of
Directors.
ARTICLE VII
Elections of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide.
ARTICLE VIII
Except as otherwise provided in this Amended and Restated
Certificate, any action required or permitted to be taken by the stockholders of
the Corporation must be effected at an annual or special meeting of the
stockholders of the Corporation, and no action required to be taken or that may
be taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting except by the unanimous written consent of all
2
<PAGE> 3
stockholders entitled to vote on such action, and the power of stockholders to
consent in writing to the taking of any action by less than unanimous consent of
all such stockholders is specifically denied.
ARTICLE IX
A director of the Corporation shall, to the fullest extent
permitted by the General Corporation Law as it now exists or as it may hereafter
be amended, not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this Article,
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or
the adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article IX, by the stockholders of the
Corporation shall not apply to or adversely affect any right or protection of a
director of the Corporation existing at the time of such amendment, repeal,
modification or adoption.
ARTICLE X
In addition to any vote of the holders of any class or series
of the stock of the Corporation required by law or by this Restated Certificate,
the affirmative vote of the holders of a majority of the voting power of all of
the then outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to amend or repeal the provisions of ARTICLE I, ARTICLE II, and
ARTICLE III of this Restated Certificate. Notwithstanding any other provision of
this Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any vote of the holders of
any class or series of the stock of the Corporation required by law or by this
Restated Certificate, the affirmative vote of the holders of at least
seventy-five percent (75%) of the voting power of all of the then outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be required to
amend or repeal any provision of this Restated Certificate not specified in the
preceding sentence.
ARTICLE XI
To the fullest extent permitted by applicable law, the
Corporation is authorized to provide indemnification of (and advancement of
expenses to) agents of the Corporation (and any other persons to which General
Corporation Law permits the Corporation to provide indemnification) through
bylaw provisions, agreements with such agents or other persons, vote
3
<PAGE> 4
of stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law, subject only to limits created by applicable General
Corporation Law (statutory or non-statutory), with respect to actions for breach
of duty to the Corporation, its stockholders, and others.
Any amendment, repeal or modification of the foregoing
provisions of this Article XI shall not adversely affect any right or protection
of a director, officer, agent, or other person existing at the time of, or
increase the liability of any director of the Corporation with respect to any
acts or omissions of such director, officer or agent occurring prior to, such
amendment, repeal or modification.
* * * *
THIRD: The foregoing amendment and restatement was approved by
the holders of the requisite number of shares of said corporation in accordance
with Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted
in accordance with the provisions of Section 242 and 245 of the General
Corporation Law.
4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned has signed this
Certificate this ____ day of ______, 1997.
---------------------------------------
James F. Clouser
President and Chief Executive Officer
ATTEST:
- ---------------------------------
Carla S. Newell
Secretary
<PAGE> 1
EXHIBIT 4.3
STERIGENICS INTERNATIONAL
INVESTORS' RIGHTS AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
I. GENERAL .................................................................................... 1
1.1 Definitions ....................................................................... 1
II. REGISTRATION; RESTRICTION ON TRANSFER ...................................................... 2
2.1 Restrictions on Transfer .......................................................... 2
2.2 Demand Registration ............................................................... 3
2.3 Piggyback Registrations ........................................................... 5
2.4 Form S-3 Registration ............................................................. 6
2.5 Expenses of Registration .......................................................... 6
2.6 Obligations of the Company ........................................................ 7
2.7 Termination of Registration Rights ................................................ 8
2.8 Delay of Registration ............................................................. 8
2.9 Indemnification ................................................................... 8
2.10 Assignment of Registration Rights ................................................. 10
2.11 Amendment of Registration Rights .................................................. 11
2.12 Limitation on Subsequent Registration Rights ...................................... 11
2.13 "Market Stand-Off" Agreement ...................................................... 11
III. COVENANTS OF THE COMPANY ................................................................... 11
3.1 Basic Financial Information and Reporting ......................................... 11
3.2 Inspection Rights ................................................................. 12
3.3 Confidentiality of Records ........................................................ 12
3.4 Reservation of Common Stock ....................................................... 13
3.5 Stock Vesting ..................................................................... 13
3.6 Key Man Insurance ................................................................. 13
3.7 Proprietary Information and Inventions Agreement .................................. 13
3.8 Real Property Holding Corporation ................................................. 13
3.9 Other Affirmative Covenants of the Company ........................................ 13
3.10 Negative Covenants of the Company ................................................. 15
3.11 Termination of Covenants .......................................................... 16
IV. RIGHTS OF FIRST REFUSAL .................................................................... 16
4.1 Subsequent Offerings .............................................................. 16
4.2 Exercise of Rights ................................................................ 16
4.3 Issuance of Equity Securities to Other Persons .................................... 17
4.4 Termination of Rights of First Refusal ............................................ 17
4.5 Transfer of Rights of First Refusal ............................................... 17
4.6 Excluded Securities ............................................................... 17
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
V. REPURCHASE ................................................................................ 18
5.1 Repurchase Rights ................................................................ 18
5.2 Deposit of Funds ................................................................. 20
5.3 Surrender of Certificates ........................................................ 20
5.4 Termination of Rights ............................................................ 20
VI. MISCELLANEOUS ............................................................................. 21
6.1 Governing Law .................................................................... 21
6.2 Survival ......................................................................... 21
6.3 Successors and Assigns ........................................................... 21
6.4 Entire Agreement ................................................................. 21
6.5 Separability ..................................................................... 21
6.6 Amendment and Waiver ............................................................. 21
6.7 Delays or Omissions .............................................................. 22
6.8 Notices .......................................................................... 22
6.9 Attorneys' Fees .................................................................. 22
6.10 Titles; and Subtitles ............................................................ 22
6.11 Counterparts ..................................................................... 22
</TABLE>
ii.
<PAGE> 4
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (the "Agreement") is entered into as
of the 20th day Of September, 1993, by and among STERIGENICS INTERNATIONAL, a
California corporation (the "Company"), and the purchasers of shares of the
Company's Common Stock, Series B Preferred Stock and Series; C Preferred Stock
(the "Shares") set forth on Exhibit A of that certain, Stock Purchase Agreement
of even date herewith (the "Purchase Agreement"). The purchasers of the Shares
shall be referred to hereinafter as the "Purchasers" and each individually as a
"Purchases."
RECITALS
WHEREAS, as a condition to purchasing the Shares, the Purchasers have
requested that the Company extend to them registration rights, information
rights, a right of first refusal, repurchase rights and certain other rights as
set forth below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:
I.
GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"FORM S-3" Means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities or
any assignee of record of such Registrable Securities in accordance with Section
2.10 hereof.
"REGISTER," "REGISTERED," AND "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (i) Common Stock of the Company issued
or issuable upon conversion of the Shares; and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement such
1.
<PAGE> 5
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Article II of this Agreement
are not assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
determined by calculating the total number of shares of the Company's Common
Stock that are Registrable Securities and either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements of a
single special counsel for the Holders, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.
"SHARES" shall mean the Series C Preferred Stock, the Series B
Preferred Stock and the Common Stock held by the Purchasers (as set forth on
Exhibit A to the Purchase Agreement).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
II.
REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or
any portion of the Shares (or the Common Stock issuable upon the conversion
thereof) unless and until the transferee has agreed in writing for die benefit
of the Company to be bound by this Section 2.1, provided and to the extent such
Sections are then applicable and:
(i)There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) (A) Such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the
2.
<PAGE> 6
circumstances surrounding the proposed disposition, and (B) if reasonably
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(iii) Notwithstanding the provisions of paragraphs
(i) and (ii) above, no such registration statement or opinion of counsel shall
be necessary for a transfer by a Holder which is (A) a partnership to its
partners in accordance with partnership interests, or (B) to the Holder's
family, member or trust for the benefit of an individual Holder, provided that
the transferee agrees to be subject to the terms of this Section 2.1 to the same
extent as if he were an original Holder hereunder.
(b) Etch certificate representing shares shall (unless
otherwise permitted by the provisions of the Agreement) be stamped or otherwise
imprinted with a legend substantially similar to the following (in addition to
any legend required under applicable state securities laws or as provided
elsewhere in the Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON
OTHER WRITTEN EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN; COMPLIANCE THEREWITH.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
2.2.1 Subject to the conditions of this Section 2.2, if the
Company shall receive at any time after September 30, 1996 a written request
from the Holders of more than thirty-five percent (35%) of the Company's
convertible Preferred Stock then outstanding (the "Initiating Holders") that the
Company file a registration statement under the Securities Act covering the
3.
<PAGE> 7
registration of Registrable Securities having an aggregate offering price to the
public, in excess of $10,000,000, then the Company shall, within thirty (30)
days of the receipt thereof, give written notice of such request to all Holders,
and subject to the limitations of Section 2.2.2, effect, as soon as practicable,
the registration under the Securities Act of all Registrable Securities that the
Holders request to be registered.
2.2.2 If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 and the Company shall include such information in the written
notice referred to in Section 2.2.1. In such event, the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders (which
underwriter or underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 2.2, if the underwriter
advises the Company in writing that marketing factors require a limitation of
the number of securities to be underwritten (including Registrable Securities)
then the Company shall so advise all Holders of Registrable Securities that
would otherwise be underwritten pursuant hereto, and the number of shares that
may be included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
2.2.3 The Company shall not be obligated. to effect more than
two (2) registrations pursuant to this Section 2.2.
2.2.4 The Company shall not be required to effect a
registration pursuant to this Section 2.2 during the period starting with the
date of filing of, and ending on the date one hundred eighty, (180) days
following the effective date of the registration statement pertaining to the
initial public offering of the Company's common stock: (the "Initial Offering"),
provided that the Company is making reasonable and good faith efforts to cause
such registration statement to become effective. In addition, the Company shall
not be required to effect a registration pursuant to this Section 2.2 if within
thirty (30) days of receipt of a written request form Initiating Holders
pursuant to Section 2.2.1, the Company gives notice to be Holders of the
Company's intention to file registration statement for its Initial Offering
within ninety (90) days.
2.2.5 Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
2.2, a certificate signed by the Chairman of the Board stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such
4.
<PAGE> 8
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
such filing for a period of not more than one hundred and twenty (120) days
after receipt of the request of the Initiating Holders; provided that such right
to delay a request shall be exercised by the Company no more than once in any
one-year period,
2.3 PIGGYBACK REGISTRATION. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans and corporate reorganizations) and will afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within twenty (20) days after receipt of the above-described
notice from the Company, so notify the Company in writing. Such notice shall
state the intended method of disposition of the Registrable Securities by such
Holder. If a Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
2.3.1 UNDERWRITING. If the registration statement under which
the Company gives notice under this Section 2.3 is for an underwritten offering,
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder to be included in a registration pursuant to
this Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Holders on a pro rata basis based on the total
number of Registrable Securities held by the Holders; and third, to any
shareholder of the Company (other than a Holder) on a pro rata basis. No such
reduction shall reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting, except that in no
event shall the amount of securities of the selling Holders included in the
registration be reduced below twenty-five percent (25%) of the total amount of
securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
shareholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling shareholder be included in such
registration which would
5.
<PAGE> 9
reduce the number of shares which may be included by Holders without the written
consent of a majority of the Holders of the Registrable Securities proposed to
be sold in the offering.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
2.4.1 promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; and
2.4.2 as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as any specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4: (i) if
Form S-3 is not available for such offering by the Holders, (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any at an aggregate price to the public of less than
$500,000, (iii) if the Company shall furnish to the Holders a certificate signed
by the Chairman of the Board of Directors of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
serious, detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request of the
Holder or Holders under this Section 2.4, (iv) if the Company has, within the
twelve (12) month period preceding the date of such request, already effected
one (1) registration on Form S-3 for the Holders pursuant to this Section 2.4,
(v) if the Company has already effected two (2) registrations on Form S-3 for
the Holders pursuant to this Section 2.4. or (vi) in any particular jurisdiction
in which the Company would be required to qualify to do business or to execute a
general consent to service off process in effecting such registration,
qualification or compliance.
2.4.3 Subject to the foregoing, the Company shall file a Form
S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders.
2.5 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.2, Section 2.3 or Section 2.4 herein shall be borne by the Company.
All Selling Expenses incurred in connection with any registrations hereunder,
shall be borne by the holders of the securities so registered pro rata on the
basis of the number of shares so registered. The Company shall not, however, be
required to pay for expenses of any registration proceeding begun pursuant to
Section 2.2 or 2.4, the
6.
<PAGE> 10
request of which has been subsequently withdrawn by the Initiating Holders
unless (a) the withdrawal is based upon material adverse information concerning
the Company of which the Initiating Holders were not aware at the time of such
request or (b) the Holders of a majority of Registrable Securities agree to
forfeit their right to one requested registration pursuant to Section 2.2 or
Section 2.4 (in which event such right shall be forfeited by all Holders). If
the Holders are required to pay the Registration Expenses, such expenses shall
be borne by the holders of securities (including Registrable Securities)
requesting such registration in proportion to the number of shares for which
registration was requested. If the Company is required to pay the Registration
Expenses of a withdrawn offering pursuant to Section 2.5(a), then the Holders
shall not forfeit their rights pursuant to Section 2.2 or Section 2.4 to a
demand registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
2.6.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days.
2.6.2 Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
2.6.3 Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
2.6.4 Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
2.6.5 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
2.6.6 Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits
7.
<PAGE> 11
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
2.6.7 In the event of an underwritten public offering,
furnish, at the request of a majority of the Holders participating in the
registration, on the date that such Registrable Securities are delivered to the
underwriters for sale (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters and to the Holders
requesting registration of Registrable Securities and (ii) a letter dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to the
underwriters.
2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Article II shall terminate and be of no further force and effect
seven (7) years after the date following the Company's Initial Offering. In
addition, any individual Holder's registration rights shall terminate if all
Registrable Securities held by and issuable to such Holder may be sold pursuant
to Rule 144 underside Securities Act during any single 90 day period.
2.8 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise denying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Article II.
2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
2.9.1 To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the " 1934 Act"), against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Securities Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or arise
based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law in connection with the offering covered
by such registration statement; and, subject to the provisions of Section 2.9.3
below, the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably
8.
<PAGE> 12
incurred by them in connection with investigating or defending any such loss
claim damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 2.9.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
2.9.2 To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers, each person, if any, who controls the Company with the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers or all person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may become
subject under the Securities Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and on, to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9.2 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the gross proceeds from the offering
received by such Holder.
2.9.3 Promptly after receipt by an indemnified party under
this Section 2.9 of notice of the commencement of any action (including any
governmental actions, such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable
9.
<PAGE> 13
time of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 2.9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.9.
2.9.4 If the indemnification provided for in this Section 2.9
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim,, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
2.9.5 The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
2.9.6 The obligations of the Company and Holders under this
Section 2.9 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
2.10 ASSIGN OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Article II may be assigned by a
Holder to a transferee or assignee of Registrable Securities; provided, however,
that no such transferee or assignee shall be entitled to registration rights
under Sections 2.2, 2.3 or 2.4 hereof unless it acquires at least one hundred
thousand (100,000) shares of Registrable Securities (as adjusted for stock
splits and combinations) and the Company shall, within twenty (20) days after
such transfer, be furnished with written notice of the name and, address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned. Notwithstanding the foregoing, rights to
cause the Company to register securities may be assigned to any subsidiary,
parent, general partner or limited partner of a Holder.
10.
<PAGE> 14
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Article II
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section
2.11 shall be binding upon each Holder and the Company. By acceptance of any
benefits under this Article II, Holders of Registrable Securities hereby agree
to be bound by the provisions hereunder.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company providing
for the granting to such holder of any registration rights unless such rights
are subordinate to the registration rights set forth herein.
2.13 "MARKET STAND-OFF" AGREEMENT. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, a Purchaser
holding any of the Company's coming securities shall not sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the Company
held by such Purchaser (other than those included in the registration) for a
period specified by the underwriters not to exceed one hundred eighty (180) days
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that:
(i) such agreement shall apply only to the Company's Initial
Offering; and
(ii) all officers and directors of the Company and holders of
at least one percent (1%) of the Company's voting securities enter into similar
agreements.
The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of said one hundred eighty (180) day
period.
III.
COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
3.1.1 The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with generally accepted accounting principles consistently applied,
and will set aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles consistently applied.
11.
<PAGE> 15
The Company will also maintain true and complete records and supporting
documentation for purposes of calculating and verifying "after-tax net proceeds"
from the "DOE Lawsuit," each as defined in Section III.B(4)(1) of the Company's
Amended and Restated Articles of Incorporation, and shall allow each Purchaser
to inspect such records and documentation pursuant to Section 3.2 below.
3.1.2 As soon as practicable after the end of each fiscal year
of the Company, and have any event within 90 days thereafter, the Company will
furnish each Purchaser a consolidated balance sheet of the Company, as at the
end of such fiscal year, and a consolidated statement of income and a
consolidated statement of cash flows of the Company, for such year, all prepared
in accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail. Such financial statements shall be accompanied by a import
and opinion thereto by independent public accountants of national standing
selected by the Company's Board of Directors.
3.1.3 As long as a Purchaser holds not less than 100,000
shares of Registrable Securities, the Company will furnish such Purchaser, as
soon as practicable after the end of the first, second and third quarterly
accounting periods in each fiscal year of the Company, and in any event within
thirty- (30) days thereafter, a consolidated balance sheet of the Company as of
the end of cut such quarterly period, and a consolidated statement of income and
a consolidated statement of cash flows of the Company for such period and for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.
3.1.4 As long as a Purchaser holds not less than 100,000
shares of Registrable Securities, the Company will furnish such Purchaser (i)
within thirty (30) days after the beginning of eat fiscal year, an annual budget
and operating plans for such fiscal year, which budget and operating plans shall
have been approved by the Company's Board of Directors; and (ii) within thirty
(30) days after the end of each month, an unaudited balance sheet and statements
of income and cash flows, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made, but such
statement shall set forth applicable budget figures and variances from budget.
3.2 INSPECTION RIGHTS. Each Purchaser shall have the right to visit and
inspect any of the properties of the Company or any of its subsidiaries, and to
discuss the affairs, finances and accounts of the Company or any of its
subsidiaries with its officers, all at such reasonable times and as often as may
be reasonably requested; provided, however, that the Company shall not be
obligated under this Section 3.2 with respect to a competitor of the Company or
with respect to information which the Board of Directors determines in good
faith is confidential and should not, therefore, be disclosed.
3.3 CONFIDENTIALITY OF RECORDS. Each Purchaser agrees to use, and to
use its best efforts to insure that its authorized representatives use, the same
degree of care as such
12.
<PAGE> 16
Purchaser uses to protect its own confidential information to keep confidential
any information furnished to it which the Company identifies as being
confidential or properitary (so long as such information is not in the public
domain), except that such Purchaser may disclose such proprietary or
confidential information to any partner, subsidiary or parent of such Purchaser
for the purpose of evaluating its investment in the Company as long as such
partner, subsidiary or parent is advised of the, confidentiality provisions of
this Section 3.3.
3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Series B and Series C Preferred Stock, all Common Stock issuable from time to
time upon such conversion.
3.5 STOCK VESTING. Unless otherwise approved by the Board of Directors,
all stock and stock equivalents issued after the date of this Agreement to
employees, directors and consultants will be subject to vesting restrictions for
at least a four-year period. The repurchase option, to which all unvested shares
of stock shall be subject, shall provide that upon termination of the employment
of the shareholder, with or without cause, the Company or its assignee (to the
extent permissible under applicable securities laws) retain the option to
repurchase at cost any unvested shares held by such shareholder.
3.6 KEY MAN INSURANCE. The Company will use its best efforts to obtain
and maintain in full force and effect term life insurance in the amount of two
million dollars ($2,000,000) on the life of James F. Clouser naming the Company
as beneficiary.
3.7 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall
require all employees to execute and deliver it Proprietary Information and
Inventions Agreement substantially in the form attached to the Purchase
Agreement as Exhibit H.
3.8 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it
will operate in a manner such that it will not become a "United States real
property holding corporation" as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA"). The Company agrees to make determinations as to its status as a
USRPHC, and will file statements concerning those determinations with the
Internal Revenue Service, in the manner and at the times required under Reg
Section 1.897-2(h), or any supplementary or successor provision thereto. Within
30 days of a request from an Purchaser or any of is partners, the Company will
inform the requesting party, in the manner set forth in Reg. Section 1.897-
2(h)(1)(iv) or any supplementary or successor provision thereto, whether that
party's interest in the Company constitutes a United States real property
interest (within the meaning of Internal Revenue Code Section 897(c)(1) and the
regulations thereunder) and whether the Company has provided to the Internal
Revenue Service all required notices as to its USRPHC status
3.9 OTHER AFFIRMATIVE COVENANTS OF THE COMPANY. Without limiting any
other covenants and provisions hereof, the Company covenants and agrees that it
will perform and observe the following covenants and provisions, and will not,
without approval of holders of the Shares in accordance with Section 6.5, amend
or revise any terms of this Section 3.9:
13.
<PAGE> 17
3.9.1 PUNCTUAL PAYMENT. Redeem or repurchase the Shares at the
time and place and in the manner provided in the Company's Articles of
Incorporation and in Article V herein.
3.9.2 PAYMENT OF TAXES. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or business, or upon any properties belonging to it, prior to
the date on which penalties attach thereto, and all lawful claims, which, if
unpaid, might become a lien or charge upon any properties of the Company,
provided that the Company shall not be required to pay any such tax, assessment,
charge, levy or claim that is being contested in good faith and by appropriate
proceedings if the Company shall have set aside on its books adequate reserves
with respect thereto as shall be determined by its Board of Directors.
3.9.3 MAINTENANCE OF INSURANCE. Maintain with responsible and
reputable insurance companies or associations insurance in such amounts and
covering such risks as is usually carried by companies of similar size engaged
in similar businesses and owning similar properties in the same general areas in
which the Company operates.
3.9.4 PRESERVATION OF CORPORATE EXISTENCE. Preserve and
maintain, its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is necessary or
desirable in view of its business and operations or the ownership of its
properties. Preserve and maintain all material licenses and other rights to use
patents, processes, licenses, trademarks, trade names, inventions, intellectual
property rights or copyrights owned or possessed by it and necessary to the
conduct of its business.
3.9.5 COMPLIANCE WITH LAWS. Comply in all material respects
with all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which could materially adversely affect its
business or condition, financial, or otherwise, except non-compliance being
contested in good faith through appropriate proceedings so long as the Company
shall have set up sufficient reserves, if any, required under generally accepted
accounting principles with respect to such items.
3.9.6 MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve
all of its properties necessary or useful in the proper conduct of its business,
in good repair, working order and condition, ordinary wear and tear excepted.
3.9.7 NEW DEVELOPMENTS. Cause all material technological or
other proprietary developments, inventions, discoveries or improvements by the
Company's employees to be fully documented in accordance with the prevailing
industry practice and, where possible and appropriate, to file and prosecute
United States and foreign patent applications relating to and protecting such
developments on behalf of the Company.
3.9.8 FINANCING. Promptly, fully and have detail, inform the
Board of Directors in advance of any commitments or contracts relating to
financing of any nature in which the
14.
<PAGE> 18
Company pledges corporate assets, other than under purchase money security
interests secured only by the assets purchased with such financing in the
ordinary course of business.
3.9.9 BOARD OF DIRECTORS; INDEMNIFICATION. The Board of
Directors shall not consist of more than five (5) directors, and one member of
the Board of Directors designated by the Purchasers will be appointed to the
Executive Committee of the Board of Directors, if and when such Executive
Committee is formed. The Articles of Incorporation or Bylaws of the Company
shall at all times provide for the indemnification of the Board of Directors to
the full extent provided by the law of the jurisdiction in which the Company is
organized. If requested by the Board of Directors, the Company shall use its
best efforts to obtain and maintain directors and officers insurance with
coverage and premium levels consistent with policies carried by companies of
similar size engaged in similar businesses, provided that such insurance can be
obtained for reasonable premiums, as determined by the Board of Directors. The
Company shall pay for reasonable travel and living expenses of the members of
the Board of Directors designated by the Purchasers in attending meetings of the
Board of Directors and committees thereof and in conducting other business on
behalf of the Company.
3.10 NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that it will
not take the actions contained in the following covenants and provisions, and
will not, without the approval of holders of the Shares hi accordance with
Section 6.5, amend or revise any terms of this Section 3.10.
3.10.1 MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Create any
subsidiary that is not a wholly-owned subsidiary, sell or otherwise dispose of
any shares of capital stock of any subsidiary, except to the Company or another
subsidiary, or permit any subsidiary to issue, sell or otherwise dispose of any
shares of its capital stock or the capital stock of any subsidiary except to the
Company or another subsidiary; provided, however, that nothing herein contained
shall prevent (i) any merger, consolidation or other form of acquisition
transaction with Griffith Laboratories, Inc. ("Griffith") or any affiliate of
Griffith. or (ii) any merger, consolidation or transfer of assets permitted
under Article III, Section B(6)(v) of the Company's Amended and Restated
Articles of Incorporation.
3.10.2 DEALINGS WITH AFFILIATES AND OTHERS. Except as set
forth on the Schedule of Exceptions to the Purchase Agreement, enter into any
transaction, including, without limitation, any loans or extensions of credit or
royalty agreements, with any officer or director of the Company or any
subsidiary or holder of any class of capital stock of the Company, or any member
of their respective immediate families or any corporation or other entity
directly or indirectly controlled by one or more of such officers, directors or
stockholders or members of their immediate families (other than any such
transactions in the ordinary course of business which are in an amount not in
excess of $10,000 unless such transaction is approved in advance by a majority
of the members of the Board of Directors who are disinterested with respect to
that transaction.
15.
<PAGE> 19
3.10.3 CHANGE IN NATURE OF BUSINESS. Make any material change
in the nature of its business as carried on at the date hereof or as
contemplated in written materials delivered to the Purchasers prior to the date
hereof.
3.10.4 AGREEMENTS WITH EMPLOYEES FOR THE PURCHASE OF
SECURITIES. Accelerate or terminate the vesting schedules under which
restrictions on transfer of capital stock of the Company lapse over a period of
time with respect to capital stock held by employees, officers or directors of
the Company, increase beyond 1,134,730 the number of shares reserved for
issuance (pursuant to options or otherwise) pursuant to stock plans or
arrangements for the benefit of employees of or consultants to the Company, or
issue, sell or exchange, agree to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange to officers, employees and/or consultants,
shares of Common Stock, or options exercisable therefor, including options
outstanding on the date of this Agreement (all of the foregoing limitations to
be equitably adjusted in the event of any stock split, combination,
reclassification or other similar event occurring on or after the date of this
Agreement), except as issued at fair market value, or granted with an exercise
price equal to fair market value, at the time of issuance or grant, to officers,
employees or consultants of the Company and any subsidiary of the Company.
3.11 TERMINATION OF COVENANTS. All covenants of the Company contained
in Article III of this Agreement shall expire and terminate as to each Purchaser
after the time of effectiveness of the Company's first firm commitment
underwritten public offering registered under the Securities Act.
IV.
RIGHTS OF FIRST REFUSAL
4.1 SUBSEQUENT OFFERINGS. Each Purchaser shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as defined
below, that the Company may, from time to time, propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by Section
4.6 hereof. Each Purchaser's pro rata share is equal to the ratio of the number
of shares of the Company's Common Stock (including all shares of Common Stock
issued or issuable: upon conversion of Series B or Series C Preferred Stock) of
which such Purchaser is seemed to be a holder immediately prior to the issuance
of such Equity Securities to the total number of shares of the Company's
outstanding Common Stock (including all shares of Common Stock issuable upon
conversion of all outstanding shares of Series B and Series C Preferred Stock).
The term "Equity Securities" shall mean (i) any stock or similar security of the
Company, (ii) any security convertible, with or without consideration, into any
stock or similar security (including any option to purchase such a convertible
security), (iii) any security carrying any warrant or right to subscribe to or
purchase any stock or similar security or (iv) any such warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Purchaser written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each
16.
<PAGE> 20
Purchaser shall have fifteen (15) days from the giving of such notice to agree
to purchase its pro rata share of the Equity Securities for the price and upon
the terms and conditions specified in the notice by giving written notice to the
Company and stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Purchaser who would cause the Company to be
in violation of applicable federal securities laws by virtue of such offer or
sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Purchasers elect to purchase their pro rata share of the Equity Securities, then
the Company shall promptly notify in writing the Purchasers who do so elect and
shall offer such Purchasers the right to acquire such unsubscribed shares
("Subscription Notice"). The Purchasers shall have five (5) days after receipt
of the Subscription Notice to notify the Company of its election to purchase all
or a portion thereof of the unsubscribed shares. If the Purchasers fail to
exercise in full the rights of first refusal, the Company shall have sixty (60)
days thereafter to sell the Equity Securities in respect of which the
Purchasers' rights were not exercised, at a price and upon terms and conditions
no more favorable to the purchasers thereof than specified in the Company's
notice to the Purchasers pursuant to Section 4.2 hereof If the Company has not
sold such Equity Securities within such sixty (60) days, the Company shall not
thereafter issue or sell any Equity Securities, without first offering such
securities to the Purchasers in the manner provided above.
4.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
established by this Article IV shall terminate upon the time of effectiveness of
the Company's first firm commitment public offering registered under the
Securities Act.
4.5 TRANSFER OF RIGHTS OF HOW REFUSAL. The rights of first refusal of
each Purchaser under this Article IV may be transferred to any constituent
partner or affiliate of such Purchaser, to any successor in interest to all or
substantially all the assets of such Purchaser, or to a transferee who acquires
one hundred twenty-five thousand (125,000) shares of Registrable Securities (as
adjusted for stock splits and combinations), provided, the Company must
received, within twenty (20) days after such transfer, written notice of the
name and address of such transferee or assignee and the securities with respect
to which the rights of first refusal are being transferred,
4.6 EXCLUDED SECURITIES. The rights of first refusal established by
this Article IV shall have no application to any of the following Equity
Securities:
4.6.1. Shares of Common Stock (and/or options, warrants or
other Common Stock purchase rights issued pursuant to such options, warrants or
other rights) issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board;
4.6.2 stock issued pursuant to any rights or agreements
outstanding as of me dam of this Agreement; options and warrants outstanding as
of the date of this Agreement and stock
17.
<PAGE> 21
issued pursuant to any such rights or agreements granted after the date of this
Agreement, provided that the rights of first refusal established by this Article
IV applied with respect to the initial sale or grant by the Company of such
rights or agreements;
4.6.3 any Equity Securities issued in connection with a
strategic partnership, merger, consolidation, acquisition or similar business
combination, provided such transaction is approved by the Company's Board of
Directors;
4.6.4 any Equity Securities that are issued by the Company as
part of a public offering referred to in Section 4.4 hereof;
4.6.5 shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization by the Company;
4.6.6 shares of Common Stock issued upon conversion of the
Series B or Series C Preferred Stock; and
4.6.7 any Equity Securities issued pursuant to any equipment
leasing arrangement, or bank financing.
V.
REPURCHASE
5.1 REPURCHASE RIGHTS. The Company shall be obligated to repurchase the
Registrable Securities as follows:
5.l.l At any time after September 30, 2000, the holders of a
majority of the Registrable Securities then outstanding may require the Company
to repurchase all of the outstanding Registrable Securities for cash at a price
of $11.00 per share as to the Series B and Series C Preferred Stock plus all
accrued or declared but unpaid dividends on such shares (the "Preferred
Repurchase Price"), and $9.15 per share as to the Common Stock plus all accrued
or declared but unpaid dividends on such shares (the "Common Repurchase Price"),
by giving notice (the "Exercise Notice") to the Company, payable as provided
below. Such Exercise Notice shall specify the repurchase date (the "Repurchase
Date"), which date shall be at least 60 days from the effective date of the
Exercise Notice. The Preferred Repurchase Price and the Common Repurchase Price
shall hereinafter be referred to collectively hereinafter as the "Repurchase
Price".
5.1.2 The Company shall repurchase all of the Registrable
Securities to be repurchased hereunder on the Repurchase Date specified in the
Exercise Notice. Notwithstanding the foregoing, if, as of the end of the quarter
immediately preceding the Repurchase Date, the Company had a Current Ratio as
defined below) of less than one, then it shall repurchase such shares in three
installments of equal amount, with the first installment on the Repurchase Date
specified in die Exercise Notice, the second installment on the first
18.
<PAGE> 22
anniversary of such date and the third installment on the second anniversary of
such date. Each such installment date shall be a "Repurchase Date" as described
herein. For purposes of this Section 5.1.2, "Current Ratio" shall mean the
Company's current assets divided by the Company's current liabilities, as
determined by reference to the Company's financial statements (prepared in
accordance with generally accepted accounting principles, to the extent
applicable for unaudited interim financial statements, consistent with the
Company's historical financial statements) for the quarter immediately preceding
the Repurchase Date.
5.1.3 At least thirty (30) but no more than sixty (60) days
prior to a Repurchase Date, the Company shall send a notice (a "Repurchase
Notice") to all holders of Registrable Securities setting forth (a) the
Repurchase Price for the shares to be repurchased; and (b) the place at which
such holders may obtain payment of the Repurchase Price upon surrender of their
share certificates. If the Company does not have sufficient funds legally
available to repurchase all shares to be repurchased at such Repurchase Date,
then it shall repurchase such shares pro rata (based on the portion of the
aggregate Repurchase Price payable to them) to the extent possible and shall
repurchase the remaining shares to be repurchased as soon as sufficient funds
are legally available.
5.1.4 If, as a result of settlement of or a final judgment
obtained in connection with the lawsuit Radiation Sterilizers, Inc. v. United
States of America, et al., , filed in the U.S. District Court, Eastern District
of Washington on April 16, 1991, or any other lawsuit arising out of the same
set of facts and circurnstances (the "DOE Lawsuit"), the Company is obligated to
pay to other parties in such lawsuit an amount in excess of $1,000,000,
notwithstanding any appeal rights the Company may have, the following provisions
shall apply:
(a) The holders of a majority of the Registrable
Securities then outstanding may require the Company to repurchase all or any
portion of the outstanding Registrable Securities for cash at a base price
(escalated in each case as provided in Section 5.1.4(b) below) of $11.00 per
share as to the Series B and Series C Preferred Stock plus all accrued or
declared but unpaid dividends on such shares, and $9.15 per share as to the
Common Stock plus all accrued or declared but unpaid dividends on such shares,
by giving notice (the "DOE Exercise Notice") to the Company, payable as provided
below. Such DOE Exercise Notice shall be delivered to the Company within 90 days
of the settlement or final judgment in the DOE Lawsuit, and shall specify the
repurchase date (the "DOE Repurchase Date"), which date shall be at least 90
days from the effective date of the DO]3 Exercise Notice. The repurchase rights
provided for in this Section 5.1.4 may be exercised only on one occasion.
(b) The base price of each of the Series B and Series
C Preferred Stock and of the Common Stock, shall escalate from the date of this
Agreement through the DOE Repurchase Date at an annual compounded rate of 6.0%,
calculated based on the number of days in such period. The escalated price for
the Series B and Series C Preferred Stock in effect as of the DOE Repurchase
Date shall be the "DOE Preferred Repurchase Price," and the escalated price for
the Common Stock in effect as of the DOE Repurchase Date shall be the "DOE
Common Repurchase Price." The DOE Preferred Repurchase Price and the DOE
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<PAGE> 23
Common Repurchase Price shall hereinafter be referred to collectively hereunder
as the "DOE Repurchase Price."
(c) The Company shall repurchase all of the Registrable
Securities to be repurchased pursuant to the DOE Exercise Notice on the DOE
Repurchase Date specified therein. If and to the extent the Company is unable to
repurchase all shares to be repurchased on the DOE Repurchase Date, the Company
shall within 15 days of the DOE Exercise Notice provide written notice of such
inability to the holders of Registrable Securities and to Charles W, King, Jr.
Mr. King, personally or through trusts for which he is a trustee, shall
repurchase the Registrable Securities which the Company is unable to repurchase
within 90 days of the scheduled DOE Repurchase Date, at the prices and otherwise
on the same terms as provided for the Company herein.
5.2 DEPOSIT OF FUNDS. On or prior to any Repurchase Date or DOE
Repurchase Date, the Company shall deposit the Repurchase Price or DOE
Repurchase Price, as applicable, of all shares to be repurchased with a bank or
trust company having aggregate capital and surplus in excess of $10,000,000 as a
trust fund, with irrevocable instructions and authority to be bank or trust
company to pay, on and after such Repurchase Date or DOE Repurchase Date, the
Repurchase Price or DOE Repurchase Price of the shares to their respective
holders upon the surrender of their share certificates. The balance of any funds
deposited by the Company pursuant to this Section 5.2 remaining unclaimed at the
expiration of one year following such Repurchase Date or DOE Repurchase Date
shall be returned to the Company promptly upon its written request.
5.3 SURRENDER OF CERTIFICATES. On or after any Repurchase Date or DOE
Repurchase Date, each holder of Registrable Securities shall surrender such
holder's certificates representing such shares to the Company and thereupon the
Repurchase Price or DOE Repurchase Price of such shares shall be payable to the
order of the person whose name appears on such certificate or certificates as
the owner thereof. From and after such Repurchase Date or DOE Repurchase Date,
unless there shall have been a default in payment of the Repurchase Price or DOE
Repurchase Price or the Company is unable to pay the Repurchase Price or DOE
Repurchase Price due to not having sufficient legally available funds, all
dividends on the Registrable Securities shall cease to accrue and all rights of
the holders of such shares (except the right to receive the Repurchase Price or
DOE Repurchase Price without interest upon surrender of their certificates)
shall cease and terminate with respect to such shares, provided that in the
event that the Registrable Securities are not repurchased due to a default in
payment by the Company or because the Company does not have sufficient legally
available funds, such Registrable Securities shall remain outstanding and shall
be entitled to all of be rights and preferences provided herein.
5.4 TERMINATION OF RIGHTS. The rights of repurchase established by this
Article V shall terminate after the time of effectiveness of the Company's first
firm commitment public offering registered, under the Securities Act.
20.
<PAGE> 24
VI
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solelyas of die date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the sitccessors, assigns, hers, executors and of the parties hereto and
shall inure to the benefit of and be enforceable by each person who shall be a
holder of Registratble Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such shares in its records as the absolute owner and holder of such shares for
all purposes, including the payment of dividends or any redemption price.
6.4 ENTIRE AGREEMENT. This Agreement constitutes the III and entire
understanding and agreement between the parties with regard to the subject
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
6.5 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6 AMENDMENT AND WAIVER.
6.6.1 Except as otherwise expressly provided, this Agreement
may be amended or modified only upon the written consent of the Company and a
majority of the Holders of Registrable Securities.
6.6.2 Except as otherwise expressly provided, the obligations
of the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of a majority of the Holders of Registrable
Securities.
21.
<PAGE> 25
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power or remedy, nor shall it be constructed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar bread, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit consent or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. AU remedies, either under this
Agreement, by law or otherwise afforded to Holders, shall be cumulative and not
alternative.
6.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if mum
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail
return receipt requested, postage prepaid, or (W) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or at
such other address as such party may designate by ten (10) days advance written
notice to the other parties hereto.
6.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, cows and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including -without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
22.
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
STERIGENICS INTERNATIONAL. SUMMIT VENTURES III L.P.
4020 Clipper Court 499 Hamilton Avenue, Suite 200
Fremont, CA 94538 Palo Alto, CA 94301
By: Summit Partners
Its General Partner
By: /s/ James F. Clouser
By: /s/
------------------------- -------------------------
James F. Clouser General Partner
SUMIMMT INVESTORS II L.P.
499 Hamilton Avenue, Suite 200
Palo Alto, CA 94301
By: Stamps Woodsum & Co.
Its General Partner
By: /s/
------------------------
General Partner
SEQUOIA CAPITAL GROWTH FUND
3000 Sand. Hill Road
Building 4, Suite 280
Menlo Park A 94025
By: Sequoia Partners
Its General Partner
By: /s/
------------------------
General Partner
23.
<PAGE> 27
SEQUOIA TECHNOLOGY PARTNERS III
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
By: Sequoia Partners
Its General Partner
By: /s/
-----------------------------
General Partner
The undersigned, hereby acknowledges and
agrees to the provisions of Section 5.1.4
of this Agreement:
/s/ Charles W. King, Jr.
------------------------------------------
Charles W. King, Jr.
24.
<PAGE> 28
STERIGENICS INTERNATIONAL
CO-SALE AGREEMENT
This Co-Sale Agreement (the "Agreement") is made as of this 20th day of
September, 1993, by and among STERIGENICS INTERNATIONAL, a California
corporation (the "Company"), the holders of the Company's Series B Preferred
Stock, Series C Preferred Stock and Common Stock listed on Exhibit A hereto (the
"Shareholders"), and the CHARLES W. KING, JR. Trust (the "Grantor").
RECITALS
WHEREAS, the Shareholders are purchasing shares of the Company's Series
B Preferred Stock, Series C Preferred Stock and Common Stock (the "Purchased
Stock") pursuant to that certain Stock Purchase Agreement (the "Purchase
Agreement") dated as of the date hereof, among the Shareholders and the Company;
WHEREAS, such Shareholders were induced by the Company to purchase the
Purchased Stock in part by the Company's and the Grantor's agreement to enter
into this Agreement; and
WHEREAS, the parties desire to enter into this Agreement in order to
grant rights of co-sale to each Shareholder.
In consideration of the mutual covenants set fort herein, the parties
agree hereto as follows:
1. DEFINITIONS.
(a) "Co-Sale Stock" shall mean shares of the Company's Common Stock or
Preferred Stock now owned or subsequently acquired by the Grantor. The number of
shares of Stock owned by the Grantor is set forth on Exhibit B, which Exhibit
shall be amended from time to time to reflect changes in the number of shares
owned by the Grantor.
(b) "Common Stock" shall mean the Company's Common Stock and shares of
Common Stock issued or issuable upon conversion of the Company's outstanding
Preferred Stock.
2. SALES BY THE GRANTOR.
(a) If the Grantor proposes to sell or transfer any shares of Co-Sale
Stock then the Grantor shall promptly give written notice (the "Notice")
simultaneously to the Company and to each of the Shareholders at least fifteen
(15) days prior to the closing of such sale or transfer. The Notice shall
describe in reasonable detail the proposed sale or transfer including, without
limitation, the number of shares of Co-Sale Stock to be sold or transferred, the
nature of such sale or transfer, the consideration to be paid, and the name and
address of each prospective
<PAGE> 29
purchaser or transferee. In the event that the sale or transfer is being made
pursuant to the provisions of Sections 3(a) or 30(b) hereof, the Notice shall
state under which section the sale or transfer is being made.
(b) Each Shareholder shall have the right, exercisable upon written
notice to the Grantor within ten (10) days after Notice, to participate in such
sale of Co-Sale Stock on the same terms and conditions. Such notice shall
indicate the number of shares of Common Stock such Shareholder wishes to sell
under his or her right to participate. To the extent one or more of the
Shareholders exercise such right of participation in accordance with the terms
and conditions set forth below, the number of shares of Co-Sale Stock that the
Grantor may sell in the transaction shall be correspondingly reduced.
(c) Each Shareholder may sell all or any part of that number of shares
equal to the product obtained by multiplying (i) the aggregate number of shares
of Co-Sale Stock covered by the Notice by (ii) a fraction the numerator of which
is the number of shares of Common Stock owned by the Shareholder at the time of
the sale or transfer and the denominator of which is the total number of shares
of Common Stock owned by the Grantor and the Shareholders at the time of the
sale or transfer.
(d) Each Shareholder who elects to participate in the sale pursuant to
this Section 2 (a "Participant") shall effect its participation in the sale by
promptly delivering to the Grantor for transfer to the prospective purchaser one
or more certificates, properly endorsed for transfer, which represent:
(i the type and number of shares of Common Stock
which such Participant elects to sell or
(ii) that number of shares of Series B or Series C
Preferred Stock which is at such time convertible into the number of shares of
Common Stock which such Participant elects to sell; provided, however, that if
the prospective purchaser objects to the delivery of Series B or Series C
Preferred Stock in lieu of Common Stock, such Participant shall convert such
Series B or Series C Preferred Stock into Common Stock and deliver Common Stock
as provided in Section 2(d)(i) above. The Company agrees to make any such
conversion concurrent with the actual transfer of such shares to the purchaser.
(e) The stock certificate or certificates that the Participant delivers
to the Grantor pursuant to Section 2(d) shall be transferred to the prospective
purchaser in consummation of the sale of the Common Stock pursuant to the terms
and conditions specified in the Notice, and the Grantor shall concurrently
therewith remit to such Participant that portion of the sale proceeds to which
such Participant is entitled by reason of its participation in such sale to the
extent that any prospective purchaser or purchasers prohibits such assignment or
otherwise refuses to purchase shares or other securities from a Participant
exercising its rights of co-sale hereunder, the Grantor shall not sell to such
prospective purchaser or purchasers any Co-Sale Stock unless and until,
simultaneously with such sale, the Grantor shall purchase such shares or other
securities from such Participant on the same terms and conditions specified in
the Notice.
2.
<PAGE> 30
(f) The exercise or non-exercise of the rights of the Participants
hereunder to participate in one or more sales of Co-Sale Stock made by the
Grantor shall not adversely affect their rights to participate in subsequent
sales of Co-Sale Stock subject to Section 2(a).
(g) If none of the Shareholders elect to participate in the sale of the
CO-Sale Stock subject to the Notice, the Grantor may, not later than sixty (60)
days following delivery to the Company of the Notice, enter into an agreement
providing for the closing of the transfer of the Co-Sale Stock covered by the
Notice within thirty (30) days of such agreement on terms and conditions not
more favorable to the transferor than those described in the Notice. Any
proposed transfer on terms and conditions more favorable than those described in
the Notice, as well as any subsequent proposed transfer of any of the Co-Sale
Stock by the Grantor, shall again be subject to the co-sale rights of the
Shareholders and shall require compliance by the Grantor with the procedures
described in this Section 2.
3. EXEMPT TRANSFERS.
(a) Notwithstanding the foregoing, the co-sale rights of the
Shareholders shall not apply to (i) any transfer or transfers by the Grantor
which in the aggregate, over the term of this Agreement amount to no more than
Ten Thousand ($10,000) dollars of Co-Sale Stock held by the Grantor as of the
date hereof, (ii) any pledge of Co-Sale Stock made pursuant to a bona fide loan
transaction with a financial institution that creates a mere security interest,
(iii) any transfer to the ancestors, descendants or spouse or to trusts for the
benefit of such persons or the Grantor; or (iv) any bona fide gift; provided
that in the event of any transfer made pursuant to one of the exemptions
provided by clauses (ii), (iii) and (iv), (A) the Grantor shall inform the
Shareholders of such pledge, transfer or gift prior to effecting it and (B) the
pledgee, transferee or donee shall furnish the Shareholders with a written
agreement to be bound by and comply with all provisions of Section 2. Except
with respect to Co-Sale Stock transferred under clause (i) above (which Co-Sale
Stock shall no longer be subject to the co-sale rights of the Shareholders),
such transferred Co-Sale Stock shall remain "Co-Sale Stock" hereunder; and such
pledgee, transferee or donee shall be treated as the "Grantor" for purposes of
this Agreement.
(b) Notwithstanding the foregoing, the provisions of Section 2 shall
not apply to the sale of any Co-Sale Stock to the public pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission under the Securities Act of 1933, amended "Securities Act").
(c) This Agreement is subject to, and Shall in no manner limit the
right of the Company to repurchase securities from the Grantor at cost pursuant
to a stock restriction agreement or other agreement between the Company and the
Grantor.
4. PROHIBITED TRANSFERS.
(a) In the event that the Grantor should sell any Co-Sale Stock in
contravention of the co-sale rights of each Shareholder under this Agreement (a
"Prohibited Transfer"), each Shareholder, in addition to such other remedies as
may be available at law, in equity or
3.
<PAGE> 31
hereunder, shall have the put option provided below, and the Grantor shall be
bound by the applicable provisions of such option.
(b) In the event of a Prohibited Transfer, each Shareholder shall have
the right to sell to the Grantor the type and number of shares of Common Stock
equal to the number of shares each Shareholder would have been entitled to
transfer to the purchaser under Section 2(c) hereof had the Prohibited Transfer
been effected pursuant to and in compliance with the terms hereof. Such sale
shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be sold to
the Grantor shall be equal to the price per share paid by the purchaser to the
Grantor in the Prohibited Transfer. The Grantor shall also reimburse each
Shareholder for any and all fees and expenses, including legal fees and
expenses, incurred pursuant to the exercise or the attempted exercise of the
Shareholder's rights under Section 2.
(ii) Within ninety (90) days after the later of the dates on
which the Shareholder (a) received notice of the Prohibited Transfer or (b)
otherwise became aware of the Prohibited Transfer, each Shareholder shall, if
exercising the option created hereby, deliver to the Grantor the certificate or
certificates represent shares to be sold, each certificate to be properly
endorsed for transfer.
(iii) The Grantor shall, upon receipt of the certificate or
certificates for the shares to be sold by a Shareholder, pursuant to this
Section 4(b), pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in Section 4(b)(i), in cash or by
other means acceptable to the Shareholder.
(iv) Notwithstanding the foregoing, any attempt by the Grantor
to transfer Co-Sale Stock in violation of Section 2 hereof shall be voidable at
the option of a majority in interest of the Shareholders if the Shareholders do
not elect to exercise the put option set forth in this Section 4, and the
Company agrees it will not effect such a transfer nor will it treat any alleged
transfee as the holder of such shares without the written consent of a majority
in interest of the Shareholders.
5. LEGEND.
(a) Each certificate representing shares of Co-Sale Stock now or
hereafter owned by the Grantor or issued to any person in connection with a
transfer pursuant to Section 3(a) hereof shall be endorsed with the following
legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN CO-SALE AGREEMENT BY AND BETWEEN THE SHAREHOLDER, THE
COMPANY AND CERTAIN HOLDERS OF STOCK OF THE COMPANY. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY."
4.
<PAGE> 32
(b) The Grantor agrees that the Company may instruct its transfer agent
to impose transfer restrictions on the shares represented by certificates
bearing the legend referred to in Section 5(a) above to enforce the provisions
of this Agreement and the Company agrees to promptly do so. The legend shall be
removed upon termination of this Agreement.
6. MISCELLANEOUS
(a) CONDITIONS TO EXERCISE OF RIGHTS. Exercise of the Shareholders'
rights under this Agreement shall be subject to and conditioned upon, and the
Grantor and the Company shall use their best efforts to assist each Shareholder
in, compliance with applicable laws.
(b) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
(c) AMENDMENT. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by the written consent of (i)
as to the Company, only by the Company, (ii) as to the Shareholders, by persons
holding more than a majority in interest of the Common Stock held by the
Shareholders and their assignees, pursuant to Section 6(d) hereof, and (iii) as
to the Grantor, only by the Grantor. Any amendment or waiver effected in
accordance with clauses (i), (ii), and (iii) of this Section 6(c) shall be
binding upon each Shareholder, its successors and assigns, the Company and the
Grantor.
(d) SUCCESSORS AND ASSIGNS. Except as otherwise specifically provided
herein, the provisions hereof shall inure to the benefit of, and be binding upon
the successors, assigns, hells, executors and administrators of the parties
hereto.
(e) ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the specific
subject matter hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein.
(f) TERM. This Agreement shall terminate (i) upon the closing of a firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act or (ii) at such time as the Shareholders hold
less than fifty percent (50%) of the Purchased Stock.
(g) OWNERSHIP. The Grantor represents and warrants that he is the sole
legal and beneficial owner of those shares of Co-Sale Stock he currently holds
subject to the Agreement and that no other person has any interest (other than a
community property interest) in such shares.
(h) NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then
5.
<PAGE> 33
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the address as set
forth on the signature page hereof or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
(i) SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceabity
shall not effect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(j) ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
(k) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
6.
<PAGE> 34
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
STERIGENICS INTERNATIONAL
4020 Clipper Court
Fremont, CA 94538
/s/ James F. Clouser
- -----------------------------------
JAMES F. CLOUSER, PRESIDENT
GRANTOR:
/s/ Charles W. King, Jr.
- -----------------------------------
CHARLES W. KING, Jr.
c/o STERIGENICS INTERNATIONAL
4020 Clipper Court
Fremont, CA, 94538
CO-SALE AGREEMENT SHAREHOLDERS:
SUMMIT VENTURES III, L.P.
499 Hamilton Avenue
Suite 200
Palo Alto, CA 94301
By: Summit Partners
Its General Partner
By /s/
------------------------------
General Partner
CO-SALE AGREEMENT
<PAGE> 35
SUMMIT INVESTORS II, L.P.
499 Hamilton Avenue
Suite 200
Palo Alto, CA 94301
By: Stamps Woodsum & Co.
Its General Partner
By /s/
---------------------------------
General Partner
SEQUOIA CAPITAL GROWTH FUND 3000
Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
By: Sequoia Partners
Its General Partner
By: /s/
---------------------------------
General Partner
SEQUOIA TECHNOLOGY PARTNERS III
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
By: Sequoia Partners
Its General Partner
By: /s/
---------------------------------
General Partner
CO-SALE AGREEMENT
<PAGE> 36
EXHIBIT A
LIST OF SHAREHOLDERS
SUMMIT VENTURES III, L.P.
499 Hamilton Avenue
Suite 200
Palo Alto, CA 94301
SUMMIT INVESTORS II, L.P.
499 Hamilton Avenue
Suite 200
Palo Alto, CA 94301
SEQUOIA CAPITAL GROWTH FUND
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
SEQUOIA TECHNOLOGY PARTNERS III
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
CO-SALE AGREEMENT
<PAGE> 37
EXHIBIT B
CO-SALE STOCK OWNERSHIP
<TABLE>
<CAPTION>
GRANTOR CO-SALE STOCK
<S> <C>
CHARLES W. KING, JR. 572,000 shares of Common Stock
</TABLE>
CO-SALE AGREEMENT
<PAGE> 1
EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as
of ___________, 1997 between SteriGenics International, Inc., a Delaware
corporation ("the Company"), and _____________________ ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee performs a valuable service for the
Company; and
WHEREAS, the Board of Directors of the Company has adopted
Bylaws (the "Bylaws") providing for the indemnification of the officers and
directors of the Company to the maximum extent authorized by Section 145 of the
Delaware General Corporation Law, as amended ("Law"); and
WHEREAS, the Bylaws and the Law, by their nonexclusive nature,
permit contracts between the Company and the officers or directors of the
Company with respect to indemnification of such officers or directors; and
WHEREAS, in accordance with the authorization as provided by
the Law, the Company may purchase and maintain a policy or policies of
directors' and officers' liability insurance ("D & O Insurance"), covering
certain liabilities which may be incurred by its officers or directors in the
performance of their obligations to the Company; and
WHEREAS, in recognition of past services and in order to
induce Indemnitee to continue to serve as an officer or director of the Company,
the Company has determined and agreed to enter into this contract with
Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's service as an
officer or director after the date hereof, the parties hereto agree as follows:
1. Indemnity of Indemnitee. The Company hereby agrees to hold
harmless and indemnify Indemnitee to the full extent authorized or permitted by
the provisions of the Law, as such may be amended from time to time, and Article
VII, Section 6 of the Bylaws, as such may be amended. In furtherance of the
foregoing indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the
Right of the Company. Indemnitee shall be entitled to the rights of
indemnification provided in this Section l(a) if, by reason of his Corporate
Status (as hereinafter defined), he is, or is threatened to be made, a party to
or participant in any Proceeding (as hereinafter defined) other than a
Proceeding by or in the right of the Company. Pursuant to this Section 1(a),
Indemnitee shall be indemnified against all Expenses (as hereinafter defined),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
or any claim, issue or matter therein, if he acted in good faith
<PAGE> 2
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
(b) Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 1(b) if, by reason of his Corporate Status, he is, or is threatened to
be made, a party to or participant in any Proceeding brought by or in the right
of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf in
connection with such Proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that, if applicable law so provides, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company unless and to the extent that the Court of
Chancery of the State of Delaware shall determine that such indemnification may
be made.
(c) Indemnification for Expenses of a Party Who is
Wholly or Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate Status,
a party to and is successful, on the merits or otherwise, in any Proceeding, he
shall be indemnified to the maximum extent permitted by law against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or matter.
For purposes of this Section and without limitation, the termination of any
claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
2. Additional Indemnity. In addition to, and without regard
to any limitations on, the indemnification provided for in Section 1, the
Company shall and hereby does indemnify and hold harmless Indemnitee against all
Expenses, judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him or on his behalf if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to or participant in any
Proceeding (including a Proceeding by or in the right of the Company),
including, without limitation, all liability arising out of the negligence or
active or passive wrongdoing of Indemnitee. The only limitation that shall exist
upon the Company's obligations pursuant to this Agreement shall be that the
Company shall not be obligated to make any payment to Indemnitee that is finally
determined (under the procedures, and subject to the presumptions, set forth in
Sections 6 and 7 hereof) to be unlawful under Delaware law.
3. Contribution in the Event of Joint Liability.
(a) Whether or not the indemnification provided in
Sections 1 and 2 hereof is available, in respect of any threatened, pending or
completed action, suit or proceeding
2
<PAGE> 3
in which Company is jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), Company shall pay, in the first instance, the
entire amount of any judgment or settlement of such action, suit or proceeding
without requiring Indemnitee to contribute to such payment and Company hereby
waives and relinquishes any right of contribution it may have against
Indemnitee. Company shall not enter into any settlement of any action, suit or
proceeding in which Company is jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding) unless such settlement provides for a
full and final release of all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations
of the Company set forth in the preceding subparagraph, if, for any reason,
Indemnitee shall elect or be required to pay all or any portion of any judgment
or settlement in any threatened, pending or completed action, suit or proceeding
in which Company is jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), Company shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee in
proportion to the relative benefits received by the Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit or proceeding arose; provided, however,
that the proportion determined on the basis of relative benefit may, to the
extent necessary to conform to law, be further adjusted by reference to the
relative fault of Company and all officers, directors or employees of the
Company other than Indemnitee who are jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, in connection with the events that resulted in
such expenses, judgments, fines or settlement amounts, as well as any other
equitable considerations which the law may require to be considered. The
relative fault of Company and all officers, directors or employees of the
Company other than Indemnitee who are jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), on the one hand, and
Indemnitee, on the other hand, shall be determined by reference to, among other
things, the degree to which their actions were motivated by intent to gain
personal profit or advantage, the degree to which their liability is primary or
secondary, and the degree to which their conduct is active or passive.
(c) Company hereby agrees to fully indemnify and hold
Indemnitee harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company other than Indemnitee who may be
jointly liable with Indemnitee.
4. Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
5. Advancement of Expenses. Notwithstanding any other
provision of this Agreement, the Company shall advance all Expenses incurred by
or on behalf of Indemnitee in connection with any Proceeding by reason of
Indemnitee's Corporate Status within ten (10) days
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<PAGE> 4
after the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances from time to time, whether prior to or after
final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall include or be
preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay
any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses. Any advances and
undertakings to repay pursuant to this Section 5 shall be unsecured and interest
free. Notwithstanding the foregoing, the obligation of the Company to advance
Expenses pursuant to this Section 5 shall be subject to the condition that, if,
when and to the extent that the Company determines that Indemnitee would not be
permitted to be indemnified under applicable law, the Company shall be entitled
to be reimbursed, within thirty (30) days of such determination, by Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Company that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee shall not
be required to reimburse the Company for any advance of Expenses until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed).
6. Procedures and Presumptions for Determination of
Entitlement to Indemnification. It is the intent of this Agreement to secure for
Indemnitee rights of indemnity that are as favorable as may be permitted under
the law and public policy of the State of Delaware. Accordingly, the parties
agree that the following procedures and presumptions shall apply in the event of
any question as to whether Indemnitee is entitled to indemnification under this
Agreement:
(a) To obtain indemnification (including, but not
limited to, the advancement of Expenses and contribution by the Company) under
this Agreement, Indemnitee shall submit to the Company a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that Indemnitee has
requested indemnification.
(b) Upon written request by Indemnitee for
indemnification pursuant to the first sentence of Section 6(a) hereof, a
determination, if required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in the specific case by one of the following
three methods, which shall be at the election of Indemnitee: (1) by a majority
vote of the disinterested directors, even though less than a quorum, or (2) by
independent legal counsel in a written opinion, or (3) by the stockholders.
(c) If the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 6(b)
hereof, the Independent Counsel shall be selected as provided in this Section
6(c). The Independent Counsel shall be selected by
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<PAGE> 5
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board of Directors). Indemnitee or the Company, as the case may be, may, within
10 days after such written notice of selection shall have been given, deliver to
the Company or to Indemnitee, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of "Independent Counsel" as defined in Section 13 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall
act as Independent Counsel. If a written objection is made and substantiated,
the Independent Counsel selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court has determined that such objection
is without merit. If, within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 6(a) hereof, no Independent
Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition the Court of Chancery of the State of Delaware or other
court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the court or by such other person as the court shall designate, and the
person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 6(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 6(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 6(c), regardless of the
manner in which such Independent Counsel was selected or appointed.
(d) In making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 6(a) of this Agreement. Anyone seeking to overcome
this presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.
(e) Indemnitee shall be deemed to have acted in good
faith if Indemnitee's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the Enterprise. In addition, the knowledge and/or actions, or failure to act, of
any director, officer, agent or employee of the Enterprise shall not be imputed
to Indemnitee for purposes of determining the right to indemnification under
this Agreement. Whether or not the foregoing provisions of this Section 6(e) are
satisfied, it shall in any event be presumed that Indemnitee has at all times
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.
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<PAGE> 6
(f) If the person, persons or entity empowered or
selected under Section 6 to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within thirty (30) days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 30 day period
may be extended for a reasonable time, not to exceed an additional fifteen (15)
days, if the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this Section 6(g) shall
not apply if the determination of entitlement to indemnification is to be made
by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy five (75)
days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the purpose of making such determination, such meeting is held for such
purpose within sixty (60) days after having been so called and such
determination is made thereat.
(g) Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Independent Counsel, member of the Board of Directors, or stockholder of the
Company shall act reasonably and in good faith in making a determination under
the Agreement of the Indemnitee's entitlement to indemnification. Any costs or
expenses (including attorneys' fees and disbursements) incurred by Indemnitee in
so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.
(h) The Company acknowledges that a settlement or
other disposition short of final judgment may be successful if it permits a
party to avoid expense, delay, distraction, disruption and uncertainty. In the
event that any action, claim or proceeding to which Indemnitee is a party is
resolved in any manner other than by adverse judgment against Indemnitee
(including, without limitation, settlement of such action, claim or proceeding
with or without payment of money or other consideration) it shall be presumed
that Indemnitee has been successful on the merits or otherwise in such action,
suit or proceeding. Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion, by clear and convincing evidence.
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<PAGE> 7
7. Remedies of Indemnitee.
(a) In the event that (i) a determination is made
pursuant to Section 6 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 5 of this Agreement, (iii) no determination of
entitlement to indemnification shall have been made pursuant to Section 6(b) of
this Agreement within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to this
Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification. Indemnitee
shall commence such proceeding seeking an adjudication within 180 days following
the date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 7(a). The Company shall not oppose Indemnitee's right
to seek any such adjudication.
(b) In the event that a determination shall have been
made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding commenced pursuant to this Section 7
shall be conducted in all respects as a de novo trial, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination under
Section 6(b).
(c) If a determination shall have been made pursuant
to Section 6(b) of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding commenced pursuant to this Section 7, absent a prohibition
of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this
Section 7, seeks a judicial adjudication of his rights under, or to recover
damages for breach of, this Agreement, or to recover under any directors' and
officers' liability insurance policies maintained by the Company the Company
shall pay on his behalf, in advance, any and all expenses (of the types
described in the definition of Expenses in Section 13 of this Agreement)
actually and reasonably incurred by him in such judicial adjudication,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of expenses or insurance recovery.
(e) The Company shall be precluded from asserting in
any judicial proceeding commenced pursuant to this Section 7 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and
shall stipulate in any such court that the Company is bound by all the
provisions of this Agreement.
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<PAGE> 8
8. Non-Exclusivity; Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the certificate of
incorporation of the Company, the Bylaws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise. No amendment, alteration or repeal
of this Agreement or of any provision hereof shall limit or restrict any right
of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal. To the extent that a change in the Law, whether by statute or judicial
decision, permits greater indemnification than would be afforded currently under
the Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an
insurance policy or policies providing liability insurance for directors,
officers, employees, or agents or fiduciaries of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person serves at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director,
officer, employee or agent under such policy or policies.
(c) In the event of any payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce such
rights.
(d) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
9. Exception to Right of Indemnification. Notwithstanding any
other provision of this Agreement, Indemnitee shall not be entitled to
indemnification under this Agreement with respect to any Proceeding brought by
Indemnitee, or any claim therein, unless (a) the bringing of such Proceeding or
making of such claim shall have been approved by the Board of Directors of the
Company or (b) such Proceeding is being brought by the Indemnitee to assert,
interpret or enforce his rights under this Agreement.
10. Duration of Agreement. All agreements and obligations of
the Company contained herein shall continue during the period Indemnitee is an
officer or director of the
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<PAGE> 9
Company (or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise) and shall continue thereafter so long as Indemnitee
shall be subject to any Proceeding (or any proceeding commenced under Section 7
hereof) by reason of his Corporate Status, whether or not he is acting or
serving in any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses,
heirs, executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as an
officer or director of the Company or any other Enterprise at the Company's
request.
11. Security. To the extent requested by the Indemnitee and
approved by the Board of Directors of the Company, the Company may at any time
and from time to time provide security to the Indemnitee for the Company's
obligations hereunder through an irrevocable bank line of credit, funded trust
or other collateral. Any such security, once provided to the Indemnitee, may not
be revoked or released without the prior written consent of the Indemnitee.
12. Enforcement.
(a) The Company expressly confirms and agrees that
it has entered into this Agreement and assumed the obligations imposed on it
hereby in order to induce Indemnitee to serve as an officer or director of the
Company, and the Company acknowledges that Indemnitee is relying upon this
Agreement in serving as an officer or director of the Company.
(b) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter hereof.
13. Definitions. For purposes of this Agreement:
(a) "Corporate Status" describes the status of a
person who is or was a director, officer, employee or agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person is or was serving at the
express written request of the Company.
(b) "Disinterested Director" means a director of the
Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(c) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is
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<PAGE> 10
or was serving at the express written request of the Company as a director,
officer, employee, agent or fiduciary.
(d) "Expenses" shall include all reasonable
attorneys' fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, participating, or
being or preparing to be a witness in a Proceeding.
(e) "Independent Counsel" means a law firm, or a
member of a law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such
party (other than with respect to matters concerning the Indemnitee under this
Agreement, or of other indemnitees under similar indemnification agreements), or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement. The Company agrees to pay the
reasonable fees of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all Expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
(f) "Proceeding" includes any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or will be involved as a party or otherwise, by reason of the
fact that Indemnitee is or was a director of the Company, by reason of any
action taken by him or of any inaction on his part while acting as an officer or
director of the Company, or by reason of the fact that he is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other Enterprise; in each case
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement; including one pending on or before the date of this Agreement;
and excluding one initiated by an Indemnitee pursuant to Section 7 of this
Agreement to enforce his rights under this Agreement.
14. Severability. If any provision or provisions of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
void, illegal or otherwise unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; and (b) to the fullest extent
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<PAGE> 11
possible, the provisions of this Agreement (including, without limitation, each
portion of any section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
thereby.
15. Modification and Waiver. No supplement, modification,
termination or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
16. Notice By Indemnitee. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure
to so notify the Company shall not relieve the Company of any obligation which
it may have to the Indemnitee under this Agreement or otherwise unless and only
to the extent that such failure or delay materially prejudices the Company.
17. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to the address set forth below
Indemnitee signature hereto.
(b) If to the Company, to:
SteriGenics International, Inc.
4020 Clipper Court
Fremont, California 94538-6540
Attention:______________________
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
18. Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
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19. Headings. The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
20. Governing Law. The parties agree that this Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware without application of the conflict of laws principles
thereof.
21. Gender. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
STERIGENICS INTERNATIONAL, INC.
By:_____________________________________
Name:______________________________
Title:_____________________________
________________________________________
Name: _________________________________
Address:
________________________________________
________________________________________
________________________________________
________________________________________
<PAGE> 1
EXHIBIT 10.2
STERIGENICS, INTERNATIONAL
SECOND AMENDED AND RESTATED 1986 STOCK OPTION PLAN
1. Introduction.
(a) Establishment. On September 15, 1986, the Radiation
Sterilizers, Inc. 1986 Stock Option Plan (the "Initial Plan") was adopted. On
June 10, 1988, the Radiation Sterilizers, Inc. 1986 Stock Option Plan was
amended and restated in its entirety and renamed the Radiation Sterilizers, Inc.
Amended and Restated 1986 Stock Option Plan (the "First Amended Plan"). The
First Amended Plan is hereby amended and restated in its entirety and renamed
the "SteriGenics International Second Amended and Restated 1986 Stock Option
Plan" (the "Plan").
(b) Purpose. The Plan is established to attract, retain and
reward persons providing services to SteriGenics International and any successor
corporation thereto (collectively referred to as the "Company"), and any present
or future parent and/or subsidiary corporations of such corporation (all of whom
along with the Company being individually referred to as a "Participating
Company" and collectively referred to as the "Participating Company Group"), and
to motivate such persons to contribute to the growth and profits of the
Participating Company Group in the future. For purposes of the Plan, a parent
corporation and a subsidiary corporation shall be as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended (the "Code").
2. Administration.
(a) General. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed committee of
the Board having such powers as shall be specified by the Board. Any subsequent
references herein to the Board shall also mean the committee if such committee
has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to terminate or amend
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law. All questions of interpretation of the Plan or of
any options granted under the Plan (an "Option") shall be determined by the
Board, and such determinations shall be final and binding upon everyone having
an interest in the Plan and/or any Option.
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(b) Options Authorized. Options may be either incentive
stock options as defined in Section 422 of the Code ("Incentive Stock Options")
or nonqualified stock options.
(c) Authority of Officers. Any officer of a Participating
Company shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.
(d) Disinterested Administration. With respect to the
participation in the Plan of employees who are also officers or directors of the
Company subject to Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Plan shall be administered by the Board in compliance
with the "disinterested administration" requirement of Rule 16b-3, as
promulgated under the Exchange Act and amended from time to time or any
successor rule or regulation ("Rule 16b-3").
(e) Compliance with Section 162(m) of the Code. In the event
a Participating Company becomes a "publicly held corporation" as defined in
paragraph (2) of Section 162(m) of the Code, as amended by the Revenue
Reconciliation Act of 1993 (P.L. 103-66), and the regulations promulgated
thereunder ("Section 162(m)"), the Company may establish a committee of outside
directors meeting the requirements of paragraph 4(C)(i) of Section 162(m) to
approve the grant of Options which might reasonably be anticipated to result in
the payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to Section
162(m).
3. Eligibility.
(a) Eligible Persons. Options may be granted only to
employees (including officers and directors who are also employees) and
directors of the Participating Company Group or to individuals who are rendering
services, as consultants to the Participating Company Group. The Board shall, in
its sole discretion, determine which persons shall be granted Options (an
"Optionee"). Eligible persons may be granted more than one Option.
(b) Prospective Employee and Consultants Included. For
purposes of paragraph 3(a), "employees" shall include prospective employees to
whom Options are granted in connection with written offers of employment with
the Participating Company Group and "consultants" shall include prospective
consultants to whom options are granted in connection with written consulting
offers with the Participating Company Group.
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<PAGE> 3
(c) Type of Option Which May Be Granted. Employees may be
granted Incentive Stock Options and/or nonqualified stock options; provided,
however, that a prospective employee may only be granted a nonqualified stock
option. A director of the Company may only be granted a nonqualified stock
option unless the director is also an employee of the Company. An individual who
is rendering services as a consultant or who is a prospective consultant may
only be granted a nonqualified stock option.
4. Shares Subject to Option. Options shall be for the purchase of
shares of the authorized but unissued common stock of the Company (the "Stock"),
subject to adjustment as provided in paragraph 10 below. The maximum number of
shares of Stock which may be issued under the plan shall be 800,000 shares.
Subject to adjustment as provided in paragraph 10 below. At any such time as a
Participating Company is a "publicly held corporation," as defined in Section
162(m) of the Code, no person shall be granted within any fiscal year of the
Company Options which in the aggregate cover more than 200,000 shares (the "Per
Optionee Limit"). In the event that any outstanding Option for any reason
expires or is terminated or canceled and/or shares of Stock subject to
repurchase are repurchased by the Company, the shares allocable to the
unexercised portion of such Option, or such repurchased shares, may again be
subject to an Option grant.
5. Time for Granting Options. All Options shall be granted, if at
all, within ten (10) years from the earlier of the date the Second Amended and
Restated 1986 Stock Option Plan is adopted by the Board or the date the Plan is
duly approved by the shareholders of the Company.
6. Terms, Conditions and Form of Options. Subject to the provisions
of the Plan, the Board shall determine for each Option (which need not be
identical) the number of shares of Stock for which the Option shall be granted,
the exercise price of the Option, the timing and terms of exercisability and
vesting of the Option, whether the Option is to be treated as an Incentive Stock
Option or as a nonqualified stock option and all other terms and conditions of
the Option not inconsistent with the Plan. Options granted pursuant to the Plan
shall be evidenced by written agreements specifying the number of shares of
Stock covered thereby, in such form as the Board shall from time to time
establish, which agreements may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:
(a) Exercise Price. The exercise price for each Option shall
be established in the sole discretion of the Board; provided, however, that (i)
the exercise price per share for an Incentive Stock Option shall be not less
than the fair market value, as determined by the Board, of a share of Stock on
the date of the granting of the Option, (ii) the exercise price per share for a
nonqualified stock option shall not be less than eighty-five percent (85%) of
the fair market value, as
3
<PAGE> 4
determined by the Board, of a share of Stock on the date of the granting of the
Option and (iii) no Option granted to an Optionee who at the time the Option is
granted owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of a Participating Company within the
meaning of Section 422(b)(6) of the Code (a "Ten Percent Owner Optionee") shall
have an exercise price per share less than one hundred ten percent (110%) of the
fair market value, as determined by the Board, of a share of Stock on the date
of the granting of the Option. Notwithstanding the foregoing, an Option (whether
an Incentive Stock Option or a nonqualified stock option) may be granted with an
exercise price lower than the minimum exercise price set forth above if such
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying with the provisions of Section 424(a) of the Code.
(b) Exercise Period of Options. The Board shall have the
power to set the time or times within which each Option shall be exercisable or
the event or events upon the occurrence of which all or a portion of each Option
shall be exercisable and the term of each Option; provided, however, that (i) no
Option shall be exercisable after the expiration of ten (10) years after the
date such Option is granted, (ii) no Option granted to a Ten Percent Owner
Optionee shall be exercisable after the expiration of five (5) years after the
date such Option is granted, and (iii) no Option granted to a prospective
employee or prospective consultant may become exercisable prior to the date on
which such person commences service with a Participating Company. Unless
otherwise provided for by the Board in the grant of an Option, any Option
granted hereunder shall be exercisable for a term of ten (10) years.
(c) Payment of Exercise Price. Payment of the exercise price
for the number of shares of Stock being purchased pursuant to any Option shall
be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company
of shares of the Company's stock owned by the Optionee having a value, as
determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (iii) by the Optionee's recourse promissory note, (iv)
by the assignment of the proceeds of a sale of some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System), or (v) by
any combination thereof. The Board may at any time or from time to time, by
adoption of or by amendment to either of the standard forms of stock option
agreement described in paragraph 7 below, or by other means, grant Options which
do not permit all of the foregoing forms of consideration to be used in payment
of the exercise price and/or which otherwise restrict one or more forms of
consideration. Notwithstanding the foregoing, an Option may not be exercised by
tender to the Company of shares of the Company's stock to the extent such tender
of
4
<PAGE> 5
stock would constitute a violation of the provisions of any law, regulation
and/or agreement restricting the redemption of the Company's stock.
Furthermore, no promissory note shall be permitted if an exercise using a
promissory note would be a violation of any law. Any permitted promissory note
shall be due and payable not more than four (4) years after the Option is
exercised, and interest shall be payable at least annually and be at least equal
to the minimum interest rate necessary to avoid imputed interest pursuant to all
applicable sections of the Code. The Board shall have the authority to permit or
require the Optionee to secure any promissory note used to exercise an Option
with the shares of Stock acquired on exercise of the Option and/or with other
collateral acceptable to the Company.
(x) Unless otherwise provided by the Board, an Option may
not be exercised by tender to the Company of the Company's stock unless such
shares of the Company's stock have either been owned by the Optionee for more
than six (6) months or were not acquired, directly or indirectly, from the
Company.
(y) Unless otherwise provided by the Board, in the event the
Company at any time is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such a applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.
(z) The Company reserves, at any and all times, the right,
in the Company's sole and absolute discretion, to establish, decline to approve
and/or terminate any program and/or procedures for the exercise of Options by
means of an assignment of the proceeds of a sale of some or all of the shares of
Stock to be acquired upon such exercise.
7. Standard Forms of Stock Option Agreement.
(a) Incentive Stock Options. Unless otherwise provided for
by the Board at the time an Option is granted, an Option designated as an
"Incentive Stock Option" shall comply with and be subject to the terms and
conditions set forth in the form of incentive stock option agreement attached
hereto as Exhibit A and incorporated herein by reference.
(b) Nonqualified Stock Options. Unless otherwise provided
for by the Board at the time an Option is granted, an Option designated as a
"Nonqualified Stock Option" shall comply with and be subject to the terms and
conditions set forth in the forms of nonqualified stock option agreement
attached hereto as Exhibit B and incorporated herein by reference.
5
<PAGE> 6
(c) Standard Term for Options. Unless otherwise provided for
by the Board in the grant of an Option, any Option granted hereunder shall be
exercisable for a term of ten (10) years.
8. Authority to Vary Terms. The Board shall have the authority from
time to time to vary the terms of either of the standard forms of Stock Option
Agreement described in paragraph 7 above either in connection with the grant of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of such revised
or amended standard form or forms of stock option agreement shall be in
accordance with the terms of the Plan.
9. Fair Market Value Limitation. To the extent that the aggregate
fair market value (determined at the time the Option is granted) of stock with
respect to which Incentive Stock Options are exercisable by an Optionee for the
first time during any calendar year (under all stock option plans of the
Company, including the Plan) exceeds One Hundred Thousand Dollars ($100,000),
such options shall be treated as nonqualified stock options. This paragraph
shall be applied by taking Incentive Stock Options into account in the order in
which they were granted.
10. Effect of Change in Stock Subject to Plan. Appropriate
adjustments shall be made in the number and class of shares of Stock subject to
the Plan, to the Per Optionee Limit set forth in paragraph 4 above, and to any
outstanding Options and in the exercise price of any outstanding Options in the
event of a stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or like change in the capital structure of the
Company.
11. Transfer of Control. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to the
Company, but only if after such event, the shareholders of the Company before
such event do not retain, directly or indirectly, a majority of the beneficial
interest in the voting stock of the Company or the Company does not survive as a
corporation:
(a) The direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company;
(b) A merger or consolidation in which the Company is a
party;
(c) The sale, exchange, or transfer of all or substantially
all of the assets of the Company (other than a sale, exchange, or transfer to
one or more subsidiary corporations (as defined in paragraph 1 above) of the
Company); or
(d) A liquidation or dissolution of the Company.
6
<PAGE> 7
In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), for the Acquiring Corporation to either assume the Company's
rights and obligations under outstanding Options or substitute options for the
Acquiring Corporation's stock for such outstanding Options. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control.
12. Provision of Information. At least annually, copies of the
Company's balance sheet and income statement for the just completed fiscal year
shall be made available to each Optionee and purchaser of shares of Stock upon
the exercise of an Option. The Company shall not be required to provide such
information to Optionees whose duties in connection with the Company assure
them access to equivalent information.
13. Options Non-Transferable. During the lifetime of the Optionee,
the Option shall be exercisable only by the Optionee. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution.
14. Transfer of Company's Rights. In the event any Participating
Company assigns, other than by operation of law, to a third person, other than
another Participating Company, any of the Participating Company's rights to
repurchase any shares of Stock acquired on the exercise of an Option, the
assignee shall pay to the assigning Participating Company the value of such
right as determined by the Company in the Company's sole discretion. Such
consideration shall be paid in cash. The requirements of this paragraph 14
regarding the minimum consideration to be received by the assigning
Participating Company shall not inure to the benefit of the Optionee whose
shares of Stock are being repurchased. Failure of a Participating Company to
comply with the provisions of this paragraph 14 shall not constitute a defense
or otherwise prevent the exercise of the repurchase right by the assignee of
such right.
15. Termination or Amendment of Plan or Options. The Board,
including any duly appointed committee of the Board, may terminate or amend the
Plan or any Option at any time; provided, however, that without the approval of
the Company's shareholders, there shall be (a) no increase in the total number
of shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 10 above), (b) no change in the class eligible to receive Incentive
Stock Options and (c) no expansion in the class eligible to receive nonqualified
stock options. In addition to the foregoing, the approval of the Company's
shareholders shall be sought for any amendment to the Plan for which the Board
deems shareholder approval necessary in
7
<PAGE> 8
order to comply with Rule 16b-3. In any event, no amendment may adversely affect
any then outstanding Option or any unexercised portion thereof, without the
consent of the Optionee, unless such amendment is required to enable an Option
designated as an Incentive Stock Option to qualify as an Incentive Stock Option.
16. Continuation of Prior Plans as to Outstanding Options.
Notwithstanding any other provision of the Plan to the contrary, the terms of
the Initial Plan and the First Amended Plan, as amended, shall remain in effect
and apply to Options granted pursuant to the Initial Plan and the First Amended
Plan, as amended, respectively.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing SteriGenics International Second Amended and Restated 1986
Stock Option Plan was duly adopted by the Board of Directors of the Company on
October 25, 1994.
/s/ Carla S. Newell
-------------------------------
Secretary
8
<PAGE> 1
EXHIBIT 10.3
STERIGENICS INTERNATIONAL, INC.
1997 EQUITY INCENTIVE PLAN
(AS ADOPTED ON JUNE 23, 1997)
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TABLE OF CONTENTS
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ARTICLE 1. INTRODUCTION..........................................................................................1
ARTICLE 2. ADMINISTRATION........................................................................................1
2.1 Committee Composition...............................................................................1
2.2 Committee Responsibilities..........................................................................1
ARTICLE 3. SHARES AVAILABLE FOR GRANTS...........................................................................2
3.1 Basic Limitation....................................................................................2
3.2 Annual Increase in Shares...........................................................................2
3.3 Additional Shares...................................................................................2
3.4 Dividend Equivalents................................................................................2
ARTICLE 4. ELIGIBILITY...........................................................................................2
4.1 Incentive Stock Options.............................................................................2
4.2 Other Grants........................................................................................3
ARTICLE 5. OPTIONS...............................................................................................3
5.1 Stock Option Agreement..............................................................................3
5.2 Number of Shares....................................................................................3
5.3 Exercise Price......................................................................................3
5.4 Exercisability and Term.............................................................................3
5.5 Effect of Change in Control.........................................................................3
5.6 Modification or Assumption of Options...............................................................4
5.7 Buyout Provisions...................................................................................4
ARTICLE 6. PAYMENT FOR OPTION SHARES.............................................................................4
6.1 General Rule........................................................................................4
6.2 Surrender of Stock..................................................................................4
6.3 Exercise/Sale.......................................................................................5
6.4 Exercise/Pledge....................................................................................5
6.5 Promissory Note.....................................................................................5
6.6 Other Forms of Payment..............................................................................5
ARTICLE 7. AUTOMATIC OPTION GRANTS TO OUTSIDE DIRECTORS..........................................................5
7.1 Initial Grants......................................................................................5
7.2 Annual Grants.......................................................................................5
7.3 Accelerated Exercisability..........................................................................5
7.4 Exercise Price......................................................................................6
7.5 Term ...............................................................................................6
7.6 Affiliates of Outside Directors.....................................................................6
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ARTICLE 8. STOCK APPRECIATION RIGHTS.............................................................................6
8.1 SAR Agreement.......................................................................................6
8.2 Number of Shares....................................................................................6
8.3 Exercise Price......................................................................................7
8.4 Exercisability and Term.............................................................................7
8.5 Effect of Change in Control.........................................................................7
8.6 Exercise of SARs....................................................................................7
8.7 Modification or Assumption of SARs..................................................................7
ARTICLE 9. RESTRICTED SHARES.....................................................................................8
9.1 Restricted Stock Agreement..........................................................................8
9.2 Payment for Awards..................................................................................8
9.3 Vesting Conditions..................................................................................8
9.4 Voting and Dividend Rights..........................................................................8
ARTICLE 10. STOCK UNITS..........................................................................................8
10.1 Stock Unit Agreement...............................................................................8
10.2 Payment for Awards.................................................................................9
10.3 Vesting Conditions.................................................................................9
10.4 Voting and Dividend Rights.........................................................................9
10.5 Form and Time of Settlement of Stock Units.........................................................9
10.6 Death of Recipient.................................................................................9
10.7 Creditors' Rights.................................................................................10
ARTICLE 11. PROTECTION AGAINST DILUTION.........................................................................10
11.1 Adjustments.......................................................................................10
11.2 Dissolution or Liquidation........................................................................10
11.3 Reorganizations...................................................................................10
ARTICLE 12. DEFERRAL OF AWARDS..................................................................................11
ARTICLE 13. AWARDS UNDER OTHER PLANS............................................................................11
ARTICLE 14. PAYMENT OF DIRECTOR'S FEES IN SECURITIES............................................................12
14.1 Effective Date....................................................................................12
14.2 Elections to Receive NSOs, Restricted Shares or Stock Units.......................................12
14.3 Number and Terms of NSOs, Restricted Shares or Stock Units........................................12
ARTICLE 15. LIMITATION ON RIGHTS................................................................................12
15.1 Retention Rights..................................................................................12
15.2 Stockholders' Rights..............................................................................12
15.3 Regulatory Requirements...........................................................................12
ARTICLE 16. WITHHOLDING TAXES...................................................................................13
16.1 General...........................................................................................13
16.2 Share Withholding.................................................................................13
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ARTICLE 17. FUTURE OF THE PLAN..................................................................................13
17.1 Term of the Plan..................................................................................13
17.2 Amendment or Termination..........................................................................13
ARTICLE 18. LIMITATION ON PAYMENTS..............................................................................13
18.1 Basic Rule........................................................................................13
18.2 Reduction of Payments.............................................................................14
18.3 Overpayments and Underpayments....................................................................14
18.4 Related Corporations..............................................................................14
ARTICLE 19. DEFINITIONS.........................................................................................14
ARTICLE 20. EXECUTION...........................................................................................18
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STERIGENICS INTERNATIONAL, INC.
1997 EQUITY INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board on June 23, 1997, effective
as of the date of the Company's initial public offering. The purpose of the Plan
is to promote the long-term success of the Company and the creation of
stockholder value by (a) encouraging Employees, Outside Directors and
Consultants to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees, Outside Directors and Consultants with
exceptional qualifications and (c) linking Employees, Outside Directors and
Consultants directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance
with, the laws of the State of Delaware (except their choice-of-law provisions).
ARTICLE 2. ADMINISTRATION.
2.1 COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more directors of
the Company, who shall be appointed by the Board. In addition, the composition
of the Committee shall satisfy:
(a) Such requirements as the Securities and Exchange
Commission may establish for administrators acting under plans intended
to qualify for exemption under Rule 16b-3 (or its successor) under the
Exchange Act; and
(b) Such requirements as the Internal Revenue Service
may establish for outside directors acting under plans intended to
qualify for exemption under section 162(m)(4)(C) of the Code.
The Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not satisfy the
foregoing requirements, who may administer the Plan with respect to Employees
and Consultants who are not considered officers or directors of the Company
under section 16 of the Exchange Act, may grant Awards under the Plan to such
Employees and Consultants and may determine all terms of such Awards.
2.2 COMMITTEE RESPONSIBILITIES. The Committee shall (a) select the
Employees, Outside Directors and Consultants who are to receive Awards under the
Plan, (b) determine the type, number, vesting requirements and other features
and conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The
<PAGE> 6
Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 BASIC LIMITATION. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Options, SARs, Stock Units and Restricted Shares awarded under the Plan shall
not exceed (a) 1,200,000 plus (b) the aggregate number of Common Shares
remaining available for grants under the Predecessor Plan on June 23, 1997, plus
(c) the additional Common Shares described in Sections 3.2 and 3.3. No
additional grants shall be made under the Predecessor Plan after June 23, 1997.
The limitation of this Section 3.1 shall be subject to adjustment pursuant to
Article 11.
3.2 ANNUAL INCREASE IN SHARES. As of January 1 of each year, commencing
with the year 1999, the aggregate number of Options, SARs, Stock Units and
Restricted Shares that may be awarded under the Plan shall automatically
increase by a number equal to the lesser of (a) 5% of the total number of Common
Shares then outstanding or (b) 250,000.
3.3 ADDITIONAL SHARES. If Restricted Shares or Common Shares issued
upon the exercise of Options granted under this Plan or under the Predecessor
Plan are forfeited, then such Common Shares shall again become available for
Awards. If Stock Units, Options or SARs granted under this Plan or under the
Predecessor Plan are forfeited or terminate for any other reason before being
exercised, then the corresponding Common Shares shall again become available for
Awards. If Stock Units are settled, then only the number of Common Shares (if
any) actually issued in settlement of such Stock Units shall reduce the number
available under Section 3.1 and the balance shall again become available for
Awards. If SARs are exercised, then only the number of Common Shares (if any)
actually issued in settlement of such SARs shall reduce the number available
under Section 3.1 and the balance shall again become available for Awards. The
foregoing notwithstanding, the aggregate number of Common Shares that may be
issued under the Plan upon the exercise of ISOs shall not be increased when
Restricted Shares or other Common Shares are forfeited.
3.4 DIVIDEND EQUIVALENTS. Any dividend equivalents paid or credited
under the Plan shall not be applied against the number of Restricted Shares,
Stock Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
ARTICLE 4. ELIGIBILITY.
4.1 INCENTIVE STOCK OPTIONS. Only Employees who are common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, an Employee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company or any
of its Parents or Subsidiaries shall not be eligible for the grant of an ISO
unless the requirements set forth in section 422(c)(6) of the Code are
satisfied.
2
<PAGE> 7
4.2 OTHER GRANTS. Only Employees, Outside Directors and Consultants
shall be eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs.
ARTICLE 5. OPTIONS.
5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical. Options may be granted in consideration of a reduction in
the Optionee's other compensation. A Stock Option Agreement may provide that a
new Option will be granted automatically to the Optionee when he or she
exercises a prior Option and pays the Exercise Price in the form described in
Section 6.2.
5.2 NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 11. Options granted to any
Optionee in a single fiscal year of the Company shall not cover more than
250,000 Common Shares, except that Options granted to a new Employee in the
fiscal year of the Company in which his or her service as an Employee first
commences shall not cover more than 500,000 Common Shares. The limitations set
forth in the preceding sentence shall be subject to adjustment in accordance
with Article 11.
5.3 EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price; provided that the Exercise Price under an ISO shall in no event
be less than 100% of the Fair Market Value of a Common Share on the date of
grant and the Exercise Price under an NSO shall in no event be less than 85% of
the Fair Market Value of a Common Share on the date of grant. In the case of an
NSO, a Stock Option Agreement may specify an Exercise Price that varies in
accordance with a predetermined formula while the NSO is outstanding.
5.4 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date or event when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an ISO shall in no event exceed 10 years from
the date of grant. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service. Options may be awarded in
combination with SARs, and such an Award may provide that the Options will not
be exercisable unless the related SARs are forfeited.
5.5 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become
exercisable as to all or part of the Common Shares subject to such Option in the
event that a Change in Control occurs with respect to the Company, subject to
the following limitations:
3
<PAGE> 8
(a) In the case of an ISO, the acceleration of
exercisability shall not occur without the Optionee's written consent.
(b) If the Company and the other party to the
transaction constituting a Change in Control agree that such
transaction is to be treated as a "pooling of interests" for financial
reporting purposes, and if such transaction in fact is so treated, then
the acceleration of exercisability shall not occur to the extent that
the Company's independent accountants and such other party's
independent accountants separately determine in good faith that such
acceleration would preclude the use of "pooling of interests"
accounting.
5.6 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.
5.7 BUYOUT PROVISIONS. The Committee may at any time (a) offer to buy
out for a payment in cash or cash equivalents an Option previously granted or
(b) authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash or cash equivalents at the
time when such Common Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan,
payment shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. The Stock Option Agreement may
specify that payment may be made in any form(s) described in this
Article 6.
(b) In the case of an NSO, the Committee may at any
time accept payment in any form(s) described in this Article 6.
6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is
applicable, all or any part of the Exercise Price may be paid by surrendering,
or attesting to the ownership of, Common Shares that are already owned by the
Optionee. Such Common Shares shall be valued at their Fair Market Value on the
date when the new Common Shares are purchased under the Plan. The Optionee shall
not surrender, or attest to the ownership of, Common Shares in payment of the
Exercise Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to the Option for
financial reporting purposes.
4
<PAGE> 9
6.3 EXERCISE/SALE. To the extent that this Section 6.3 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to a
securities broker approved by the Company to sell all or part of the Common
Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.
6.4 EXERCISE/PLEDGE. To the extent that this Section 6.4 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the Common Shares being purchased under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
6.5 PROMISSORY NOTE. To the extent that this Section 6.5 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering a full-recourse promissory note on a form prescribed by the Company;
provided that the par value of the Common Shares being purchased under the Plan
shall be paid in cash or cash equivalents.
6.6 OTHER FORMS OF PAYMENT. To the extent that this Section 6.6 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid in any other form that is consistent with applicable laws, regulations
and rules.
ARTICLE 7. AUTOMATIC OPTION GRANTS TO OUTSIDE DIRECTORS.
7.1 INITIAL GRANTS. Each Outside Director who first becomes a member of
the Board after the date of the Company's initial public offering shall receive
a one-time grant of an NSO covering 15,000 Common Shares (subject to adjustment
under Article 11). Such NSO shall be granted on the date when such Outside
Director first joins the Board. Such NSO shall become exercisable with respect
to 24% of the Common Shares subject thereto on the first anniversary of the date
of grant and with respect to an additional 2% of the Common Shares subject
thereto upon completion of each month of service thereafter until such NSO is
exercisable in full 50 months after the date of grant.
7.2 ANNUAL GRANTS. Upon the conclusion of each regular annual meeting
of the Company's stockholders held in the year 1998 or thereafter, each Outside
Director who will continue serving as a member of the Board thereafter shall
receive an NSO covering 3,000 Common Shares (subject to adjustment under Article
11), except that such NSO shall not be granted in the calendar year in which the
same Outside Director received the NSO described in Section 7.1. NSOs granted
under this Section 7.2 shall become exercisable in full on the first anniversary
of the date of grant.
7.3 ACCELERATED EXERCISABILITY. All NSOs granted to an Outside Director
under this Article 7 shall also become exercisable in full in the event of:
(a) The termination of such Outside Director's
service because of death, total and permanent disability or retirement
at or after age 65; or
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(b) A Change in Control with respect to the Company,
except as provided in the next following sentence.
If the Company and the other party to the transaction constituting a Change in
Control agree that such transaction is to be treated as a "pooling of interests"
for financial reporting purposes, and if such transaction in fact is so treated,
then the acceleration of exercisability shall not occur to the extent that the
Company's independent accountants and such other party's independent accountants
separately determine in good faith that such acceleration would preclude the use
of "pooling of interests" accounting.
7.4 EXERCISE PRICE. The Exercise Price under all NSOs granted to an
Outside Director under this Article 7 shall be equal to 100% of the Fair Market
Value of a Common Share on the date of grant, payable in one of the forms
described in Sections 6.1, 6.2, 6.3 and 6.4.
7.5 TERM. All NSOs granted to an Outside Director under this Article 7
shall terminate on the earliest of (a) the 10th anniversary of the date of
grant, (b) the date three months after the termination of such Outside
Director's service for any reason other than death or total and permanent
disability or (c) the date 12 months after the termination of such Outside
Director's service because of death or total and permanent disability.
7.6 AFFILIATES OF OUTSIDE DIRECTORS. The Committee may provide that the
NSOs that otherwise would be granted to an Outside Director under this Article 7
shall instead be granted to an affiliate of such Outside Director. Such
affiliate shall then be deemed to be an Outside Director for purposes of the
Plan, provided that the service-related vesting and termination provisions
pertaining to the NSOs shall be applied with regard to the service of the
Outside Director.
ARTICLE 8. STOCK APPRECIATION RIGHTS.
8.1 SAR AGREEMENT. Each grant of an SAR under the Plan shall be
evidenced by an SAR Agreement between the Optionee and the Company. Such SAR
shall be subject to all applicable terms of the Plan and may be subject to any
other terms that are not inconsistent with the Plan. The provisions of the
various SAR Agreements entered into under the Plan need not be identical. SARs
may be granted in consideration of a reduction in the Optionee's other
compensation.
8.2 NUMBER OF SHARES. Each SAR Agreement shall specify the number of
Common Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Article 11. SARs granted to any Optionee in a
single calendar year shall in no event pertain to more than 250,000 Common
Shares, except that SARs granted to a new Employee in the fiscal year of the
Company in which his or her service as an Employee first commences shall not
pertain to more than 500,000 Common Shares. The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 11.
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8.3 EXERCISE PRICE. Each SAR Agreement shall specify the Exercise
Price. An SAR Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the SAR is outstanding.
8.4 EXERCISABILITY AND TERM. Each SAR Agreement shall specify the date
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. An SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. SARs may be
awarded in combination with Options, and such an Award may provide that the SARs
will not be exercisable unless the related Options are forfeited. An SAR may be
included in an ISO only at the time of grant but may be included in an NSO at
the time of grant or thereafter. An SAR granted under the Plan may provide that
it will be exercisable only in the event of a Change in Control.
8.5 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the
time of granting an SAR or thereafter, that such SAR shall become fully
exercisable as to all Common Shares subject to such SAR in the event that a
Change in Control occurs with respect to the Company, subject to the following
sentence. If the Company and the other party to the transaction constituting a
Change in Control agree that such transaction is to be treated as a "pooling of
interests" for financial reporting purposes, and if such transaction in fact is
so treated, then the acceleration of exercisability shall not occur to the
extent that the Company's independent accountants and such other party's
independent accountants separately determine in good faith that such
acceleration would preclude the use of "pooling of interests" accounting.
8.6 EXERCISE OF SARS. Upon exercise of an SAR, the Optionee (or any
person having the right to exercise the SAR after his or her death) shall
receive from the Company (a) Common Shares, (b) cash or (c) a combination of
Common Shares and cash, as the Committee shall determine. The amount of cash
and/or the Fair Market Value of Common Shares received upon exercise of SARs
shall, in the aggregate, be equal to the amount by which the Fair Market Value
(on the date of surrender) of the Common Shares subject to the SARs exceeds the
Exercise Price. If, on the date when an SAR expires, the Exercise Price under
such SAR is less than the Fair Market Value on such date but any portion of such
SAR has not been exercised or surrendered, then such SAR shall automatically be
deemed to be exercised as of such date with respect to such portion.
8.7 MODIFICATION OR ASSUMPTION OF SARS. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in return for the grant of new SARs for the same or a different
number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of an SAR shall, without the consent of the
Optionee, alter or impair his or her rights or obligations under such SAR.
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ARTICLE 9. RESTRICTED SHARES.
9.1 RESTRICTED STOCK AGREEMENT. Each grant of Restricted Shares under
the Plan shall be evidenced by a Restricted Stock Agreement between the
recipient and the Company. Such Restricted Shares shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan. The provisions of the various Restricted Stock
Agreements entered into under the Plan need not be identical.
9.2 PAYMENT FOR AWARDS. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
that an Award consists of newly issued Restricted Shares, the Award recipient
shall furnish consideration with a value not less than the par value of such
Restricted Shares in the form of cash, cash equivalents or past services
rendered to the Company (or a Parent or Subsidiary), as the Committee may
determine.
9.3 VESTING CONDITIONS. Each Award of Restricted Shares may or may not
be subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Restricted Stock Agreement. A
Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant's death, disability or retirement or other events. The Committee
may determine, at the time of granting Restricted Shares or thereafter, that all
or part of such Restricted Shares shall become vested in the event that a Change
in Control occurs with respect to the Company, except as provided in the next
following sentence. If the Company and the other party to the transaction
constituting a Change in Control agree that such transaction is to be treated as
a "pooling of interests" for financial reporting purposes, and if such
transaction in fact is so treated, then the acceleration of vesting shall not
occur to the extent that the Company's independent accountants and such other
party's independent accountants separately determine in good faith that such
acceleration would preclude the use of "pooling of interests" accounting.
9.4 VOTING AND DIVIDEND RIGHTS. The holders of Restricted Shares
awarded under the Plan shall have the same voting, dividend and other rights as
the Company's other stockholders. A Restricted Stock Agreement, however, may
require that the holders of Restricted Shares invest any cash dividends received
in additional Restricted Shares. Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to
which the dividends were paid.
ARTICLE 10. STOCK UNITS.
10.1 STOCK UNIT AGREEMENT. Each grant of Stock Units under the Plan
shall be evidenced by a Stock Unit Agreement between the recipient and the
Company. Such Stock Units shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the Plan.
The provisions of the various Stock Unit Agreements entered into under the Plan
need not be identical. Stock Units may be granted in consideration of a
reduction in the recipient's other compensation.
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10.2 PAYMENT FOR AWARDS. To the extent that an Award is granted in the
form of Stock Units, no cash consideration shall be required of the Award
recipients.
10.3 VESTING CONDITIONS. Each Award of Stock Units may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Stock Unit Agreement. A Stock
Unit Agreement may provide for accelerated vesting in the event of the
Participant's death, disability or retirement or other events. The Committee may
determine, at the time of granting Stock Units or thereafter, that all or part
of such Stock Units shall become vested in the event that a Change in Control
occurs with respect to the Company, except as provided in the next following
sentence. If the Company and the other party to the transaction constituting a
Change in Control agree that such transaction is to be treated as a "pooling of
interests" for financial reporting purposes, and if such transaction in fact is
so treated, then the acceleration of vesting shall not occur to the extent that
the Company's independent accountants and such other party's independent
accountants separately determine in good faith that such acceleration would
preclude the use of "pooling of interests" accounting.
10.4 VOTING AND DIVIDEND RIGHTS. The holders of Stock Units shall have
no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded
under the Plan may, at the Committee's discretion, carry with it a right to
dividend equivalents. Such right entitles the holder to be credited with an
amount equal to all cash dividends paid on one Common Share while the Stock Unit
is outstanding. Dividend equivalents may be converted into additional Stock
Units. Settlement of dividend equivalents may be made in the form of cash, in
the form of Common Shares, or in a combination of both. Prior to distribution,
any dividend equivalents which are not paid shall be subject to the same
conditions and restrictions as the Stock Units to which they attach.
10.5 FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested
Stock Units may be made in the form of (d) cash, (e) Common Shares or (f) any
combination of both, as determined by the Committee. The actual number of Stock
Units eligible for settlement may be larger or smaller than the number included
in the original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based
on the average Fair Market Value of Common Shares over a series of trading days.
Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to the
Stock Units have been satisfied or have lapsed, or it may be deferred to any
later date. The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment pursuant
to Article 11.
10.6 DEATH OF RECIPIENT. Any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's beneficiary
or beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary survives the
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Award recipient, then any Stock Units Award that becomes payable after the
recipient's death shall be distributed to the recipient's estate.
10.7 CREDITORS' RIGHTS. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.
ARTICLE 11. PROTECTION AGAINST DILUTION.
11.1 ADJUSTMENTS. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a spin-off
or a similar occurrence, the Committee shall make such adjustments as it, in its
sole discretion, deems appropriate in one or more of:
(a) The number of Options, SARs, Restricted Shares
and Stock Units available for future Awards under Article 3;
(b) The limitations set forth in Sections 5.2 and
8.2;
(c) The number of NSOs to be granted to Outside
Directors under Article 7;
(d) The number of Common Shares covered by each
outstanding Option and SAR;
(e) The Exercise Price under each outstanding Option
and SAR; or
(f) The number of Stock Units included in any prior
Award which has not yet been settled.
Except as provided in this Article 11, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
11.2 DISSOLUTION OR LIQUIDATION. To the extent not previously exercised
or settled, Options, SARs and Stock Units shall terminate immediately prior to
the dissolution or liquidation of the Company.
11.3 REORGANIZATIONS. In the event that the Company is a party to a
merger or other reorganization, outstanding Awards shall be subject to the
agreement of merger or
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reorganization. Such agreement shall provide for (a) the continuation of the
outstanding Awards by the Company, if the Company is a surviving corporation,
(b) the assumption of the outstanding Awards by the surviving corporation or its
parent or subsidiary, (c) the substitution by the surviving corporation or its
parent or subsidiary of its own awards for the outstanding Awards, (d) full
exercisability or vesting and accelerated expiration of the outstanding Awards
or (e) settlement of the full value of the outstanding Awards in cash or cash
equivalents followed by cancellation of such Awards.
ARTICLE 12. DEFERRAL OF AWARDS.
The Committee (in its sole discretion) may permit or require a
Participant to:
(a) Have cash that otherwise would be paid to such
Participant as a result of the exercise of an SAR or the settlement of
Stock Units credited to a deferred compensation account established for
such Participant by the Committee as an entry on the Company's books;
(b) Have Common Shares that otherwise would be
delivered to such Participant as a result of the exercise of an Option
or SAR converted into an equal number of Stock Units; or
(c) Have Common Shares that otherwise would be
delivered to such Participant as a result of the exercise of an Option
or SAR or the settlement of Stock Units converted into amounts credited
to a deferred compensation account established for such Participant by
the Committee as an entry on the Company's books. Such amounts shall be
determined by reference to the Fair Market Value of such Common Shares
as of the date when they otherwise would have been delivered to such
Participant.
A deferred compensation account established under this Article 12 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Article 12.
ARTICLE 13. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs.
Such awards may be settled in the form of Common Shares issued under this Plan.
Such Common Shares shall be treated for all purposes under the Plan like Common
Shares issued in settlement of Stock Units and shall, when issued, reduce the
number of Common Shares available under Article 3.
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ARTICLE 14. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
14.1 EFFECTIVE DATE. No provision of this Article 14 shall be effective
unless and until the Board has determined to implement such provision.
14.2 ELECTIONS TO RECEIVE NSOS, RESTRICTED SHARES OR STOCK UNITS. An
Outside Director may elect to receive his or her annual retainer payments and/or
meeting fees from the Company in the form of cash, NSOs, Restricted Shares or
Stock Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Article 14 shall be filed with the Company on the prescribed form.
14.3 NUMBER AND TERMS OF NSOS, RESTRICTED SHARES OR STOCK UNITS. The
number of NSOs, Restricted Shares or Stock Units to be granted to Outside
Directors in lieu of annual retainers and meeting fees that would otherwise be
paid in cash shall be calculated in a manner determined by the Board. The terms
of such NSOs, Restricted Shares or Stock Units shall also be determined by the
Board.
ARTICLE 15. LIMITATION ON RIGHTS.
15.1 RETENTION RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee,
Outside Director or Consultant. The Company and its Parents, Subsidiaries and
Affiliates reserve the right to terminate the service of any Employee, Outside
Director or Consultant at any time, with or without cause, subject to applicable
laws, the Company's certificate of incorporation and by-laws and a written
employment agreement (if any).
15.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, if applicable, the time when he or she becomes
entitled to receive such Common Shares by filing any required notice of exercise
and paying any required Exercise Price. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.
15.3 REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
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ARTICLE 16. WITHHOLDING TAXES.
16.1 GENERAL. To the extent required by applicable federal, state,
local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
16.2 SHARE WITHHOLDING. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Common Shares that otherwise
would be issued to him or her or by surrendering all or a portion of any Common
Shares that he or she previously acquired. Such Common Shares shall be valued at
their Fair Market Value on the date when taxes otherwise would be withheld in
cash.
ARTICLE 17. FUTURE OF THE PLAN.
17.1 TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of the Company's initial public offering. The Plan shall
remain in effect until it is terminated under Section 17.2, except that no ISOs
shall be granted on or after the 10th anniversary of the later of (a) the date
when the Board adopted the Plan or (b) the date when the Board adopted the most
recent increase in the number of Common Shares available under Article 3 which
was approved by the Company's stockholders.
17.2 AMENDMENT OR TERMINATION. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.
ARTICLE 18. LIMITATION ON PAYMENTS.
18.1 BASIC RULE. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer by
the Company under the Plan to or for the benefit of a Participant (a "Payment")
would be nondeductible by the Company for federal income tax purposes because of
the provisions concerning "excess parachute payments" in section 280G of the
Code, then the aggregate present value of all Payments shall be reduced (but not
below zero) to the Reduced Amount; provided that the Committee, at the time of
making an Award under the Plan or at any time thereafter, may specify in writing
that such Award shall not be so reduced and shall not be subject to this Article
18. For purposes of this Article 18, the "Reduced Amount" shall be the amount,
expressed as a present value, which maximizes the aggregate present value of the
Payments without causing any Payment to be nondeductible by the Company because
of section 280G of the Code.
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18.2 REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 18, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 18 shall be binding upon
the Company and the Participant and shall be made within 60 days of the date
when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
18.3 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount which is subject to taxation under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
18.4 RELATED CORPORATIONS. For purposes of this Article 18, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
ARTICLE 19. DEFINITIONS.
19.1 "AFFILIATE" means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.
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19.2 "AWARD" means any award of an Option, an SAR, a Restricted Share
or a Stock Unit under the Plan.
19.3 "BOARD" means the Company's Board of Directors, as constituted
from time to time.
19.4 "CHANGE IN CONTROL" shall mean:
(a) The consummation of a merger or consolidation of
the Company with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's securities outstanding immediately
after such merger, consolidation or other reorganization is owned by
persons who were not stockholders of the Company immediately prior to
such merger, consolidation or other reorganization;
(b) The sale, transfer or other disposition of all or
substantially all of the Company's assets;
(c) A change in the composition of the Board, as a
result of which fewer than two-thirds of the incumbent directors are
directors who either (i) had been directors of the Company on the date
24 months prior to the date of the event that may constitute a Change
in Control (the "original directors") or (ii) were elected, or
nominated for election, to the Board with the affirmative votes of at
least a majority of the aggregate of the original directors who were
still in office at the time of the election or nomination and the
directors whose election or nomination was previously so approved; or
(d) Any transaction as a result of which any person
is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
at least 30% of the total voting power represented by the Company's
then outstanding voting securities. For purposes of this Paragraph (d),
the term "person" shall have the same meaning as when used in sections
13(d) and 14(d) of the Exchange Act but shall exclude:
(i) A trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a Parent
or Subsidiary;
(ii) A corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the
Company; and
(iii) A person who was a stockholder of the Company
prior to the Company's initial public offering.
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A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
19.5 "CODE" means the Internal Revenue Code of 1986, as amended.
19.6 "COMMITTEE" means a committee of the Board, as described in
Article 2.
19.7 "COMMON SHARE" means one share of the common stock of the Company.
19.8 "COMPANY" means SteriGenics International, Inc., a Delaware
corporation.
19.9 "CONSULTANT" means a consultant or adviser who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.1.
19.10 "EMPLOYEE" means a common-law employee of the Company, a Parent,
a Subsidiary or an Affiliate.
19.11 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
19.12 "EXERCISE PRICE," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.
19.13 "FAIR MARKET VALUE" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in The Wall Street Journal. Such determination
shall be conclusive and binding on all persons.
19.14 "ISO" means an incentive stock option described in section 422(b)
of the Code.
19.15 "NSO" means a stock option not described in sections 422 or 423
of the Code.
19.16 "OPTION" means an ISO or NSO granted under the Plan and entitling
the holder to purchase Common Shares.
19.17 "OPTIONEE" means an individual or estate who holds an Option or
SAR.
19.18 "OUTSIDE DIRECTOR" shall mean a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.1.
16
<PAGE> 21
19.19 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
19.20 "PARTICIPANT" means an individual or estate who holds an Award.
19.21 "PLAN" means this SteriGenics International, Inc. 1997 Equity
Incentive Plan, as amended from time to time.
19.22 "PREDECESSOR PLAN" means the SteriGenics International Second
Amended and Restated 1986 Stock Option Plan.
19.23 "RESTRICTED SHARE" means a Common Share awarded under the Plan.
19.24 "RESTRICTED STOCK AGREEMENT" means the agreement between the
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Share.
19.25 "SAR" means a stock appreciation right granted under the Plan.
19.26 "SAR AGREEMENT" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.
19.27 "STOCK OPTION AGREEMENT" means the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to his or her Option.
19.28 "STOCK UNIT" means a bookkeeping entry representing the
equivalent of one Common Share, as awarded under the Plan.
19.29 "STOCK UNIT AGREEMENT" means the agreement between the Company
and the recipient of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.
19.30 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
17
<PAGE> 22
ARTICLE 20. EXECUTION.
To record the adoption of the Plan by the Board, the Company
has caused its duly authorized officer to execute this document in the name of
the Company.
STERIGENICS INTERNATIONAL, INC.
By: _____________________________________
Title: __________________________________
18
<PAGE> 1
EXHIBIT 10.4
STERIGENICS INTERNATIONAL, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
(AS ADOPTED ON JUNE 23, 1997)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. PURPOSE OF THE PLAN..............................................................1
SECTION 2. ADMINISTRATION OF THE PLAN.......................................................1
(a) Committee Composition...........................................................1
(b) Committee Responsibilities......................................................1
SECTION 3. ENROLLMENT AND PARTICIPATION.....................................................1
(a) Offering Periods................................................................1
(b) Accumulation Periods............................................................1
(c) Enrollment......................................................................1
(d) Duration of Participation.......................................................1
(e) Applicable Offering Period......................................................2
SECTION 4. EMPLOYEE CONTRIBUTIONS...........................................................2
(a) Frequency of Payroll Deductions.................................................2
(b) Amount of Payroll Deductions....................................................2
(c) Changing Withholding Rate.......................................................2
(d) Discontinuing Payroll Deductions................................................3
(e) Limit on Number of Elections....................................................3
SECTION 5. WITHDRAWAL FROM THE PLAN.........................................................3
(a) Withdrawal......................................................................3
(b) Re-Enrollment After Withdrawal..................................................3
SECTION 6. CHANGE IN EMPLOYMENT STATUS......................................................3
(a) Termination of Employment.......................................................3
(b) Leave of Absence................................................................3
(c) Death...........................................................................4
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.............................................4
(a) Plan Accounts...................................................................4
(b) Purchase Price..................................................................4
(c) Number of Shares Purchased......................................................4
(d) Available Shares Insufficient...................................................4
(e) Issuance of Stock...............................................................5
(f) Unused Cash Balances............................................................5
(g) Stockholder Approval............................................................5
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP...................................................5
(a) Five Percent Limit..............................................................5
</TABLE>
i
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<TABLE>
<S> <C> <C>
(b) Dollar Limit....................................................................5
SECTION 9. RIGHTS NOT TRANSFERABLE..........................................................6
SECTION 10. NO RIGHTS AS AN EMPLOYEE........................................................6
SECTION 11. NO RIGHTS AS A STOCKHOLDER......................................................6
SECTION 12. SECURITIES LAW REQUIREMENTS.....................................................7
SECTION 13. STOCK OFFERED UNDER THE PLAN....................................................7
(a) Authorized Shares...............................................................7
(b) Anti-Dilution Adjustments.......................................................7
(c) Reorganizations.................................................................7
SECTION 14. AMENDMENT OR DISCONTINUANCE.....................................................7
SECTION 15. DEFINITIONS.....................................................................7
(a) "Accumulation Period"...........................................................7
(b) "Board".........................................................................8
(c) "Change in Control".............................................................8
(d) "Code"..........................................................................8
(e) "Committee".....................................................................8
(f) "Company".......................................................................8
(g) "Compensation"..................................................................8
(h) "Eligible Employee".............................................................8
(i) "Exchange Act"..................................................................9
(j) "Fair Market Value".............................................................9
(k) "IPO"...........................................................................9
(l) "Offering Period"...............................................................9
(m) "Participant"...................................................................9
(n) "Participating Company".........................................................9
(o) "Plan"..........................................................................9
(p) "Plan Account".................................................................10
(q) "Purchase Price"...............................................................10
(r) "Stock"........................................................................10
(s) "Subsidiary"...................................................................10
SECTION 15. EXECUTION......................................................................10
</TABLE>
ii
<PAGE> 4
STERIGENICS INTERNATIONAL, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE OF THE PLAN.
The Plan was adopted by the Board on June 23, 1997, effective as of the
date of the IPO. The purpose of the Plan is to provide Eligible Employees with
an opportunity to increase their proprietary interest in the success of the
Company by purchasing Stock from the Company on favorable terms and to pay for
such purchases through payroll deductions. The Plan is intended to qualify under
section 423 of the Code.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of one or more directors of
the Company, who shall be appointed by the Board.
(b) COMMITTEE RESPONSIBILITIES. The Committee shall interpret the Plan
and make all other policy decisions relating to the operation of the Plan. The
Committee may adopt such rules, guidelines and forms as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.
SECTION 3. ENROLLMENT AND PARTICIPATION.
(a) OFFERING PERIODS. While the Plan is in effect, two overlapping
Offering Periods shall commence in each calendar year. The Offering Periods
shall consist of the 24-month periods commencing on each May 1 and November 1,
except that the first Offering Period shall commence on the date of the IPO and
end on October 31, 1999.
(b) ACCUMULATION PERIODS. While the Plan is in effect, two Accumulation
Periods shall commence in each calendar year. The Accumulation Periods shall
consist of the six-month periods commencing on each May 1 and November 1, except
that the first Accumulation Period shall commence on the date of the IPO and end
on April 30, 1998.
(c) ENROLLMENT. Any individual who, on the day preceding the first day
of an Offering Period, qualifies as an Eligible Employee may elect to become a
Participant in the Plan for such Offering Period by executing the enrollment
form prescribed for this purpose by the Committee. The enrollment form shall be
filed with the Company at the prescribed location not later than five days prior
to the commencement of such Offering Period.
(d) DURATION OF PARTICIPATION. Once enrolled in the Plan, a Participant
shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws
<PAGE> 5
from the Plan under Section 5(a) or reaches the end of the Accumulation Period
in which his or her employee contributions were discontinued under Section 4(d)
or 8(b). A Participant who discontinued employee contributions under Section
4(d) or withdrew from the Plan under Section 5(a) may again become a
Participant, if he or she then is an Eligible Employee, by following the
procedure described in Subsection (c) above. A Participant whose employee
contributions were discontinued automatically under Section 8(b) shall
automatically resume participation at the beginning of the earliest Accumulation
Period ending in the next calendar year, if he or she then is an Eligible
Employee.
(e) APPLICABLE OFFERING PERIOD. For purposes of calculating the Purchase
Price under Section 7(b), the applicable Offering Period shall be determined as
follows:
(i) Once a Participant is enrolled in the Plan for an Offering
Period, such Offering Period shall continue to apply to him or her until
the earliest of (A) the end of such Offering Period, (B) the end of his
or her participation under Subsection (d) above or (C) re-enrollment in
a subsequent Offering Period under Paragraph (ii) below.
(ii) In the event that the Fair Market Value of Stock on the last
trading day before the commencement of the Offering Period in which the
Participant is enrolled is higher than on the last trading day before
the commencement of any subsequent Offering Period, the Participant
shall automatically be re-enrolled for such subsequent Offering Period.
(iii) When a Participant reaches the end of an Offering Period
but his or her participation is to continue, then such Participant shall
automatically be re-enrolled for the Offering Period that commences
immediately after the end of the prior Offering Period.
SECTION 4. EMPLOYEE CONTRIBUTIONS.
(a) FREQUENCY OF PAYROLL DEDUCTIONS. A Participant may purchase shares
of Stock under the Plan solely by means of payroll deductions. Payroll
deductions, as designated by the Participant pursuant to Subsection (b) below,
shall occur on each payday during participation in the Plan.
(b) AMOUNT OF PAYROLL DEDUCTIONS. An Eligible Employee shall designate
on the enrollment form the portion of his or her Compensation that he or she
elects to have withheld for the purchase of Stock. Such portion shall be a whole
percentage of the Eligible Employee's Compensation, but not less than 1% nor
more than 15%.
(c) CHANGING WITHHOLDING RATE. If a Participant wishes to change the
rate of payroll withholding, he or she may do so by filing a new enrollment form
with the Company at the prescribed location at any time. The new withholding
rate shall be effective as soon as reasonably practicable after such form has
been received by the Company. The new withholding
2
<PAGE> 6
rate shall be a whole percentage of the Eligible Employee's Compensation, but
not less than 1% nor more than 15%.
(d) DISCONTINUING PAYROLL DEDUCTIONS. If a Participant wishes to
discontinue employee contributions entirely, he or she may do so by filing a new
enrollment form with the Company at the prescribed location at any time. Payroll
withholding shall cease as soon as reasonably practicable after such form has
been received by the Company. (In addition, employee contributions may be
discontinued automatically pursuant to Section 8(b).) A Participant who has
discontinued employee contributions may resume such contributions by filing a
new enrollment form with the Company at the prescribed location. Payroll
withholding shall resume as soon as reasonably practicable after such form has
been received by the Company.
(e) LIMIT ON NUMBER OF ELECTIONS. No Participant shall make more than
two elections under Subsection (c) or (d) above during any Accumulation Period.
SECTION 5. WITHDRAWAL FROM THE PLAN.
(a) WITHDRAWAL. A Participant may elect to withdraw from the Plan by
filing the prescribed form with the Company at the prescribed location at any
time before the last day of an Accumulation Period. As soon as reasonably
practicable thereafter, payroll deductions shall cease and the entire amount
credited to the Participant's Plan Account shall be refunded to him or her in
cash, without interest. No partial withdrawals shall be permitted.
(b) RE-ENROLLMENT AFTER WITHDRAWAL. A former Participant who has
withdrawn from the Plan shall not be a Participant until he or she re-enrolls in
the Plan under Section 3(c). Re-enrollment may be effective only at the
commencement of an Offering Period.
SECTION 6. CHANGE IN EMPLOYMENT STATUS.
(a) TERMINATION OF EMPLOYMENT. Termination of employment as an Eligible
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 5(a). (A transfer from one Participating
Company to another shall not be treated as a termination of employment.)
(b) LEAVE OF ABSENCE. For purposes of the Plan, employment shall not be
deemed to terminate when the Participant goes on a military leave, a sick leave
or another bona fide leave of absence, if the leave was approved by the Company
in writing and if continued crediting of service for such purpose is expressly
required by the terms of such leave or by applicable law (as determined by the
Company). Employment, however, shall be deemed to terminate 90 days after the
Participant goes on a leave, unless a contract or statute protects his or her
right to return to work. Employment shall be deemed to terminate in any event
when the approved leave ends, unless the Participant immediately returns to
work.
3
<PAGE> 7
(c) DEATH. In the event of the Participant's death, the amount credited
to his or her Plan Account shall be paid to a beneficiary designated by him or
her for this purpose on the prescribed form or, if none, to the Participant's
estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death.
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.
(a) PLAN ACCOUNTS. The Company shall maintain a Plan Account on its
books in the name of each Participant. Whenever an amount is deducted from the
Participant's Compensation under the Plan, such amount shall be credited to the
Participant's Plan Account. Amounts credited to Plan Accounts shall not be trust
funds and may be commingled with the Company's general assets and applied to
general corporate purposes. No interest shall be credited to Plan Accounts.
(b) PURCHASE PRICE. The Purchase Price for each share of Stock purchased
at the close of an Accumulation Period shall be the lower of:
(i) 85% of the Fair Market Value of such share on the last
trading day in such Accumulation Period; or
(ii) 85% of the Fair Market Value of such share on the last
trading day before the commencement of the applicable Offering Period
(as determined under Section 3(e)) or, in the case of the first Offering
Period under the Plan, 85% of the price at which one share of Stock is
offered to the public in the IPO.
(c) NUMBER OF SHARES PURCHASED. As of the last day of each Accumulation
Period, each Participant shall be deemed to have elected to purchase the number
of shares of Stock calculated in accordance with this Subsection (c), unless the
Participant has previously elected to withdraw from the Plan in accordance with
Section 5(a). The amount then in the Participant's Plan Account shall be divided
by the Purchase Price, and the number of shares that results shall be purchased
from the Company with the funds in the Participant's Plan Account. The foregoing
notwithstanding, no Participant shall purchase more than 5,000 shares of Stock
with respect to any Accumulation Period nor more than the amounts of Stock set
forth in Sections 8(b) and 13(a). The Committee may determine with respect to
all Participants that any fractional share, as calculated under this Subsection
(c), shall be rounded down to the next lower whole share.
(d) AVAILABLE SHARES INSUFFICIENT. In the event that the aggregate
number of shares that all Participants elect to purchase during an Accumulation
Period exceeds the maximum number of shares remaining available for issuance
under Section 13(a), then the number of shares to which each Participant is
entitled shall be determined by multiplying the number of shares available for
issuance by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
4
<PAGE> 8
(e) ISSUANCE OF STOCK. Certificates representing the shares of Stock
purchased by a Participant under the Plan shall be issued to him or her as soon
as reasonably practicable after the close of the applicable Accumulation Period,
except that the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee (unless the
Participant has elected that certificates be issued to him or her). Shares may
be registered in the name of the Participant or jointly in the name of the
Participant and his or her spouse as joint tenants with right of survivorship or
as community property.
(f) UNUSED CASH BALANCES. An amount remaining in the Participant's Plan
Account that represents the Purchase Price for any fractional share shall be
carried over in the Participant's Plan Account to the next Accumulation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares that could not be purchased by reason of
Subsection (c) above, Section 8(b) or Section 13(a) shall be refunded to the
Participant in cash, without interest.
(g) STOCKHOLDER APPROVAL. Any other provision of the Plan
notwithstanding, no shares of Stock shall be purchased under the Plan unless and
until the Company's stockholders have approved the adoption of the Plan.
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.
(a) FIVE PERCENT LIMIT. Any other provision of the Plan notwithstanding,
no Participant shall be granted a right to purchase Stock under the Plan if such
Participant, immediately after his or her election to purchase such Stock, would
own stock possessing more than 5% of the total combined voting power or value of
all classes of stock of the Company or any parent or Subsidiary of the Company.
For purposes of this Subsection (a), the following rules shall apply:
(i) Ownership of stock shall be determined after applying the
attribution rules of section 424(d) of the Code;
(ii) Each Participant shall be deemed to own any stock that he or
she has a right or option to purchase under this or any other plan; and
(iii) Each Participant shall be deemed to have the right to
purchase 5,000 shares of Stock under this Plan with respect to each
Accumulation Period.
(b) DOLLAR LIMIT. Any other provision of the Plan notwithstanding, no
Participant shall purchase Stock with a Fair Market Value in excess of the
following limit:
(i) In the case of Stock purchased during an Offering Period that
commenced in the current calendar year, the limit shall be equal to (A)
$25,000 minus (B) the Fair Market Value of the Stock that the
Participant previously purchased in the current calendar year (under
this Plan and all other employee stock purchase plans of the Company or
any parent or Subsidiary of the Company).
5
<PAGE> 9
(ii) In the case of Stock purchased during an Offering Period
that commenced in the immediately preceding calendar year, the limit
shall be equal to (A) $50,000 minus (B) the Fair Market Value of the
Stock that the Participant previously purchased (under this Plan and all
other employee stock purchase plans of the Company or any parent or
Subsidiary of the Company) in the current calendar year and in the
immediately preceding calendar year.
(iii) In the case of Stock purchased during an Offering Period
that commenced in the second preceding calendar year, the limit shall be
equal to (A) $75,000 minus (B) the Fair Market Value of the Stock that
the Participant previously purchased (under this Plan and all other
employee stock purchase plans of the Company or any parent or Subsidiary
of the Company) in the current calendar year and in the two preceding
calendar years.
For purposes of this Subsection (b), the Fair Market Value of Stock shall be
determined in each case as of the beginning of the Offering Period in which such
Stock is purchased. Employee stock purchase plans not described in section 423
of the Code shall be disregarded. If a Participant is precluded by this
Subsection (b) from purchasing additional Stock under the Plan, then his or her
employee contributions shall automatically be discontinued and shall resume at
the beginning of the earliest Accumulation Period ending in the next calendar
year (if he or she then is an Eligible Employee).
SECTION 9. RIGHTS NOT TRANSFERABLE.
The rights of any Participant under the Plan, or any Participant's
interest in any Stock or moneys to which he or she may be entitled under the
Plan, shall not be transferable by voluntary or involuntary assignment or by
operation of law, or in any other manner other than by beneficiary designation
or the laws of descent and distribution. If a Participant in any manner attempts
to transfer, assign or otherwise encumber his or her rights or interest under
the Plan, other than by beneficiary designation or the laws of descent and
distribution, then such act shall be treated as an election by the Participant
to withdraw from the Plan under Section 5(a).
SECTION 10. NO RIGHTS AS AN EMPLOYEE.
Nothing in the Plan or in any right granted under the Plan shall confer
upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Participating Companies or of the
Participant, which rights are hereby expressly reserved by each, to terminate
his or her employment at any time and for any reason, with or without cause.
SECTION 11. NO RIGHTS AS A STOCKHOLDER.
A Participant shall have no rights as a stockholder with respect to any
shares of Stock that he or she may have a right to purchase under the Plan until
such shares have been purchased on the last day of the applicable Accumulation
Period.
6
<PAGE> 10
SECTION 12. SECURITIES LAW REQUIREMENTS.
Shares of Stock shall not be issued under the Plan unless the issuance
and delivery of such shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.
SECTION 13. STOCK OFFERED UNDER THE PLAN.
(a) AUTHORIZED SHARES. The aggregate number of shares of Stock available
for purchase under the Plan shall be 400,000, subject to adjustment pursuant to
this Section 13.
(b) ANTI-DILUTION ADJUSTMENTS. The aggregate number of shares of Stock
offered under the Plan, the 5,000-share limitation described in Section 7(c) and
the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of consideration
by the Company, the distribution of the shares of a Subsidiary to the Company's
stockholders or a similar event.
(c) REORGANIZATIONS. Any other provision of the Plan notwithstanding,
immediately prior to the effective time of a Change in Control, the Offering
Period and Accumulation Period then in progress shall terminate and shares shall
be purchased pursuant to Section 7. In the event of a merger or consolidation to
which the Company is a constituent corporation and which does not constitute a
Change in Control, the Plan shall continue unless the plan of merger or
consolidation provides otherwise. The Plan shall in no event be construed to
restrict in any way the Company's right to undertake a dissolution, liquidation,
merger, consolidation or other reorganization.
SECTION 14. AMENDMENT OR DISCONTINUANCE.
The Board shall have the right to amend, suspend or terminate the Plan
at any time and without notice. Except as provided in Section 13, any increase
in the aggregate number of shares of Stock to be issued under the Plan shall be
subject to approval by a vote of the stockholders of the Company. In addition,
any other amendment of the Plan shall be subject to approval by a vote of the
stockholders of the Company to the extent required by an applicable law or
regulation.
SECTION 15. DEFINITIONS.
(a) "ACCUMULATION PERIOD" means a six-month period during which
contributions may be made toward the purchase of Stock under the Plan, as
determined pursuant to Section 3(b).
7
<PAGE> 11
(b) "BOARD" means the Board of Directors of the Company, as constituted
from time to time.
(c) "CHANGE IN CONTROL" means:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
stockholders of the Company immediately prior to such merger,
consolidation or other reorganization; or
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets or the complete liquidation or
dissolution of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of the Board, as described in Section
2.
(f) "COMPANY" means SteriGenics International, Inc., a Delaware
corporation.
(g) "COMPENSATION" means (i) the total compensation paid in cash to a
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions and overtime pay, plus (ii) any pre-tax
contributions made by the Participant under section 401(k) or 125 of the Code.
Compensation shall exclude moving or relocation allowances, car allowances,
imputed income attributable to cars or life insurance, fringe benefits,
contributions to employee benefit plans and similar items. The Committee shall
determine whether a particular item is included in Compensation.
(h) "ELIGIBLE EMPLOYEE" means any employee of a Participating Company
who meets both of the following requirements:
(i) His or her customary employment is for more than five months
per calendar year and for more than 20 hours per week; and
(ii) He or she either (A) was an employee of a Participating
Company on the date of the IPO or (B) has been an employee of a
Participating Company for not less than three consecutive months.
The foregoing notwithstanding, an individual shall not be considered an Eligible
Employee if his or her participation in the Plan is prohibited by the law of any
country which has jurisdiction
8
<PAGE> 12
over him or her or if he or she is subject to a collective bargaining agreement
that does not provide for participation in the Plan.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "FAIR MARKET VALUE" means the market price of Stock, determined by
the Committee as follows:
(i) If Stock was traded over-the-counter on the date in question
but was not traded on The Nasdaq Stock Market or The Nasdaq National
Market, then the Fair Market Value shall be equal to the mean between
the last reported representative bid and asked prices quoted for such
date by the principal automated inter-dealer quotation system on which
Stock is quoted or, if the Stock is not quoted on any such system, by
the "Pink Sheets" published by the National Quotation Bureau, Inc.;
(ii) If Stock was traded over-the-counter on the date in question
and was traded on The Nasdaq Stock Market or The Nasdaq National Market,
then the Fair Market Value shall be equal to the last-transaction price
quoted for such date by The Nasdaq Stock Market or The Nasdaq National
Market;
(iii) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date;
and
(iv) If none of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in The Wall Street Journal or as reported
directly to the Company by Nasdaq or a comparable exchange. Such determination
shall be conclusive and binding on all persons.
(k) "IPO" means the initial offering of Stock to the public pursuant to
a registration statement filed with the Securities and Exchange Commission on
Form S-1.
(l) "OFFERING PERIOD" means a 24-month period with respect to which the
right to purchase Stock may be granted under the Plan, as determined pursuant to
Section 3(a).
(m) "PARTICIPANT" means an Eligible Employee who elects to participate
in the Plan, as provided in Section 3(c).
(n) "PARTICIPATING COMPANY" means (i) the Company and (ii) each present
or future Subsidiary designated by the Committee as a Participating Company.
(o) "PLAN" means this SteriGenics International, Inc. 1997 Employee
Stock Purchase Plan, as it may be amended from time to time.
9
<PAGE> 13
(p) "PLAN ACCOUNT" means the account established for each Participant
pursuant to Section 7(a).
(q) "PURCHASE PRICE" means the price at which Participants may purchase
Stock under the Plan, as determined pursuant to Section 7(b).
(r) "STOCK" means the Common Stock of the Company.
(s) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
SECTION 16. EXECUTION.
To record the adoption of the Plan by the Board on June 23, 1997, the
Company has caused its authorized officer to execute the same.
STERIGENICS INTERNATIONAL, INC.
By:________________________________________
Title:_____________________________________
10
<PAGE> 1
EXHIBIT 10.5
SERIES 1985A LOAN AGREEMENT
Between
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
And
RADIATION STERILIZERS, INCORPORATED
Dated as of November 1, 1985
Series 1985A
$2,150,000
<PAGE> 2
LOAN AGREEMENT
TABLE OF CONTENTS
(The Table of Contents is not a part of the Loan Agreement but is for
convenience of reference only)
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PARTIES 1
ARTICLE I. DEFINITIONS AND CERTAIN
RULES OF INTERPRETATION
Section 1.1. Definitions 1
Section 1.2. Certain Rules of Interpretation 13
ARTICLE II. REPRESENTATIONS
Section 2.1. Representations by the Issuer 13
Section 2.2. No Warranty by Issuer of Condition
or Suitability of the Facilities 16
Section 2.3. Representations by the Company 16
ARTICLE III. ACQUISITION, CONSTRUCTION AND
INSTALLATION OF THE FACILITIES;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction and
Installation of the Facilities 22
Section 3.2. Agreement to Issue Bonds;
Application of Proceeds 22
Section 3.3. Disbursements from
the Construction Fund 22
Section 3.4. Obligation to Furnish
Documents to Trustee 27
Section 3.5. Establishment of Completion Date 27
Section 3.6. Company Required to Pay
Costs of Facilities If
Construction Fund Insufficient 28
Section 3.7. Remedies Against Suppliers,
Contractors and Subcontractors
and Their Sureties 29
Section 3.8. Investment of Bond Fund and
Construction Fund Moneys Permitted 29
Section 3.9. Title to the Facilities 29
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ARTICLE IV. LOAN BY THE ISSUER TO THE
COMPANY; REPAYMENT OF LOAN
Section 4.1. Loan By the Issuer to the
Company; Repayment of Loan;
Obligations Unconditional 30
Section 4.2. Company Consent to Assignment of
Agreement and Execution of Indenture;
Company's Performance Under Indenture 31
Section 4.3. Prepayment of Loan 32
Section 4.4. Delivery of Letter of Credit
to Trustee 34
Section 4.5. Satisfaction of Company's Obligation 35
Section 4.6. Alternate Letter of Credit;
Alternate Credit Facility 35
Section 4.7. Extension of Letter of Credit 36
Section 4.8. Notice of Prepayments;
Issuer to Effect Redemption 36
Section 4.9. Relative Position of this
Article and the Indenture 36
Section 4.10. Place of Payment 37
Section 4.11. Payments to the Remarketing Agent
and the Paying Agent 37
ARTICLE V. PARTICULAR COVENANTS
Section 5.1. Maintenance of Existence 37
Section 5.2. Qualification in the State 38
Section 5.3. Indemnification of Issuer
and Trustee
Section 5.4. Payment of Trustee's Fees 39
Section 5.5. Maintenance and Operation
of the Facilities 40
Section 5.6. Covenants of Company and Issuer with
Respect to Exemption of Interest
from Federal Income Taxation 40
Section 5.7. Insurance Required 43
Section 5.8. Taxes, Other Governmental
Charges and Utility Charges 44
Section 5.9. Damage, Destruction and Eminent Domain 44
Section 5.10. Company's Obligation To Pay
Certain Fees Expenses of the Issuer 45
Section 5.11. Application of Certain Proceeds
Prior to the Expiration Date
of the Letter of Credit 45
Section 5.12. Non-Arbitrage Covenant; Compliance
with Special Arbitrage Rules 46
Section 5.13. Fixed Interest Rate 52
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ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default 52
Section 6.2. Remedies on Events of Default 54
Section 6.3. No Remedy Exclusive 55
Section 6.4. Agreement To Pay Attorneys'
Fees and Expenses 56
Section 6.5. No Additional Waiver
Implied by One Waiver 56
ARTICLE VII. MISCELLANEOUS
Section 7.1. Termination of Agreement 56
Section 7.2. Confidential Information 57
Section 7.3. Cancellation of Bonds 57
Section 7.4. Amounts Remaining in Bond Fund,
Construction Fund and
Other Funds and Accounts 57
Section 7.5. Notices 57
Section 7.6. Binding Effect; Parties in Interest 57
Section 7.7. Extent of Covenants of the
Issuer; No Personal Liability 58
Section 7.8. Amendments, Changes and Modifications 58
Section 7.9. Execution Counterparts 58
Section 7.10. Severability 58
Section 7.11. Captions 58
Section 7.12. Payments Due on Non-Business Days 59
Section 7.13. Governing Law 59
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TESTIMONIUM
SIGNATURES AND SEALS
EXHIBIT A
<PAGE> 5
SERIES 1985A LOAN AGREEMENT
Between
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
and
RADIATION STERILIZERS, INCORPORATED
THIS SERIES 1985A LOAN AGREEMENT made as of the 1st day of November, 1985,
between the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY, a non-profit
industrial development corporation created and existing under the laws of the
State of Texas (the Issuer), and RADIATION STERILIZERS, INCORPORATED, a
corporation organized and existing under the laws of the State of California and
qualified to do business in the State of Texas.
WITNESSETH:
That the parties hereto, intending to be legally bound hereby, and for and
in consideration of the premises and the mutual covenants hereinafter contained,
do hereby covenant, agree and bind themselves, as follows; provided, that any
obligation of the Issuer created by or a rising out of this Agreement shall
never constitute a debt or a pledge of the faith and credit or the taxing power
of the Issuer or any political subdivision or taxing district of the State of
Texas but shall be payable solely out of the "Trust Estate" (defined in the
Trust Indenture hereinafter referred to), anything herein contained to the
contrary by implication or otherwise notwithstanding:
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1. Definitions. In addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:
Act - The Development Corporation Act of 1979, Article 5190.6 V.A.T.C.S.,
as amended.
Adjustment Date - After the Conversion Date, the Interest Payment Date
next preceding the Expiration Date of
<PAGE> 6
the Alternate Credit Facility or the Expiration Date of the Letter of Credit, as
the case may be,
Agreement - This Series 1985A Loan Agreement as from time to time
supplemented or amended in accordance with the provisions hereof and of the
Indenture.
Alternate Credit Facility - A credit facility other than the Letter of
Credit, including without limitation, an irrevocable letter of credit or bond
insurance policy, which provides for payment of the principal of, and the
interest on, the Bonds, when due.
Alternate Letter of Credit - An irrevocable letter of credit issued in
accordance with Section 4.6 of this Agreement.
Authorized Company Representative - The person at the time designated to
act on behalf of the Company by written certificate furnished to the Issuer, the
Bank and the Trustee, containing the specimen signature of such person and
signed on behalf of the Company by its President or any Vice President. Such
certificate may designate an alternate or alternates.
Authorized Issuer Representative - The person at the time designated to
act on behalf of the Issuer by written certificate furnished to the Company, the
Bank and the Trustee containing the specimen signature of such person and signed
on behalf of the Issuer by its President or Vice President. Such certificate may
designate an alternate or alternates. Such person must be satisfactory to the
Company and shall be replaced by the Issuer upon the written request of the
Company.
Available Moneys - Moneys on deposit in trust with the Trustee for a
period of at least one hundred twenty-three (123) days during which no petition
in bankruptcy or similar insolvency proceeding has been filed by or against the
Company.
Bank - The issuer of the Letter of Credit, initially, Wells Fargo Bank,
N.A., San Jose, California, a national banking association.
Bond Fund - The Bond principal and interest payment fund created in
Section 702 of the Indenture and within which has been established a general
account and a special account. Any reference herein to the "Bond Fund" without
further limitation or explanation shall be deemed to be a reference to the
general account in the Bond Fund.
2
<PAGE> 7
Bond Payment Date - Any date upon which the principal of, and the
redemption premium (if any) or interest on, the Bonds shall be payable pursuant
to the Indenture, whether at stated maturity, by redemption, by acceleration or
otherwise.
Bond Resolution - The resolution adopted by the Issuer authorizing the
issuance of the Bonds, as the same may be amended, modified or supplemented by
any amendments or modifications thereof and supplements thereto entered into in
accordance with the provisions of the Indenture.
Bondholder, owner or holder of the Bonds - The registered owner of any
Bond.
Bonds - The Trinity River Industrial Development Authority Variable Rate
Demand Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), series 1985A, in the aggregate principal amount of $2,150,000, issued
pursuant to the provisions of the Indenture.
Business Day - Any day, other than a Saturday or Sunday, on which banks
located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located and in New York, New
York, are not required or authorized by law to remain closed and on which The
New York Stock Exchange, Inc. is not closed.
Code - The Internal Revenue Code of 1954, as amended, and the applicable
Income Tax Regulations thereunder.
Commission - The Texas Economic Development Commission, and its successors
and assigns.
Commitment Date - November 28, 1983, the date of the "official action"
resolution by which the Issuer agreed in principle to issue the Bonds for the
benefit of the Company to assist in the financing of the Facilities.
Company - Radiation Sterilizers, Incorporated, a corporation organized
under the laws of the State of California and qualified to do business in the
State, and its lawful successors and assigns including any surviving, resulting,
or transferee entity as provided in Section 5.1
Completion Date - The date of completion of the acquisition, construction
and equipping of the Facilities as that date shall be certified as provided in
Section 3.5.
3
<PAGE> 8
Construction Fund - The construction fund created with the Depository in
Section 601 of the Indenture.
Construction Period - The period between the beginning of acquisition,
construction or equipping of the Facilities or the date on which Bonds are first
delivered to the Original Purchasers, whichever is earlier, and the Completion
Date.
Conversion Date - The date upon which the Bonds begin to bear interest at
the Fixed Interest Rate, which date shall be established in accordance with
Section 402 of the Indenture.
County - Tarrant County, a political subdivision of the State.
default - An event or condition the occurrence of which would, with the
lapse of time or the giving of notice or both, become an Event of Default.
Depository - Initially, First City Bank of Dallas, or such other
depository appointed in accordance with Section 1218 of the Indenture.
Determination of Taxability - A determination that the interest income on
any of the Bonds is subject to Federal income taxation as a result of an Event
of Taxability, which determination shall be deemed to have been made upon the
occurrence of the first to occur of the following:
(a) the date on which the Company files (in compliance with its
obligations hereunder) any Supplemental Statement which discloses that an
Event of Taxability has occurred;
(b) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service
that, based upon any filings of the Company, or upon any review or audit
of the Company, or upon any other grounds whatsoever, an Event of
Taxability has occurred;
(c) the date on which the Company receives notice from the Trustee
in writing that the Trustee has been advised by any holder or former
holder of a Bond that the Internal Revenue Service has issued a statutory
notice of deficiency or similar notice to such holder or former holder
which asserts in effect that the interest on the Bonds of such holder or
former holder is includable in the gross income of such holder or former
holder due to the occurrence of an Event of Taxability;
4
<PAGE> 9
(d) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that
there has been issued a public or private ruling of the Internal Revenue
Service or a technical advice memorandum issued by the national office of
the Internal Revenue Service that the interest on the Bonds is includable
for Federal income tax purposes in the gross income of any holder or
former holder of a Bond due to the occurrence of an Event of Taxability;
or
(e) the date on which the Company is advised in writing that a final
determination, from which no further right of appeal exists, has been made
by a court of competent jurisdiction in the United States of America in a
proceeding with respect to which the Company has been given written notice
and an opportunity to participate and defend that the interest on the
Bonds is includable in the gross income of any holder or former holder of
a Bond due to the occurrence of an Event of Taxability;
provided, however, no Determination of Taxability shall occur under subparagraph
(b), (c) or (d) of this paragraph unless the Company has been afforded the
opportunity, at its expense, to contest any such conclusion and/or assessment
and, further, no Determination of Taxability shall occur until such contest, if
made, has been finally determined. The Company shall be deemed to have been
afforded the opportunity to contest if it shall have been permitted to commence
and maintain any action in the name of any holder or former holder of a Bond to
judgment and through any appeals therefrom or other proceedings related thereto.
Eligible Investments - Has the following meanings:
(a) any bonds or other obligations of the United States of America
which as to principal and interest constitute direct obligations of the
United States of America, or any obligations of subsidiary corporations of
the United States of America fully guaranteed as to payment by the United
States of America;
(b) obligations of the Federal Land Bank;
(c) obligations of the Federal Home Loan Bank;
(d) obligations of the Federal Intermediate Credit Bank;
(e) obligations of the Central Bank for Cooperatives;
5
<PAGE> 10
(f) certificates of deposit of national or state banks located
within the State including the Trustee of any of its affiliates which have
deposits insured by the Federal Deposit Insurance Corporation and
certificates of deposit of Federal savings and loan associations and state
building and loan associations located within the State which have
deposits insured by the Federal Savings and Loan Insurance Corporation
(including the certificates of deposit of any bank, savings and loan
association or building and loan association acting as depository,
custodian or trustee for any proceeds of the Bonds); provided however,
that the portion of such certificates of deposit in excess of the amount
insured by the Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation, if any, shall be secured by
deposit with the Federal Reserve Bank of Dallas, Texas, or other Federal
Reserve Bank or with any national or state bank located within the State,
of any of the obligations included in (a), (b), (c) , (d) or (e) above;
and
(g) repurchase agreements with respect to obligations included in
(a), (b), (c), (d) or (e) above and any other investments;
provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing on or prior to the date payment is due of the obligation
for which the draw was made .
Event of Default - One of the events so denominated and described in
Section 6.1 of this Agreement.
Event of Taxability - The date on which the interest income on any of the
Bonds becomes subject to Federal income taxation as a result of any of the
following conditions or circumstances:
(a) as it result of Section 103(b) (6) (D) Capital Expenditures being paid
or incurred with respect to the Local Facilities, the aggregate face amount of
the Bonds determined in accordance with the provisions of Section 103(b) (6) (D)
of the Code exceeds the limit permitted by said Section 103 (b) (6) (D); or
(b) the Bonds constitute "arbitrage bonds" within the meaning of Section
103(c) of the Code; or
6
<PAGE> 11
(c) the weighted average maturity of the Bonds exceeds the weighted
average estimated economic life of the components comprising the Facilities by
more than 20%, determined pursuant to Section 103(b)(14) of the Code; or
(d) (i) more than 25% of the net proceeds of the sale of the Bonds are
used to provide a facility the primary purpose of which is one of the following:
retail food and beverage services (including eating and drinking places, but
excluding grocery stores), automobile sales or service, or the provision of
recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds is
used to provide the following: any private or commercial golf course,
country club, massage parlor, tennis club, skating facility (including
roller skating, skateboard and ice skating), racquet sports facility
(including any handball or racquetball court), hot tub facility, suntan
facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds is
used to provide any airplane, skybox or other luxury box, any health club
facility, any facility primarily used for gambling, or any store the
principal business of which is the sale of alcoholic beverages for
consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds is
used (directly or indirectly) for the acquisition of land (or an interest
therein) to be used for farming purposes, or 25% or more of the net
proceeds of the sale of the Bonds is used (directly or indirectly) for the
acquisition of land (or an interest therein) other than land to be used
for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds is used
for the acquisition of any property the first use of which property is not
pursuant to such acquisition, except with respect to any building (and the
equipment therefor) if the rehabilitation expenditures with respect to
such building equal or exceed 15% of the portion of the cost of acquiring
such building (and equipment) financed with the proceeds of the Bonds; or
(e) the Facilities are operating as a facility the primary purpose of
which causes the Facilities to constitute a prohibited facility within the
meaning of Section 103(b) of the Code; or
7
<PAGE> 12
(f) the sum of the authorized face amount of the Bonds allocable to each
"test-period beneficiary" (as defined in Section 103(b) (15) (D) of the Code)
plus the respective aggregate face amount of all tax-exempt industrial
development bonds presently outstanding (not including any obligations which are
to be redeemed from the proceeds of the Bonds) which are allocable to each such
test-period beneficiary exceeds $40,000,000; or
(g) less than substantially all of the net proceeds of the sale of the
Bonds are used to pay the costs of land or property of a character subject to
the allowance for depreciation under Section 167 of the Code; or
(h) the taking of any action by the Issuer, the Company or any person
acting on the Company's behalf or upon the Company's direction, or the failure
of the Issuer, the Company or any such person to take any action, or any mistake
in or untruthfulness of any representation of the Issuer or the Company
contained in this Agreement or in any certificate of the Issuer or the Company
delivered pursuant to this Agreement or the Indenture or in connection with the
issuance of the Bonds, if such act or omission, or such mistake in or
untruthfulness of such representation, has the effect of causing the interest
income on the Bonds to be or become subject to Federal income taxation;
provided, however, that no Event of Taxability shall be deemed to have occurred
with respect to any Bond if the interest income thereon shall be subject to
Federal income taxation for any period solely because during that period such
Bond was held by a person who is a Substantial User or a Related Person; and,
provided further, that no Event of Taxability shall be deemed to have occurred
if the interest income on any of the Bonds becomes subject to Federal income
taxation as a result of a Taxability Change.
Excess Investment Earnings Account - The excess investment earnings
account created pursuant to Section 804 of the Indenture.
Expiration Date of the Alternate Credit Facility - The date established in
the Alternate Credit Facility for the expiration thereof, and in the event such
date is extended, such date as extended.
Expiration Date of the Letter of Credit - The date established in the
Letter of Credit for the expiration thereof in accordance with its terms,
initially April 15, 1988, and in the event such date is extended, such date as
extended.
8
<PAGE> 13
Facilities - The real, personal and mixed property identified in Exhibit A
attached hereto, together with any additions and improvements thereto,
modifications thereof and substitutions therefor.
Financing Statements - Any and all financing statements (including
continuation statements) filed for record from time to time to perfect the
security interests created or assigned.
Fixed Interest Rate - A fixed nonfloating interest rate on the Bonds
established in accordance with Section 402 of the Indenture.
Force Majeure - Acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders of any kind of the government of
the United States of America, or of a state of the United States of America or
any of their departments, agencies, political subdivisions or officials, or any
civil or military authority; insurrections; riots; epidemics; landslides;
lightning; earthquakes; fires; hurricanes, tornadoes or storms; floods;
washouts; droughts; arrests; restraints of governments and people; civil
disturbances; explosions; breakage or accident to machinery, transmission pipes
or canals; partial or entire failure of utilities; or any cause or event not
reasonably within the control of the Company.
Government Obligations - (a) direct obligations of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged, or (b) obligations issued by a person controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of, premium, if any, and the interest on which is
fully guaranteed as a full faith and credit obligation of the United States of
America (including any securities described in (a), or b) issued or held in
book-entry form on the books of the Department of the Treasury of the United
States of America), which obligations, in either case, are not subject to
redemption prior to maturity at less than par by anyone other than the holder.
Governmental Unit - The Trinity River Authority Of Texas.
Indenture - The Trust Indenture between the Issuer and the Trustee, of
even date herewith, as the same may be amended, modified or supplemented by any
amendments or modifications thereof and any supplements thereto entered into in
accordance with the provisions thereof.
9
<PAGE> 14
Independent Counsel - An attorney or firm thereof duly admitted to
practice law before the highest court of any state in the United States of
America or the District of Columbia and not an employee on a full-time basis of
either the Issuer or the Company (but who or which may be regularly retained by
either).
Independent Engineer - An engineer or engineering firm registered and
qualified to practice the profession of engineering under the laws of the State
and not an employee on a full-time basis of either the Issuer or the Company
(but who or which may be regularly retained by either).
Independent Tax Counsel - Independent Counsel selected by the Company and
satisfactory to the Trustee, experienced in matters relating to the exemption
from Federal income tax of interest on obligations issued by states or their
political subdivisions.
Interest Payment Date - With respect to the Bonds prior to and including
the Conversion Date the first Business Day of each calendar month commencing
January 2, 1986, and after the Conversion Date the first day of each November
and May.
Interest Rate for Advances - A rate per annum which is equal to the sum of
two percent (2%) and the Prime Rate.
Interest Reserve Requirement - $108,902.
Issuer - The Trinity River Industrial Development Authority, a public body
corporate and politic created and existing pursuant to the provisions of the
Act, and its successors and assigns.
Letter of Credit - The irrevocable letter of credit issued by the Bank
contemporaneously with the original issuance of the Bonds, except that upon the
issuance and delivery of an Alternate Letter of Credit, "Letter of Credit" shall
mean such Alternate Letter of Credit, and upon the delivery of an Alternate
Credit Facility, "Letter of Credit" shall, unless the context otherwise
requires, include reference to the Alternate Credit Facility.
Letter of Credit Agreement - The Series A Reimbursement Agreement, dated
as of November 1, 1985, between the Company and the Bank, pursuant to which the
Letter of Credit is issued by the Bank and delivered to the Trustee, and any and
all modifications, alterations, amendments and supplements thereto, and includes
any agreement between the Company and the Bank pursuant to which any Alternate
Letter of Credit is issued or any Alternate Credit Facility is made available.
10
<PAGE> 15
Loan Term - The period commencing on the date of this Agreement and ending
on the date on which the Bonds have been fully paid (or provision for their
payment has been made) in accordance with the provisions of the Indenture.
Local Facilities - "facilities" (as the term "facilities" is used in
Section 103(b) (6) (E) of the Code) of which the Company or a Related Person
thereto is or will be the Principal User and which are located wholly within the
County. For purposes of this definition, a contiguous or integrated "facility"
located on both sides of the border between any two or more political
jurisdictions shall be considered as being located wholly within each such
political jurisdiction.
Net proceeds of the sale of the Bonds - Those proceeds of the sale of the
Bonds remaining after payment of all expenses in connection with the issuance of
the Bonds and the deposit of all accrued interest (if any) received from the
sale of the Bonds in the Bond Fund, together with investment earnings on such
net proceeds Earned prior to the Completion Date.
Net Proceeds - When used with respect to any insurance proceeds or any
condemnation award, means the gross proceeds thereof less the payment of all
expenses (including attorneys fees and any extraordinary fees and expenses of
the Trustee) incurred in the collection of such gross proceeds.
Notice Address - Has the following meanings:
(a) As to the Company: Radiation Sterilizers, Incorporated
Attention : President
3000 Sand Hill Road
Menlo Park, California 94025
(b) As to the Issuer: Trinity River Industrial
Development Authority
5300 S. Collins
Arlington Texas 76010
Attention: Secretary/Treasurer
(c) As to the Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
Attention: George Huxtable,
Vice President
2055 Gateway Plaza, Suite 200
San Jose, California 95110
11
<PAGE> 16
(d) As to the Trustee: Bank One Trust Company, N.A.
Attention: Corporate Trust
Administration
100 East Broad Street
Columbus, Ohio 43271-0181,
or such address as may hereafter be provided pursuant to Section 7.5.
Person - Any natural person, corporation, cooperative, partnership, trust
or unincorporated organization, government or governmental body or agency,
political subdivision or other legal entity as in the context may be
appropriate.
President - The President of the Issuer.
Prime Rate - The rate of interest as announced from time to time by Wells
Fargo Bank, N.A. , San Francisco, California, as its prime rate of interest,
such rate changing automatically and immediately from time to time effective as
of the effective date of each such announced change.
Principal User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6) (E) of the Code), a "principal user"
of such "facilities" within the meaning of Section 103 (b) (6) of the Code.
Related Person - When used with reference to any Principal User or any
Substantial User, means a "related person" within the meaning of Section 103 (b)
(6) of the Code.
Secretary - The Secretary of the Issuer.
Section 103(b)(6)(D) Capital Expenditures - Capital expenditures described
in Section 1.103-10(b) (2) (ii) of the income Tax Regulations, but shall not
include capital expenditures described as "excluded expenditures" in Section
1.103-10(b) (2) (iv) of the Income Tax Regulations.
Security interest or security interests - Refer to the security interests
created in the Indenture and shall have the meaning set forth in the U.C.C.
State - The State of Texas.
Substantial User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6)(E) of the Code), a "substantial user"
of such "facilities" within the meaning of Section 103 (b) (13) of the Code.
12
<PAGE> 17
Supplemental Statement - Any statement, supplemental statement or other
tax schedule, return or document filed with the Internal Revenue Service
(whether pursuant to Income Tax Regulations Section 1.103-10(b) (2) (vi), as the
same may be amended or supplemented, or otherwise).
Taxability Change - Any change in the Constitution or laws of the United
States of America or the applicable Income Tax Regulations thereunder occurring
after the date of issuance of the Bonds which results in the interest on any of
the Bonds being included in the gross income of any holder (other than a holder
who is a Substantial User or a Related Person).
Taxable Period - With respect to a Bond, the period which elapses from the
Event of Taxability until payment in full of such Bond.
Trustee - The Trustee at the time serving as such under the Indenture.
"Principal Office" of the Trustee means the principal corporate trust office of
the Trustee, which office at the date of this Agreement is located at the
address hereinbefore specified under the definition, "Notice Address".
U.C.C. - The Uniform Commercial Code of the State, as now or hereafter
amended.
Section 1.2. Certain Rules of Interpretation. The definitions set forth in
Section 1.1 shall be equally applicable to both the singular and plural forms of
the terms therein defined and shall cover all genders.
Herein, hereby, hereunder, hereof, hereinbefore, hereinafter and other
equivalent words - Refer to this Agreement and not solely to the particular
Article, Section or subdivision hereof in which such word is used.
Reference herein to an Article number (eg., Article IV) or a Section
number (eg., Section 6.2) shall be construed to be a reference to the designated
Article number or Section number hereof unless the context or use clearly
indicates another or different meaning or intent.
ARTICLE II.
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer makes the following
representations as the basis for the undertakings on its part herein contained:
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(a) Organization and Authority. The Issuer is a non-profit industrial
development corporation, created and validly existing pursuant to the
Constitution and laws of the State, including particularly the provisions of the
Act. The Issuer has all requisite power and authority under the Act to (i) issue
the Bonds, (ii) lend the proceeds thereof to the Company to enable the Company
to acquire, construct and install the Facilities, and (iii) enter into, and
perform its obligations under, this Agreement and the Indenture.
(b) Pending Litigation. There are no actions, suits, proceedings,
inquiries or investigations pending, or to the knowledge of the Issuer
threatened, against or affecting the Issuer in any court or before any
governmental authority or arbitration board or tribunal, which involve the
possibility of materially and adversely affecting the transactions contemplated
by this Agreement or the Indenture or which, in any way, would adversely affect
the validity or enforceability of the Bonds, the Indenture, this Agreement or
any agreement or instrument to which the Issuer is a party and which is used or
contemplated for use in the consummation of the transactions contemplated hereby
or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
issuance and sale of the Bonds and the execution and delivery by the Issuer of
this Agreement and the Indenture, and the compliance by the Issuer with all of
the provisions of each thereof and of the Bonds (i) are within the purposes,
powers and authority of the Issuer, (ii) have been done in full compliance with
the provisions of the Act, are legal and will not conflict with or constitute on
the part of the Issuer a violation of or a breach of or default under, or result
in the creation of any lien, charge or encumbrance upon any property of the
Issuer (other than as contemplated by this Agreement and the Indenture) under
the provisions of, any charter instrument, by-law, indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which the Issuer is a
party or by which the Issuer is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or properties, and
(iii) have been duly authorized by all necessary corporate action on the part of
the Issuer.
(d) Governmental Consents. Neither the nature of the Issuer nor any of its
activities or properties, nor any relationship between the Issuer and any other
person, nor any circumstance in connection with the offer, issue, sale or
delivery of any of the Bonds is such as to require the consent, approval or
authorization of, or the filing,
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registration or qualification with, any governmental authority on the part of
the Issuer in connection with the execution, delivery and performance of this
Agreement and the Indenture or the offer, issue, sale or delivery of the Bonds,
other than those already obtained.
(e) No Defaults. No event has occurred and no condition exists with
respect to the Issuer which would constitute an "Event of Default" as defined in
this Agreement or the Indenture or which, with the lapse of time or with the
giving of notice or both, would become an "Event of Default" under this
Agreement or the Indenture. The Issuer is not in default under the Act or under
any charter instrument, by-law or other agreement or instrument to which it is a
party or by which it is bound.
(f) No Prior Pledge. Neither this Agreement nor the Trust Estate has been
pledged or hypothecated in any manner or for any purpose other than as provided
in the indenture as security for the payment of the Bonds.
(g) Disclosure. Neither the representations of the Issuer contained in
this Agreement and the Indenture nor any written statement relating to the
Issuer furnished to the Original Purchasers of the Bonds by or on behalf of the
Issuer in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
(h) Nature and Location of Facilities. The financing of the Facilities is
in furtherance of the public purpose intended to be served by the Act. The
Facilities will be located within the County.
(i) No Other Outstanding Industrial Development Bonds. The issuer has no
outstanding issues of "industrial development bonds" (as defined in Section
103(b) (2) of the Code), the proceeds of which have been or will be used with
respect to the Local Facilities.
(j) Official Action. By resolution duly adopted on November 28, 1983, the
Issuer took "official action" (within the meaning of Section 1.103-8(a) (5) of
the Income Tax Regulations under the Code) providing for the acquisition,
construction and installation of the Facilities and the financing of the cost of
the Facilities, in whole or in part, through the issuance of the Bonds.
(k) Limited Obligations. Notwithstanding anything herein contained to the
contrary, any obligation the Issuer
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may hereby incur for the payment of money shall not constitute an indebtedness
of the State or of any Political subdivision thereof within the meaning of any
state constitutional provision or statutory limitation and shall not give rise
to a pecuniary liability of the State or a political subdivision thereof, or
constitute a charge against the general credit or taxing power of said State or
a political subdivision thereof, but shall be limited obligations of the Issuer
Payable solely from the Trust Estate.
Section 2.2. No Warranty by Issuer of Condition or Suitability of the
Facilities. The Issuer makes no warranty, either express or implied, as to the
condition the Facilities or as to the suitability of the Facilities for the
Company's purposes.
Section 2.3. Representations by the Company. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization and Power. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and is qualified to do business and is in good standing
under the laws of the State, and (ii) has all requisite power and authority and
all necessary licenses and permits to own and operate its properties and to
carry on its business as now being conducted and as presently proposed to be
conducted.
(b) Pending Litigation. There are no proceedings pending, or to the
knowledge of the Company threatened, against or affecting the Company in any
court or before any governmental authority or arbitration board or tribunal
which involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company, or the ability of the Company to perform its obligations under
this Agreement or the Letter of Credit Agreement. The Company is not in default
with respect to an order of any court, governmental authority or arbitration
board or tribunal.
(c) Agreements Are Legal and Authorized. The execution and delivery by the
Company of this Agreement and the Letter of Credit Agreement and the compliance
by the Company with all of the provisions hereof and thereof (i) a re within the
corporate power of the Company, (ii) will not conflict with or result in any
breach of any of the provisions of, or constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any property of the Company
under the provisions of, any agreement, charter document, by-law or other
instrument to which the Company is a party or by which it may be bound, or any
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license, judgment, decree, law, statute, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its activities or properties, and (iii) have been duly authorized by all
necessary corporate action on the part of the Company.
(d) Governmental Consent. Neither the Company nor any of its business or
properties, nor any relationship between the Company and any other person, nor
any circumstances in connection with the execution, delivery and performance by
the Company of this Agreement and the Letter of Credit Agreement or the offer,
issue, sale or delivery by the Issuer of the Bonds, is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Company other
than those already obtained.
(e) No Defaults. No event has occurred and no condition exists with
respect to the Company that would constitute an "Event of Default" under this
Agreement, the indenture or the Letter of Credit Agreement or which, with the
lapse of time or with the giving of notice or both, would become an "Event of
Default" under this Agreement, the Indenture or the Letter of Credit Agreement.
The Company is not in violation in any material respect of any agreement,
charter document, by-law or other instrument to which it is a party or by which
it may be bound.
(f) Compliance with Law. The Company is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject and has not
failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to the conduct of
its business, which violation or failure to obtain might materially and
adversely affect the properties, business, prospects, profits or conditions
(financial or otherwise) of the Company.
(g) Restrictions on the Company. The Company is not a party to any
contract or agreement, or subject to any charter or other corporate restriction,
that materially and adversely affects the business of the Company. The Company
is not a party to any contract or agreement that restricts the right or ability
of the Company to incur or guarantee indebtedness for borrowed money.
(h) Disclosure. Neither the representations of the Company contained in
this Agreement and the Letter of Credit Agreement, nor any written statement
relating to the Company furnished by or on behalf of the Company to the Issuer
or the Original Purchasers of the Bonds in connection with the transactions
contemplated hereby or thereby, contains any
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<PAGE> 22
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading. There is no
fact that the Company has not disclosed to the Issuer and to the Original
Purchasers of the Bonds in writing that materially and adversely affects or in
the future may (so far as the Company can now reasonably foresee) materially and
adversely affect the acquisition, construction, installation, ownership or
operation of the Facilities, or the properties, business, prospects, profits or
condition (financial or otherwise) of the Company, or the ability of the Company
to perform its obligations under this Agreement, the Letter of Credit Agreement
or any documents or transactions contemplated hereby.
(i) Inducement. The issuance of the Bonds by the Issuer and the lending of
the proceeds thereof to the Company to enable the Company to acquire, construct
and install the Facilities have induced the Company to locate the Facilities in
the County which will directly result in a retention of employment opportunities
in the County for approximately 40 persons.
(j) Operation of Facilities. The Company intends to operate the Facilities
from the Completion Date to the expiration or sooner termination of this
Agreement as provided herein as a "project" within the meaning of the Act and so
long as the Bonds remain outstanding the Company agrees that it shall not
operate the Facilities as a facility the primary purpose of which causes the
Facilities to constitute a prohibited facility within the meaning of Section 103
(b) of the Code.
(k) Nature of Facilities. Substantially all of the net proceeds of the
sale of the Bonds will be used to acquire land or property of a character
subject to the allowance for depreciation under Section 167 of the Code and such
costs representing proceeds so used are properly chargeable to a capital account
of the Company for Federal income tax purposes or would be so chargeable either
with a proper election by the Company or but for a proper election by the
Company to deduct the costs.
(1) Commencement of Construction. The acquisition, construction and
installation of the Facilities commenced after November 28, 1983, and no
obligation relating to the acquisition, construction or installation of the
Facilities was paid or incurred prior to such date.
(m) Prior Issues. Except for the Bonds, no bonds, notes or other
obligations of any state, territorial possession or any political subdivision of
the United States of
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America or any political subdivision of any of the foregoing or of the District
of Columbia have been issued since April 30, 1968, and are now outstanding, the
proceeds of which have been or are to be used primarily with respect to the
Local Facilities.
(n) Composite Issues. There are no other obligations heretofore issued or
to be issued by or on behalf of any state, territory or possession of the United
States, or political subdivision of any of the foregoing, or of the District of
Columbia, for the benefit of the Company or any Related Person, which constitute
"industrial development bonds" within the meaning of Section 103(b) of the Code
and which (i) were or are to be sold at substantially the same time as the
Bonds, (ii) were or are to be sold at substantially the same interest rate as
the interest rate of the Bonds, (iii) were or are to be sold pursuant to a
common plan of marketing as the marketing plan for the Bonds, and (iv) a re
payable directly or indirectly by the Company or from the source from which the
Bonds are payable.
(o) Capital Expenditures. The principal amount of the Bonds and the amount
of all Section 103(b) (6)(D) Capital Expenditures that have been paid or
incurred with respect to the Local Facilities during the three years next
preceding the date of issue of the Bonds other than out of the proceeds of the
sale of the Bonds do not in the aggregate exceed the sum of $10,000,000.
(p) Election Information. The information furnished by the Company and
used by the Issuer in preparing the election which has been filed by or on
behalf of the Issuer with the Internal Revenue Service pursuant to Section 103
(b) (6) (D) of the Code was true and complete as of the date of filing of said
election.
(q) I.R.S. Form 8038 Information. The information furnished by the Company
and used by the issuer in preparing I.R.S. Form 8038, "Information Return for
Private Activity Bond Issues", which has been filed by or on behalf of the
Issuer with the Internal Revenue Service Center in Philadelphia, Pennsylvania,
pursuant to Section 103(l) of the Code, was true and complete as of the date of
filing thereof.
(r) Limitation on Maturity. The weighted average maturity of the Bonds
does not exceed the weighted average estimated economic life of the components
comprising the Facilities by more than 20%, determined pursuant to Section
103(b) (14) of the Code.
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(s) Restrictions on Financing and Operation of Certain Facilities. At no
time will:
(i) more than 25% of the net proceeds of the sale of the Bonds be
used to provide a facility the primary purpose of which is one of the
following: retail food and beverage services (including eating and
drinking places, but excluding grocery stores), automobile sales or
service, or the provision of recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds be
used to provide the following: any private or commercial golf course,
country club, massage parlor, tennis club, skating facility (including
roller skating, skateboard and ice skating), racquet sports facility
(including any handball or racquetball court), hot tub facility, suntan
facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds be
used to provide any airplane, skybox, or other private luxury box, any
health club facility, any facility primarily used for gambling, or any
store the principal business of which is the sale of alcoholic beverages
for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds be
used (directly or indirectly) for the acquisition of land (or an interest
therein) to be used for farming purposes, or 25% or more of the net
proceeds of the sale of the Bonds be used (directly or indirectly) for the
acquisition of land other than land to be used for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds be used
for the acquisition of any property the first use of which property is not
pursuant to such acquisition, except with respect to any building (and the
equipment therefor) if the rehabilitation expenditures with respect to
such building equal or exceed 15% of the portion of the cost of acquiring
such building (and equipment) financed with the proceeds of the Bonds; or
(vi) the Facilities be operated as a facility the primary purpose of
which causes the Facilities to constitute a prohibited facility within the
meaning of Section 103(b) of the Code,
(t) Aggregation of Issues for Single Project. The Facilities are not a
part of a single building, an enclosed
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shopping mall, or a strip of offices, stores or warehouses using substantial
common facilities, and with respect to which any other bonds, notes, or other
obligations have been or will be issued under Section 103(b) of the Code.
(u) Aggregate Limit Per Taxpayer for Small Issue Exemption. The sum of the
authorized face amount of the Bonds allocable to each "test-period beneficiary"
(as defined in Section 103(b) (15) (D) of the Code) plus the respective
aggregate face amount of all tax-exempt industrial development revenue bonds
presently outstanding (not including any obligations which are to be redeemed
from the proceeds of the Bonds) which are allocable to each such test-period
beneficiary, does not exceed $40,000,000.
(v) Reasonable Expectations. Based on current facts, estimates and
circumstances, it is expected that:
(i) the acquisition, construction and installation of the Facilities
and the expenditure of all Bond proceeds will be completed by that date
which is not more than six months from the Original Issuance Date of the
Bonds,
(ii) work on the Facilities (which has commenced) will proceed with
due diligence to completion,
(iii) the net proceeds of the sale of the Bonds are needed for the
purpose of paying all or a part of the cost of the acquisition,
construction and installation of the Facilities, and
(iv) the Facilities will not be sold or disposed of, in whole or in
part, prior to payment in full of the Bonds.
(w) Substantial Binding Obligation. Various contracts providing for the
acquisition, construction and installation of the Facilities have been entered
into and the amounts required to be paid under said contracts exceed $100,000 or
2 1/2%, whichever is less, of the estimated total cost of the Facilities.
(x) The Company represents to the Issuer and the Commission that (i) the
Project will contribute to the economic growth or stability of the Governmental
Unit by (aa) increasing or stabilizing employment opportunities in the
Governmental Unit, (bb) significantly increasing or stabilizing the property tax
base of the Governmental Unit and (cc) promoting commerce within the
Governmental Unit and the State of Texas; (ii) it has no present intention of
moving or disposing of any part of the Project; and (iii) it
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has no present intention of directing the Project to a use other than the
purposes represented to the Governmental Unit and the Commission.
ARTICLE III.
ACQUISITION, CONSTRUCTION AND
INSTALLATION OF THE FACILITIES;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction and Installation of the Facilities.
The Company agrees that the acquisition, construction and installation of the
Facilities will be completed as promptly as practicable after receipt of the
proceeds from the sale of the Bonds, delays incident to strikes, riots, acts of
God or the public enemy or other causes beyond the reasonable control of the
Company only excepted, but if such acquisition, construction and installation is
not completed, there shall be no resulting liability on the part of the Issuer
and no diminution in or postponement of the payments required to be paid by the
Company hereunder.
Section 3.2. Agreement to Issue Bonds; Application of Proceeds. In order
to provide funds for the payment of the cost of the acquisition, construction
and installation of the Facilities (including capitalized interest), the Issuer
agrees that as soon as possible it will authorize, validate, sell and cause to
be delivered to the Original Purchasers thereof, the Bonds, bearing interest and
maturing as set forth in Article II of the Indenture, at a price to be approved
by the Company, and it will thereupon deposit an amount equal to the interest
Reserve Requirement into the Bond Fund and will deposit the balance of the
proceeds received from said sale in the Construction Fund.
The Company may cause such changes to be made to the "Description of
Facilities" attached hereto as Exhibit A as it may desire provided that such
changes shall not result in (i) the Facilities not being a "project" within the
meaning of the Act, (ii) the Facilities constituting a prohibited facility
within the meaning of Section 103(b) of the Code, (iii) less than substantially
all of the net proceeds of the sale of the Bonds being used to pay the costs of
land or property of a character subject to the allowance for depreciation under
Section 167 of the Code, and (iv) a violation of the limitation on maturity of
the Bonds under Section 103(b) (14) of the Code.
Section 3.3. Disbursements from the Construction Fund. The Issuer will in
the Indenture authorize and direct the
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Depository to use the moneys in the Construction Fund for the following purposes
but subject to the provisions of Section 3.8, for no other purposes:
(a) payment of the initial or acceptance fee of the Trustee and the
Depository and fees and expenses of their respective counsel, the fees for
recording the deeds whereby the appropriate title in and to the Facilities has
been acquired by the Company, payments for title examination and insurance, and
any title curative documents that the Company may deem desirable to file for
record in order to perfect or protect its title in and to the Facilities and the
fees and expenses in connection with any actions or proceedings that the Company
may deem desirable to bring in order to perfect its title in and to the
Facilities;
(b) payment to the Company of such amounts, if any, as shall be necessary
to reimburse the Company in full for all advances and payments made by it prior
to or after the delivery of the Bonds for expenditures in connection with the
acquisition by the Company of appropriate title in and to the Facilities
(including the cost of such acquisition and of any rights-of-way for the purpose
of providing access to and from the Facilities), clearing the site, site
improvement, the preparation of plans and specifications for the Facilities
(including any preliminary study or planning of the Facilities or any aspect
thereof), the acquisition, construction and installation of the Facilities and
the acquisition, construction and installation necessary to provide utility
services or other facilities including trackage to connect the Facilities with
public transportation facilities, and all real or personal properties deemed
necessary in connection with the Facilities, or any one or more of said
expenditures (including architectural, engineering and supervisory services)
with respect to any of the foregoing;
(c) payment of, or reimbursement of the Company and the Issuer for, the
legal and accounting fees and expenses, financial consultants' fees, financing
charges (including underwriting or placement fees) and printing and engraving
costs incurred in connection with the authorization, sale and issuance of the
Bonds, the preparation of this Agreement, the Letter of Credit Agreement, the
Letter of Credit, the Indenture, the Bond Purchase Agreement, the Financing
Statements and all other documents in connection therewith and in connection
with the acquisition of appropriate title in and to the Facilities, including
fees for filing the Financing Statements;
(d) payment of, or reimbursement of the Company for, labor, services,
material, supplies and/or equipment used or
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furnished in site improvement and in the construction of the Facilities, all as
provided in the plans and specifications therefor, payment for the cost of the
acquisition and installation of the Facilities, payment for the cost of
acquisition, construction and installation of utility services or other
facilities including trackage to connect the Facilities with public
transportation facilities, and all real and personal properties deemed necessary
in connection with the Facilities and payment for the miscellaneous expenses
incidental to any of the foregoing;
(e) payment of, or reimbursement of the Company for, the fees, if any, for
architectural, engineering and supervisory services with respect to the
Facilities;
(f) payment of, or reimbursement of the Company and the Issuer for, as
such payments become due, the fees and expenses of the Trustee, the Registrar,
the Bond Registrar, the paying agent(s) and the fees and expenses of their
counsel properly incurred under the Indenture that may become due during the
Construction Period; and payment into the Bond Fund of sufficient moneys to pay
interest on the Bonds accruing during the Construction Period or to reimburse
the Bank for drawings under the Letter of Credit to pay interest on the Bonds
accruing during the Construction Period, as the case may be;
(g) payment of, or reimbursement of the Company and the issuer for, any
other legal and valid costs and expenses relating to the Facilities;
(h) all moneys remaining in the Construction Fund (including moneys earned
on investments made pursuant to the provisions of Section 3.8) after the
Completion Date and payment in full of the cost of the acquisition, construction
and installation of the Facilities, and after payment of all other items
provided for in the preceding subsections of this Section then due and payable,
shall at the direction of the company be (i) subject to Section 5.6(f), and
subject to the prior written approval of the Bank, which may be withheld in its
sole and absolute discretion used to acquire, construct and install additions,
extensions and improvements to the Facilities in accordance with amended plans
and specifications therefor duly filed with the Issuer, (ii) transferred to the
Trustee which shall redeem Bonds, to the maximum extent practicable consistent
with making partial redemptions in amounts of not less than $50,000 or integral
multiples thereof, or, on or after the Conversion Date, $5,000 or integral
multiples thereof, at the earliest date permitted by the Indenture or to
purchase Bonds for the purpose of cancellation at any time prior to the earliest
date permitted by the Indenture for the redemption of Bonds, (iii) paid into the
Bond Fund to pay interest on the Bonds, or (iv) a combination of (I), (ii)
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and/or (iii) as is provided in such direction, provided that amounts approved by
the Authorized Company Representative and the Authorized Issuer Representative
shall be retained by the Depository in the Construction Fund for payment of
costs not then due and payable. Any balance remaining of such retained moneys
after full payment of all such costs shall be used by the Trustee as directed by
the Company in the manner specified in clauses (i), (ii), (iii) or (iv) of this
subsection. Amounts directed by the Company to be used by the Trustee in the
manner specified in clause (ii) shall not, pending such use, be invested at a
yield which exceeds the yield on the Bonds. Amounts in excess in the aggregate
of 5% of the net proceeds of the sale of the Bonds shall not be directed by the
Company to be used for the purposes described in clauses (i), (ii), (iii) or
(iv) without providing the Trustee with an opinion of Independent Tax Counsel
stating that such use will not impair the exemption of the interest on the Bonds
from Federal income taxation pursuant to Section 103(b) of the Code.
The payments specified in subsections (a) through (g) of this Section
shall be made by the Depository only upon receipt of the following:
(1) a written requisition for such payment signed by the Authorized
Company Representative and the Authorized issuer Representative;
(2) a certificate by the persons signing such requisition
certifying:
(i) that an obligation in the stated amount has been incurred
(A) in connection with the issuance of the Bonds, or (B) and is
required to reimburse the Bank for a drawing under the Letter of
Credit, or (C) in connection with the acquisition, construction and
installation of the Facilities;
(ii) that such obligation is a proper charge against the
Construction Fund and has not been the basis of any previous
withdrawal from the Construction Fund, and specifying the purpose
and circumstances of such obligation in reasonable detail and the
name and address of the person to whom such obligation is owed,
accompanied by a bill or statement of account for such obligation;
(iii) that (A) they have no notice of any vendors',
materialmen's, mechanics', suppliers' or other similar liens or
right to liens, chattel mortgages or conditional sales contracts, or
other
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contracts or obligations which should be satisfied or discharged
before payment of such obligation is made, or (B) such requisition
is for the purpose of obtaining funds to be used to satisfy or
discharge a lien or contract of the type described in (A) above;
(iv) that such requisition contains no request for payment on
account of any portion of such obligation which the Company is, as
of the date of such requisition, entitled to retain under any
retained percentage agreements;
(v) that payment of such obligation when added to all other
payments previously made from the Construction Fund will not result
in less than substantially all of the net proceeds of the sale of
the Bonds expended at such time being used to provide land or
property of a character subject to the allowance for depreciation
under Section 167 of the Code; and
(vi) that such requisition contains no request for payment on
account of any obligation paid or incurred prior to November 28,
1983; and
(3) with respect to any such requisition for payment for labor,
services, material, supplies and/or equipment, an additional certificate,
signed by the Authorized Company Representative, certifying that insofar
as such obligation was incurred for labor, services, material, supplies
and/or equipment in connection with the acquisition, construction and
installation of the Facilities, such labor and/or services were actually
performed in a satisfactory manner and such material, supplies and/or
equipment were actually used in or about the construction or delivered at
the site of the Facilities for that purpose and that the item of equipment
with respect to which any payment is requested constitutes a portion of
the Facilities. Such requisition and certification shall be in
substantially the form attached hereto as Exhibit B and by this reference
thereto made a part hereof.
In approving or certifying any requisition under this Section, the Issuer
may rely as to the completeness and accuracy of all statements in such
requisition upon the approval of or certification to such requisition by the
Authorized Company Representative, and the Company hereby agrees to indemnify
and save harmless the Issuer, its directors, officers, agents and employees from
any liability
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incurred in connection with any requisition so approved or certified.
In making any such payment from the Construction Fund the Depository may
rely on any such requisitions and any such certificates delivered to it pursuant
to this Section and the Depository shall be relieved of all liability with
respect to making such payments in accordance with any such requisitions and
such supporting certificate or certificates without inspection of the Facilities
or any other investigation.
Anything herein to the contrary notwithstanding, the Depository hereby
agrees that it will not make any disbursement from the Construction Fund without
the prior written approval of the Bank (subject to certain pre-approvals of
disbursements by the Bank) .
The issuer and the Company agree for the benefit of each other and for the
benefit of the Depository, the Trustee and the holders of the Bonds that the
proceeds of the Bonds will not be used in any manner which would result in the
loss of the exemption from Federal income taxation of the interest on the Bonds.
Section 3.4. Obligation to Furnish Documents to Depository. The Issuer and
the Company agree to cooperate with each other in furnishing to the Depository
the documents referred to in Section 3.3 that are required to effect payments
out of the Construction Fund, and to cause such requisitions and certificates to
be directed by the Authorized Company Representative and the Authorized Issuer
Representative to the Depository as may be necessary to effect such payments.
Such obligation of the Issuer and the company is subject to any provisions
hereof or of the Indenture requiring additional documentation with respect to
payments and shall not extend beyond the moneys in the Construction Fund
available for payment under the terms of the Indenture.
Section 3. 5. Establishment of Completion Date. The Completion Date shall
be evidenced to the Depository by a certificate signed by the Authorized Company
Representative stating that, except for amounts retained by the Trustee for
costs of the Facilities not then due and payable as provided in Section 3.3(h).
(a) the acquisition, construction and installation of the Facilities have
been completed substantially in accordance with the plans and specifications
therefor and all labor, services, materials, supplies and/or equipment used
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in such acquisition, construction and installation have been paid for,
(b) all other facilities necessary in connection with the Facilities have
been acquired, constructed and installed substantially in accordance with
the plans and specifications therefor and all costs and expenses incurred
in connection therewith have been paid,
(c) the Facilities and all other facilities in connection therewith have
been acquired, constructed and installed to his satisfaction and are
suitable and sufficient for the efficient operation of the Facilities for
its intended purposes,
(d) substantially all of the net proceeds of the sale of the Bonds have
been used to acquire land or property of a character subject to the
allowance for depreciation under Section 167 of the Code and such costs
representing proceeds so used are properly chargeable to the capital
account of the Company for Federal income tax purposes or would be so
chargeable either with a proper election by the Company or but for a
proper election by the Company to deduct the costs, and
(e) a certificate of occupancy, if required, and any other permissions
required of governmental authorities for the occupancy of the Facilities
have been obtained.
Notwithstanding the foregoing, such certificate by the Authorized Company
Representative shall state that it is given without prejudice to any rights
against third parties which exist on the date of such certificate or which may
subsequently come into being and shall be in substantially the form attached
hereto as Exhibit C and by this reference thereto made a part hereof. The
Company agrees to furnish a copy of such certificate to the Issuer at the same
time such document is furnished to the Trustee.
Section 3.6. Company Required to Pay Costs of Facilities If Construction
Fund Insufficient. If the moneys in the Construction Fund available for payment
of the cost of the Facilities should not be sufficient to pay the cost thereof
in full, the Company agrees to complete the Facilities and to pay all that
portion of the cost of the Facilities as may be in excess of the moneys
available therefor in the Construction Fund. The Issuer does not make any
warranty, either express or implied, that the moneys which will be paid into the
Construction Fund and which, under the provisions of this Agreement, will be
available for payment of the cost of the Facilities will be sufficient to pay
all costs which will be incurred in that connection. The Company
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agrees that if after exhaustion of the moneys in the Construction Fund the
Company should pay any portion of the cost of the Facilities pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Issuer or from the Trustee or from the holders or owners of
any of the Bonds, nor shall it be entitled to any diminution in or postponement
of the payments required to be made hereunder.
Section 3.7. Remedies Against Suppliers, Contractors and Subcontractors
and Their Sureties. The Company may prosecute or defend any action or proceeding
or take any other action involving any defaulting supplier, contractor,
subcontractor or surety therefor which the Company deems reasonably necessary,
and in such event the Issuer agrees to cooperate fully with the Company, to the
extent it might lawfully do so, in any such action or proceeding. Any moneys
recovered by way of damages, refunds, adjustments or otherwise in connection
with the foregoing shall belong to the Company.
Section 3.8. Investment of Bond Fund and Construction Fund Moneys
Permitted. Any moneys held in the Bond Fund of the Construction Fund shall be
invested or reinvested by the Trustee upon the oral or written request and
direction of the Company, and, if oral, promptly confirmed in writing, in
Eligible Investments, to the extent permitted by the laws of the State. Such
investments shall be made upon direction of the Authorized Company
Representative and shall mature in such amounts and at such times as may be
necessary to provide funds when needed to make payments from the Bond Fund or
the Construction Fund. The Trustee may make any and all such investments through
its own investment department. Any interest or gain received from such
investments shall be credited to and held in the Bond Fund or the Construction
Fund and any loss from such investments shall be charged against the Bond Fund
or the Construction Fund and paid by the Company at such time as there are
insufficient moneys in any such Fund to make a required payment. The Trustee
shall not be responsible or liable for any loss suffered in connection with any
investment of funds made by it in accordance with the provisions of Article VI I
I of the Indenture. The provisions of this Section 3.8 shall be subject to the
provisions of Section 5. 12(b) of this Agreement and Section 804 of the
Indenture.
Section 3.9. Title to the Facilities. The Issuer acknowledges and agrees
that it will not be vested with any interest in the Facilities by virtue of
executing, delivering and performing this Agreement or issuing the Bonds to
finance the cost of the acquisition, construction and
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installation thereof and that the Facilities will not constitute any part of the
security for the Bonds.
ARTICLE IV.
LOAN BY THE ISSUER TO THE COMPANY;
REPAYMENT OF LOAN
Section 4.1. Loan By the Issuer to the Company; Repayment of Loan;
Obligations Unconditional. The Issuer shall lend from time to time, pursuant to
Section 3.3, to the Company the proceeds of the sale of the Bonds for the
purposes provided in this Agreement. The Company will repay said loan, as
follows: On each Bond Payment Date until the principal of, and the redemption
premium (if any) and the interest on, all Bonds shall have been fully paid (or
provision for the payment thereof shall have been made in accordance with the
provisions of the Indenture) a sum in immediately available funds which, when
added to the balance which is then in the Bond Fund and available for such
purpose, shall be equal to the amount payable as principal of, and redemption
premium (if any) and interest on, Bonds then outstanding under the Indenture on
such Bond Payment Date.
Not later than the fifth (5th) Business Day next succeeding each interest
Payment Date prior to the Interest Payment Date next preceding the Expiration
Date of the Letter of Credit, the Company shall pay an amount equal to the
difference between the Interest Reserve Requirement and the aggregate amount of
Available Moneys on deposit in or credited to the Bond Fund on the Business Day
next succeeding such interest Payment Date.
In any event, the amount payable under this Section 4.1 on any Bond
Payment Date shall be sufficient to pay the total amount due with respect to the
principal of, and redemption premium (if any) and interest on, the Bonds on such
Bond Payment Date. If, after making any transfer from the Construction Fund to
the Bond Fund required by the Indenture, on any Bond Payment Date the balance in
the Bond Fund is insufficient to make required payments of principal of, and
redemption premium (if any) and interest on, the Bonds on such date, the Company
shall forthwith pay to the Trustee, on behalf of the Issuer for deposit into the
Bond Fund, any such deficiency; provided, however, that if at any time all the
outstanding Bonds are paid and discharged as provided in Article X of the
Indenture no further such payments shall be required. In the Indenture, the
Issuer has directed the Trustee to apply such payments in accordance with the
provisions of the Indenture and this Agreement.
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The obligations of the Company to make the payments required in this
Section 4.1 and in Section 4.3 in the amounts and at the times specified and to
perform and observe the other agreements on its part contained herein shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, any set-off, counterclaim, recoupment, defense
(other than payment itself) or other right which the Company may have against
the Issuer, the Trustee, or anyone else for any reason whatsoever. The Company
hereby waives, to the extent permitted by applicable law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate or cancel this Agreement except in
accordance with the express terms hereof. Nothing contained in this Section 4.1
shall be construed to release the Issuer from the performance of any of the
agreements on its part herein contained; and in the event the Issuer should fail
to perform any such agreement on its part, the Company may institute such action
against the Issuer as the Company may deem necessary to compel performance or
recover its damages for nonperformance so long as such action will not be
inconsistent with the agreements on the part of the Company contained in the
first sentence of this paragraph.
In the event the Company should fail to make any of the payments required
in this Section 4.1, the item or installment so in default shall continue as an
obligation of the Company until the amount in default shall have been paid in
full. The Company agrees to pay interest on all overdue amounts which represent
repayments of principal of, or redemption premium on, the Bonds at the rate
borne by such Bonds.
Anything herein, in the Indenture or in the Bonds to the contrary
notwithstanding, the obligations of the Company hereunder shall be subject to
the limitation that payments constituting interest under this Section shall not
be required to the extent that the receipt of such payment by the holder of any
Bond would be contrary to the provisions of law applicable to such holder which
limit the maximum rate of interest which may be charged or collected by such
holder.
Section 4.2. Company Consent to Assignment of Agreement and Execution of
Indenture; Company's Performance Under Indenture. The Company understands that
the Issuer, as security for the payment of the principal of, and the redemption
premium (if any) and the interest on, the Bonds, will assign and pledge to, and
create a security interest in favor of, the Trustee pursuant to the Indenture
certain of its rights, title and interest in and to this Agreement
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including all Revenues, reserving, however, its rights (a) pursuant to this
Agreement providing that notices, approvals, consents, requests and other
communications be given to the Issuer, (b) to reimbursement and payment of costs
and expenses under Sections 5.3, 5.10 and 6.4, and (c) to indemnification and to
exemption from liability, both individual and corporate, under Section 5.3, and
the Company hereby agrees and consents to such assignment and pledge. The
Company acknowledges that it has received a copy of the Indenture and consents
to the execution of the same by the Issuer.
The Company agrees, for the benefit of the bondholders, to do and perform
all acts and things contemplated in the Indenture to be done or performed by it.
Section 4.3. Prepayment of Loan.
(a) Mandatory Prepayment of the Loan. The Company shall be obligated to
prepay unpaid amounts of the loan made by the Issuer to the Company pursuant to
Section 4.1 prior to the stated maturity of the Bonds in the event that the
Bonds are required to be redeemed pursuant to Section 301 of the Indenture.
(b) Optional Prepayments Pursuant to the Indenture. The Company shall have
the right, at its option, to direct the Issuer to effect the redemption of the
Bonds pursuant to Section 301 (a) or (c) of the Indenture.
(c) Optional Prepayments upon Condemnation of Facilities. After the
Conversion Date, in the event that title to or the temporary use of the
Facilities, or any part thereof, shall be taken under the exercise of the power
of eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, any Net Proceeds received from any award
made in any such eminent domain proceedings may, at the option of the Company
(which option must be exercised within ninety (90) days of the date of entry of
a final order in any eminent domain proceedings granting condemnation), be paid
to the Trustee in prepayment of unpaid amounts of the loan made by the Issuer
pursuant to Section 4. 1 and shall be applied by the Trustee as shall be
directed in writing by the Authorized Company Representative (i) to the
redemption of all of the Bonds or purchase of Bonds in the open market for the
purpose of cancellation pursuant to the Indenture upon exercise of the
prepayment option set forth in Section 4.3(d) below,, or (ii) to the redemption
of less than all of the Bonds pursuant to the Indenture or payment into the Bond
Fund; provided that, in the case of (ii), the Company shall furnish the Issuer
and the Trustee (x) a certificate of an Independent Engineer
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selected by the Company stating (A) that the property forming a part of the
Facilities that was taken by such condemnation was not essential to the
character of the Facilities as industrial facilities, or (B) that the Facilities
have been restored to a condition substantially equivalent to their condition as
industrial facilities prior to the taking by such condemnation proceedings, with
such changes, alterations and modifications (including the substitution and
addition of other property) as may be desired by the Company and as will not
materially impair the character of the Facilities as industrial facilities, or
(C) that improvements have been acquired which are suitable for the operation of
the Facilities as industrial facilities, and (y) an opinion of Independent Tax
Counsel or a ruling of the Internal Revenue Service to the effect that such
application of the Net Proceeds will not jeopardize the exemption of interest on
the Bonds from Federal income taxation.
(d) Optional Prepayments in Certain Events. After the Conversion Date, the
Company shall have the right, at its option, within ninety (90) days following
the event under clause (i) or (ii) below authorizing the exercise of such
option, of at any time during the continuation of an event under clause (iii) or
(iv) below authorizing the exercise of such option, to give written notice to
the Issuer and the Trustee of its exercise of such option and to prepay, or
cause to be prepaid, all the amounts payable pursuant to Section 4.1 and such
other amounts as specified in this Section 4.3(d) within ninety (90) days
following the giving of notice of such exercise, if any of the following shall
have occurred:
(i) all or a substantial part of the Facilities shall have been
damaged or destroyed (A) to such extent that the Company deems it not
practicable or desirable to restore such damaged or destroyed property
within a period of three (3) consecutive months to the condition thereof
immediately preceding such damage or destruction, or (B) to such extent
that the Company is thereby reasonably expected to be prevented from
carrying on its normal operations at the Facilities for a period of three
(3) consecutive months;
(ii) title to, or the temporary use of, all or a substantial part of
the Facilities shall have been taken, or condemned under the exercise of
the power of eminent domain, by any governmental authority, person, firm
or corporation acting under governmental authority (including such a
taking or takings as result in the Company's being reasonably expected to
be prevented from carrying on its normal operations at the Facilities for
a period of three (3) consecutive months);
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(iii) changes in costs or economic availability of energy, labor,
raw materials, operating supplies, including fuel, power, or facilities
necessary for the operation of all or a substantial part of the Facilities
shall have occurred, or such technological or other changes shall have
occurred, which in the Company's reasonable judgment render continued
operation of all or a substantial part of the Facilities impracticable or
uneconomic for their purpose; or
(iv) any court or administrative body shall enter a judgment, order
or decree, or shall take administrative action, requiring the Company to
cease all or any substantial part of its operations at the Facilities to
such extent that the Company is or will be prevented from carrying on its
normal operations at the Facilities for a period of three (3) consecutive
months.
For purposes of this Section 4.3(d), the term "substantial part" when used with
reference to the Facilities shall mean any part of the Facilities as to which
the total acquisition, restoration and equipping cost amounted to (i) at least
twenty-five percentum (25%) of the aggregate principal amount of Bonds issued
pursuant to the Indenture, or (ii) an amount equal to the aggregate principal
amount of Bonds then outstanding, whichever is less.
The amount payable by the Company in the event it is required to prepay
the loan pursuant to subsection (a) of Section 4.3 or it exercises the option
granted to it in subsection (d) of this Section 4.3 shall be a sum which, when
added to the moneys and investments held for the credit of the Bond Fund and all
other funds and accounts then held by the Trustee in respect of the Bonds and
available for the purpose, will be sufficient pursuant to the provisions of
Article X of the Indenture to pay and discharge all the then outstanding Bonds
on the first possible date for redemption, plus an amount of money payable to
the Trustee equal to the Trustee's and Paying Agent's fees, charges and expenses
under the Indenture accrued and to accrue until such final payment and
redemption of the Bonds.
The amount payable by the Company in the event it exercises the option
granted to it pursuant to subsection (b) of this Section 4.3 shall be sufficient
pursuant to Section 301 (a) or Section 301 (c) of the Indenture to pay the
applicable redemption price of the Bonds to be redeemed.
Section 4.4. Delivery of Letter of Credit to Trustee. The Company shall
cause the Letter of Credit to be issued and delivered to the Trustee on the
Original Issuance Date of the Bonds. The Company hereby authorizes and directs
the
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Trustee to draw moneys under the Letter of Credit, in accordance with the
provisions of the Letter of Credit Agreement and the Indenture.
Section 4.5. Satisfaction of Company's Obligation. The obligation of the
Company to make any payments required under Sections 4.1 and 4.3 of this
Agreement shall be deemed to be satisfied and discharged to the extent of (a)
the corresponding payment made by the Bank to the Trustee under the Letter of
Credit, or (b) payments of principal of, or interest on, the Bonds from moneys
transferred from the Construction Fund pursuant to Section 3.3(h), or (c) Net
Proceeds of insurance or condemnation awards which are applied to the payment of
principal of, or interest on, the Bonds.
Section 4.6. Alternate Letter of Credit; Alternate Credit Facility. At any
time prior to the sixtieth (60th) day next preceding the Expiration Date of the
Letter of Credit, the Company may, at its option, provide for and deliver to the
Trustee an Alternate Letter of Credit. An Alternate Letter of Credit shall be an
irrevocable letter of credit, other than the Letter of Credit issued by the Bank
and delivered to the Trustee on the Original Issuance Date of the Bonds, issued
by a commercial bank, the terms of which shall in all material respects be the
same as the Letter of Credit. At least forty-six (46) Business Days but not more
than sixty (60) days prior to the date of delivery of an Alternate Letter of
Credit, the Company shall (i) deliver to the Trustee an opinion of Independent
Tax Counsel stating that the delivery of such Alternate Letter of Credit to the
Trustee is authorized under this Agreement and the Act, complies with the terms
of this Agreement and will not adversely affect the exemption from Federal
income taxation of interest on the Bonds, (ii) deliver to the Trustee written
evidence from Moody's, if the Bonds are rated by Moody's, and S&P, if the Bonds
are rated by S&P, in each case to the effect that such rating agency has
reviewed the proposed Alternate Letter of Credit and that the substitution of
the Alternate Letter of Credit for the Letter of Credit will not, by itself,
result in a reduction of its rating of the Bonds from that which then prevails,
and (iii) direct that the Trustee notify the Bank and the holders of outstanding
Bonds, in accordance with of Section 302 of the Indenture, that an Alternate
Letter of Credit will be delivered to the Trustee.
On or after the Conversion Date or the Interest Payment Date next
preceding the Expiration Date of the Letter of Credit, the Company may provide
for the delivery of an Alternate Credit Facility to provide security for payment
of the principal of, and the interest on, the Bonds; provided
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that the Company shall (i) deliver to the Trustee an opinion of Independent Tax
Counsel stating that the delivery of such Alternate Credit Facility is
authorized under this Agreement and the Act, complies with the terms of this
Agreement and will not adversely affect the exemption from Federal income
taxation of interest on the Bonds, and (ii) direct the Trustee to notify the
Bank and the holders of outstanding Bonds, in accordance with Section 302 of the
Indenture, that an Alternate Credit Facility will be delivered to the Trustee.
In the event that such Alternate Credit Facility is to be delivered prior to the
Conversion Date, such Alternate Credit Facility may provide for payment of the
purchase price of Bonds delivered to the Trustee in accordance with Section 302
of the Indenture.
Any Alternate Letter of Credit or Alternate Credit Facility shall have an
initial term of not less than one (1) year.
Section 4.7. Extension of Letter of Credit. The Company may, at its
election and with the consent of the Bank, provide for one or more extensions of
the Letter of Credit for any period commencing after December 15, 1988.
Section 4.8. Notice of Prepayments; Issuer to Effect Redemption. If the
Company shall be required or determines to make any payments, or cause any
payments to be made, pursuant to subsections (a), (b), (c) or (d) of Section
4.3, it shall give notice in writing of such intention to the Issuer and the
Trustee, which notice shall state the provisions of the Indenture under which
the Issuer is to apply such payment. In such event or in the event that moneys
in the Bond Fund are sufficient to redeem all the Bonds then outstanding under
the Indenture and to pay interest to accrue thereon to the redemption date, the
Issuer (or the Company upon the request and on behalf of the Issuer) will, but
only upon the direction of the Company, forthwith take all steps that may be
necessary to effect the redemption of all or part of the then outstanding Bonds
as specified by the Company, on the earliest redemption date on which such
redemption may be made under the applicable provisions of the Indenture. Except
as otherwise provided in said subsections (c) and (d) of Section 4.3, such
notice must be received by the Issuer and the Trustee prior to the first date on
which the Issuer would be required to give notice to the Trustee or to take any
other action in respect to the Issuer's right to effect the redemption of Bonds
pursuant to the appropriate provision of the Indenture.
Section 4.9. Relative Position of this Article and the Indenture. The
rights and options granted to the Company in this Article shall be and remain
prior and superior to the
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Indenture and may be exercised whether or not the Company is in default under
this Agreement, provided that such default will not result in nonfulfillment of
any condition to the exercise of any such right or option.
Section 4.10. Place of Payment. All amounts payable by the Company
pursuant to Section 4.1 or Section 4.3 of this Agreement shall be paid directly
to the Trustee at its Principal Office on behalf of the Issuer for deposit into
the Bond Fund as provided in the Indenture and the Issuer consents to said
amounts being paid in such manner.
Section 4.11. Payments to the Remarketing Agent and the Paying Agent. The
Company shall pay to the Remarketing Agent and the Paying Agent amounts equal to
the amounts to be paid by the Paying Agent or the Remarketing Agent pursuant to
Section 401 (g) of the Indenture or by the Paying Agent pursuant to Section 401
(h) of the Indenture, such amounts to be paid by the Company to the Remarketing
Agent or the Paying Agent on the dates such payments are to be made pursuant to
said Sections 401 (g) or 401 (h), respectively; provided, however, that the
obligation of the Company to make any such payments hereunder shall be reduced
by the amount of any moneys available for such payments under clause (i) or (ii)
of said Section 401 (g) or clause (i) of said Section 401 (h); and provided,
further, that the obligation of the Company to make any payment hereunder shall
be deemed to be satisfied and discharged to the extent that payment is made
using moneys described in clause (iii) of said Section 401 (g) or clause (ii) of
said Section 401 (h).
ARTICLE V.
PARTICULAR COVENANTS
Section 5.1. Maintenance of Existence. The Company agrees that during the
Loan Term it will maintain its existence, will not voluntarily dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it; provided, that the Company may,
without violating the agreements contained in this Section 5.1, consolidate with
or merge into another entity, or permit one or more other entities to
consolidate with or merge into it, or sell or otherwise transfer to another
entity all or substantially all (of its assets as an entirety and thereafter
dissolve, provided that if the surviving, resulting or transferee entity, as the
case may be, is other than the Company, such surviving, resulting or transferee
entity is solvent,
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assumes in writing all of the obligations of the Company hereunder, is organized
under the laws of the United States of America, a state thereof or the District
of Columbia and is qualified to do business in the State.
If consolidation, merger or sale or other transfer is made as provided in
this Section 5.1, the provisions of this Section 5.1 shall continue in full
force and effect and no further consolidation, merger or sale or other transfer
shall be made except in compliance with the provisions of this Section 5.1.
Section 5.2. Qualification in the State. The Company warrants that it is
and throughout the Loan Term it will continue to be an entity either organized
under the laws of the State or qualified to do business in the State as a
foreign entity.
The Company shall preserve and keep in full force and effect all licenses
and permits necessary to the proper conduct of its business.
Section 5.3. Indemnification of Issuer and Trustee. The Company shall
indemnify and save the Issuer, the Commission and the Trustee harmless against
and from all claims by or on behalf of any person, firm or corporation arising
from the conductor management of, or from any work or thing done on, the
Facilities during the Loan Term, and against and from all claims arising during
the Loan Term from
(a) any condition of the Facilities caused by the Company,
(b) any failure on the part of the Company in the performance of any
of its obligations hereunder,
(c) any contract entered into in connection with the acquisition,
construction and installation of the Facilities,
(d) any act of negligence of the Company or of its agents,
contractors, servants, employees or licensees, and
(e) any act of negligence of any assignee or sublessee of the
Company, or of any agent, contractor, servant, employee or licensee of any
assignee or sublessee of the Company.
The Company shall indemnify and save the Issuer, the Commission and the Trustee
harmless from and against all
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costs and expenses incurred in or in connection with any action or proceeding
brought thereon, and upon notice from the Issuer or the Trustee, the Company
shall defend them or either of them in any such action or proceeding. The
Company shall indemnify and save the Trustee harmless from and against any loss,
liability, expense or advance incurred or made without gross negligence or bad
faith on the part of the Trustee, arising out of or in connection with the
acceptance or administration of the trusts established under the Indenture and
this Agreement, including the costs and expenses of defending itself against any
claim of liability in the premises.
The Company agrees to pay to the Trustee any and all sums of money
required to be paid by the Issuer pursuant to Section 1202 of the indenture.
The provisions of this Section shall survive the termination of this
Agreement.
Section 5.4. Payment of Trustee's Fees, Except as paid out of the
Construction Fund pursuant to Section 3.3 of this Agreement, the Company agrees
to pay to or upon the order of the Trustee, (i) an amount equal to the fees of
the Trustee, as Trustee, which will be payable on such dates as shall be
mutually agreeable to the Trustee and the Company for the Ordinary Services of
the Trustee rendered and its Ordinary Expenses incurred under the indenture,
(ii) the reasonable fees, charges and expenses of the Trustee, as Bond Registrar
and Paying Agent (including any charges imposed with respect to the transfer of
registration or exchange of Bonds), and of Paying Agents on the Bonds for acting
as Paying Agents as provided in the Indenture, as and when the same become due,
and (iii) the reasonable fees, charges and expenses of the Trustee for
Extraordinary Services rendered and Extraordinary Expenses incurred by it under
the Indenture, as and when the same become due; provided that the Company may
contest in good faith the necessity for any such Extraordinary Services and
Extraordinary Expenses and the reasonableness of any such fees, charges or
expenses after payment of the same (so long as such action shall not impair the
agreements of the Company contained in this Section 5.4), and such contest or
action shall not constitute a default or an Event of Default hereunder,
If the Company should fail to make any of the payments required in this
Section, the item or installment which the Company has failed to make shall
continue as an obligation of the Company until the same shall have been fully
paid, and the Company agrees to pay the same with interest thereon at the
interest Rate for Advances until paid in full,
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Section 5.5. Maintenance and Operation of the Facilities. The Company
agrees that during the Loan Term it will keep the Facilities including all
appurtenances thereto in good repair and good operating condition at its own
cost. The Company has represented in Section 2.3(j) its intention with respect
to the operation of the Facilities; provided, however, the Company shall not be
under any obligation to operate the Facilities if, in the judgment of the
Company, such operation is not in the best interest of the Company.
The Company shall have the privilege of remodeling the Facilities or
making additions, modifications, substitutions and improvements to the
Facilities from time to time as it, in its sole discretion, may deem to be
desirable for its uses and purposes, provided that such remodeling, additions,
modifications, substitutions and improvements, when constructed do not
materially adversely affect the character of the Facilities as an industrial
facility, or cause the Facilities to cease to be a "project" within the meaning
of the Act, or cause the Facilities to constitute a prohibited facility with the
meaning of Section 103(b) of the Code. The cost of such remodeling, additions,
modifications, substitutions and improvements shall be paid by the Company or,
to the extent permitted by this Agreement and the Indenture, from the
Construction Fund.
The Company may remove and dispose of any items included as Facilities
which the Company determine have become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary, provided that any such removal will not
materially impair the character of the Facilities as an industrial facility, or
cause the Facilities to cease to be a "project" within the meaning of the Act,
or cause the Facilities to constitute a prohibited facility within the meaning
of Section 103(b) of the Code. In the event any such removal causes damage to
the remaining Facilities, the Company shall restore the same or repair such
damage.
The Company may from time to time, in its sole discretion, and at its own
expense, install additional property in conjunction with the Facilities. Such
property may be modified or removed at any time, provided that such modification
or removal will not materially adversely affect the character of the Facilities
as an industrial facility, or cause the Facilities to cease to be a "project"
within the meaning of the Act, or cause the Facilities to constitute a
prohibited facility with the meaning of Section 103(b) of the Code.
Section 5.6. Covenants of Company and Issuer with, Respect to Exemption of
Interest from Federal Income Taxation. The Bonds are being issued by the Issuer
in
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compliance with the conditions necessary for the interest income on the Bonds to
be exempt from Federal income taxation pursuant to the provisions of Section
103(b) (6) (D) of the Code relating to "industrial development bonds" issued as
part of an issue the aggregate authorized face amount of which is $10,000,000 or
less and substantially all of the proceeds of which are to be used for the
acquisition, construction, reconstruction or improvement of land or property of
a character subject to the allowance for depreciation under Section 167 of the
Code. It is the intention of the parties hereto that the interest on the Bonds
be and remain free from Federal income taxation, and, to that end, the Issuer
and the Company do hereby covenant with each other, the Trustee and each of the
holders of any Bonds, as follows:
(a) that the Issuer will not cause and the Company will not cause or
permit the proceeds of the Bonds to be used in a manner which will cause
the interest on the Bonds to lose the exemption from Federal income
taxation conferred by Section 103(b) (6) (D) of the Code;
(b) that during the three-year period immediately following the date
of the issuance and delivery of the Bonds, neither of them shall make or
cause or permit to be made any Section 103(b) (6) (D) Capital Expenditures
with respect to the Local Facilities which would cause the Interest
payable on the Bonds to be or become subject to Federal income taxation;
(c) that should the circumstances set forth in Sections 103(b)(6)
(D) and (E) of the Code occur (during the six-year period referred to
therein), either through the fault of the Company or through circumstances
beyond the Company's control, and there shall occur a Determination of
Taxability, the Company shall prepay all amounts payable under Section 4.1
and cause such amounts to be applied by the Trustee to the redemption of
all outstanding Bonds and otherwise as provided in Section 4.3(a) and
Section 301 of the Indenture;
(d) that, promptly following the filing of the company's Federal
income tax return for each of its fiscal years which covers any portion of
the three-year period following the date of issuance and delivery of the
Bonds it will furnish to the Trustee a copy of each Supplemental Statement
filed by the Company in connection with each such Federal income tax
return or that portion of each such Supplemental Statement which
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reports Section 103(b)(6)(D) Capital Expenditures relating to the Local
Facilities;
(e) that, during the term of this Agreement, the Company will fully
comply with all effective rules, rulings and regulations promulgated by
the Department of the Treasury or the Internal Revenue Service, with
respect to bonds issued under Section 103(b) (6)(D) of the Code so as to
maintain the tax-exempt status of the interest payable on the Bonds;
(f) that the Company will make no change in the plans and
specifications for the Facilities which would result in (i) the Facilities
not being a "project" within the meaning of the Act, (ii) the Facilities
constituting a prohibited facility within the meaning of Section 103(b) of
the Code, (iii) less than substantially all of the net proceeds of the
sale of the Bonds being used to pay the costs of land or property of a
character subject to the allowance for depreciation under Section 167 of
the Code, or (iv) a violation of the limitation on maturity of the Bonds
under Section 103(b) (14) of the Code;
(g) that at no time will:
(i) more than 25% of the net proceeds of the sale of the Bonds
be used to provide a facility the primary purpose of which is one of
the following: retail food and beverage services (including eating
and drinking places, but excluding grocery stores), automobile sales
or service, or the provision of recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
be used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds
be used to provide any airplane, skybox, or other private luxury
box, any health club facility, any facility primarily used for
gambling, or any store the principal business of which is the sale
of alcoholic beverages for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
be used (directly or indirectly)
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for the acquisition of land (or an interest therein) to be used for
farming purposes, or 25% or more of the net proceeds of the sale of
the Bonds be used (directly or indirectly) for the acquisition of
land other than land to be used for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
be used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of
the portion of the cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(vi) the Facilities be operated as a facility the primary
purpose of which causes the Facilities to constitute a prohibited
facility within the meaning of Section 103(b) of the Code; and
(h) that at no time during the three-year period beginning on the later of
the date the Facilities are placed in service or the date of issuance and
delivery of the Bonds will the Company permit any person to be an owner or
Principal User of the Facilities if the sum of the authorized face amount of the
Bonds allocable to such person plus the aggregate face amount of all tax-exempt
industrial development bonds presently outstanding which are allocable to such
person exceeds $40,000,000.
Section 5.7. Insurance Required. Throughout the Loan Term the Company
shall keep the Facilities continuously insured against such risks as are
customarily insured against by businesses of like size and type, paying as the
same become due all premiums in respect thereto. The insurance hereby required
may be contained in blanket policies now or hereafter maintained by the Company
and may provide for such deductible provisions as are customary with businesses
of like size and type. In addition, the Company shall comply, or cause
compliance, with applicable workers' compensation laws of the State.
All such policies, or a certificate or certificates of the insurers that
such insurance is in force and effect, shall be deposited with the Trustee and
shall contain a provision that such policy may not be cancelled unless the
Trustee is notified at least thirty (30) days prior to cancellation; and at
least thirty (30) days prior to
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expiration of any such policy, the Company shall furnish the Trustee with
written evidence that the policy has been renewed or replaced or is no longer
required hereby.
Section 5.8. Taxes, Other Governmental Charges and Utility Charges. The
Company agrees to pay, as the same respectively become due, all taxes,
assessments whether general or special, and governmental or utility charges of
any kind whatsoever that may at any time be lawfully assessed, levied or imposed
against or with respect to or incurred in the operation, maintenance or use of
the Facilities (including, without limiting the generality of the foregoing, all
sales and ad valorem taxes and any taxes levied upon or with respect to the
receipts, income or revenues of the Issuer from this Agreement) which, if not
paid, may become or be made a lien or a charge on the amounts payable by the
Company under this Agreement.
The Company may, at its expense and in its own name and behalf, in good
faith contest any such taxes, assessments or charges and, in the event of any
such contest, may permit the taxes, assessments or charges so contested to
remain unpaid during the period of such contest, including any appeal period,
unless by nonpayment of any such items prior to the final adjudication if said
contest (i) the ability of the Company to make the payments hereunder will be
materially endangered, or (ii) the moneys or investments in the Bond Fund or the
Construction Fund will be subject to loss or forfeiture, or (iii) the continued
proper and efficient operation of the Facilities will be materially threatened,
and in any such event such taxes, assessments or charges shall be paid promptly.
Section 5.9. Damage, Destruction and Eminent Domain. If at any time during
the Loan Term, the Facilities, or any portion thereof, shall be damaged or
destroyed by fire, flood, windstorm or other casualty or title to, or the
temporary use of, the Facilities, or any portion thereof, shall have been taken
by the exercise of the power of eminent domain, the Company (unless it shall
have exercised its option to prepay the loan pursuant to Section 4.3(c) Or
4.3(d)) shall cause the Net Proceeds from insurance or condemnation or an amount
equal thereto (i) to be used for the repair, reconstruction, restoration or
improvement of such Facilities, or such portion thereof, as industrial
facilities, or (ii) to be used for the acquisition, construction or improvement
of additional industrial facilities within the County for use in connection with
operational facilities of the company, provided that the Company shall first
have obtained an opinion of Independent Tax Counsel or a ruling of the Internal
Revenue Service that the proposed
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use pursuant to this clause (ii) will not cause the interest on the Bonds to
become included in the gross income of the holders of the Bonds for the purposes
of Federal income taxation, or (iii) to be deposited into the Bond Fund (but
only for application, as instructed by the Authorized Company Representative, to
the purchase of Bonds in the open market for the purpose of cancellation at
prices not exceeding the then open market price of the Bonds or to the
redemption of the Bonds at the next available optional redemption date in the
manner provided in the Indenture), or (iv) to be used for any combination of the
purposes permitted by (and subject to the conditions described in) clauses (i),
(ii) and (iii) above.
Notwithstanding anything to the contrary contained in this Loan Agreement,
until the first to occur of (a) the expiration of the Letter of Credit or (b) a
material default by the Bank in connection therewith, the provisions of the
Reimbursement Agreement shall control with respect to the payment and
application of insurance and condemnation proceeds.
Section 5.10. Company's Obligation To Pay Certain Fees Expenses of the
issuer. The Company agrees to pay to the Issuer reasonable out-of-pocket or
extraordinary expenses of the issuer, related to the Facilities and incurred as
a result of a request of the Company or a requirement (in the reasonable
judgment of the Issuer) of this Agreement or the Indenture, and which are not
otherwise required to be paid by the Company under the terms of this Agreement,
including but not limited to the fees and expenses incurred in complying with
Section 503 of the Indenture.
In consideration of the issuance and delivery of the Bonds by the Issuer
and the lending of the proceeds thereof to the Company to enable it to acquire,
construct and install the Facilities, the Company agrees to pay to the Issuer on
the Original Issuance Date of the Bonds, an amount equal to 1/8 of 1% of the
principal amount of the Bonds, and on each anniversary of the Original Issuance
Date of the Bonds, an amount equal to $400 per $1,000,000 of Outstanding Bonds
as of such date.
In the event the Company should fail to make any of the payments required
in this Section 5.10, the item or installment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon until paid at
the Interest Rate for Advances.
The provisions of this Section shall survive the termination of this
Agreement.
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Section 5.11. Application of Certain Proceeds Prior to the Expiration Date
of the Letter of Credit. Notwithstanding the provisions of Section 5.9 of this
Agreement, prior to the Expiration Date of the Letter of Credit, any moneys
available for application in accordance with clause (iii) of Section 5.9 of this
Agreement shall be held by the Trustee in a separate account for a period of one
hundred twenty-three (123) days from the date of receipt thereof. If during said
one hundred twenty-three (123) day period no petition in bankruptcy or similar
insolvency proceeding has been filed by or against the Company or by the Issuer,
such moneys shall be applied to the maximum extent possible to the purchase for
cancellation or redemption of Outstanding Bonds, and any moneys remaining
thereafter shall be applied to payment of interest on the Bonds on the Interest
Payment Date next following said one hundred twenty-three (123) day period.
Section 5.12. Non-Arbitrage Covenant; Compliance with Special Arbitrage
Rules.
(a) The Company hereby covenants and agrees with the Issuer and the
Trustee for the benefit of the holders of any of the Bonds, present and future,
that it will proceed with due diligence to spend the "gross proceeds"
(hereinafter defined) of the Bonds in connection with the acquisition,
construction and installation of the Facilities and that it will not make, or
permit, any use of the proceeds of the Bonds which will cause the Bonds to be
"arbitrage bonds" within the meaning of Section 103(c) of the Code and any
Income Tax Regulations promulgated thereunder as such regulations may apply to
obligations issued as of the date of the Bonds. The Company shall deliver to the
Issuer its certificate, evidencing the reasonable expectations of the Company,
in such reasonable form as the Issuer shall specify and upon which the Issuer
may rely in furnishing the certificate required by Section 207 of the Indenture.
(b) The Company hereby further covenants and agrees with the Issuer and
the Trustee, and with the holders of any of the Bonds, present and future, as
follows:
(1) All of the gross proceeds of the Bonds, other than gross proceeds held
in a "bona fide debt service fund" (hereinafter defined) will be expended on the
Facilities within six (6) months of the date of issuance and delivery of the
Bonds, or
(2) If any part of the gross proceeds of the Bonds has not been expended
on the Facilities within six (6) months of the date of issuance and delivery of
the Bonds, the Company shall invest or cause such gross proceeds to be invested
in
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the manner described in subparagraph (A) below and shall pay or cause to be paid
to the United States the amounts described in subparagraph (B) below in
accordance with the terms and conditions set forth therein.
(A) Except during any "temporary period" (hereinafter defined), the
aggregate amount of gross proceeds of the Bonds which are invested in
"nonpurpose obligations" (hereinafter defined) having a "yield"
(hereinafter defined) higher than the yield on the Bonds shall at no time
during any "bond year" (hereinafter defined) exceed one hundred fifty
percentum (150%) of the "debt service" (hereinafter defined) on the Bonds
for such bond year. In addition, the aggregate amount of gross proceeds of
the -Bonds invested hereunder in nonpurpose obligations having a yield
higher than the yield on the Bonds shall be promptly and appropriately
reduced as the amount of outstanding Bonds is reduced (whether by payment
at maturity, mandatory sinking fund redemption, redemption prior to
maturity, or otherwise). The Company shall not be required to sell or
dispose of nonpurpose obligations if such sale or disposition would result
in the realization of a loss, for Federal income tax purposes, that
exceeds the amount that would be rebated to the United States pursuant to
the provisions of subparagraph (b) (2) (B) below (but for such sale or
disposition), at the time of such sale or disposition if a rebate were due
at such time. The provisions of the foregoing sentence shall not apply to
the extent that other nonpurpose obligations acquired with the gross
proceeds of the Bonds may be sold or disposed of without incurring the
loss described above, and in any event the provisions of the foregoing
sentence shall cease to apply thirty (30) days after the last day of the
first "computation period" (defined in subparagraph (b)(2) (B)) ending
thereafter on which such nonpurpose obligations can be sold or disposed of
without incurring the loss described hereinabove. The provisions of this
subparagraph (A) shall not apply to gross proceeds of the Bonds which are:
(i) invested for the initial temporary period provided in Section
1.103-14(b) (1) of the Income Tax Regulations;
(ii) held in a bona fide debt service fund for the Bonds and
invested for the 13-month temporary period provided in Section 1.103-14(b)
(10) of the Income Tax Regulations;
(iii) invested for either of the temporary periods provided for a
sinking fund for the Bonds in
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Sections 1.103-14(b)(8) and 1.103-14(b)(12) of the Income Tax Regulations;
(iv) invested during the one-year temporary period provided for
investment earnings derived from, invested proceeds of the Bonds and from
the investment of amounts held in a sinking fund for the Bonds under
Sections 1.103-14(b)(6) and 1.103-14(b)(9) of the Income tax Regulations;
(v) invested for the temporary period provided for proceeds of a
refunding issue in Section 1 103-14(e) (3) of the Income Tax Regulations;
or
(vi) held in a "revolving fund" (within the meaning of Section
1.103-14(b) (11) of the Income Tax Regulations) and invested during the
three-year temporary period set forth therein.
(B) At the time or times hereinafter set forth, the Company shall
pay or shall cause the Trustee to pay to the United States an amount,
hereinafter referred to as the "Rebate Amount", which is equal to the sum
of:
(i) the excess of --
(a) the aggregate amounts earned from the Original Issuance
Date of the Bonds on all nonpurpose obligations in which gross
proceeds of the Bonds have been invested (other than nonpurpose
obligations attributable to an excess described herein) over
(b) the aggregate amounts which would have been earned if the
yield on such nonpurpose obligations (other than nonpurpose
obligations attributable to an excess described herein) had been
equal to the yield on the Bonds, plus
(ii) any income attributable to the excess described in clause (i)
above.
The Rebate Amount payable to the United States shall be determined annually by
the Company for each bond year during which Bonds remain outstanding and upon
retirement of the last of the Bonds (each such period is hereinafter referred to
as a "computation period"). The Rebate Amount determined for one bond year shall
not be reduced or offset as a result of any determination of the Rebate Amount
for any other bond year. Such Rebate Amounts shall be deposited annually in the
Excess Investment Earnings Account created pursuant to the provisions of Section
804 of the Indenture. The Rebate
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Amount shall be paid to the United States in installments, as follows:
(1) subject to clause (III) below, the first such installment shall
be paid no later than thirty (30) days after the end of the fifth (5th)
bond year of the Bonds;
(11) subject to clause (111) below, an additional installment shall
be paid on or prior to the last day of each additional installment payment
period during which any of the Bonds remain outstanding. For purposes of
this clause (II), an installment payment period shall commence on the last
day on which a preceding installment of the Rebate Amount was required to
be paid, and shall end on the day preceding the fifth (5th) anniversary of
such payment date;
(III) anything herein to the contrary notwithstanding, the last
installment shall be paid no later than thirty (30) days after the last of
the Bonds has been retired; and
(IV) each installment shall be in an amount which, when aggregated
with the amount of any prior installments paid to the United States
hereunder, will equal at least ninety percentum (90%) of the total Rebate
Amount payable to the United States hereunder as of the date such
installment is paid; provided, however, that the last installment shall be
in an amount equal to the entire remaining balance of the Rebate Amount
payable to the United States hereunder.
The Company shall maintain or cause to be maintained records of such
determinations for each computation period until six years after payment in full
of the Bonds and shall make such records available to the Issuer, the Trustee
and their representatives upon reasonable request therefor. The Issuer and the
Trustee hereby agree to cooperate with the Company in making the determinations
for each computation period required pursuant to this subparagraph (b),
To that end the Trustee, as Construction Fund and Bond Fund custodian, has
covenanted and agreed in Section 804 of the Indenture that it will, on or before
each anniversary of the date of issuance of the Bonds, prepare and file with the
Issuer and the Company a report with respect to the Construction Fund and the
Bond Fund setting forth the total amounts invested during the preceding bond
year, the investments made with the moneys in the Construction Fund and the Bond
Fund and the investment earnings (and losses) resulting from the investments in
each such Fund, respectively,
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together with such additional information concerning such Funds and the
investments therein, respectively, as the Issuer or the Company shall reasonably
request.
(3) For purposes of clause (a) of subparagraph (2) (B) (i) of this
subparagraph (b), the Company, in determining the aggregate amounts earned on
all nonpurpose obligations acquired with gross proceeds of the Bonds--
(A) will take into account any gain or loss incurred on the
disposition of any such nonpurpose obligation, and
(B) unless the Issuer otherwise elects, will not take into account
any amounts earned on nonpurpose obligations held in a bona fide debt
service fund for the Bonds during any bond year in which the gross
earnings on such fund do not exceed One Hundred Thousand Dollars
($100,000).
(4) Except as provided in Section 1.103-15AT(d) (6) of the Temporary
Income Tax Regulations with respect to the purchase of obligations of the United
States Treasury directly from the United States Treasury, at no time shall any
of the gross proceeds of the Bonds be invested in (A) nonpurpose obligations
having a purchase price which is not equal to the fair market value of
comparable obligations or producing a yield which is not equal to the fair
market yield of comparable obligations, or (B) in any other manner resulting in
a "prohibited payment" (within the meaning of Section 1.103-15 AT(d) (6) of the
Temporary Income Tax Regulations) of any portion of the Rebate Amount, directly
or indirectly, to a party other than the United States.
(5) Notwithstanding the provisions of subparagraph (b) (1), if gross
proceeds of the Bonds subsequently arise following the end of the six-month
period commencing on the date of issuance and delivery of the Bonds (whether due
to sale of the Project, condemnation of the Project, damage or destruction to
the Project, or otherwise) the provisions of subparagraph (b)(1) shall cease to
apply and the Company shall be obligated to (i) make the payments to the United
States set forth in subparagraph (b) (2) ( B) with respect to the gross proceeds
of the Bonds which arise following the end of such six-month period (but not
with respect to gross proceeds of the Bonds expended during such six-month
period) and perform the other duties set forth in subparagraph (b) (2) (B), and
(ii) limit the amount of gross proceeds of the issue and perform the other
duties set forth in subparagraph (b)(2)(A) above.
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(c) For purposes of construing this Section and Section 804 of the
Indenture, the following definitions shall apply:
(1) "bona fide debt service fund" shall have the meaning set forth
in Income Tax Regulation Section 1 103-13(b) (12);
(2) "bond year" shall mean the one-year period commencing on
Original Issuance Date of the Bonds and ending one year later, and each
one-year period thereafter until payment in full of the Bonds;
(3) "debt service" shall have the meaning set forth in Code Section
103(c) (6) (C) (iii) and Temporary Income Tax Regulation Section
1.103-15AT(b) (5) and Temporary Income Tax Regulation Section
1.103-15AT(c)(4);
(4) "gross proceeds" shall have the meaning set forth in Temporary
Income Tax Regulation Section 1.103-15AT(b) (6) and shall include:
(i) original proceeds of the Bonds;
(ii) investment proceeds of the Bonds;
(iii) transferred proceeds of the Bonds;
(iv) amounts held in a sinking fund for the Bonds;
(v) amounts held in a reasonably required reserve or
replacement fund for the Bonds;
(vi) securities or obligations pledged as security for the
payment of debt service on the Bonds;
(vii) amounts received with respect to acquired purpose
obligations acquired with the proceeds of the Bonds;
(viii) any other amount to be used to pay debt service on the
Bonds; and
(ix) any amounts received as a result of investing any amounts
described in (i) through (viii) above;
(5) "nonpurpose obligations" shall have the meaning set forth in
Code Section 103(c) (6) (H) (ii)
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and Temporary Income Tax Regulation Section 1.103-15AT(b) (2);
(6) "temporary period" shall mean the temporary periods set forth in
Temporary Income Tax Regulation Section 1.103-15AT(c) (2) and described in
clauses (i)-(vi) of subparagraph (b) (2) (A) above; and
(7) "yield" shall have the meaning set forth in Code Section 103(c)
(6) (C) (ii) and Temporary Income Tax Regulation Section 1.103-15AT(b) (3)
and Temporary Income Tax Regulation Section 1.103-15AT(c) (4).
(d) The covenants and agreements contained in subparagraph (b) above are
intended to assure compliance with Section 103(c) (6) of the Code and with
Temporary Income Tax Regulation Section 1.103-15AT. In the event such Temporary
Income Tax Regulations are hereafter modified, or Final Income Tax Regulations
are promulgated in substitution for such Temporary Income Tax Regulations, and
such modifications or such Final Income Tax Regulations modify or delete any
element of the covenants contained in subparagraph (b) above, the Company shall
be relieved of its obligation to comply with such covenants to the extent of
such modification or deletion. In the event such modifications or Final Income
Tax Regulations impose additional requirements which are applicable to the
Bonds, the Company hereby covenants and agrees to comply with the provisions of
the Temporary income Tax Regulations, as modified, or with such Final Income Tax
Regulations.
Section 5.13. Fixed Interest Rate. The Company acknowledges that the
interest rate on the Bonds shall be converted to the Fixed Interest Rate upon
the happening of certain events specified in Section 402 of the Indenture. The
Company agrees to use its best efforts to deliver to the Trustee an opinion of
Independent Tax Counsel to the effect that conversion to the Fixed Interest Rate
will not adversely affect the exemption of the interest on the Bonds from
Federal income taxation.
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default. An Event of Default shall mean one or more
of the following described events:
(a) failure by the Company to pay any amounts required to be paid under
Section 4.1 or 4.3 of this Agreement on or
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prior to the date on which payment is required to be made by said Section 4.1 or
4.3;
(b) failure by the Company to observe and perform any covenant, condition
or agreement on its part to be observed or performed under this Agreement, other
than as referred to in paragraph (a) of this Section 6.1 or in Section 5.6 or
Section 5.12 of this Agreement, and the continuance thereof for a period of
sixty (60) days after written notice, specifying such failure and requesting
that it be remedied, has been given to the Company by the Issuer or the Trustee,
unless the Trustee shall agree to an extension of such time prior to its
expiration, or if the failure be such that it cannot be corrected within the
applicable period, it shall not constitute an Event of Default if corrective
action is instituted by the Company within the applicable period and diligently
pursued until the failure is corrected;
(c) any representation by or on behalf of the Company contained in this
Agreement or in any instrument furnished in compliance with or in reference to
this Agreement or the Indenture proves false or misleading in any material
respect as of the date of the making or furnishing thereof;
(d) the Company shall (i) apply for or consent to the appointment of, or
the taking or possession by, a receiver, custodian, trustee or liquidator of the
Company or of all or a substantial part of its property, (ii) admit in writing
its inability to pay its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding up, or composition or adjustment of debts,
(vi) fail to controvert in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against the Company in an involuntary case under
said Federal Bankruptcy Code, or (vii) take any action for the purpose of
effecting any of the foregoing;
(e) a proceeding or case shall be commenced, without the application or
consent of the Company, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding-up, or composition or
readjustment of debts, of the Company, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Company or of all or any
substantial part of its assets, or (iii) similar relief in respect of the
Company, as the case may be, under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceedings or case shall continue undismissed, or an order, judgment or decree
approving or
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ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) days from commencement of such proceeding or
case, or an order for relief against the Company shall be entered in an
involuntary case under said Federal Bankruptcy Code; or
(f) an "Event of Default" occurs and is continuing under Section 1101 of
the Indenture.
The provisions of subsection (b) of this Section are subject to the limitation
that if, by reason of Force Majeure, the Company is unable in whole or in part
to carry out its agreements on its part herein contained, other than the
obligations on the part of the Company contained in Sections 4.1, 4.3, 5.3, 5.4,
5.6, 5.7, 5.8 and 5.12, the Company shall not be deemed in default during the
continuance of such inability. The Company agrees, however, to use all
reasonable efforts to remedy with all reasonable dispatch the cause or causes
preventing the Company from carrying out its agreements; provided, that the
settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Company, unfavorable to the Company.
The declaration of an Event of Default under subsections (d) or (e) of
this Section 6.1, and the exercise of remedies upon any such declaration, shall
be subject to any applicable limitations of Federal bankruptcy law affecting or
precluding such declaration or exercise during the pendency of or immediately
following any bankruptcy, insolvency or reorganization proceedings.
The provisions of Sections 6.1 and 6.2 are subject to the further
limitation that the rescission or annulment of a declaration that all the Bonds
outstanding under the Indenture are immediately due and payable shall also
constitute a rescission or annulment of any corresponding declaration made
pursuant to Sections 6.1 or 6.2 and a waiver and rescission of the consequences
of such declaration and of the Event of Default with respect to which such
declaration had been made, provided that no such waiver or rescission shall
extend to or affect any subsequent or other Event of Default or impair any right
consequent thereon.
Section 6.2. Remedies on Events of Default. Whenever any Event of Default
referred to in Section 6.1 shall have happened and be subsisting, any one or
more of the following remedial steps may be taken; provided, however, that if an
Event of Default under subsection (b) of Section 6.1 occurs
54
<PAGE> 59
as a result of the failure to observe or perform any covenants or agreements
under Section 5.5, the remedies of the Issuer and the Trustee shall be limited
to those provided in subsections (c) and (d) of this Section 6.2:
(a) the Issuer or the Trustee may, or the Trustee, under the
circumstances provided in Section 1102 of the Indenture, shall be
obligated to, declare, as the case may be, all unpaid amounts payable
pursuant to Section 4.1 or 4.3 of this Agreement to be immediately due and
payable, whereupon the same shall become immediately due and payable;
(b) the Issuer may at its option, or the Trustee, as provided in
Section 1103 of the Indenture, may at its option take or shall be
obligated to take, as the case may be, whatever action at law or in equity
may appear necessary or desirable to collect the amounts then due and
thereafter to become due;
(c) the Issuer or the Trustee may take whatever action at law, or in
equity may appear necessary or desirable to enforce performance and
observance of any obligation, agreement or covenant of the Company under
this Agreement; and
(d) in the event any of the Bonds shall at the time be outstanding
and unpaid, the Issuer or the Trustee may have access to and inspect,
examine and make copies of the books and records and any and all accounts
and data of the Company as the Issuer may reasonably request but only,
however, insofar as they pertain to the Facilities.
Any amounts collected pursuant to action taken under this Section 6.2 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if the Bonds have been fully paid (or provision for payment
thereof has been made in accordance with the provisions of the Indenture), and
all reasonable fees, charges and expenses of the Trustee and Paying Agents
provided for herein have been paid, shall be paid to the Bank to the extent that
any moneys are owed to the Bank pursuant to the Letter of Credit Agreement and,
otherwise, to the Company; provided, however, that any such amounts which do not
represent payments which the Company is required to make pursuant to Section 4.1
or 4.3 of this Agreement shall be paid to the party to whom such amounts are
owed.
Notwithstanding the foregoing, in the event the Bank has fully funded the
Letter of Credit, neither the Issuer
55
<PAGE> 60
nor the Trustee shall have any right to pursue remedies under subsections (b)
and (c) above.
Section 6.3. No Remedy Exclusive. No remedy conferred upon or reserved to
the Issuer or the Trustee by this Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law, in equity or by statute. No delay
in exercising or omission to exercise any right or power accruing upon any Event
of Default shall impair any such right and power which may be exercised from
time to time and as often as may be deemed expedient. In order to entitle the
Issuer or the Trustee to exercise any remedy reserved to it in this Article VI,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required.
Section 6.4. Agreement To Pay Attorneys' Fees and Expenses. Should an
Event of Default occur or in the event the Company should default under any of
the provisions of this Agreement and the Issuer or the Trustee should employ
attorneys or incur other expenses for the collection of the amounts payable
hereunder by the Company or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company contained in this
Agreement, the Company agrees that it will on demand therefor reimburse the
lawful and reasonable fees of such attorneys and such other expenses so
incurred. If any such fees and expenses are not so reimbursed, the amount
thereof, together with interest thereon from the date of demand for payment at
the Interest Rate for Advances, shall, to the extent permitted by law,
constitute indebtedness secured hereby and by the Indenture, and in any action
brought to collect such indebtedness, the Trustee or the Issuer, as applicable,
shall be entitled to seek the recovery of such fees and expenses in such action
except as limited by law or by judicial order or decision entered in such
proceedings.
The provisions of this Section shall survive the termination of this
Agreement,
Section 6.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
56
<PAGE> 61
ARTICLE VII
MISCELLANEOUS
Section 7.1. Termination of Agreement. This Agreement shall be in full
force and effect from the date hereof until the end of the Loan Term, at which
time the obligations of the Issuer and the Company hereunder shall terminate,
provided that any obligations of the Company with respect to the payment of
costs and expenses under this Agreement shall survive such termination and
continue in effect until such costs and expenses are paid in full.
Section 7.2. Confidential Information. The Company shall not be required
to disclose, or to permit the Issuer, the Trustee or others to acquire access
to, any information deemed by the Company to be proprietary or confidential.
Section 7.3. Cancellation of Bonds. The Company shall have the right to
cause Bonds to be delivered to the Trustee for cancellation, and the Issuer
shall cause the Trustee to cancel any Bonds so delivered to the Trustee.
Section 7.4. Amounts Remaining in Bond Fund, Construction Fund and Other
Funds and Accounts. It is agreed by the parties hereto than any amounts
remaining in the Bond Fund, the Construction Fun or any other fund or account
created under this Agreement or the Indenture and held by the Trustee after
payment in full of the Bonds (or provision for payment thereof having been made)
in accordance with the provisions of the Indenture and the fees, charges and
expenses of the Trustee and Paying Agent and all other amounts required to be
paid under the Indenture or under this Agreement shall belong to and be paid by
the Trustee to the Bank to the extent that any moneys are owed to the Bank
pursuant to the Letter of Credit Agreement and, otherwise, to the Company;
provided, however, any amounts remaining in the Excess Investment Earnings
Account shall be held and disbursed solely in accordance with the provisions of
Section 5. 12(b) hereof and Section 804 of the Indenture.
Section 7.5. Notices. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered mail, postage prepaid, addressed to the Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, the Bank or the
Trustee shall also be given to the others. The Company, the Issuer, the Bank and
the Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent or persons to whose attention the same shall be
directed.
57
<PAGE> 62
Section 7.6. Binding Effect; Parties in Interest. This Agreement shall
inure to the benefit of and shall be binding upon the Issuer, the Company and
their respective successors and assigns, subject, however, to the limitations
contained in Sections 4.1 and 5.1, and subject to the further limitation that
any obligation of the Issuer created by or arising out of this Agreement shall
not be a general debt of the Issuer but shall be a limited obligation payable
solely out of payments, revenues and other income, charges and moneys realized
under this Agreement, the sale of the Bonds or the Net Proceeds as provided
herein. Nothing in this Agreement is intended or shall be construed to give to
any person, firm or corporation other than the Trustee, the Bank and the parties
hereto any legal or equitable remedy or claim under or in respect of this
Agreement or any provision herein contained.
Section 7.7. Extent of Covenants of the Issuer; No Personal Liability. All
covenants, stipulations, obligations and agreements of the Issuer contained in
this Agreement shall be effective to the extent authorized and permitted by
applicable law. No such covenant, stipulation, obligation or agreement shall be
deemed to be a covenant, stipulation, obligation or agreement or any present or
future director, officer, agent or employee of the Issuer in his individual
capacity, and neither the directors of the Issuer nor any officer executing the
Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof or by reason of
the covenants, stipulations, obligations or agreements of the Issuer contained
in this Agreement or in the Indenture.
Section 7.8. Amendments, Changes and Modifications. Except as otherwise
provided in this Agreement or in the Indenture, subsequent to the initial
issuance of Bonds and prior to payment of the Bonds in full (or provision of the
payment thereof having been made) in accordance with the provisions of the
Indenture, this Agreement may not be effectively amended, changed, modified,
altered or terminated without the prior written consent of the Trustee, and
prior to the Expiration Date of the Letter of Credit, the Bank.
Section 7.9. Execution Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute but one and the same Agreement.
Section 7.10. Severability. If any clause, provision or section of this
Agreement shall be held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any of the remaining
58
<PAGE> 63
clauses, provisions or sections hereof and this Agreement shall be construed and
enforced as if such illegal or invalid clause, provision or section had not been
contained herein. In case any agreement or obligation contained in this
Agreement shall be held to be in violation of law, then such agreement or
Obligation shall be deemed to be the agreement or obligation of the Issuer or
the Company, as the case may be, to the full extent permitted by law.
Section 7.11. Captions. The captions or headings in this Agreement are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Agreement.
Section 7.12. Payments Due on Non-Business Days. After the Conversion
Date, in any case where the date for any payment required to be made hereunder
or under the Indenture shall not be a Business Day, then payment need not be
made on such date but may be made on the next succeeding Business Day with the
same force and effect as if made on the date fixed for such payment, and if such
payment is made on the next succeeding Business Day no interest shall accrue for
the period after such date.
Section 7.13. Governing Law. This Agreement shall be governed exclusively
by, and construed in accordance with, the laws of the State.
59
<PAGE> 64
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement to be
executed in their respective corporate names by their duly authorized officers,
all as of the date first above written.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
(CORPORATE SEAL) By: [SIG]
-------------------------------
President
Attest:
[SIG]
- --------------------------------
Secretary
RADIATION STERILIZERS,
INCORPORATED
(CORPORATE SEAL)
By: /s/ ALLEN CHIN
-------------------------------
President
Attest:
/s/ CHARLES W. KING JR.
- --------------------------------
Secretary
60
<PAGE> 65
EXHIBIT A
DESCRIPTION OF THE PROJECT
1. A brief description of the Project, its location and intended use are as
follows:
The Project is the construction of a 21,000 square foot manufacturing
facility located on 1.25 acres of land at 301 Wichita Street, Fort Worth,
Texas 76140. The facility will be used to provide radiation sterilization
services to the disposable medical device industry on a contractual basis.
Cobalt-60 is the radioisotope used as the energy source in the
sterilization process. This type of facility must be licensed and
regulated by the Nuclear Regulatory Commission and the appropriate state
agencies. Construction will be of steel frame with an exterior wall of
concrete and/or brick. The proposed Project consists of an industrial
building that houses a radiation cell. The cell is a reinforced concrete
structure that is built over a stainless steel lined pool of water (the
isotope is lowered into the water when personnel access to the cell is
required). A major component of each facility is a proprietary,
computer-controlled conveyor system that transports the materials to be
sterilized through the radiation cell.
2. The estimated number of new jobs to be created as a result of the Project
is 40 with an estimated annual payroll of $1,200,000. The new jobs will
consist of plant managers, technical employees, production managers and
assembly and warehouse personnel.
3. The following is a statement of the present ownership of the Project site
describing liens and encumbrances and the acquisitions, necessary
interests, access, approvals, permits, consents and authorizations
The Project site is currently owned by the User and was purchased in
January, 1984 for the sum of $65,005.20. An additional 3,000 square feet
of contiguous property was purchased in February, 1985 for $4,370.30.
There are no liens or encumbrances on the Project site. All necessary
access roads, utilities and drainage facilities have been or can be
provided. All approvals, permits, consents or authorizations of any
governmental or public agency, authority or person required in connection
with the construction installation and operation of the Project have been
or can be obtained.
4. The estimated cost of the Project and sources of payment are as follows:
<TABLE>
<S> <C> <C>
Land $ 70,000
Building 725,000
Machinery & Equipment 3,312,000
Total Financing Charges 202,700
Bond Counsel Fee $ 23,000
User Counsel Fee 4,800
Trustee Fee 3,000
Financial Advisory Fee 9,600
Issuer Administrative Fee 14,700
TEDC Application Fee 4,600
TEDC Allocation Request Fee 4,600
Rating Agency Fee 8,000
Bond Discount 69,000
Letter of Credit Fee 59,400
Lever of Credit Bank's Expenses 2,000
</TABLE>
RADIATION STERILIZERS, INCORPORATED
<PAGE> 66
<TABLE>
<S> <C> <C>
Interest During Construction $ 25,000
Architecture & Engineering 25,000
Reserve Fund 253,000
----------
TOTAL PROJECT COSTS $4,612,700
==========
FINANCED FROM AGGREGATE BOND PROCEEDS $4,600,000
Series 1985A $ 2,150,000
Series 1985B 2,450,000
</TABLE>
The balance of the Project, $12,700, will be paid by the User.
5. The estimated dates of commencement and completion of the Project are as
follows:
Commencement: June 1985
Completion: October 1985
RADIATION STERILIZERS, INCORPORATED
<PAGE> 67
EXHIBIT B
REQUISITION AND CERTIFICATION
Request No. Date:
Bank One Trust Company, N.A., as Trustee
under the Trust Indenture,
dated as of November 1, 1985,
relating to $2,150,000 Trinity River
Industrial Development Authority
Variable Rate Demand Industrial
Development Revenue Bonds
(Radiation Sterilizers, Incorporated
Project), Series 1985A
Attention: Corporate Trust Administration
The undersigned Authorized Company Representative and Authorized Issuer
Representative designated pursuant to the terms of a Loan Agreement, dated as of
November 1, 1985 (the "Agreement"), between Trinity River Industrial Development
Authority, a non-profit industrial development corporation created and existing
under the laws of the State of Texas (the "Issuer"), and Radiation Sterilizers,
Incorporated, a California corporation (the "Company") hereby request that there
be paid from the Construction Fund (hereinbelow described) the sum of $
___________ , and in that connection with respect to the use of the proceeds of
the $2,150,000 Trinity River Industrial Development Authority Variable Rate
Demand Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Bonds"), DO HEREBY CERTIFY, as follows:
1. The requested payment is a proper charge against Trinity River
Industrial Development Authority Construction Fund -- Radiation
Sterilizers, Incorporated Project, 1985A and has not been the basis of any
previous withdrawal from said Construction Fund.
2. Payment should be made to:
Name:
Address:
3. Attached hereto is a bill, statement of account or a schedule
showing in reasonable detail the items with respect to which payment is
being requested and, if the Company or the Issuer is to be reimbursed,
proof of payment of such items is attached hereto,
<PAGE> 68
which proof is satisfactory to the undersigned and the Trustee may act
thereon.
4. Payment of this obligation when added to all other payments
previously made from said Construction Fund will not result in less than
substantially all of the net proceeds of the sale of the Bonds (net
proceeds being those proceeds remaining after paying all expenses incurred
in connection with the issuance of the Bonds, together with investment
earnings on such net proceeds earned prior to the "Completion Date"
(defined in the Agreement)) being used to provide land or property of a
character subject to the allowance for depreciation under Section 167 of
the Internal Revenue Code of 1954, as amended.
5. (a) The Company has no notice of any vendors', materialmen's,
mechanics', suppliers' or other similar liens or right to liens, chattel
mortgages or conditional sales contracts, or other contracts or
obligations which should be satisfied or discharged before payment of such
obligation is made, or (b) this requisition is for the purpose of
obtaining funds to be used to satisfy or discharge a lien or contract of
the type described in (a) above.
6. This requisition contains no request for payment on account of
any portion of such obligation which the Company is, as of the date
hereof, entitled to retain under retained percentage agreements.
7. The obligation does not represent a cost paid or incurred by the
Issuer or the Company prior to November 28, 1983.
As provided in Section 3.3 of the Agreement, the Issuer may rely upon the
Company as to the completeness and accuracy of all statements contained herein.
By:
Authorized Company Representative
By:
Authorized Issuer Representative
With respect to any such item representing payment for labor, services,
material, supplies and/or equipment, insofar as such obligation was incurred for
labor, services, material, supplies and/or equipment in connection with the
acquisition, construction and installation of the "Facilities" (defined in the
Agreement), (i) such labor and/or
<PAGE> 69
services were actually performed in a satisfactory manner, and (ii) such
material, supplies and/or equipment were actually used in or about the
construction of the Facilities or delivered at the site of the Facilities for
that purpose and the item of equipment with respect to which such payment is
requested constitutes a portion of the Facilities.
By :
Authorized Company Representative
<PAGE> 70
EXHIBIT C
CERTIFICATE OF COMPLETION
The undersigned Authorized Company Representative designated pursuant to
that certain Loan Agreement (the "Agreement"), dated as of November 1, 1985,
between Trinity River Industrial Development Authority, a non-profit industrial
development corporation created and existing under the laws of the State of
Texas, and Radiation Sterilizers, Incorporated, a California corporation (the
"Company"), DOES HEREBY CERTIFY, as follows:
l. The acquisition, construction and installation of the "Facilities" as
described in the Agreement have been completed substantially in accordance with
the plans and specifications therefor and all labor, services, material,
supplies and/or equipment used in such acquisition, construction and
installation have been paid for, except for amounts retained in the
"Construction Fund" created in the Agreement for costs of the Facilities not yet
due and payable.
2. All other facilities necessary in connection with the Facilities have
been acquired, constructed and installed substantially in accordance with the
plans and specifications therefor and all costs and expenses incurred in
connection therewith have been paid, except for amounts retained in said
Construction Fund for costs of the Facilities not yet due and payable.
3. The Facilities and all other facilities in connection therewith have
been acquired, constructed and installed in a satisfactory manner and are
suitable and sufficient for the efficient operation of the Facilities for its
intended purposes.
4. Substantially all of the net proceeds of the $2,150,000 in aggregate
principal amount of Trinity River Industrial Development Authority Variable Rate
Demand Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Bonds") (net proceeds being those proceeds
remaining after paying all expenses incurred in connection with the issuance of
the Bonds, together with investment earnings on such net proceeds earned prior
to the "Completion Date" (defined in the Agreement)), have been used to acquire
land or property of a character subject to the allowance for depreciation under
Section 167 of the Internal Revenue Code of 1954, as amended, and such costs
representing proceeds so used are properly chargeable to the capital account of
the Company for Federal income tax purposes or would be so chargeable
<PAGE> 71
either with a proper election by the Company or but for a proper election by the
Company to deduct the costs.
5. A certificate of occupancy and all other permissions required of
governmental authorities for the occupancy of the Facilities have been obtained.
This Certificate is given without prejudice to any rights against third
parties which exist on the date of this Certificate or which may subsequently
come into being.
This ______ the day of ______________, 1985.
RADIATION STERILIZERS,
INCORPORATED
By :
Authorized Company Representative
<PAGE> 1
EXHIBIT 10.6
SERIES 1985B LOAN AGREEMENT
Between
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
And
RADIATION STERILIZERS, INCORPORATED
Dated as of November 1, 1985
Series 1985B
$2,450,000
<PAGE> 2
LOAN AGREEMENT
TABLE OF CONTENTS
(The Table of Contents is not a part of the Loan Agreement but
is for convenience of reference only)
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES ....................................................................... 1
ARTICLE I. DEFINITIONS AND CERTAIN
RULES OF INTERPRETATION
Section 1.1. Definitions ............................... 1
Section 1.2. Certain Rules of Interpretation ........... 13
ARTICLE II. REPRESENTATIONS
Section 2.1. Representations by the Issuer ............. 13
Section 2.2. No Warranty by Issuer of Condition
or Suitability of the Facilities .......... 16
Section 2.3. Representations by the Company ............ 16
ARTICLE III. ACQUISITION, CONSTRUCTION AND
INSTALLATION OF THE FACILITIES;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction and
Installation of the Facilities ............ 22
Section 3.2. Agreement to Issue Bonds;
Application of Proceeds ................... 22
Section 3.3. Disbursements from
the Construction Fund ..................... 22
Section 3.4. Obligation to Furnish
Documents to Trustee ...................... 27
Section 3.5. Establishment of Completion Date .......... 27
Section 3 6. Company Required to Pay
Costs of Facilities If
Construction Fund Insufficient ............ 28
Section 3.7. Remedies Against Suppliers,
Contractors and Subcontractors
and Their Sureties ........................ 29
Section 3.8. Investment of Bond Fund and
Construction Fund Moneys Permitted ........ 29
Section 3.9. Title to the Facilities ................... 29
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV. LOAN BY THE ISSUER TO THE
COMPANY; REPAYMENT OF LOAN
Section 4.1. Loan By the Issuer to the
Company; Repayment of Loan;
Obligations Unconditional ................. 30
Section 4.2. Company Consent to Assignment of
Agreement and Execution of Indenture;
Company's Performance Under Indenture ..... 31
Section 4.3. Prepayment of Loan ........................ 32
Section 4.4. Delivery of Letter of Credit
to Trustee ................................ 34
Section 4.5. Satisfaction of Company ' s Obligation .... 35
Section 4.6. Alternate Letter of Credit;
Alternate Credit Facility
Section 4.7. Extension of Letter of Credit ............. 36
Section 4.8. Notice of Prepayments;
Issuer to Effect Redemption ............... 36
Section 4.9. Relative Position of this
Article and the Indenture ................. 36
Section 4.10. Place of Payment .......................... 37
Section 4.11. Payments to the Remarketing Agent
and the Paying Agent ...................... 37
ARTICLE V. PARTICULAR COVENANTS
Section 5.1. Maintenance of Existence .................. 37
Section 5.2. Qualification in the State ................ 38
Section 5.3. Indemnification of Issuer
and Trustee
Section 5.4. Payment of Trustee's Fees ................. 39
Section 5.5. Maintenance and Operation
of the Facilities ......................... 40
Section 5.6. Covenants of Company and Issuer with
Respect to Exemption of Interest
from Federal Income Taxation .............. 40
Section 5.7. Insurance Required ........................ 43
Section 5.8. Taxes, Other Governmental
Charges and Utility Charges ............... 44
Section 5.9. Damage, Destruction and Eminent Domain .... 44
Section 5.10. Company's Obligation To Pay
Certain Fees Expenses of the Issuer ....... 45
Section 5.11. Application of Certain Proceeds
Prior to the Expiration Date
of the Letter of Credit ................... 45
Section 5.12. Son-Arbitrage Covenant; Compliance
with Special Arbitrage Rules .............. 46
Section 5.13. Fixed Interest Rate ....................... 52
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default ......................... 52
Section 6.2. Remedies on Events of Default ............. 54
Section 6.3. No Remedy Exclusive ....................... 55
Section 6.4. Agreement To Pay Attorneys'
Fees and Expenses ......................... 56
Section 6.5. No Additional Waiver
Implied by One Waiver ..................... 56
ARTICLE VII. MISCELLANEOUS
Section 7.1. Termination of Agreement .................. 56
Section 7.2. Confidential Information .................. 57
Section 7.3. Cancellation of Bonds ..................... 57
Section 7.4. Amounts Remaining in Bond Fund,
Construction Fund and
Other Funds and Accounts .................. 57
Section 7.5. Notices ................................... 57
Section 7.6. Binding Effect; Parties in Interest ....... 57
Section 7.7. Extent of Covenants of the
Issuer; No Personal Liability ............. 58
Section 7.8. Amendments, Changes and Modifications ..... 58
Section 7.9. Execution Counterparts .................... 58
Section 7.10. Severability .............................. 58
Section 7.11. Captions .................................. 58
Section 7.12. Payments Due on Non-Business Days ......... 59
Section 7.13. Governing Law ............................. 59
</TABLE>
TESTIMONIUM
SIGNATURES AND SEALS
EXHIBIT A
<PAGE> 5
SERIES 1985B LOAN AGREEMENT
Between
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
and
RADIATION STERILIZERS, INCORPORATED
THIS SERIES 1985B LOAN AGREEMENT made as of the lst day of November,
1985, between the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY, a nonprofit
industrial development corporation created and existing under the laws of the
State of Texas (the issuer), and RADIATION STERILIZERS, INCORPORATED, a
corporation organized and existing under the laws of the State of California and
qualified to do business in the State of Texas.
WITNESSETH:
That the parties hereto, intending to be legally bound hereby, and for
and in consideration of the premises and the mutual covenants hereinafter
contained, do hereby covenant, agree and bind themselves, as follows; provided,
that any obligation of the Issuer created by or a rising out of this Agreement
shall never constitute a debt or a pledge of the faith and credit or the taxing
power of the Issuer or try political subdivision or taxing district of the State
of Texas but shall be payable solely out of the "Trust Estate" (defined in the
Trust indenture hereinafter referred to anything herein contained to the
contrary by implication or otherwise notwithstanding:
ARTICLE I.
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1. Definitions. in addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:
Act - The Development Corporation Act of 1979, Article 5190.6
V.A.T.C.S., as amended.
Adjustment Date - After the Conversion Date the Interest Payment Date
next preceding the Expiration Date of
<PAGE> 6
the Alternate Credit Facility or the Expiration Date of the Letter of Credit, as
the case may be.
Agreement - This Series 1985B Loan Agreement as from time to time
supplemented or amended in accordance with the provisions hereof and of the
Indenture.
Alternate Credit Facility - A credit facility other than the Letter of
Credit, including without limitation an irrevocable letter of credit or bond
insurance policy, which provides for payment of the principal of, and the
interest on, the Bonds, when due.
Alternate Letter of Credit - An irrevocable letter of credit issued in
accordance with Section 4.6 of this Agreement.
Authorized Company Representative - The person at the time designated
to act on behalf of the Company by written certificate furnished to the Issuer,
the Bank and the Trustee, containing the specimen signature of such person and
signed on behalf of the Company by its President or any Vice President. Such
certificate may designate an alternate or alternates.
Authorized issuer Representative - The person at the time designated to
act on behalf of the issuer by written certificate furnished to the Company, the
Bank and the Trustee containing the specimen signature of such person and signed
on behalf of the Issuer by its President or Vice President. Such certificate may
designate an alternate or alternates. Such person must be satisfactory to the
Company and shall be replaced by the Issuer upon the written request of the
Company.
Available Moneys - Moneys on deposit in trust with the Trustee for a
period of at least one hundred twenty-three (123) days during which no petition
in bankruptcy or similar insolvency proceeding has been filed by or against the
Company.
Bank - The issuer of the Letter of Credit, initially, Wells Fargo Bank,
N.A., San Jose, California, a national banking association.
Bond Fund - The Bond principal and interest payment fund created in
Section 702 of the Indenture and within which has been established a general
account and a special account. Any reference herein to the "Bond Fund" without
further limitation or explanation shall be deemed to be a reference to the
general account in the Bond Fund.
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<PAGE> 7
Bond Payment Date - Any date upon which the Principal of, and the
redemption premium (if any) or interest on, the Bonds shall be payable pursuant
to the Indenture, whether at stated maturity, by redemption, by acceleration or
otherwise.
Bond Resolution - The resolution adopted by the Issuer authorizing the
issuance of the Bonds, as the same may be amended, modified or supplemented by
any amendments or modifications thereof and supplements thereto entered into in
accordance with the provisions of the Indenture.
Bondholder, owner or holder of the Bonds - The registered owner of any
Bond.
Bonds - The Trinity River Industrial Development Authority Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985B, in the aggregate principal amount of
$2,450,000, issued pursuant to the provisions of the Indenture.
Business Day - Any day, other than at Saturday or Sunday, on which
banks located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located and in New York, New
York, are not required or authorized by law to remain closed and on which The
New York Stock Exchange, Inc. is not closed.
Code - The internal Revenue Code of 1954, as amended, and the
applicable Income rax Regulations thereunder.
Commission - The Texas Economic Development Commission, and its
successors and assigns.
Commitment Date - November 28, 1983, the date of the "official action"
resolution by which the Issuer agreed in principle to issue the Bonds for the
benefit of the Company to assist in the financing of the Facilities.
Company - Radiation Sterilizers, Incorporated, a corporation organized
under the laws of the State of California and qualified to do business in the
State, and its lawful successors and assigns including any surviving, resulting,
or transferee entity as provided in Section 5.1
Completion Date - The date of completion of the acquisition,
construction and equipping of the Facilities as that date shall be certified as
provided in Section 3.5.
3
<PAGE> 8
Construction Fund - The construction fund created with the Depository
in Section 601 of the Indenture.
Construction Period - The period between the beginning of acquisition,
construction or equipping of the Facilities or the date on which Bonds are first
delivered to the original Purchasers, whichever is earlier, and the Completion
Date.
Conversion Date - The date upon which the Bonds begin to bear interest
at the Fixed Interest Rate, which date shall be established in accordance with
Section 402 of the Indenture.
County - Tarrant County, a political subdivision of the State.
default - An event or condition the occurrence of which would, with the
lapse of time or the giving of notice or both, become an Event of Default.
Depository - Initially, First City Bank of Dallas, or such other
depository appointed in accordance with Section 1218 of the Indenture.
Determination of Taxability - A determination that the interest income
on any of the Bonds is subject to Federal income taxation as a result of an
Event of Taxability, which determination shall be deemed to have been made upon
the occurrence of the first to occur of the following:
(a) the date on which the Company files (in compliance with
its obligations hereunder) any Supplemental Statement which discloses
that an Event of Taxability has occurred;
(b) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service
that, based upon any filings of the Company, or upon any review or
audit of the Company, or upon any other grounds whatsoever, an Event of
Taxability has occurred;
(c) the date on which the Company receives notice from the
Trustee in writing that the trustee has been advised by any holder or
former holder of a Bond that the Internal Revenue Service has issued a
statutory notice of deficiency or similar notice to such holder or
former holder which asserts in affect that the interest on the Bonds of
such holder or former holder is includable in the gross income of such
holder or former holder due to the occurrence of an Event of
Taxability;
4
<PAGE> 9
(d) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service
that there has been issued a public or private ruling of the Internal
Revenue Service or a technical advice memorandum issued by the national
office of the Internal Revenue Service that the interest on the Bonds
is includable for Federal income tax purposes in the gross income of
any holder or former holder of a Bond due to the occurrence of an Event
of Taxability; or
(e) the date on which the Company is advised in writing that a
final determination, from which no further right of appeal exists, has
been made by a court of competent jurisdiction in the United States of
America in a proceeding with respect to which the Company has been
given written notice and an opportunity to participate and defend that
the interest on the Bonds is includable in the gross income of any
holder or former holder of a Bond due to the occurrence of an Event of
Taxability;
provided, however, no Determination of Taxability shall occur under subparagraph
(b), (c) or (d) of this paragraph unless the Company has been afforded the
opportunity, at its expense, to contest any such conclusion and/or assessment
and, further, no Determination of Taxability shall occur until such contest, if
made, has been finally determined. The Company shall be deemed to have been
afforded the opportunity to contest if it shall have been permitted to commence
and maintain any action in the name of any holder or former holder of a Bond to
judgment and through any appeals therefrom or other proceedings related thereto.
Eligible Investments - Has the following meanings:
(a) any bonds or other obligations of the United States of
America which as to principal and interest constitute direct
obligations of the United States of America, or any obligations of
subsidiary corporations of the United States of America fully
guaranteed as to payment by the United States of America;
(b) obligations of the Federal Land Bank;
(c) obligations of the Federal Home Loan Bank;
(d) obligations of the Federal Intermediate Credit Bank;
(e) obligations of the Central Bank for Cooperatives;
5
<PAGE> 10
(f) certificates of deposit of national or state banks located
within the State including the Trustee of any of its affiliates which
have deposits insured by the Federal Deposit Insurance Corporation and
certificates of deposit of Federal savings and loan associations and
state building and loan associations located within the State which
have deposits insured by the Federal Savings and Loan Insurance
Corporation (including the certificates of deposit of any bank, savings
and loan association or building and loan association acting as
depository, custodian or trustee for any proceeds of the Bonds);
provided however, that the portion of such certificates of deposit in
excess of the amount insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance Corporation, if
any, shall be secured by deposit with the Federal Reserve Bank of
Dallas, Texas, or other Federal Reserve Bank or with any national or
state bank located within the State, of any of the obligations included
in (a), (b), (c), (d) or (e) above; and
(g) repurchase agreements with respect to obligations included
in (a), (b), (c), (d) or (e) above and any other investments;
provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing on or prior to the date payment is due of the obligation
for which the draw was made.
Event of Default - One of the events so denominated and described in
Section 6. 1 of this Agreement.
Event of Taxability - The date on which the interest income on any of
the Bonds becomes subject to Federal income taxation as a result of any of the
following conditions or circumstances:
(a) as it result of Section 103(b) (6)(D) Capital Expenditures being
paid or incurred with respect to the Local Facilities, the aggregate face amount
of the Bonds determined in accordance with the provisions of Section 103(b) (6)
(D) of the Code exceeds the limit permitted by said Section 103 (b) (6) (D); or
(b) the Bonds constitute "arbitrage bonds" within the meaning of
Section 103(c) of the Code; or
6
<PAGE> 11
(c) the weighted average maturity of the Bonds exceeds the weighted
average estimated economic life of the components comprising the Facilities by
more than 20%, determined pursuant to Section 103 (b) (14) of the Code; or
(d) (i) more than 25% of the net proceeds of the sale of the Bonds are
used to provide a facility the primary purpose of which is one of the following:
retail food and beverage services (including eating and drinking places, but
excluding grocery stores), automobile sales or service, or the provision of
recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
is used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet sports
facility (including any handball or racquetball court), hot tub
facility, suntan facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds
is used to provide any airplane, skybox or other luxury box, any health
club facility, any facility primarily used for gambling, or any store
the principal business of which is the sale of alcoholic beverages for
consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
is used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25% or more of
the net proceeds of the sale of the Bonds is used (directly or
indirectly) for the acquisition of land (or an interest therein) other
than land to be used for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
is used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of the
portion of the cost of acquiring such building (and equipment) financed
with the proceeds of the Bonds; or
(e) the Facilities are operating as a facility the primary purpose of
which causes the Facilities to constitute a prohibited facility within the
meaning of Section 103(b) of the Code; or
7
<PAGE> 12
(f) the sum of the authorized face amount of the Bonds allocable to
each "test-period beneficiary" (as defined in Section 103(b) (15) (D) of the
Code) plus the respective aggregate face amount of all tax-exempt industrial
development bonds presently outstanding (not including any obligations which are
to be redeemed from the proceeds of the Bonds) which are allocable to each such
test-period beneficiary exceeds $40,000,000; or
(g) less than substantially all of the net proceeds of the sale of the
Bonds are used to pay the costs of land or property of a character subject to
the allowance for depreciation under Section 167 of the Code; or
(h) the taking of any action by the Issuer, the Company or any person
acting on the Company's behalf or upon the Company's direction, or the failure
of the Issuer, the Company or any such person to take any action, or any mistake
in or untruthfulness of any representation of the Issuer or the Company
contained in this Agreement or in any certificate of the Issuer or the Company
delivered pursuant to this Agreement or the Indenture or in connection with the
issuance of the Bonds, if such act or omission, or such mistake in or
untruthfulness of such representation, has the effect of causing the interest
income on the Bonds to be or become subject to Federal income taxation;
provided, however, that no Event of Taxability shall be deemed to have occurred
with respect to any Bond if the interest income thereon shall be subject to
Federal income taxation for any period solely because during that period such
Bond was held by a person who is a Substantial User or a Related Person; and,
provided further, that no Event of Taxability shall be deemed to have occurred
if the interest income on any of the Bonds becomes subject to Federal income
taxation as a result of a Taxability Change.
Excess Investment Earnings Account - The excess investment earnings
account created pursuant to Section 804 of the Indenture.
Expiration Date of the Alternate Credit Facility - The date established
in the Alternate Credit Facility for the expiration thereof, and in the event
such date is extended, such date as extended.
Expiration Date of the Letter of Credit - The date established in the
Letter of Credit for the expiration thereof in accordance with its terms,
initially April 15. 1988, and in the event such date is extended, such date as
extended.
8
<PAGE> 13
Facilities - The real, personal and mixed property identified in
Exhibit A attached hereto, together with any additions and improvements thereto,
modifications thereof and substitutions therefor.
Financing Statements - Any and all financing statements (including
continuation statements) filed for record from time to time to perfect the
security interests created or assigned.
Fixed Interest Rate - A fixed nonfloating interest rate on the Bonds
established in accordance with Section 402 of the Indenture.
Force Majeure - Acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders of any kind of the government of
the United States of America, or of a state of the United States of America or
any of their departments, agencies, political subdivisions or officials, or any
civil or military authority; insurrections; riots; epidemics; landslides;
lightning; earthquakes; fires; hurricanes, tornadoes or storms; floods;
washouts; droughts; arrests; restraints of governments and people; civil
disturbances; explosions; breakage or accident to machinery, transmission pipes
or canals; partial or entire failure of utilities; or any cause or event not
reasonably within the control of the Company.
Government Obligations - (a) direct obligations of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged, or (b) obligations issued by a person controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of, premium, if any, and the interest on which is
fully guaranteed as a full faith and credit obligation of the United States of
America (including any securities described in (a) or (b) issued or held in
book-entry form on the books of the Department of the Treasury of the United
States of America), which obligations, in either case, are not subject to
redemption prior to maturity at less than par by anyone other than the holder.
Governmental Unit - The Trinity River Authority of Texas.
Indenture - The Trust Indenture between the Issuer and the Trustee, of
even date herewith, as the same may be amended. modified or supplemented by any
amendments or modifications thereof and any supplements thereto entered into in
accordance with the provisions thereof.
9
<PAGE> 14
Independent Counsel - An attorney or firm thereof duly admitted to
practice law before the highest court of any state in the United States of
America or the District of Columbia and not an employee on a full-time basis of
either the Issuer or the Company (but who or which may be regularly retained by
either).
Independent Engineer - An engineer or engineering firm registered and
qualified to practice the profession of engineering under the laws of the State
and not an employee on at full-time basis of either the Issuer or the Company
(but who or which may be regularly retained by either).
Independent Tax Counsel - Independent Counsel selected by the Company
and satisfactory to the Trustee, experienced in matters relating to the
exemption from Federal income tax of interest on obligations issued by states or
their political subdivisions.
Interest Payment Date - With respect to the Bonds prior to and
including the Conversion Date the first Business Day of each calendar month
commencing January 2, 1986, and after the Conversion Date the first day of each
November and May.
Interest Rate for Advances - A rate per annum which is equal to the sum
of two percentum (2%) and the Prime Rate.
Interest Reserve Requirement - $124,098.
Issuer - The Trinity River Industrial Development Authority, a public
body corporate and politic created and existing pursuant to the provisions of
the Act, and its successors and assigns.
Letter of Credit - The irrevocable letter of credit issued by the Bank
contemporaneously with the original issuance of the Bonds, except that upon the
issuance and delivery of an Alternate Letter of Credit, "Letter of Credit" shall
mean such Alternate Letter of Credit, and upon the delivery of an Alternate
Credit Facility, "Letter of Credit" shall, unless the context otherwise
requires, include reference to the Alternate Credit Facility.
Letter of Credit Agreement - The Series B Reimbursement Agreement,
dated as of November 1, 1985, between the Company and the Bank, pursuant to
which the Letter of Credit is issued by the Bank and delivered to the Trustee,
and any and all modifications, alterations, amendments and supplements thereto,
and includes any agreement between the Company and the Bank pursuant to which
any Alternate Letter of Credit is issued or any Alternate Credit Facility is
made available.
10
<PAGE> 15
Loan Term - The period commencing on the date of this Agreement and
ending on the date on which the Bonds have been fully paid (or provision for
their payment has been made) in accordance with the provisions of the Indenture.
Local Facilities - "facilities" (as the term "facilities" is used in
Section 103(b) (6) (E) of the Code) of which the Company or a Related Person
thereto is or will be the Principal User and which are located wholly within the
County. For purposes of this definition, it contiguous or integrated "facility"
located on both sides of the border between any two or more political
jurisdictions stall be considered as being located wholly within each such
political jurisdiction.
Net proceeds of the sale of the Bonds - Those proceeds of the sale of
the Bonds remaining after payment of all expenses in connection with the
issuance of the Bonds and the deposit of all accrued interest (if any) received
from the sale of the Bonds in the Bond Fund, together with investment earnings
on such net proceeds Earned prior to the Completion Date.
Net Proceeds - When used with respect to any insurance proceeds or any
condemnation award, means the gross proceeds thereof less the payment of all
expenses (including attorneys fees and any extraordinary fees and expenses of
the Trustee) incurred in the collection of such gross proceeds.
Notice Address - Has the following meanings:
(a) As to the Company: Radiation Sterilizers, Incorporated
Attention : President
3000 Sand Hill Road
Menlo Park, California 94025
(b) As to the Issuer: Trinity River Industrial
Development Authority
5300 S. Collins
Arlington, Texas 76010
Attention: Secretary/Treasurer
(c) As to the Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
Attention: George Huxtable,
Vice President
2055 Gateway Plaza, Suite 200
San Jose, California 95110
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<PAGE> 16
(d) As to the Trustee: Bank One Trust Company, N.A.
Attention: Corporate Trust
Administration
100 East Broad Street
Columbus, Ohio 43271-0181,
or such address as may hereafter be provided pursuant to Section 7.5.
Person - Any natural person, corporation, cooperative, partnership,
trust or unincorporated organization, government or governmental body or agency,
political subdivision or other legal entity as in the context may be
appropriate.
President - The President of the Issuer.
Prime Rate - The rate of interest as announced from time to time by
Wells Fargo Bank, N.A., San Francisco, California, as its prime rate of
interest, such rate changing automatically and immediately from time to time
effective as of the effective date of each such announced change.
Principal User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6) (E) of the Code), a "principal user"
of such "facilities" within the meaning of Section 103 (b) (6) of the Code.
Related Person - When used with reference to any Principal User or any
Substantial User, means a "related person" within the meaning of Section
103(b)(6) of the Code.
Secretary - The Secretary of the Issuer.
Section 103(b)(6)(D) Capital Expenditures - Capital expenditures
described in Section 1.103-10(b) (2) (ii) of the Income Tax Regulations, but
shall not include capital expenditures described as "excluded expenditures" in
Section 1.103-10(b) (2) (iv) of the Income Tax Regulations.
Security interest or security interests - Refer to the security
interests created in the Indenture and shall have the meaning set forth in the
U.C.C.
State - The State of Texas.
Substantial User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6)(E) of the Code), a "substantial user"
of such "facilities" within the meaning of Section 103 (b) (13) of the Code.
12
<PAGE> 17
Supplemental Statement - Any statement, supplemental statement or other
tax schedule, return or document filed with the internal Revenue Service
(whether pursuant to Income Tax Regulations Section 1.103-10(b) (2) (vi), as the
same may be amended or supplemented, or otherwise).
Taxability Change - Any change in the Constitution or laws of the
United States of America or the applicable Income Tax Regulations thereunder
occurring after the date of issuance of the Bonds which results in the interest
on any of the Bonds being included in the gross income of any holder (other than
a holder who is a Substantial User or a Related Person).
Taxable Period - With respect to a Bond, the period which elapses from
the Event of Taxability until payment in full of such Bond.
Trustee - The Trustee at the time serving as such under the Indenture.
"Principal Office" of the Trustee means the principal corporate trust office of
the Trustee, which office at the date of this Agreement is located at the
address hereinbefore specified under the definition, "Notice Address".
U.C.C. - The Uniform Commercial Code of the State, as now or hereafter
amended.
Section 1.2. Certain Rules of Interpretation. The definitions set forth
in Section 1.1 shall be equally applicable to both the singular and plural forms
of the terms therein defined and shall cover all genders.
Herein, hereby, hereunder, hereof, hereinbefore, hereinafter and other
equivalent words - Refer to this Agreement and not solely to the particular
Article, Section or subdivision hereof in which such word is used.
Reference herein to an Article number (eg., Article IV) or a Section
number (eg., Section 6.2) shall be construed to be a reference to the designated
Article number or Section number hereof unless the context or use clearly
indicates another or different meaning or intent.
ARTICLE II.
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
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<PAGE> 18
(a) Organization and Authority. The Issuer is a non-profit industrial
development corporation, created and validly existing pursuant to the
Constitution and laws of the State, including particularly the provisions of the
Act. The Issuer has all requisite power and authority under the Act to (i) issue
the Bonds, (ii) lend the proceeds thereof to the Company to enable the Company
to acquire, construct and install the Facilities, and (iii) enter into, and
perform its obligations under, this Agreement and the Indenture.
(b) Pending Litigation. There are no actions, suits, proceedings,
inquiries or investigations pending, or to the knowledge of the Issuer
threatened, against or affecting the Issuer in any court or before any
governmental authority or arbitration board or tribunal, which involve the
possibility of materially and adversely affecting the transactions contemplated
by this Agreement or the Indenture or which, in any way, would adversely affect
the validity or enforceability of the Bonds, the Indenture, this Agreement or
any agreement or instrument to which the Issuer is a party and which is used or
contemplated for use in the consummation of the transactions contemplated hereby
or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
issuance and sale of the Bonds and the execution and delivery by the Issuer of
this Agreement and the Indenture, and the compliance by the Issuer with all of
the provisions of each thereof and of the Bonds (i) are within the purposes,
powers and authority of the Issuer, (ii) have been done in full compliance with
the provisions of the Act, are legal and will not conflict with or constitute on
the part of the Issuer a violation of or a breach of or default under, or result
in the creation of any lien charge or encumbrance upon any property of the
Issuer (other than as contemplated by this Agreement and the Indenture) under
the provisions of, any charter instrument, by-law, indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which the Issuer is a
party or by which the Issuer is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or properties, and
(iii) have been duly authorized by all necessary corporate action on the part of
the Issuer.
(d) Governmental Consents. Neither the nature of the Issuer nor any of
its activities or properties, nor any relationship between the Issuer and any
other person, nor any circumstance in connection with the offer, issue, sale or
delivery of any of the Bonds is such as to require the consent, approval or
authorization of, or the filing,
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<PAGE> 19
registration or qualification with, any governmental authority on the part of
the Issuer in connection with the execution, delivery and performance of this
Agreement and the Indenture or the offer, issue, sale or delivery of the Bonds,
other than those already obtained.
(e) No Defaults. No event has occurred and no condition exists with
respect to the Issuer which would constitute an "Event of Default" as defined in
this Agreement or the Indenture or which, with the lapse of time or with the
giving of notice or both, would become an "Event of Default" under this
Agreement or the Indenture. The Issuer is not in default under the Act or under
any charter instrument, by-law or other agreement or instrument to which it is a
party or by which it is bound.
(f) No Prior Pledge. Neither this Agreement nor the Trust Estate has
been pledged or hypothecated in any manner or for any purpose other than as
provided in the indenture as security for the payment of the Bonds.
(g) Disclosure. Neither the representations of the Issuer contained in
this Agreement and the Indenture nor any written statement relating to the
Issuer furnished to the original Purchasers of the Bonds by or on behalf of the
Issuer in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
(h) Nature and Location of Facilities. The financing of the Facilities
is in furtherance of the public purpose intended to be served by the Act. The
Facilities will be located within the County.
(i) No Other outstanding Industrial Development Bonds. The Issuer has
no outstanding issues of "industrial development bonds" (as defined in Section
103(b) (2) of the Code), the proceeds of which have been or will be used with
respect to the Local Facilities.
(j) Official Action. By resolution duly adopted on November 28, 1983,
the issuer took "official action" (within the meaning of Section 1.103-8(a) (5)
of the Income Tax Regulations under the Code) providing for the acquisition,
construction and installation of the Facilities and the financing of the cost of
the Facilities, in whole or in part, through the issuance of the Bonds.
(k) Limited Obligations. Notwithstanding anything herein contained to
the contrary any obligation the Issuer
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<PAGE> 20
may hereby incur for the payment of money shall not constitute an indebtedness
of the State or of any Political subdivision thereof within the meaning of any
state constitutional provision or statutory limitation and shall not give rise
to a pecuniary liability of the State or a political subdivision thereof, or
constitute a charge against the general credit or taxing power of said State or
a political subdivision thereof, but shall be limited obligations of the Issuer
payable solely from the Trust Estate.
Section 2.2. No Warranty by Issuer of Condition or Suitability of the
Facilities, The Issuer makes no warranty, either express or implied, as to the
condition the Facilities or as to the suitability of the Facilities for the
Company's purposes.
Section 2.3. Representations by the Company. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization and Power. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and is qualified to do business and is in good standing
under the laws of the State, and (ii) has all requisite power and authority and
all necessary licenses and permits to own and operate its properties and to
carry on its business as now being conducted and as presently proposed to be
conducted.
(b) Pending Litigation. There are no proceedings pending, or to the
knowledge of the Company threatened, against or affecting the Company in any
court or before any governmental authority or arbitration board or tribunal
which involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company, or the ability of the Company to perform its obligations under
this Agreement or the Letter of Credit Agreement. The Company is not in default
with respect to an order of any court, governmental authority or arbitration
board or tribunal.
(c) Agreements Are Legal and Authorized. The execution and delivery by
the Company of this Agreement and the Letter of Credit Agreement and the
compliance by the Company with all of the provisions hereof and thereof (i) a re
within the corporate power of the Company, (ii) will not conflict with or result
in any breach of any of the provsions of, or constitute a default under, or
result in the creation of any lien, charge or encumbrance upon any property of
the Company under the provisions of, any agreement, charter document, by-law or
other instrument to which the Company is a party or by which it may be bound, or
any
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license, judgment, decree, law, statute, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its activities or properties, and (iii) have been duly authorized by all
necessary corporate action on the part of the Company.
(d) Governmental Consent. Neither the Company nor any of its business
or properties, nor any relationship between the Company and any other person,
nor any circumstances in connection with the execution, delivery and performance
by the Company of this Agreement and the Letter of Credit Agreement or the
offer, issue, sale or delivery by the Issuer of the Bonds, is such as to require
the consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Company other
than those already obtained.
(e) No Defaults. No event has occurred and no condition exists with
respect to the Company that would constitute an "Event of Default" under this
Agreement, the Indenture or the Letter of Credit Agreement or which, with the
lapse of time or with the giving of notice or both, would become an "Event of
Default" under this Agreement, the Indenture or the Letter of Credit Agreement.
The Company is not in violation in any material respect of any agreement,
charter document, by-law or other instrument to which it is a party or by which
it may be bound.
(f) Compliance with Law. The Company is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject and has not
failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to the conduct of
its business, which violation or failure to obtain might materially and
adversely affect the properties, business, prospects, profits or conditions
(financial or otherwise) of the Company.
(g) Restrictions on the Company The Company is not a party to any
contract or agreement, or subject to any charter or other corporate restriction,
that materially and adversely affects the business of the Company. The Company
is not a party to any contract or agreement that restricts the right or ability
of the Company to incur or guarantee indebtedness for borrowed money.
(h) Disclosure. Neither the representations of the Company contained in
this Agreement and the Letter of Credit Agreement, nor any written statement
relating to the Company furnished by or on behalf of the Company to the Issuer
or the Original Purchasers of the Bonds in connection with the transaction
contemplated hereby or thereby, contains any
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untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading. There is no
fact that the Company has not disclosed to the Issuer and to the Original
Purchasers of the Bonds in writing that materially and adversely affects or in
the future may (so far as the Company can now reasonably foresee) materially and
adversely affect the acquisition, construction, installation, ownership or
operation of the Facilities, or the properties, business, prospects, profits or
condition (financial or otherwise) of the Company, or the ability of the Company
to perform its obligations under this Agreement, the Letter of Credit Agreement
or any documents or transactions contemplated hereby.
(i) Inducement. The issuance of the Bonds by the Issuer and the lending
of the proceeds thereof to the Company to enable the Company to acquire,
construct and install the Facilities have induced the Company to locate the
Facilities in the County which will directly result in a retention of employment
opportunities in the County for approximately 40 persons.
(j) Operation of Facilities. The Company intends to operate the
Facilities from the Completion Date to the expiration or sooner termination of
this Agreement as provided herein as a "project" within the meaning of the Act
and so long as the Bonds remain outstanding the Company agrees that it shall not
operate the Facilities as a facility the primary purpose of which causes the
Facilities to constitute a prohibited facility within the meaning of Section
103(b) of the Code.
(k) Nature of Facilities. Substantially all of the net proceeds of the
sale of the Bonds will be used to acquire land or property of a character
subject to the allowance for depreciation under Section 167 of the Code and such
costs representing proceeds so used are properly chargeable to a capital account
of the Company for Federal income tax purposes or would be so chargeable either
with a proper election by the Company or but for a proper election by the
Company to deduct the costs.
(1) Commencement of Construction. The acquisition, construction and
installation of the Facilities commenced after November 28, 1983, and no
obligation relating to the acquisition, construction or installation of the
Facilities was paid or incurred prior to such date.
(m) Prior Issues. Except for the Bonds, no bonds, notes or other
obligations of any state, territorial possession or any political subdivision of
the United States of
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America or any political subdivision of any of the foregoing or of the District
of Columbia have been issued since April 30, 1968, and are now outstanding, the
proceeds of which have been or are to be used primarily with respect to the
Local Facilities.
(n) Composite Issues. There are no other obligations heretofore issued
or to be issued by or on behalf of any state, territory or possession of the
United States, or political subdivision of any of the foregoing, or of the
District of Columbia, for the benefit of the Company or any Related Person,
which constitute "industrial development bonds" within the meaning of Section
103(b) of the Code and which (i) were or are to be sold at substantially the
same time as the Bonds, (ii) were or are to be sold at substantially the same
interest rate as the interest rate of the Bonds, (iii) were or are to be sold
pursuant to a common plan of marketing as the marketing plan for the Bonds, and
(iv) a re payable directly or indirectly by the Company or from the source from
which the Bonds are payable.
(o) Capital Expenditures. The principal amount of the Bonds and the
amount of all Section 103(b) (6)(D) Capital Expenditures that have been paid or
incurred with respect to the Local Facilities during the three years next
preceding the date of issue of the Bonds other than out of the proceeds of the
sale of the Bonds do not in the aggregate exceed the sum of $10,000,000.
(p) Election Information. The information furnished by the Company and
used by the Issuer in preparing the election which has been filed by or on
behalf of the Issuer with the Internal Revenue Service pursuant to Section 103
(b) (6) (D) of the Code was true and complete as of the date of filing of said
election.
(q) I.R.S. Form 8038 Information. The information furnished by the
Company and used by the issuer in preparing I.R.S. Form 8038, "Information
Return for Private Activity Bond Issues", which has been filed by or on behalf
of the Issuer with the Internal Revenue Service Center in Philadelphia,
Pennsylvania, pursuant to Section 103(l) of the Code, was true and complete as
of the date of filing thereof.
(r) Limitation on Maturity. The weighted average maturity of the Bonds
does not exceed the weighted average estimated economic life of the components
comprising the Facilities by more than 20% determined pursuant to Section 103
(b) (14) of the Code.
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(s) Restrictions On Financing and Operation of Certain Facilities. At
no time will :
(i) more than 25% of the net proceeds of the sale of the Bonds
be used to provide a facility the primary purpose of which is one of
the following: retail food and beverage services (including eating and
drinking places, but excluding grocery stores), automobile sales or
service, or the provision of recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
be used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet sports
facility (including any handball or racquetball court), hot tub
facility, suntan facility or racetrack; or
(iii)- any portion of the net proceeds of the sale of the
Bonds be used to provide any airplane, skybox, or other private luxury
box, any health club facility, any facility primarily used for
gambling, or any store the principal business of which is the sale of
alcoholic beverages for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
be used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25% or more of
the net proceeds of the sale of the Bonds be used (directly or
indirectly) for the acquisition of land other than land to be used for
farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
be used for the acquisition of any property -the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of the
portion of the cost of acquiring such building (and equipment) financed
with the proceeds of the Bonds; or
(vi) the Facilities be operated as a facility the primary
purpose of which causes the Facilities to constitute a prohibited
facility within the meaning of Section 103(b) of the Code.
(t) Aggregation of Issues for Single Project. The Facilities are not a
part if a single building, an enclosed
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shopping mall, or a strip of offices, stores or warehouses using substantial
common facilities, and with respect to which any other bonds, notes, or other
obligations have been or will be issued under Section 103(b) of the Code.
(u) Aggregate Limit Per Taxpayer for Small Issue Exemption. The sum of
the authorized face amount of the Bonds allocable to each "test-period
beneficiary" (as defined in Section 103(b) (15) (D) of the Code) plus the
respective aggregate face amount of all tax-exempt industrial development
revenue hands presently outstanding (not including any obligations which a re to
be redeemed from the proceeds of the Bonds) which are allocable to each such
test-period beneficiary, does not exceed $40,000,000.
(v) Reasonable Expectations. Based on current facts, estimates and
circumstances, it is expected that:
(i) the acquisition, construction and installation of the
Facilities and the expenditure of all Bond proceeds will be completed
by that date which is not more than six months from the Original
Issuance Date of the Bonds,
(ii) work on the Facilities (which has commenced) will proceed
with due diligence to completion,
(iii) the net proceeds of the sale of the Bonds are needed for
the purpose of paying all or a part of the cost of the acquisition,
construction and installation of the Facilities, and
(iv) the Facilities will not be sold or disposed of, in whole
or in part, prior to payment in full of the Bonds,
(w) Substantial Binding Obligation. Various contracts providing for the
acquisition, construction and installation of the Facilities have been entered
into and the amounts required to be paid under said contracts exceed $100,000 or
2 1/2%, whichever is less, of the estimated total cost of the Facilities.
(x) The Company represents to the Issuer and the Commission that (i)
the Project will contribute to the economic growth or stability of the
Governmental Unit by (aa) increasing or stabilizing employment opportunities in
the Governmental Unit, (bb) significantly increasing or stabilizing the property
tax base of the Governmental Unit and (cc) promoting commerce within the
Governmental Unit and. the State of Texas; (ii) it has no present intention of
moving or disposing of any part of the Project; and (iii) it
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has no present intention of directing the Project to a use other than the
purposes represented to the Governmental Unit and the Commission.
ARTICLE III.
ACQUISITION, CONSTRUCTION AND
INSTALLATION OF THE FACILITIES;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction and Installation of the
Facilities. The Company agrees that the acquisition, construction and
installation of the Facilities will be completed as promptly as practicable
after receipt of the proceeds from the sale of the Bonds, delays incident to
strikes, riots, acts of God or the public enemy or other causes beyond the
reasonable control of the Company only excepted, but if such acquisition,
construction and installation is not completed, there shall be no resulting
liability on the part of the Issuer and no diminution in or postponement of the
payments required to be paid by the Company hereunder.
Section 3.2. Agreement to Issue Bonds; Application of Proceeds. In
order to provide funds for the payment of the cost of the acquisition,
construction and installation of the Facilities (including capitalized
interest), the Issuer agrees that as soon as possible it will authorize,
validate, sell and cause to be delivered to the Original Purchasers thereof, the
Bonds, bearing interest and maturing as set forth in Article II of the
Indenture, at a price to be approved by the Company, and it will thereupon
deposit an amount equal to the Interest Reserve Requirement into the Bond Fund
and will deposit the balance of the proceeds received from said sale in the
Construction Fund.
The Company may cause such changes to be made to the "Description of
Facilities" attached hereto as Exhibit A as it may desire provided that such
changes shall not result in (i) the Facilities not being a "project" within the
meaning of the Act, (ii) the Facilities constituting a prohibited facility
within the meaning of Section 103(b) of the Code (iii) less than substantially
all of the net proceeds of the sale of the Bonds being used to pay the costs of
land or property of a character subject to the allowance for depreciation under
Section 167 of the Code, and (iv) a violation of the limitation on maturity of
the Bonds under Section 103(b) (14) of the Code.
Section 3.3. Disbursements from the Construction Fund. The Issuer will
in the Indenture authorize and direct the
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Depository to use the moneys in the Construction Fund for the following purposes
but, subject to the provisions of Section 3.8, for no other purposes:
(a) payment of the initial or acceptance fee of the Trustee and the
Depository and fees and expenses of their respective counsel, the fees for
recording the deeds whereby the appropriate title in and to the Facilities has
been acquired by the Company, payments for title examination and insurance, and
any title curative documents that the Company may deem desirable to file for
record in order to perfect or protect its title in and to the Facilities and the
fees and expenses in connection with any actions or proceedings that the Company
may deem desirable to bring in order to perfect its title in and to the
Facilities;
(b) payment to the Company of such amounts, if any, as shall be
necessary to reimburse the Company in full for all advances and payments made by
it prior to or after the delivery of the Bonds for expenditures in connection
with the acquisition by the Company of appropriate title in and to the
Facilities (including the cost of such acquisition and of any rights-of-way for
the purpose of providing access to and from the Facilities), clearing the site,
site improvement, the preparation of plans and specifications for the Facilities
(including any preliminary study or planning of the Facilities or any aspect
thereof), the acquisition, construction and installation (of the Facilities and
the acquisition, construction and installation necessary to provide utility
services or other facilities including trackage to connect the Facilities with
public transportation facilities, and all real or personal properties deemed
necessary in connection with the Facilities, or any one or more of said
expenditures (including architectural, engineering and supervisory services)
with respect to any of the foregoing;
(c) payment of, or reimbursement of the Company and the Issuer for, the
legal and accounting fees and expenses financial consultants' fees, financing
charges (including underwriting or placement fees) and printing and engraving
costs incurred in connection with the authorization, sale and issuance of the
Bonds, the preparation of this Agreement, the Letter of Credit Agreement, the
Letter of Credit, the Indenture, the Bond Purchase Agreement, the Financing
Statements and all other documents in connection therewith and in connection
with the acquisition of appropriate title in and to the Facilities, including
fees for filing the Financing Statements;
(d) payment of, or reimbursement of the Company for labor, services,
material, supplies and/or equipment used or
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furnished in site improvement and in the construction of the Facilities, all as
provided in the plans and specifications therefor, payment for the cost of the
acquisition and installation of the Facilities, payment for the cost of
acquisition, construction and installation of utility services or other
facilities including trackage to connect the Facilities with public
transportation facilities, and all real and personal properties deemed necessary
in connection with the Facilities and payment for the miscellaneous expenses
incidental to any of the foregoing;
(e) payment of, or reimbursement of the Company for, the fees, if any,
for architectural, engineering and supervisory services with respect to the
Facilities;
(f) payment of, or reimbursement of the Company and the Issuer for, as
such payments become due, the fees and expenses of the Trustee, the Registrar,
the Bond Registrar, the paying agent(s) and the fees and expenses of their
counsel properly incurred under the Indenture that may become due during the
Construction Period; and payment into the Bond Fund of sufficient moneys to pay
interest on the Bonds accruing during the Construction Period or to reimburse
the Bank for drawings under the Letter of Credit to pay interest on the Bonds
accruing during the Construction Period, as the case may be;
(g) payment of; or reimbursement of the Company and the Issuer for, any
other legal and valid costs and expenses relating to the Facilities;
(h) all moneys remaining in the Construction Fund (including moneys
earned on investments made pursuant to the provisions of Section 3.8) after the
Completion Date and payment in full of the cost of the acquisition, construction
and installation of the Facilities, and after payment of all other items
provided for in the preceding subsections of this Section then due and payable,
shall at the direction of the Company be (i) subject to Section 5.6(f), and
subject to the prior written approval of the Bank, which maybe withheld in its
sole and absolute discretion, used to acquire, construct and install additions,
extensions and improvements to the Facilities in accordance with amended plans
and specifications therefor duly filed with the Issuer, (ii) transferred to the
Trustee which shall redeem Bonds, to the maximum extent practicable consistent
with making partial redemptions in amounts of not less than $50,000 or integral
multiples thereof, or, on or after the Conversion Date, $5,000 or integral
multiples thereof, at the earliest date permitted by the Indenture or to
purchase Bonds for the purpose of cancellation at any time prior to the earliest
date permitted by the Indenture for the redemption of Bonds, (iii) paid into the
Bond Fund to pay interest on the Bonds, or (iv) a combination of (i), (ii)
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and/or (iii) as is provided in such direction, provided that amounts approved by
the Authorized Company Representative and the Authorized Issuer Representative
shall be retained by the Depository in the Construction Fund for payment of
costs not then due and payable. Any balance remaining of such retained moneys
after full payment of all such costs shall be used by the Trustee as directed by
the Company in the manner specified in clauses (i), (ii), (iii) or (iv) of this
subsection. Amounts directed by the Company to be used by the Trustee in the
manner specified in clause (ii) shall not, pending such use, be invested at a
yield which exceeds the yield on the Bonds. Amounts in excess in the aggregate
of 5% of the net proceeds of the sale of the Bonds shall not be directed by the
Company to be used for the purposes described in clauses (i), (ii), (iii) or
(iv) without providing the Trustee with an opinion of Independent Tax Counsel
stating that such use will not impair the exemption of the interest on the Bonds
from Federal income taxation pursuant to Section 103 (b) of the Code.
The payments specified in subsections (a) through (g) of this Section
shall be made by the Depository only upon receipt of the following:
(1) a written requisition for such payment signed by the
Authorized Company Representative and the Authorized Issuer
Representative;
(2) a certificate by the persons signing such requisition
certifying:
(i) that an obligation in the stated amount has been
incurred (A) in connection with the issuance of the Bonds, or
(B) and is required to reimburse the Bank for a drawing under
the Letter of Credit, or (C) in connection with the
acquisition, construction and installation of the Facilities;
(ii) that such obligation is a proper charge against
the Construction Fund and has not been the basis of any
previous withdrawal from the Construction Fund, and specifying
the purpose and circumstances of such obligation in reasonable
detail and the name and address of the person to whom such
obligation is owed, accompanied by a bill or statement of
account for such obligation;
(iii) that (A) they have no notice of any vendors',
materialmen's, mechanics', suppliers' or other similar liens
or right to liens, chattel mortgages or conditional sales
contracts, or other
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contracts or obligations which should be satisfied or
discharged before payment of such obligation is made, or ( B)
such requisition is for the purpose of obtaining funds to be
used to satisfy or discharge a lien or contract of the type
described in (A) above;
(iv) that such requisition contains no request for
payment on account of any portion of such obligation which the
Company is, as of the date of such requisition, entitled to
retain under any retained percentage agreements;
(v) that payment of such obligation when added to all
other payments previously made from the Construction Fund will
not result in less than substantially all of the net proceeds
of the sale of the Bonds expended at such time being used to
provide land or property of a character subject to the
allowance for depreciation under Section 167 of the Code; and
(vi) that such requisition contains no request for
payment on account of any obligation paid or incurred prior to
November 28, 1983; and
(3) with respect to any such requisition for payment for
labor, services, material, supplies and/or equipment, an additional
certificate, signed by the Authorized Company Representative,
certifying that insofar as such obligation was incurred for labor,
services, material, supplies and/or equipment in connection with the
acquisition, construction and installation of the Facilities, such
labor and/or services were actually performed in a satisfactory manner
and such material, supplies and/or equipment were actually used in or
about the construction or delivered at the site of the Facilities for
that purpose and that the item of equipment with respect to which any
payment is requested constitutes a portion of the Facilities. Such
requisition and certification shall be in substantially the form
attached hereto as Exhibit B and by this reference thereto made a part
hereof.
In approving or certifying any requisition under this Section, the
Issuer may rely as to the completeness and accuracy of all statements in such
requisition upon the approval of or certification to such requisition by the
Authorized Company Representative, and the Company hereby agrees to indemnify
and save harmless the Issuer, its directors, officers, agents and employees from
any liability
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incurred in connection with any requisition so approved or certified.
In making any such payment from the Construction Fund the Depository
may rely on any such requisitions and any such certificates delivered to it
pursuant to this Section and the Depository shall be relieved of all liability
with respect to making such payments in accordance with any such requisitions
and such supporting certificate or certificates without inspection of the
Facilities or any other investigation.
Anything herein to the contrary notwithstanding, the Depository hereby
agrees that it will not make any disbursement from the Construction Fund without
the prior written approval of the Bank (subject to certain premapprovals of
disbursements by the Bank).
The Issuer and the Company agree for the benefit of each other and for
the benefit of the Depository, the Trustee and the holders of the Bonds that the
proceeds of the Bonds will not be used in any manner which would result in the
loss of the exemption from Federal income taxation of the interest on the Bonds.
Section 3.4. Obligation to Furnish Documents to Depository. The Issuer
and the Company agree to cooperate with each other in furnishing to the
Depository the documents referred to in Section 3.3 that are required to effect
payments out of the Construction Fund, and to cause such requisitions and
certificates to be directed by the Authorized Company Representative and the
Authorized Issuer Representative to the Depository as may be necessary to effect
such payments. Such obligation of the Issuer and the Company is subject to any
provisions hereof or of the Indenture requiring additional documentation with
respect to payments and shall not extend beyond the moneys in the Construction
Fund available for payment under the terms of the Indenture.
Section 3.5. Establishment of Completion Date. The Completion Date
shall be evidenced to the Depository by a certificate signed by the Authorized
Company Representative stating that, except for amounts retained by the Trustee
for costs of the Facilities not then due and payable as provided in Section
3.3(h),
(a) the acquisition construction and installation of the Facilities
have been completed substantially in accordance with the plans and
specifications therefor and all, labor, services, materials, supplies and/or
equipment used
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in such acquisition, construction and installation have been paid for,
(b) all other facilities necessary in connection with the Facilities
have been acquired, constructed and installed substantially in
accordance with the plans and specifications therefor and all costs and
expenses incurred in connection therewith have been paid,
(c) the Facilities and all other facilities in connection therewith
have been acquired, constructed and installed to his satisfaction and
are suitable and sufficient for the efficient operation of the
Facilities for its intended purposes,
(d) substantially all of the net proceeds of the sale of the Bonds have
been used to acquire land or property of a character subject to the
allowance for depreciation under Section 167 of the Code and such costs
representing proceeds so used are properly chargeable to the capital
account of the Company for Federal income tax purposes or would be so
chargeable either with a proper election by the Company or but for a
proper election by the Company to deduct the costs, and
(e) a certificate of occupancy, if required, and any other permissions
required of governmental authorities for the occupancy of the
Facilities have been obtained.
Notwithstanding the foregoing, such certificate by the Authorized Company
Representative shall state that it is given without prejudice to any rights
against third parties which exist on the date of such certificate or which may
subsequently come into being and shall be in substantially the form attached
hereto as Exhibit C and by this reference thereto made a part hereof. The
Company agrees to furnish a copy of such certificate to the Issuer at the same
time such document is furnished to the Trustee.
Section 3.6. Company Required to Pay Costs of Facilities If
Construction Fund Insufficient. If the moneys in the Construction Fund available
for payment of the cost of the Facilities should not be sufficient to pay the
cost thereof in full, the Company agrees to complete the Facilities and to pay
all that portion of the cost of the Facilities as may be in excess of the moneys
available therefor in the Construction Fund. The Issuer does not make any
warranty, either express or implied, that the moneys which will be paid into the
Construction Fund and which, under the provisions of this Agreement, will be
available for payment of the cost of the Facilities will be sufficient to pay
all costs which will be incurred in that connection. The Company
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agrees that if after exhaustion of the moneys in the Construction Fund the
Company should pay any portion of the cost of the Facilities pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Issuer or from the Trustee or from the holders or owners of
any of the Bonds, nor shall it be entitled to any diminution in or postponement
of the payments required to be made hereunder.
Section 3.7. Remedies Against Suppliers, Contractors and Subcontractors
and Their Sureties. The Company may prosecute or defend any action or proceeding
or take any other action involving any defaulting supplier, contractor,
subcontractor or surety therefor which the Company deems reasonably necessary,
and in such event the Issuer agrees to cooperate fully with the Company, to the
extent it might lawfully do so, in any such action or proceeding. Any moneys
recovered by way of damages, refunds, adjustments or otherwise in connection
with the foregoing shall belong to the Company.
Section 3.8. Investment of Bond Fund and Construction Fund Moneys
Permitted. Any moneys held in the Bond Fund or the Construction Fund shall be
invested or reinvested by the Trustee upon the oral or written request and
direction of the Company, and, if oral, promptly confirmed in writing, in
Eligible Investments, to the extent permitted by the laws of the State. Such
investments shall be made upon direction of the Authorized Company
Representative and shall mature in such amounts and at such times as may be
necessary to provide funds when needed to make payments from the Bond Fund or
the Construction Fund. The Trustee may make any and all such investments through
its own investment department. Any interest or gain received from such
investments shall be credited to and held in the Bond Fund or the Construction
Fund and any loss from such investments shall be charged against the Bond Fund
or the Construction Fund and paid by the Company at such time as there are
insufficient moneys in any such Fund to make a required payment. The Trustee
shall not be responsible or liable for any loss suffered in connection with any
investment of funds made by it in accordance with the provisions of Article VI I
I of the Indenture. The provisions of this Section 3.8 shall be subject to the
provisions of Section 5. 12(b) of this Agreement and Section 804 of the
Indenture.
Section 3.9. Title to the Facilities. The Issuer acknowledges and
agrees that it will not be vested with any interest in the Facilities by virtue
of executing, deliver- ing and performing this Agreement or issuing the Bonds to
finance the cost of the acquisition, construction and
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installation thereof and that the Facilities will not constitute any part of the
security for the Bonds.
ARTICLE IV.
LOAN BY THE ISSUER TO THE COMPANY;
REPAYMENT OF LOAN
Section 4.1. Loan By the Issuer to the Company; Repayment of Loan;
Obligations Unconditional. The Issuer shall lend from time to time, pursuant to
Section 3.3, to the Company the proceeds of the sale of the Bonds for the
purposes provided in this Agreement. The Company will repay said loan, as
follows: On each Bond Payment Date until the principal of, and the redemption
premium (if any) and the interest on, all Bonds shall have been fully paid (or
provision for the payment thereof shall have been made in accordance with the
provisions of the Indenture) a sum in immediately available funds
which, when added to the balance which is then in the Bond Fund and available
for such purpose, shall be equal to the amount payable as principal of, and
redemption premium (if any) and interest on, the Bonds then outstanding under
the Indenture on such Bond Payment Date.
Not later than the fifth (5th) Business Day next succeeding each
Interest Payment Date prior to the Interest Payment Date next receding the
Expiration Date of the Letter of Credit, the Company shall pay an amount equal
to the difference between the Interest Reserve Requirement and the aggregate
amount of Available Moneys on deposit in or credited to the Bond Fund on the
Business Day next succeeding such Interest Payment Date.
In any event, the amount payable under this Section 4.1 on any Bond
Payment Date shall be sufficient to pay the total amount due with respect to the
principal of, and redemption premium (if any) and interest on, the Bonds on such
Bond Payment Date. If, after making any transfer from the Construction Fund to
the Bond Fund required by the Indenture, on any Bond Payment Date the balance in
the Bond Fund is insufficient to make required payments of principal of, and
redemption premium (if any) and interest on, the Bonds on such date, the Company
shall forthwith pay to the Trustee, on behalf of the Issuer for deposit into the
Bond Fund, any such deficiency; provided, however, that if at any time all the
outstanding Bonds are paid and discharged as provided in Article X of the
Indenture no further such payments shall be required. In the Indenture, the
Issuer has directed the Trustee to apply such payments in accordance with the
provisions of the Indenture and this Agreement.
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The obligations of the Company to make the payments required in this
Section 4.1 and in Section 4.3 in the amounts and at the times specified and to
perform and observe the other agreements on its part contained herein shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, any set-off, counterclaim, recoupment, defense
(other than payment itself) or other right which the Company may have against
the Issuer, the Trustee, or anyone else for any reason whatsoever. The Company
hereby waives, to the extent permitted by applicable law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate or cancel this Agreement except in
accordance with the express terms hereof Nothing contained in this Section 4.1
shall be construed to release the Issuer from the performance of any of the
agreements on its part herein contained; and in the event the Issuer should fail
to perform any such agreement on its part, the Company may institute such action
against the Issuer as the Company may deem necessary to compel performance or
recover its damages for nonperformance so long as such action will not be
inconsistent with the agreements on the part of the Company contained in the
first sentence of this paragraph.
In the event the Company should fail to make any of the payments
required in this Section 4.1, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been paid in full. The Company agrees to pay interest on all overdue amounts
which represent repayments of principal of, or redemption premium on, the Bonds
at the rate borne by such Bonds.
Anything herein, in the Indenture or in the Bonds to the contrary
notwithstanding the obligations of the Company hereunder shall be subject to the
limitation that payments constituting interest under this Section shall not be
required to the extent that the receipt of such payment by the holder of any
Bond would be contrary to the provisions of law applicable to such holder which
limit the maximum rate of interest which may be charged or collected by such
holder.
Section 4.2. Company Consent to Assignment of Agreement and Execution
of Indenture; Company's Performance Under Indenture. The Company understands
that the Issuer, as security for the payment of the principal of, and the
redemption premium (if any) and the interest on, the Bonds, will assign and
pledge to, and create a security interest in favor of, the Trustee pursuant to
the Indenture certain of its rights, title and interest in and to this Agreement
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including all Revenues, reserving, however, its rights (a) pursuant to this
Agreement providing that notices, approvals, consents, requests and other
communications be given to the Issuer, (b) to reimbursement and payment of costs
and expenses under Sections 5.3, 5.10 and 6.4, and (c) to indemnification and to
exemption from liability, both individual and corporate, under Section 5.3, and
the Company hereby agrees and consents to such assignment and pledge. The
Company acknowledges that it has received a copy of the Indenture and consents
to the execution of the same by the Issuer.
The Company agrees, for the benefit of the bondholders, to do and
perform all acts and things contemplated in the Indenture to be done or
performed by it.
Section 4.3. Prepayment of Loan.
(a) Mandatory Prepayment of the Loan. The Company shall be obligated to
prepay unpaid amounts of the loan made by the Issuer to the Company pursuant to
Section 4.1 prior to the stated maturity of the Bonds in the event that the
Bonds are required to be redeemed pursuant to Section 301 of the Indenture.
(b) Optional Prepayments Pursuant to the Indenture. The Company shall
have the right, at its option, to direct the Issuer to effect the redemption of
the Bonds pursuant to Section 301 (a) or (c) of the Indenture.
(c) Optional Prepayments upon Condemnation of Facilities. After the
Conversion Date, in the event that title to or the temporary use of the
Facilities, or any part thereof, shall be taken under the exercise of the power
of eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, any Net Proceeds received from any award
made in any such eminent domain proceedings may, at the option of the Company
(which option must be exercised within ninety (90) days of the date of entry of
a final order in any eminent domain proceedings granting condemnation), be paid
to the Trustee in prepayment of unpaid amounts of the loan made by the Issuer
pursuant to Section 4.1 and shall be applied by the Trustee as shall be directed
in writing by the Authorized Company Representative (i) to the redemption of all
of the Bonds or purchase of Bonds in the open market for the purpose of
cancellation pursuant to the Indenture upon exercise of the prepayment option
set forth in Section 4.3(d) below, or (ii) to the redemption of less than all of
the Bonds pursuant to the Indenture or payment into the Bond Fund; provided
that, in, the case of (ii), the Company shall furnish the Issuer and the Trustee
(x) a certificate of an Independent Engineer
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selected by the Company stating (A) that the property forming a part of the
Facilities that was taken by such condemnation was not essential to the
character of the Facilities as industrial facilities, or (B) that. the
Facilities have been restored to a condition substantially equivalent to their
condition as industrial facilities prior to the taking by such condemnation
proceedings, with such changes, alterations and modifications (including the
substitution and addition of other property) as may be desired by the Company
and as will not materially impair the character of the Facilities as industrial
facilities, or (C) that improvements have been acquired which are suitable for
the operation of the Facilities its industrial facilities, and (y) an opinion of
Independent Tax Counsel or a ruling of the Internal Revenue Service to the
effect that such application of the Net Proceeds will not jeopardize the
exemption of interest on the Bonds from Federal income taxation.
(d) Optional Prepayments in Certain Events. After the Conversion Date,
the Company shall have the right, at its option, within ninety (90) days
following the event under clause (i) or (ii) below authorizing the exercise of
such option, or at any time during the continuation of an event under clause
(iii) or (iv) below authorizing the exercise of such option, to give written
notice to the Issuer and the Trustee of its exercise of such option and to
prepay, or cause to be prepaid, all the amounts payable pursuant to Section 4.1
and such other amounts as specified in this Section 4.3(d) within ninety (90)
days following the giving of notice of such exercise, if any of the following
shall have occurred:
(i) all or a substantial part of the Facilities shall have
been damaged or destroyed (A) to such extent that the Company deems it
not practicable or desirable to restore such damaged or destroyed
property within a period of three (3) consecutive months to the
condition thereof immediately preceding such damage or destruction, or
(B) to such extent that the Company is thereby reasonably expected to
be prevented from carrying on its normal operations at the Facilities
for a period of three (3) consecutive months;
(ii) title to, or the temporary use of, all or a substantial
part of the Facilities shall have been taken, or condemned under the
exercise of the power of eminent domain, by any governmental authority,
person, firm or corporation acting under governmental authority
(including such a taking or takings as result in the Company's being
reasonably expected to be prevented from carrying on its normal
operations at the Facilities for a period of three (3) consecutive
months);
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(iii) changes in costs or economic availability of energy,
labor, raw materials, operating supplies, including fuel, power, or
facilities necessary for the operation of all or a substantial part of
the Facilities shall have occurred, or such technological or other
changes shall have occurred, which in the Company's reasonable judgment
render continued operation of all or a substantial part of the
Facilities impracticable or uneconomic for their purpose; or
(iv) any court or administrative body shall enter a judgment,
order or decree, or shall take administrative action, requiring the
Company to cease all or any substantial part of its operations at the
Facilities to such extent that the Company is or will be prevented from
carrying on its normal operations at the Facilities for a period of
three (3) consecutive months.
For purposes of this Section 4.3(d), the term "substantial part" when used with
reference to the Facilities shall mean any part of the Facilities as to which
the total acquisition, restoration and equipping cost amounted to (i) at least
twenty-five percentum (25%) of the aggregate principal amount of Bonds issued
pursuant to the Indenture, or (ii) an amount equal to the aggregate principal
amount of Bonds then outstanding, whichever is less.
The amount payable by the Company in the event it is required to prepay
the loan pursuant to subsection (a) of Section 4.3 or it exercises the option
granted to it in subsection (d) of this Section 4.3 shall be a sum which, when
added to the moneys and investments held for the credit of the Bond Fund and all
other funds and accounts then held by the Trustee in respect of the Bonds and
available for the purpose, will be sufficient pursuant to the provisions of
Article X of the Indenture to pay and discharge all the then outstanding Bonds
on the first possible date for redemption, plus an amount of money payable to
the Trustee equal to the Trustee's and Paying Agent's fees, charges and expenses
under the Indenture accrued and to accrue until such final payment and
redemption of the Bonds.
The amount payable by the Company in the event it exercises the option
granted to it pursuant to subsection (b) of this Section 4.3 shall be sufficient
pursuant to Section 301 (a) or Section 301 (c) of the Indenture to pay the
applicable redemption price of the Bonds to be redeemed.
Section 4.4. Delivery of Letter of Credit to Trustee. The Company shall
cause the Letter of Credit to be issued and delivered to the Trustee on the
Original Issuance Date of the Bonds. The Company hereby authorizes and directs
the
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Trustee to draw moneys under the Letter of Credit, in accordance with the
provisions of the Letter of Credit Agreement and the Indenture.
Section 4.5. Satisfaction of Company's Obligation. The obligation of
the Company to make any payments required under Sections 4.1 and 4.3 of this
Agreement shall be deemed to be satisfied and discharged to the extent of (a)
the corresponding payment made by the Bank to the Trustee under the Letter of
Credit, or (b) payments of principal of, or interest on, the Bonds from moneys
transferred from the Construction Fund pursuant To Section 3.3(h), or (c) Net
Proceeds of insurance or condemnation awards which are applied to the payment of
principal of, or interest on, the Bonds.
Section 4.6. Alternate Letter of Credit; Alternate Credit Facility. At
any time prior to the sixtieth (60th) day next preceding the Expiration Date of
the Letter of Credit, the Company may, at its option, provide for and deliver to
the Trustee an Alternate Letter of Credit. An Alternate Letter of Credit shall
be an irrevocable letter of credit, other than the Letter of Credit issued by
the Bank and delivered to the Trustee on the Original Issuance Date of the
Bonds, issued by a commercial bank, the terms of which shall in all material
respects be the same as the Letter of Credit. At least forty-six (46) Business
Days but not more than sixty (60) days prior to the date of delivery of an
Alternate Letter of Credit, the Company shall (i) deliver to the Trustee an
opinion of Independent Tax Counsel stating that the delivery of such Alternate
Letter of Credit to the Trustee is authorized under this Agreement and the Act,
complies with the terms of this Agreement and will not adversely affect the
exemption from Federal income taxation of interest on the Bonds, (ii) deliver to
the Trustee written evidence from Moody's, if the Bonds are rated by Moody's,
and S&P, if the Bonds are rated by S&P, in each case to the effect that such
rating agency has reviewed the proposed Alternate Letter of Credit and that the
substitution of the Alternate Letter of Credit for the Letter of Credit will
not, by itself, result in a reduction of its rating of the Bonds from that which
then prevails, and (iii) direct that the Trustee notify the Bank and the holders
of outstanding Bonds, in accordance with of Section 302 of the Indenture, that
an Alternate Letter of Credit will be delivered to the Trustee.
On or after the Conversion Date or the Interest Payment Date next
preceding the Expiration Date of the Letter of Credit, the Company may provide
for the delivery of an Alternate Credit Facility to provide security for payment
of the principal of, and the interest on, the Bonds; provided
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that the Company shall (i) deliver to the Trustee an opinion of Independent Tax
Counsel stating that the delivery of such Alternate Credit Facility is
authorized under this Agreement and the Act, complies with the terms of this
Agreement and will not adversely affect the exemption from Federal income
taxation of interest on the Bonds, and (ii) direct the Trustee to notify the
Bank and the holders of outstanding Bonds, in accordance with Section 302 of the
Indenture, that an Alternate Credit Facility will be delivered to the Trustee.
In the event that such Alternate Credit Facility is to be delivered prior to the
Conversion Date, such Alternate Credit Facility may provide for payment of the
purchase price of Bonds delivered to the Trustee in accordance with Section 302
of the Indenture.
Any Alternate Letter of Credit or Alternate Credit Facility shall have
an initial term of not less than one (1) year.
Section 4.7. Extension of Letter of Credit. The Company may, at its
election and with the consent of the Bank, provide for one or more extensions of
the Letter of Credit for any period commencing after December 15, 1988.
Section 4.8. Notice of Prepayments; Issuer to Effect Redemption. If the
Company shall be required or determines to make any payments, or cause any
payments to be made, pursuant to subsections (a), (b), (c) or (d) of Section
4.3, it shall give notice in writing of such intention to the Issuer and the
Trustee, which notice shall state the provisions of the Indenture under which
the Issuer is to apply such payment. In such event or in the event that moneys
in the Bond Fund are sufficient to redeem all the Bonds then outstanding under
the Indenture and to pay interest to accrue thereon to the redemption date, the
Issuer (or the Company upon the request and on behalf of the Issuer) will, but
only upon the direction of the Company, forthwith take all steps that may be
necessary to effect the redemption of all or part of the then outstanding Bonds
as specified by the Company, on the earliest redemption date on which such
redemption may be made under the applicable provisions of the Indenture. Except
as otherwise provided in said subsections (c) and, (d) of Section 4.3, such
notice must be received by the Issuer and the Trustee prior to the first date on
which the Issuer would be required to give notice to the Trustee or to take any
other action in respect to the Issuer's right to effect the redemption of Bonds
pursuant to the appropriate provision of the Indenture.
Section 4.9. Relative Position of this Article and the Indenture. The
rights and options granted to the Company in this Article shall be and remain
prior and superior to the
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Indenture and may be exercised whether or not the Company is in default under
this Agreement, provided that such default will not result in nonfulfillment of
any condition to the exercise of any such right or option.
Section 4.10. Place of Payment. All amounts payable by the Company
pursuant to Section 4.1 or Section 4.3 of this Agreement shall be paid directly
to the Trustee at its Principal Office on behalf of the Issuer for deposit into
the Bond Fund as provided in the Indenture and the Issuer consents to said
amounts being paid in such manner.
Section 4.11. Payments to the Remarketing Agent and the Paying Agent.
The Company shall pay to the Remarketing Agent and the Paying Agent amounts
equal to the amounts to be paid by the Paying Agent or the Remarketing Agent
pursuant to Section 401 (g) of the Indenture or by the Paying Agent pursuant to
Section 401 (h) of the Indenture, such amounts to be paid by the Company to the
Remarketing Agent or the Paying Agent on the dates such payments are to be made
pursuant to said Sections 401 (g) or 401 (h), respectively; provided, however,
that the obligation of the Company to make any such payments hereunder shall be
reduced by the amount of any moneys available for such payments under clause (i)
or (ii) of said Section 401 (g) or clause (i) of said Section 401 (h); and
provided, further, that the obligation of the Company to make any payment
hereunder shall be deemed to be satisfied and discharged to the extent that
payment is made using moneys described in clause (iii) of said Section 401 (g)
or clause (ii) of said Section 401 (h).
ARTICLE V.
PARTICULAR COVENANTS
Section 5.1. Maintenance of Existence. The Company agrees that during
the Loan Term it will maintain its existence, will not voluntarily dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it; provided, that the Company may,
without violating the Agreements contained in this Section 5.1, consolidate with
or merge into another entity, or permit one or more other entities to
consolidate with or merge into it, or sell or otherwise transfer to another
entity all or substantially all of its assets as art entirety and thereafter
dissolve, provided that if the surviving, resulting or transferee entity, as the
case may be, is other than the Company, such surviving, resulting or transferee
entity is solvent,
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assumes in writing all of the obligations of the Company hereunder, is organized
under the laws of the United States of America, a state thereof or the District
of Columbia and is qualified to do business in the State.
If consolidation, merger or sale or other transfer is made as provided
in this Section 5.1, the provisions of this Section 5.1 shall continue in full
force and effect and no further consolidation, merger or sale or other transfer
shall be made except in compliance with the provisions of this Section 5.1.
Section 5.2. Qualification in the State. The Company warrants that it
is and throughout the Loan Term it will continue to be an entity either
organized under the laws of the State or qualified to do business in the State
as a foreign entity.
The Company shall preserve and keep in full force and effect all
licenses and permits necessary to the proper conduct of its business.
Section 5.3. Indemnification of Issuer and Trustee. The Company shall
indemnify and save the Issuer, the Commission and the Trustee harmless against
and from all claims by or on behalf of any person, firm or corporation arising
from the conduct or management of, or from any work or thing done on, the
Facilities during the Loan Term, and against and from all claims arising during
the Loan Term from
(a) any condition of the Facilities caused by the Company,
(b) any failure on the part of the Company in the performance
of any of its obligations hereunder,
(c) any contract entered into in connection with the
acquisition, construction and installation of the Facilities,
(d) any act of negligence of the Company or of its agents,
contractors, servants, employees or licensees, and
(e) any act of negligence of any assignee or sublessee of the
Company, or of any agent, contractor, servant, employee or licensee of
any assignee or sublessee of the Company.
The Company shall indemnify and save the Issuer, the Commission sand the Trustee
harmless from and against all
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costs and expenses incurred in or in connection with any action or proceeding
brought thereon, and upon notice from the Issuer or the Trustee, the Company
shall defend them or either of them in any such action or proceeding. The
Company shall indemnify and save the Trustee harmless from and against any loss,
liability, expense or advance incurred or made without gross negligence or bad
faith on the part of the Trustee, arising out of or in connection with the
acceptance or administration of the trusts established under the Indenture and
this Agreement, including the costs and expenses of defending itself against any
claim of liability in the premises.
The Company agrees to pay to the Trustee any and all sums of money
required to be paid by the Issuer pursuant to Section 1202 of the Indenture.
The provisions of this Section shall survive the termination of this
Agreement.
Section 5.4. Payment of Trustee's Fees. Except as paid out of the
Construction Fund pursuant to Section 3.3 of this Agreement, the Company agrees
to pay to or upon the order of the Trustee, (i) an amount equal to the fees of
the Trustee, as Trustee, which will be payable on such dates as shall be
mutually agreeable to the Trustee and the Company for the Ordinary Services of
the Trustee rendered and its Ordinary Expenses incurred under the Indenture,
(ii) the reasonable fees, charges and expenses of the Trustee, as Bond Registrar
and Paying Agent (including any charges imposed with respect to the transfer of
registration or exchange of Bonds), and of Paying Agents on the Bonds for acting
as Paying Agents as provided in the Indenture, as and when the same become due,
and (iii) the reasonable fees, charges and expenses of the Trustee for
Extraordinary Services rendered and Extraordinary Expenses incurred by it under
the Indenture, as and when the same become due; provided that the Company may
contest in good faith the necessity for any such Extraordinary Services and
Extraordinary Expenses and the reasonableness of any such fees, charges or
expenses after payment of the same (so long as such action shall not impair the
agreements of the Company contained in this Section 5.4), and such contest or
action shall not constitute a default or an Event of Default hereunder.
If the Company should fail to make any of the payments required in this
Section, the item or installment which the Company has failed to make shall
continue as an obligation of the Company until the same shall have been fully
paid, and the Company agrees to pay the same with interest thereon, at the
Interest Rate for Advances until paid in full.
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Section 5.5. Maintenance and Operation of the Facilities. The Company
agrees that during the Loan Term it will keep the Facilities including all
appurtenances thereto in good repair and good operating condition at its own
cost. The Company has represented in Section 2.3(j) its intention with respect
to the operation of the Facilities; provided, however, the Company shall not be
under any obligation to operate the Facilities if, in the judgment of the
Company, such operation is not in the best interest of the Company.
The Company shall have the privilege of remodeling the Facilities or
making additions, modifications, substitutions and improvements to the
Facilities from time to time as it, in its sole discretion, may deem to be
desirable for its uses and purposes, provided that such remodeling, additions,
modifications, substitutions and improvements, when constructed do not
materially adversely affect the character of the Facilities as an industrial
facility, or cause the Facilities to cease to be a "project" within the meaning
of the Act, or cause the Facilities to constitute a prohibited facility with the
meaning of Section 103(b) of the Code. The cost of such remodeling, additions,
modifications, substitutions and improvements shall be paid by the Company or,
to the extent permitted by this Agreement and the Indenture, from the
Construction Fund.
The Company may remove and dispose of any items included as Facilities
which the Company determines have become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary, provided that any such removal will not
materially impair the character of the Facilities as an industrial facility, or
cause the Facilities to cease to be a "project" within the meaning of the Act,
or cause the Facilities to constitute a prohibited facility within the meaning
of Section 103(b) of the Code. In the event any such removal causes damage to
the remaining Facilities, the Company shall restore the same or repair such
damage.
The Company may from time to time, in its sole discretion, and at its
own expense, install additional property in conjunction with the Facilities.
Such property may be modified or removed at any time, provided that such
modification or removal will not materially adversely affect the character of
the Facilities as an industrial facility, or cause the Facilities to cease to be
a "project" within the meaning of the Act, or cause the Facilities to constitute
a prohibited facility with the meaning of Section 103(b) of the Code.
Section 5.6. Covenants of Company and Issuer with Respect to Exemption
of Interest from Federal Income Taxation. The Bonds are being issued by the
Issuer in
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compliance with the conditions necessary for the interest income on the Bonds to
be exempt from Federal income taxation pursuant to the provisions of Section
103(b) (6) (D) of the Code relating to "industrial development bonds" issued as
part of an issue the aggregate authorized face amount of which is $10,000,000 or
less and substantially all of the proceeds of which are to be used for the
acquisition, construction, reconstruction or improvement of land or property of
a character subject to the allowance for depreciation under Section 167 of the
Code. It is the intention of the parties hereto that the interest on the Bonds
be and remain free from Federal income taxation, and, to that end, the Issuer
and the Company do hereby covenant with each other, the Trustee and each of the
holders of any Bonds, as follows:
(a) that the Issuer will not cause and the Company will not
cause or permit the proceeds of the Bonds to be used in a manner which
will cause the interest on the Bonds to lose the exemption from Federal
income taxation conferred by Section 103(b) (6) (D) of the Code;
(b) that during the three-year period immediately following
the date of the issuance and delivery of the Bonds, neither of them
shall make or cause or permit to be made any Section 103(b) (6) (D)
Capital Expenditures with respect to the Local Facilities which would
cause the interest payable on the Bonds to be or become subject to
Federal income taxation;
(c) that should the circumstances set forth in Sections
103(b)(6) (D) and (E) of the Code occur (during the six-year period
referred to therein), either through the fault of the Company or
through circumstances beyond the Company's control, and there shall
occur a Determination of Taxability, the Company shall prepay all
amounts payable under Section 4.1 and cause such amounts to be applied
by the Trustee to the redemption of all outstanding Bonds and otherwise
as provided in Section 4.3(a) and Section 301 of the Indenture;
(d) that promptly following the filing of the Company's
Federal income tax return for each of its fiscal years which covers any
portion of the three-year period following the date of issuance and
delivery of the Bonds it will furnish to the Trustee a copy of each
Supplemental Statement filed by the Company in connection with each
such Federal income tax return or that, portion of each such
Supplemental Statement which
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reports Section 103(b)(6)(D) Capital Expenditures relating to
the Local Facilities;
(e) that, during the term of this Agreement, the Company will
fully comply with all effective rules, rulings and regulations
promulgated by the Department of the Treasury or the Internal Revenue
Service, with respect to bonds issued tinder Section 103(b) (6)(D) of
the Code so as to maintain the tax-exempt status of the interest
payable on the Bonds;
(f) that the Company will make no change in the plans and
specifications for the Facilities which would result in (i) the
Facilities not being a "project" within the meaning of the Act, (ii)
the Facilities constituting a prohibited facility within the meaning of
Section 103(b) of the Code, (iii) less than substantially all of the
net proceeds of the sale of the Bonds being used to pay the costs of
land or property of a character subject to the allowance for
depreciation under Section 167 of the Code, or (iv) a violation of the
limitation on maturity of the Bonds under Section 103 (b) (14) of the
Code;
(g) that at no time will:
(i) more than 25% of the net proceeds of the
sale of the Bonds be used to provide a facility the
primary purpose of which is one of the following:
retail food and beverage services (including eating
and drinking places, but excluding grocery stores),
automobile sales or service, or the provision of
recreation or entertainment; or
(ii) any portion of the net proceeds of the
sale of the Bonds be used to provide the following:
any private or commercial golf course, country club,
massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice
skating), racquet sports facility (including any
handball or racquetball court), hot tub facility,
suntan facility or racetrack; or
(iii) any portion of the net proceeds of the
sale of the Bonds be used to provide any airplane,
skybox, or other private luxury box, any health club
facility, any facility primarily used for gambling,
or any store the principal business of which is the
sale of alcoholic beverages for consumption off
premises; or
(iv) any portion of the net proceeds of the
sale of the Bonds be used (directly or indirectly)
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for the acquisition of land (or an interest therein)
to be used for farming purposes, or 25% or more of
the net proceeds of the sale of the Bonds be used
(directly or indirectly) for the acquisition of land
other than land to be used for farming purposes; or
(v) any portion of the net proceeds of the
sale of the Bonds be used for the acquisition of any
property the first use of which property is not
pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the
rehabilitation expenditures with respect to such
building equal or exceed 15% of the portion of the
cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(vi) the Facilities be operated as a
facility the primary purpose of which causes the
Facilities to constitute a prohibited facility within
the meaning of Section 103(b) of the Code; and
(h) that at no time during the three-year period beginning on the later
of the date the Facilities are placed in service or the date of issuance and
delivery of the Bonds will the Company permit any person to be an owner or
Principal User of the Facilities if the sum of the authorized face amount of the
Bonds allocable to such person plus the aggregate face amount of all tax-exempt
industrial development bonds presently outstanding which are allocate to such
person exceeds $40,000,000.
Section 5.7. Insurance Required. Throughout the Loan Term the Company
shall keep the Facilities continuously insured against such risks as are
customarily insured against by businesses of like size and type, paying as the
same become due all premiums in respect thereto. The insurance hereby required
may be contained in blanket policies now or hereafter maintained by the Company
and may provide for such deductible provisions as are customary with businesses
of like size and type. In addition, the Company shall Comply, or cause
compliance, with applicable workers' compensation laws of the State.
All such policies, or a certificate or certificates of the insurers
that such insurance is in force and effect, shall be deposited with the Trustee
and shall contain a provision that such policy may not be cancelled unless the
Trustee is notified at least thirty (30) days prior to cancellation; and at
least thirty (30) days prior to
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expiration of any such policy, the Company shall furnish the Trustee with
written evidence that the policy has been renewed or replaced or is no longer
required hereby.
Section 5.8. Taxes, Other Governmental Charges and Utility Charges. The
Company agrees to pay, as the same respectively become due, all taxes,
assessments, whether general or special, and governmental or utility charges of
any kind whatsoever that may at any time be lawfully assessed, levied or imposed
against or with respect to or incurred in the operation, maintenance or use of
the Facilities (including, without limiting the generality of the foregoing, any
taxes levied upon or with respect to the receipts, income or revenues of the
Issuer from this Agreement) which, if not paid, may become or be made a lien or
a charge on the amounts payable by the Company under this Agreement.
The Company may, at its expense and in its own name and behalf, in good
faith contest any such taxes, assessments or charges and, in the event of any
such contest, may permit the taxes, assessments or charges so contested to
remain unpaid during the period of such contest, including any appeal period,
unless by nonpayment of any such items prior to the final adjudication if said
contest (i) the ability of the Company to make the payments hereunder will be
materially endangered, or (ii) the moneys or investments in the Bond Fund or the
Construction Fund will be subject to loss or forfeiture, or (iii) the continued
proper and efficient operation of the Facilities will be materially threatened,
and in any, such event such taxes, assessments or charges shall be paid
promptly.
Section 5.9. Damage, Destruction and Eminent Domain. If at any time
during the Loan Term, the Facilities, or any portion thereof, shall be damaged
or destroyed by fire, flood, windstorm or other casualty or title to, or the
temporary use of, the Facilities, or any portion thereof, shall have been taken
by the exercise of the power of eminent domain, the Company (unless it shall
have exercised its option to prepay the loan pursuant to Section 4.3(c) or
4.3(d)) shall cause the Net Proceeds from insurance or condemnation or an amount
equal thereto (i) to be used for the repair, reconstruction restoration or
improvement of such Facilities, or such portion thereof, as industrial
facilities, or (ii) to be used for the acquisition, construction or improvement
of additional industrial facilities within the County for use in connection with
operational facilities of the Company, provided that the Company shall first
have obtained an opinion of Independent Tax Counsel or, a ruling of the Internal
Revenue Service that the proposed
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use pursuant to this clause (ii) will not cause the interest on the Bonds to
become included in the gross income of the holders of the Bonds for the purposes
of Federal income taxation, or (iii) to be deposited into the Bond Fund (but
only for application, as instructed by the Authorized Company Representative, to
the purchase of Bonds in the open market for the purpose of cancellation at
prices not exceeding the then open market price of the Bonds or to the
redemption of the Bonds at the next available optional redemption date in the
manner provided in the Indenture), or (iv) to be used for any combination of the
purposes permitted by (and subject to the conditions described in) clauses (i),
(ii) and (iii) above.
Notwithstanding anything to the contrary contained in this Loan
Agreement, until the first to occur of (a) the expiration of the Letter of
Credit or (b) a material default by the Bank in connection therewith, the
provisions of the Reimbursement Agreement shall control with respect to the
payment and application of insurance and condemnation proceeds.
Section 5.10. Company's Obligation To Pay Certain Fees Expenses of the
Issuer. The Company agrees to pay to the Issuer reasonable out-of-pocket or
extraordinary expenses of the Issuer, related to the Facilities and incurred as
a result of a request of the Company or a requirement (in the reasonable
judgment of the Issuer) of this Agreement or the Indenture, and which are not
otherwise required to be paid by the Company under the terms of this Agreement,
including but not limited to the fees and expenses incurred in complying with
Section 503 of the Indenture.
In consideration of the issuance and delivery of the Bonds by the
Issuer and the lending of the proceeds thereof to the Company to enable it to
acquire, construct and install the Facilities, the Company agrees to pay to the
Issuer on the Original Issuance Date of the Bonds, an amount equal to 1/8 of 1%
of the principal amount of the Bonds, and on each anniversary of the Original
Issuance Date of the Bonds, an amount equal to $400 per $1,000,000 of
outstanding Bonds as of such date.
In the event the Company should fail to make any of the payments
required in this Section 5.10, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid, and the Company agrees to pay the same with interest thereon
until paid at the Interest Rate for Advances.
The provisions of this Section shall survive the termination of this
Agreement.
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Section 5.11. Application of Certain Proceeds Prior to the Expiration
Date of the Letter of Credit. Notwithstanding the provisions of Section 5.9 of
this Agreement, prior to the Expiration Date of the Letter of Credit, any moneys
available for application in accordance with clause (iii) of Section 5.9 of this
Agreement shall be held by the Trustee in a separate account for a period of one
hundred twenty-three (123) days from the date of receipt thereof. If during said
one hundred twenty-three (123) day period no petition in bankruptcy or similar
insolvency proceeding has been filed by or against the Company or by the Issuer,
such moneys shall be applied to the maximum extent possible to the purchase for
cancellation or redemption of Outstanding Bonds, and any moneys remaining
thereafter shall be applied to payment of interest on the Bonds on the Interest
Payment Date next following said one hundred twenty-three (123) day period.
Section 5.12. Non-Arbitrage Covenant; Compliance with Special Arbitrage
Rules.
(a) The Company hereby covenants and agrees with the Issuer and the
Trustee for the benefit of the holders of any of the Bonds, present and future,
that it will proceed with clue diligence to spend the "gross proceeds"
(hereinafter defined) of the Bonds in connection with the acquisition,
construction and installation of the Facilities and that in will not make, or
permit, any use of the proceeds of the Bonds which will cause the Bonds to be
"arbitrage bonds" within the meaning of Section 103(c) of the Code and any
Income Tax Regulations promulgated thereunder as such regulations may apply to
obligations issued as of the date of the Bonds. The Company shall deliver to the
Issuer its certificate, evidencing the reasonable expectations of the Company,
in such reasonable form as the Issuer shall specify and upon which the Issuer
may rely in furnishing the certificate required by Section 207 of the Indenture.
(b) The Company hereby further covenants and agrees with the Issuer and
the Trustee, and with the holders of any of the Bonds, present and future, as
follows:
(1) All of the gross proceeds of the Bonds, other than gross proceeds
held in a "bona fide debt service fund" (hereinafter defined) will be expended
on the Facilities within six (6) months of the date of issuance and delivery of
the Bonds, or
(2) If any part of the gross proceeds of the Bonds has not been
expended on the Facilities within six (6) months of the date of issuance and
delivery of the Bonds, the Company shall invest or cause such gross proceeds to
be invested in
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the manner described in subparagraph (A) below and shall pay or cause to be paid
to the United States the amounts described in subparagraph (B) below in
accordance with the terms and conditions set forth therein.
(A) Except during any "temporary period" (hereinafter
defined), the aggregate amount of gross proceeds of the Bonds which are
invested in "nonpurpose obligations" (hereinafter defined) having a
"yield" (hereinafter defined) higher than the yield on the Bonds shall
at no time during any "bond year" (hereinafter defined) exceed one
hundred fifty percentum (150%) of the "debt service" (hereinafter
defined) on the Bonds for such bond year. In addition, the aggregate
amount of gross proceeds of the Bonds invested hereunder in nonpurpose
obligations having a yield higher than the yield on the Bonds shall be
promptly and appropriately reduced as the amount of outstanding Bonds
is reduced (whether by payment at maturity, mandatory sinking fund
redemption, redemption prior to maturity, or otherwise). The Company
shall not be required to sell or dispose of nonpurpose obligations if
such sale or disposition would result in the realization of a loss, for
Federal income tax purposes, that exceeds the amount that would be
rebated to the United States pursuant to the provisions of subparagraph
(b) (2) (B) below (but for such sale or disposition), at the time of
such sale or disposition if a rebate were due at such time. The
provisions of the foregoing sentence shall not apply to the extent that
other nonpurpose obligations acquired with the gross proceeds of the
Bonds may be sold or disposed of without incurring the loss described
above, and in any event the provisions of the foregoing sentence shall
cease to apply thirty (30) days after the last day of the first
"computation period" (defined in subparagraph (b)(2) (B)) ending
thereafter on which such nonpurpose obligations can be sold or disposed
of without incurring the loss described hereinabove. The provisions of
this subparagraph (A) shall not apply to gross --- proceeds of the
Bonds which are:
(i) invested for the initial temporary period provided in
Section 1.103-14(b) (1) of the Income Tax Regulations;
(ii) held in a bona fide debt service fund for the Bonds and
invested for the 13-month temporary period provided in Section
1.103-14(b) (10) of the Income Tax Regulations;
(iii) invested for either of the temporary periods provided
for a sinking fund for the Bonds in
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Sections 1.103-14(b)(8) and 1.103-14(b)(12) of the Income Tax
Regulations;
(iv) invested during the one-year temporary period provided
for investment earnings derived from invested proceeds of the Bonds and
from the investment of amounts held in a sinking fund for the Bonds
under Sections 1.103-14(b)(6) and 1.103-14(b)(9) of the Income tax
Regulations;
(v) invested for the temporary period provided for proceeds of
a refunding issue in Section 1 103-14(e) (3) of the Income Tax
Regulations; or
(vi) held in a "revolving fund" (within the meaning of Section
1.103-14(b) (11) of the Income Tax Regulations) and invested during the
three-year temporary period set forth therein.
(B) At the time or times hereinafter set forth, the Company
shall pay or shall cause the Trustee to pay to the United States an
amount, hereinafter referred to as the "Rebate Amount", which is equal
to the sum of:
(i) the excess of --
(a) the aggregate amounts earned from the Original
Issuance Date of the Bonds on all nonpurpose obligations in
which gross proceeds of the Bonds have been invested (other
than nonpurpose obligations attributable to an excess
described herein) over
(b) the aggregate amounts which would have been
earned if the yield on such nonpurpose obligations (other than
nonpurpose obligations attributable to an excess described
herein) had been equal to the yield on the Bonds, plus
(ii) any income attributable to the excess described in clause
(i) above.
The Rebate Amount payable to the United States shall be determined annually by
the Company for each bond year during which Bonds remain outstanding and upon
retirement of the last of the Bonds (each such period is hereinafter referred to
as a "computation period"). The Rebate Amount determined for one bond year shall
not be reduced or offset as a result of any determination of the Rebate Amount
for any other bond year. Such Rebate Amounts shall be deposited annually in the
Excess Investment Earnings Account created pursuant to the provisions of Section
804 of the Indenture. The Rebate
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Amount shall be paid to the United States in installments, as follows:
(I) subject to clause (III) below, the first such installment
shall be paid no later than thirty (30) days after the end of the fifth
(5th) bond year of the Bonds;
(II) subject to clause (111) below, an additional installment
shall be paid on or prior to the last day of each additional
installment payment period during which any of the Bonds remain
outstanding. For purposes of this clause (II), an installment payment
period shall commence on the last day on which a preceding installment
of the Rebate Amount was required to be paid, and shall end on the day
preceding the fifth (5th) anniversary of such payment date;
(III) anything herein to the contrary notwithstanding, the
last installment shall be paid no later than thirty (30) days after the
last of the Bonds has been retired; and
(IV) each installment shall be in an amount which, when
aggregated with the amount of any prior installments paid to the United
States hereunder, will equal at least ninety percentum (90%) of the
total Rebate Amount payable to the United States hereunder as of the
date such installment is paid; provided, however, that the last
installment shall be in an amount equal to the entire remaining balance
of the Rebate Amount payable to the United States hereunder.
The Company shall maintain or cause to be maintained records of such
determinations for each computation period until six years after payment in full
of the Bonds and shall make such records available to the Issuer, the Trustee
and their representatives upon reasonable request therefor. The Issuer and the
Trustee hereby agree to cooperate with the Company in making the determinations
for each computation period required pursuant to this subparagraph (b).
To that end the Trustee, as Construction Fund and Bond Fund custodian, has
covenanted and agreed in Section 804 of the Indenture that it will, on or before
each anniversary of the date of issuance of the Bonds, prepare and file with the
Issuer and the Company a report with respect to the Construction Fund and the
Bond Fund setting forth the total amounts invested during the preceding bond
year, the investments made with the moneys in the Construction Fund and the Bond
Fund and the investment earnings (and losses) resulting from the investments in
each such Fund, respectively,
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together with such additional information concerning such Funds and the
investments therein, respectively, as the Issuer or the Company shall reasonably
request.
(3) For purposes of clause (a) of subparagraph (2) (B) (i) of this
subparagraph (b), the Company, in determining the aggregate amounts earned on
all nonpurpose obligations acquired with gross proceeds of the Bonds--
(A) will take into account any gain or loss incurred on the
disposition of any such nonpurpose obligation, and
(B) unless the Issuer otherwise elects, will not take into
account any amounts earned on nonpurpose obligations held in a bona
fide debt service fund for the Bonds during any bond year in which the
gross earnings on such fund do not exceed One Hundred Thousand Dollars
($100,000).
(4) Except as provided in Section 1.103-15AT(d) (6) of the Temporary
Income Tax Regulations with respect to the purchase of obligations of the United
States Treasury directly from the United States Treasury, at no time shall any
of the gross proceeds of the Bonds be invested in (A) nonpurpose obligations
having a purchase price which is not equal to the fair market value of
comparable obligations or producing at yield which is not equal to the fair
market yield of comparable obligations, or (B) in any other manner resulting in
a "prohibited payment" (within the meaning of Section 1.103-15 AT(d) (6) of the
Temporary Income Tax Regulations) of any portion of the Rebate Amount, directly
or indirectly, to a party other than the United States.
(5) Notwithstanding the provisions of subparagraph (b) (1), if gross
proceeds of the Bonds subsequently arise following the end of the six-month
period commencing on the date of issuance and delivery of the Bonds (whether due
to sale of the Project, condemnation of the Project, damage or destruction to
the Project, or otherwise) the provisions of subparagraph (b)(1) shall cease to
apply and the Company shall be obligated to (i) make the payments to the United
States set forth in subparagraph (b) (2) ( B) with respect to the gross proceeds
of the Bonds which arise following the end of such six-month period (but not
with respect to gross proceeds of the Bonds expended during such six-month
period) and perform the other duties set forth in subparagraph (b) (2) (B) , and
(ii) limit the amount of gross proceeds of the issue and perform the other
duties set forth in subparagraph (b)(2)(A) above.
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(c) For purposes of construing this Section and Section 804 of the
Indenture, the following definitions shall apply:
(1) "bona fide debt service fund" shall have the meaning set
forth in Income Tax Regulation Section 1 103-13(b) (12);
(2) "bond year" shall mean the one-year period commencing on
Original Issuance Date of the Bonds and ending one year later, and each
one-year period thereafter until payment in full of the Bonds;
(3) "debt service" shall have the meaning set forth in Code
Section 103(c) (6) (C) (iii) and Temporary Income Tax Regulation
Section 1.103-15AT(b) (5) and Temporary Income Tax Regulation Section
1.103-15AT(c)(4);
(4) "gross proceeds" shall have the meaning set forth in
Temporary Income Tax Regulation Section 1.103-15AT(b) (6) and shall
include:
(i) original proceeds of the Bonds;
(ii) investment proceeds of the Bonds;
(iii) transferred proceeds of the Bonds;
(iv) amounts held in a sinking fund for the Bonds;
(v) amounts held in a reasonably required reserve or
replacement fund for the Bonds;
(vi) securities or obligations pledged as security
for the payment of debt service on the Bonds;
(vii) amounts received with respect to acquired
purpose obligations acquired with the proceeds of the
Bonds;
(viii) any other amount to be used to pay debt
service on the Bonds; and
(ix) any amounts received as a result of investing
any amounts described in (i) through (viii) above;
(5) "nonpurpose obligations" shall have the meaning set forth
in Code Section 103(c) (6) (H) (ii)
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and Temporary Income Tax Regulation Section 1.103-15AT(b) (2);
(6) "temporary period" shall mean the temporary periods set
forth in Temporary Income Tax Regulation Section 1.103-l5AT(c) (2) and
described in clauses (i)-(vi) of subparagraph (b) (2) (A) above; and
(7) "yield" shall have the meaning set forth in Code Section
103(c) (6) (C) (ii) and Temporary Income Tax Regulation Section
1.103-15AT(b) (3) and Temporary Income Tax Regulation Section
1.103-15AT(c) (4).
(d) The covenants and agreements contained in subparagraph (b) above
are intended to assure compliance with Section 103(c) (6) of the Code and with
Temporary Income Tax Regulation Section 1.103-15AT. In the event such Temporary
Income Tax Regulations are hereafter modified, or Final Income Tax Regulations
are promulgated in substitution for such Temporary Income Tax Regulations, and
such modifications or such Final Income Tax Regulations modify or delete any
element of the covenants contained in subparagraph (b) above, the Company shall
be relieved of its obligation to comply with such covenants to the extent of
such modification or deletion. In the event such modifications or Final income
Tax Regulations impose additional requirements which are applicable to the
Bonds, the Company hereby covenants and agrees to comply with the provisions of
the Temporary Income Tax Regulations, as modified, or with such Final Income Tax
Regulations.
Section 5.13. Fixed Interest Rate. The Company acknowledges that the
interest rate on the Bonds shall be converted to the Fixed Interest Rate upon
the happening of certain events specified in Section 402 of the Indenture. The
Company agrees to use its best efforts to deliver to the Trustee an opinion of
Independent Tax Counsel to the effect that conversion to the Fixed Interest Rate
will not adversely affect the exemption of the interest on the Bonds from
Federal income taxation.
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default. An Event of Default shall mean one or
more of the following described events:
(a) failure by the Company to pay any amounts required to be paid under
Section 4.1 or 4.3 of this Agreement on or
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prior to the date on which payment is required to be made by said Section 4.1 or
4.3;
(b) failure by the Company to observe and perform any covenant,
condition or agreement on its part to be observed or performed under this
Agreement other than as referred to in paragraph (a) of this Section 6.1 or in
Section 5.6 or Section 5.12 of this Agreement, and the continuance thereof for a
period of sixty (60) days after written notice, specifying such failure and
requesting that it be remedied, has been given to the Company by the Issuer or
the Trustee, unless the Trustee shall agree to an extension of such time prior
to its expiration or if the failure be such that it cannot be corrected within
the applicable period, it shall not constitute an Event of Default if corrective
action is instituted by the Company within the applicable period and diligently
pursued until the failure is corrected;
(c) any representation by or on behalf of the Company contained in this
Agreement or in any instrument furnished in compliance with or in reference to
this Agreement or the Indenture proves false or misleading in any material
respect as of the date of the making or furnishing thereof;
(d) the Company shall (i) apply for or consent to the appointment of,
or the taking or possession by, a receiver, custodian, trustee or liquidator of
the Company or of all or a substantial part of its property, (ii) admit in
writing its inability to pay its debts as such debts become due, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Federal Bankruptcy Code (as now or hereafter in effect), (v) file
a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding up, or composition or adjustment of debts,
(vi) fail to controvert in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against the Company in an involuntary case under
said Federal Bankruptcy Code, or (vii) take any action for the purpose of
effecting any of the foregoing;
(e) a proceeding or case shall be commenced, without the application or
consent of the Company, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding-up, or composition or
readjustment of debts, of the Company, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Company or of all or any
substantial part of its assets, or (iii) similar relief in respect of the
Company, as the case may be, under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceedings or case shall continue undismissed, or an order, judgment or decree
approving or
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ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) days from commencement of such proceeding or
case, or an order for relief against the Company shall be entered in an
involuntary case under said Federal Bankruptcy Code; or
(f) an "Event of Default" occurs and is continuing under Section 1101
of the Indenture.
The provisions of subsection (b) of this Section are subject to the
limitation that if, by reason of Force Majeure, the Company is unable in whole
or in part to carry out its agreements on. its part herein contained, other than
the obligations on the part of the Company contained in Sections 4.1, 4.3, 5.3,
5.4, 5.6, 5.7, 5.8 and 5.12, the Company shall not be deemed in default during
the continuance of such inability. The Company agrees, however, to use all
reasonable efforts to remedy with all reasonable dispatch the cause or causes
preventing the Company from carrying out of agreements; provided, that the
settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Company, unfavorable to the Company.
The declaration of an Event of Default under subsections (d) or (e) of
this Section 6.1, and the exercise of remedies upon any such declaration, shall
be subject to any applicable limitations of Federal bankruptcy law affecting or
precluding such declaration or exercise during the pendency of or immediately
following any bankruptcy, insolvency or reorganization proceedings.
The provisions of Sections 6.1 and 6.2 are subject to the further
limitation that the rescission or annulment of a declaration that all the Bonds
outstanding under the Indenture are immediately due and payable shall also
constitute a rescission or annulment of any corresponding declaration made
pursuant to Sections 6.1 or 6.2 and a waiver and rescission of the consequences
of such declaration and of the Event of Default with respect to which such
declaration had been made, provided that no such waiver or rescission shall
extend to or affect any subsequent or other Event of Default or impair any right
consequent thereon.
Section 6.2. Remedies on Events of Default. Whenever any Event of
Default referred to in Section 6.1 shall have happened and be subsisting, any
one or more of the following remedial steps may be taken; provided, however,
that if at Event of Default under subsection (b) of Section 6.1 occurs
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as a result of the failure to observe or perform any covenants or agreements
under Section 5.5, the remedies of the Issuer and the Trustee shall be limited
to those provided in subsections (c) and (d) of this Section 6.2:
(a) the Issuer or the Trustee may, or the Trustee, under the
circumstances provided in Section 1102 of the Indenture, shall be
obligated to, declare, as the case may be, all unpaid amounts payable
pursuant to Section 4.1 or 4.3 of this Agreement to be immediately due
and payable, whereupon the same shall become immediately due and
payable;
(b) the Issuer may at its option, or the Trustee, as provided
in Section 1103 of the Indenture, may at its option take or shall be
obligated to take, as the case may be, whatever action at law or in
equity may appear necessary or desirable to collect the amounts then
due and thereafter to become due;
(c) the Issuer or the Trustee may take whatever action at law
or in equity may appear necessary or desirable to enforce performance
and observance of any obligation, agreement or covenant of the Company
under this Agreement; and
(d) in the event any of the Bonds shall at the time be
outstanding and unpaid, the Issuer or the Trustee may have access to
and inspect, examine and make copies of the books and records and any
and all accounts and data of the Company as the Issuer may reasonably
request but only, however, insofar as they pertain to the Facilities.
Any amounts collected pursuant to action taken under this Section 6.2 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if the Bonds have been fully paid (or provision for payment
thereof has been made in accordance with the provisions of the Indenture), and
all reasonable fees, charges and expenses of the Trustee and Paying Agents
provided for herein have been paid, shall be paid to the to the extent that any
moneys are owed to the Bank pursuant to the Letter of Credit Agreement and,
otherwise, to the Company; provided, however, that any such amounts which do not
represent payments which the Company is required to make pursuant to Section 4.1
or 4.3 of this Agreement shall be paid to the party to whom such amounts are
owed.
Notwithstanding the foregoing, in the event the Bank has fully funded the Letter
of Credit, neither the Issuer
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nor the Trustee shall have any right to pursue remedies under subsections (b)
and (c) above.
Section 6.3. No Remedy Exclusive. No remedy conferred upon or reserved
to the Issuer or the Trustee by this Agreement is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law, in equity or by statute. No delay
in exercising or omission to exercise any right or power accruing upon any Event
of Default shall impair any such right and power which may be exercised from
time to time and as often as may be deemed expedient. In order to entitle the
Issuer or the Trustee to exercise any remedy reserved to it in this Article VI,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required.
Section 6.4. Agreement To Pay Attorneys' Fees and Expenses. Should an
Event of Default occur or in the event the Company should default under any of
the provisions of this Agreement and the Issuer or the Trustee should employ
attorneys or incur other expenses for the collection of the amounts payable
hereunder by the Company or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company contained in this
Agreement, the Company agrees that it will on demand therefor reimburse the
lawful and reasonable fees of such attorneys and such other expenses so
incurred. If any such fees and expenses are not so reimbursed, the amount
thereof, together with interest thereon from the date of demand for payment at
the Interest Rate for Advances, shall, to the extent permitted by law,
constitute indebtedness secured hereby and by the Indenture, and in any action
brought to collect such indebtedness, the Trustee or the Issuer, as applicable,
shall be entitled to seek the recovery of such fees and expenses in such action
except as limited by law or by judicial order or decision entered in such
proceedings.
The provisions of this Section shall survive the termination of this
Agreement,
Section 6.5. No Additional Waiver implied by One Waiver. In the event
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
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ARTICLE VII.
MISCELLANEOUS
Section 7.1. Termination of Agreement. This Agreement shall be in full
force and effect from the date hereof until the end of the Loan Term, at which
time the obligations of the Issuer and the Company hereunder shall terminate,
provided that any obligations of the Company with respect to the payment of
costs and expenses under this Agreement shall survive such termination and
continue in effect until such costs and expenses are paid in full.
Section 7.2. Confidential Information. The Company shall not be
required to disclose, or to permit the Issuer, the Trustee or others to acquire
access to, any information deemed by the Company to be proprietary or
confidential.
Section 7.3. Cancellation of Bonds. The Company shall have the right to
cause Bonds to be delivered to the Trustee for cancellation, and the Issuer
shall cause the Trustee to cancel any Bonds so delivered to the Trustee,
Section 7.4. Amounts Remaining in Bond Fund, Construction Fund and
Other Funds and Accounts. It is agreed by the parties hereto that any amounts
remaining in the Bond Fund, the Construction Fund or any other fund or account
created under this Agreement or the Indenture and held by the Trustee after
payment in full of the Bonds (or provision for payment thereof having been made)
in accordance with the provisions of the Indenture and the fees, charges and
expenses of the Trustee and Paying Agent and all other amounts required to be
paid under the Indenture or under this Agreement shall belong to and be paid by
the Trustee to the Bank to the extent that any moneys are owed to the Bank
pursuant to the Letter of Credit Agreement and, otherwise, to the Company;
provided, however, any amounts remaining in the Excess Investment Earnings
Account shall be held and disbursed solely in accordance with the provisions of
Section 5. 12(b) hereof and Section 804 of the Indenture.
Section 7.5. Notices. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered mail, postage prepaid, addressed to the Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, the Bank or the
Trustee shall also be given to the others. The Company, the Issuer, the Bank and
the Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent or persons to whose attention the same shall be
directed.
57
<PAGE> 62
Section 7.6. Binding Effect; Parties in Interest. This Agreement shall
inure to the benefit of and shall be binding upon the Issuer, the Company and
their respective successors and assigns, subject, however, to the limitations
contained in Sections 4.1 and 5.1, and subject to the further limitation that
any obligation of the Issuer created by or arising out of this Agreement shall
not be a general debt of the Issuer but shall be a limited obligation payable
solely out of payments, revenues and other income, charges and moneys realized
under this Agreement, the sale of the Bonds or the Net Proceeds as provided
herein. Nothing in this Agreement is intended or shall be construed to give to
any person, firm or corporation other than the Trustee, the Bank and the parties
hereto any legal or equitable remedy or claim under or in respect of this
Agreement or any provision herein contained.
Section 7. 7. Extent of Covenants of the Issuer; No Personal Liability.
All covenants, stipulations, obligations and agreements of the Issuer contained
in this Agreement shall be effective to the extent authorized and permitted by
applicable law. No such covenant, stipulation, obligation or agreement shall be
deemed to be a covenant, stipulation, obligation or agreement or any present or
future director, officer, agent or employee of the Issuer in his individual
capacity, and neither the directors of the Issuer nor any officer executing the
Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof or by reason of
the covenants, stipulations, obligations or agreements of the Issuer contained
in this Agreement or in the Indenture.
Section 7.8. Amendments, Changes and Modifications. Except as otherwise
provided in this Agreement or in the Indenture, subsequent to the initial
issuance of Bonds and prior to payment of the Bonds in full (or provision of the
payment thereof having been made) in accordance with the provisions of the
Indenture, this Agreement may not be effectively amended, changed, modified,
altered or terminated without the prior written consent of the Trustee, and
prior to the Expiration Date of the Letter of Credit, the Bank.
Section 7.9. Execution Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute but one and the same Agreement.
Section 7.10. Severability. If any clause, provision or section of this
Agreement shall be held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any of the remaining
58
<PAGE> 63
clauses, provisions or sections hereof and this Agreement shall be construed and
enforced as if such illegal or invalid clause, provision or section had not been
contained herein . In case any agreement or obligation contained in this
Agreement shall be held to be in violation of law, then such agreement or
obligation shall be deemed to be the agreement or obligation of the Issuer or
the Company, as the case may be, to the full extent permitted by law.
Section 7.11. Captions. The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Agreement.
Section 7.12. Payments Due on Non-Business Days. After the Conversion
Date, in any case where the date for any payment required to be made hereunder
or under the Indenture shall not be a Business Day, then payment need not be
made on such date but may be made on the next succeeding Business Day with the
same force and effect as if made on the date fixed for such payment, and if such
payment is made on the next succeeding Business Day no interest shall accrue for
the period after such date.
Section 7.13. Governing Law. This Agreement shall be governed
exclusively by, and construed in accordance with, the laws of the State.
59
<PAGE> 64
IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective corporate names by their duly
authorized officers, all as of the date first above written.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
(CORPORATE SEAL)
BY: /s/ Signature Unreadable
----------------------------
President
Attest:
/s/ Ramona A. Niner
- -------------------
Secretary
RADIATION STERILIZERS,
INCORPORATED
(CORPORATE SEAL)
By: /s/ Allan Chin
------------------
President
Attest:
/s/ Charles W. King Jr.
- -----------------------
Secretary
60
<PAGE> 65
EXHIBIT A
DESCRIPTION OF THE PROJECT
1. A brief description of the Project, its location and intended use are
as follows:
The Project is the construction of a 21,000 square foot manufacturing
facility located on 1.25 acres of land at 301 Wichita Street, Fort
Worth, Texas 76140. The facility will be used to provide radiation
sterilization services to the disposable medical device industry on a
contractual basis. Cobalt-60 is the radioisotope used as the energy
source in the sterilization process. This type of facility must be
licensed and regulated by the Nuclear Regulatory Commission and the
appropriate state agencies. Construction will be of steel frame with an
exterior wall of concrete and/or brick. The proposed Project consists
of an industrial building that houses a radiation cell. The cell is a
reinforced concrete structure that is built over a stainless steel
lined pool of water (the isotope is lowered into the water when
personnel access to the cell is required). A major component of each
facility is a proprietary, computer-controlled conveyor system that
transports the materials to be sterilized through the radiation cell.
2. The estimated number of new jobs to be created as a result of the
Project is 40 with an estimated annual payroll of $1,200,000. The new
jobs will consist of plant managers, technical employees, production
managers and assembly and warehouse personnel.
3. The following is a statement of the present ownership of the Project
site describing liens and encumbrances and the acquisitions, necessary
interests, access, approvals permits, consents and authorizations.
The Project site is currently owned by the User and was purchased in
January, 1984 for the sum of $65,005.20. An additional 3,000 square
feet of contiguous property was purchased in February, 1985 for
$4,370.30. There are no liens or encumbrances on the Project sites. All
necessary access roads, utilities, and drainage facilities have been or
can be provided. All approvals, permits, consents or authorizations of
any governmental or public agency, authority or person required in
connection with the construction, installation and operation of the
Project have been or can be obtained.
4. The estimated cost of the Project and sources of payment are as
follows:
<TABLE>
<S> <C> <C>
Land $ 70,000
Budding 725,000
Machinery Equipment 3,312,000
Total Financing Charges 202,700
Bond Counsel Fee $ 23,000
User Counsel Fee 4,800
Trustee Re 3,000
Financial Advisory Fee 9,600
Issuer Administrative Fee 14,700
TEDC Application Fee 4,600
TEDC Allocation Request Fee 4,600
Rating Agency Fee 8,000
Bond Discount 69,000
Letter of Credit Fee 59,400
Letter of Credit Bank's Expenses 2,000
RADIATION STERILIZERS, INCORPORATED
</TABLE>
<PAGE> 66
<TABLE>
<S> <C> <C>
Interest During Construction $ 25,000
Architecture Engineering 25,000
Reserve Fund 253,000
-----------
TOTAL PROJECT COSTS $ 4,612,700
===========
FINANCED FROM AGGREGATE BOND PROCEEDS $ 4,600,000
Series 1985A $ 2,150,000
Series 1985B 2,450,000
</TABLE>
The balance of the Project, $12,700, will be paid by the User.
5. The estimated dates of commencement and completion of the Project are
as follows:
Commencement: June 1985
Completion: October 1985
RADIATION STERILIZERS, INCORPORATED
<PAGE> 67
EXHIBIT B
REQUISITION AND CERTIFICATION
Request No. Date:
Bank One Trust Company, N.A., as Trustee
under the Trust Indenture,
dated as of November 1, 1985,
relating to $2,450,000 Trinity River
Industrial Development Authority
Variable Rate Demand Industrial
Development Revenue Bonds
(Radiation Sterilizers, Incorporated
Project), Series 1985B
Attention: Corporate Trust Administration
The undersigned Authorized Company Representative and Authorized Issuer
Representative designated pursuant to the terms of a Loan Agreement, dated as of
November 1, 1985 (the "Agreement"), between Trinity River Industrial Development
Authority, a non-profit industrial development corporation created and existing
under the laws of the State of Texas (the 'Issuer"), and Radiation Sterilizers,
Incorporated, a California corporation (the "Company") hereby request that there
be paid from the Construction Fund (hereinbelow described) the sum of $ _______,
and in that connection with respect to the use of the proceeds of the $2,450,000
Trinity River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985B (the "Bonds"), DO HEREBY CERTIFY, as follows:
l. The requested payment is a proper charge against Trinity
River Industrial Development Authority Construction Fund -- Radiation
Sterilizers, Incorporated Project, 1985B and has not been the basis
of any previous withdrawal from said Construction Fund.
2. Payment should be made to:
Name:
Address:
3. Attached hereto is a bill, statement of account or a
schedule showing in reasonable detail the items with respect to which
payment is being requested, and, if the Company or the Issuer is to be
reimbursed proof of payment of such items is attached hereto,
<PAGE> 68
which proof is satisfactory to the undersigned and the Trustee may act
thereon.
4. Payment of this obligation when added to all other payments
previously made from said Construction Fund will not result in less
than substantially all of the net proceeds of the sale of the Bonds
(net proceeds being those proceeds remaining after paying all expenses
incurred in connection with the issuance of the Bonds, together with
investment earnings on such net proceeds earned prior to the
"Completion Date" (defined in the Agreement)) being used to provide
land or property of a character subject to the allowance for
depreciation under Section 167 of the Internal Revenue Code of 1954, as
amended.
5. (a) The Company has no notice of any vendors',
materialmen's, mechanics', suppliers' or other similar liens or right
to liens, chattel mortgages or conditional sales contracts or other
contracts or obligations which should be satisfied or discharged before
payment of such obligation is made, or (b) this requisition is for the
purpose of obtaining funds to be used to satisfy or discharge a lien or
contract of the type described in (a) above.
6. This. requisition contains no request for payment on
account of any portion of such obligation which the Company is, as of
the date hereof, entitled to retain under retained percentage
agreements.
7. The obligation does not represent a cost paid or incurred
by the Issuer or the Company prior to November 28, 1983.
As provided in Section 3.3 of the Agreement, the Issuer may rely upon
the Company as to the completeness and accuracy of all statements contained
herein.
By:
Authorized Company Representative
By:
Authorized Issuer Representative
With respect to any such item representing payment for labor, services,
material supplies and/or equipment, insofar as such obligation was incurred for
labor, services, material, supplies and/or equipment in connection with the
acquisition, construction and installation of the "Facilities" (defined in the
Agreement), (i) such labor and/or
<PAGE> 69
services were actually performed in a satisfactory manner, and (ii) such
material, supplies and/or equipment were actually used in or about the
construction of the Facilities or delivered at the site of the Facilities for
that purpose and the item of equipment with respect to which such payment is
requested constitutes a portion of the Facilities.
By :
Authorized Company Representative
<PAGE> 70
EXHIBIT C
CERTIFICATE OF COMPLETION
The undersigned Authorized Company Representative designated pursuant
to that certain Loan Agreement (the "Agreement"), dated as of November 1, 1985,
between Trinity River Industrial Development Authority, a non-profit industrial
development corporation created and existing under the laws of the State of
Texas, and Radiation Sterilizers, Incorporated, a California corporation (the
"Company"), DOES HEREBY CERTIFY, as follows:
1. The acquisition construction and installation of the "Facilities" as
described in the Agreement have been completed substantially in accordance with
the plans and specifications therefor and all labor, services, material,
supplies and/or equipment used in such acquisition, construction and
installation have been paid for, except for amounts retained in the
"Construction Fund" created in the Agreement for costs of the Facilities not yet
due and payable.
2. All other facilities necessary in connection with the Facilities
have been acquired, constructed and installed substantially in accordance With
the plans and specifications therefor and all costs and expenses incurred in
connection therewith have been paid, except for amounts retained in said
Construction Fund for costs of the Facilities not yet due and payable.
3. The Facilities and all other facilities in connection therewith have
been acquired, constructed and installed in a satisfactory manner and are
suitable and sufficient for the efficient operation of the Facilities for its
intended purposes.
4. Substantially all of the net proceeds of the $2,450,000 in aggregate
principal amount of Trinity River Industrial Development Authority Variable Rate
Demand industrial Development Revenue Bonds (Radiation Sterilizers, incorporated
Project), Series 1985B (the "Bonds") (net proceeds being those proceeds
remaining after paying all expenses incurred in connection with the issuance of
the Bonds, together with investment earnings on such net proceeds earned prior
to the "Completion Date" (defined in the Agreement)), have been used to acquire
land or property of a character subject to the allowance for depreciation under
Section 167 of the Internal Revenue Code of 1954, as amended, and such costs
representing proceeds so used are properly chargeable to the capital account of
the Company for Federal income tax purposes or would be so chargeable
<PAGE> 71
either with a proper election by the Company or but for a proper election by the
Company to deduct the costs.
5. A certificate of occupancy and all other permissions required of
governmental authorities for the occupancy of the Facilities have been obtained.
This Certificate is given without prejudice to any rights against third
parties which exist on the date of this Certificate or which may subsequently
come into being.
This ______ the day of ________, 1985.
RADIATION STERILIZERS,
INCORPORATED
By :
Authorized Company Representative
<PAGE> 1
EXHIBIT 10.7
SERIES 1985A TRUST INDENTURE
Between
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
And
BANK ONE TRUST COMPANY, N.A.,
As Trustee
Dated as of November 1, 1985
-----------------------
Trinity River Industrial Development Authority
Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project),
Series 1985A
$2,150,000
-----------------------
JWR: FIFTH DRAFT 12/9/85
<PAGE> 2
TRUST INDENTURE
TABLE OF CONTENTS
(The Table of Contents is not a part of the the Trust Indenture but is for
convenience of reference only)
<TABLE>
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<S> <C> <C> <C>
PARTIES 1
RECITALS 1
GRANTING CLAUSES 3
HABENDUM 4
GRANT IN TRUST 4
GENERAL COVENANT 4
ARTICLE I. DEFINITIONS AND CERTAIN
RULES OF INTERPRETATION
Section 101. Definitions 5
Section 102. Certain Rules of Interpretation 17
ARTICLE II. THE BONDS
Section 201. Authorized Amount of Bonds 18
Section 202. Issuance of Bonds 18
Section 203. Replacement Bonds 19
Section 204. Execution; Limited Obligation 20
Section 205. Authentication 20
Section 206. Form of Bonds 21
Section 207. Delivery of Bonds 40
Section 208. Mutilated, Lost, Stolen
or Destroyed Bonds 42
Section 209. Exchangeability and Transfer of
Bonds; Persons Treated as Owners 42
ARTICLE III. REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption Dates and Prices 44
Section 302. Notices of Redemption, Conversion
Date, Expiration Date of the Letter
of Credit, Expiration Date of the
Alternate Credit Facility or Delivery
of an Alternate Letter of Credit
or Alternate Credit Facility 46
Section 303. Cancellation 48
Section 304. Payment of Bonds Upon Redemption 49
Section 305. Pro Rata Redemption 49
</TABLE>
<PAGE> 3
<TABLE>
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<S> <C> <C> <C>
ARTICLE IV. PURCHASE AND PLACEMENT OF
BONDS; LETTER OF CREDIT
Section 401. Purchase of the Bonds 50
Section 402. Conversion to Fixed Interest Rate 56
Section 403. Remarketing Agent 57
Section 404. Letter of Credit 59
Section 405. No Federal Guarantee 60
Section 406. Treatment of Bonds Not Remarketed 60
ARTICLE V. GENERAL COVENANTS
Section 501. Payment of Principal,
Purchase Price, Redemption Premium
(If Any) and Interest 60
Section 502. Performance of Covenants; Authority 60
Section 503. Filing of Financing Statements 61
Section 504. Priority of Pledge
and Security Interest 61
Section 505. Rights Under Agreement 61
Section 506. Maintenance of Insurance;
Payment of Taxes, Charges, etc. 61
Section 507. Maintenance and Repair 62
Section 508. Issuer's Election to Issue Bonds
Pursuant to Section 103(b)(6)(D)
of the Code 62
ARTICLE VI. CUSTODY AND APPLICATION
OF PROCEEDS OF BONDS
Section 601. Creation of the Construction Fund 62
Section 602. Disposition of Bond Proceeds 62
Section 603. Disbursements from Construction Fund 62
Section 604. Completion of the Facilities 63
ARTICLE VII. REVENUES AND FUNDS
Section 701. Source of Payment of Bonds 63
Section 702. Creation of the Bond Fund 63
Section 703. Payments into the Bond Fund 64
Section 704. Use of Moneys in the Bond Fund 65
Section 705. Custody of the Bond Fund 66
Section 706. Non-presentment of Bonds at Maturity 66
Section 707. Payments to the Company
from the Bond Fund 67
ARTICLE VIII. INVESTMENTS
Section 801. Construction Fund Investments 67
Section 802. Bond Fund Investments 68
Section 803. Non-Arbitrage Covenant; Compliance
with Special Arbitrage Rules 68
Section 804. Excess Investment Earnings Account 69
</TABLE>
<PAGE> 4
<TABLE>
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<S> <C> <C> <C>
ARTICLE IX. SUBORDINATION TO RIGHTS OF COMPANY
Section 901. Subordination to Rights of the Company 70
ARTICLE X. DISCHARGE OF LIEN
Section 1001. Discharge of Lien
and Security Interests 70
Section 1002. Provision for Payment of Bonds 70
Section 1003. Discharge of the Indenture 71
ARTICLE XI. DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 1101. Defaults; Events of Default 72
Section 1102. Acceleration 73
Section 1103. Other Remedies 74
Section 1104. Right of Bondholders
to Direct Proceeding 75
Section 1105. Application of Moneys 75
Section 1106. Rights and Remedies Vested in Trustee 77
Section 1107. Rights and Remedies of Bondholders 78
Section 1108. Termination of Proceedings 78
Section 1109. Waivers of Events of Default 79
ARTICLE XII. THE TRUSTEE; PAYING AGENT;
AND BOND REGISTRAR
Section 1201. Acceptance of the Trusts 80
Section 1202. Fees, Charges and Expenses of Trustee 83
Section 1203. Notice to Bondholders
If Event of Default Occurs 84
Section 1204. Intervention by Trustee 84
Section 1205. Successor Trustee 84
Section 1206. Resignation by the Trustee; judicial
Appointment of Successor Trustee 85
Section 1207. Removal of the Trustee 85
Section 1208. Appointment of Successor Trustee by
the Bondholders; Temporary Trustee 85
Section 1209. Concerning Any Successor Trustee 86
Section 1210. Trustee Protected in Relying
Upon Resolutions, etc. 86
Section 1211. Successor Trustee as Custodian of
Funds, Paying Agent and Bond Registrar 87
Section 1212. Trust Estate May Be
Vested in Co-Trustee 87
Section 1213. Filing of Certain
Continuation Statements 88
Section 1214. Adoption of Authentication 88
Section 1215. Succession of Paying Agents 88
Section 1216. Right of Trustee to Pay
Taxes and Other Charges 89
Section 1217. Several Capacities 89
</TABLE>
<PAGE> 5
<TABLE>
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<S> <C> <C> <C>
ARTICLE XIII. SUPPLEMENTAL INDENTURES
Section 1301. Supplemental Indentures Not
Requiring Consent of Bondholders 89
Section 1302. Supplemental Indentures Requiring
Consent of Bondholders 90
Section 1303. Trustee Authorized to join in
Supplements; Reliance on Counsel 92
Section 1304. Approval of Bank 92
ARTICLE XIV. AMENDMENT OF AGREEMENT
AND LETTER OF CREDIT
Section 1401. Amendments, etc., to Agreement and
Letter of Credit Not Requiring
Consent of Bondholders 92
Section 1402. Amendments, etc., to Agreement
and Letter of Credit Requiring
Consent of Bondholders 92
Section 1403. Trustee Authorized to join in
Amendments; Reliance on Counsel 93
Section 1404. Approval of Bank 93
ARTICLE XV. MEETINGS OF BONDHOLDERS
Section 1501. Purposes for Which Bondholders'
Meetings May Be Called
Section 1502. Place of Meetings of Bondholders 94
Section 1503. Call and Notice of
Bondholders' Meetings 94
Section 1504. Persons Entitled to Vote
at Bondholders' Meetings 94
Section 1505. Determination of Voting Rights;
Conduct and Adjournment of Meetings 95
Section 1506. Counting Votes and Recording
Action of Meetings 96
Section 1507. Revocation by Bondholders 96
</TABLE>
<PAGE> 6
<TABLE>
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<S> <C> <C> <C>
ARTICLE XVI. MISCELLANEOUS
Section 1601. Consents, etc. , of Bondholders 97
Section 1602. Issuer's Obligations Limited 97
Section 1603. Immunity of Directors, Officers
and Employees of Issuer 98
Section 1604. Limitation of Rights 99
Section 1605. Severability 99
Section 1606. Notices 99
Section 1607. Trustee as Paying Agent
and Bond Registrar 100
Section 1608. Payments Due on Days
Other Than Business Days 100
Section 1609. Counterparts 100
Section 1610. Priority Over Other Liens 100
Section 1611. Binding Effect 101
Section 1612. Captions 101
Section 1613. Notice to S&P 101
Section 1614. References to Bank 101
Section 1615. Laws Governing Indenture 101
</TABLE>
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENT AND CONSENT OF COMPANY
<PAGE> 7
SERIES 1985A TRUST INDENTURE
THIS SERIES 1985A TRUST INDENTURE (the "Indenture") dated as of November
1, 1985, made and entered into by and between TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY, a non-profit industrial development corporation created
and existing under the laws of the State of Texas (the "Issuer"), and BANK ONE
TRUST (COMPANY, N.A., a national banking association organized and existing
under and by virtue of the laws of the United States of America, having power
and authority to accept and execute trusts, and having a principal. corporate
trust office in Columbus, Ohio, as trustee (the "Trustee"),
WITNESSETH:
WHEREAS, the Issuer has been created pursuant to the Development
Corporation Act of 1979, being Article 5190.6, V.A.T.C.S., as amended (the
"Act"), and is empowered under the Act to issue its revenue bonds, as further
set forth herein; and
WHEREAS, the Issuer, by due corporate action, has authorized the financing
of the acquisition, construction, and installation of an industrial facility in
Fort Worth, Texas (the "Facilities"), pursuant to plans and specifications
therefor, such Facilities to be financed by the Issuer for Radiation
Sterilizers, Incorporated, a California corporation qualified to do business in
the State of Texas (the "Company"), pursuant to a Loan Agreement, dated as of
November 1, 1985 (the "Agreement"); and
WHEREAS, after careful study and investigation of the nature of the
proposed Facilities, the Issuer has determined that, in assisting with the
financing of the Facilities, it will be acting in furtherance of the public
purposes intended to be served by the Act; and
WHEREAS, the Issuer has been advised by the Company that the amount
necessary to finance the cost of the acquisition, construction and installation
of the Facilities, including expenses incidental thereto, is $2,150,000 and, by
proper corporate action, the Issuer has authorized the issuance and sale of
$2,150,000 in aggregate principal amount of its Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project), Series 1985A (the "Bonds"), the
proceeds of which will be used to finance the cost of` the acquisition,
construction and installation of the Facilities; and
WHEREAS, the Issuer has entered into the Agreement with the Company under
the terms of which the Issuer has agreed
<PAGE> 8
to finance the cost of acquiring, constructing and installing the Facilities
through the issuance of the Bonds and, in consideration thereof, the Company has
agreed to pay to the Issuer moneys sufficient (i) to pay the principal of, and
the redemption premium (if any) and the interest on, the Bonds as the same
become due and payable, (ii) to pay the purchase price of any Bonds required to
be purchased hereunder, and (iii) to pay certain administrative expenses in
connection with the Bonds; and
WHEREAS, as security for the payment of the Bonds, the Issuer has agreed
to assign and pledge to the Trustee and, with respect to certain funds of the
Issuer, to the Depository (as defined herein) all right, title and interest of
the Issuer in (a) the Agreement (except certain rights reserved by the Issuer
under the terms of this Indenture) together with the Agreement, (b) all amounts
on deposit from time to time in the "Bond Fund" and the Construction Fund (each
being hereinafter defined), but excluding any amounts on deposit in the "Excess
Investment Earnings Account" (hereinafter defined), and (c) the "Revenues"
(hereinafter defined); and
WHEREAS, Wells Fargo Bank, N.A., a national banking association (the
"Bank"), is issuing its irrevocable standby Letter of Credit, dated the date of
delivery of the Bonds (the "Letter of Credit"), in favor of the Trustee, for the
account of the Company, obligating the Bank to pay to the Trustee for the period
described therein upon request and in accordance with the terms thereof, up to
(i) an amount equal to the aggregate principal amount of the Bonds then
outstanding (A) to pay the principal of the Bonds, whether at maturity, upon
redemption or otherwise, and (B) to enable the Trustee to pay the purchase price
of any Bonds required to be purchased under the terms of this Indenture, plus
(ii) an amount equal to fifty-five (55) days accrued and unpaid interest at the
maximum rate which may be borne by the Bonds on all outstanding Bonds (other
than Bonds held by the Bank as a result of a drawing under the Letter of
Credit); and
WHEREAS, the Bank and the Company will enter into a Series A Reimbursement
Agreement, dated as of November 1, 1985 (the "Letter of Credit Agreement"),
under the terms of which the Company will agree to reimburse the Bank for all
amounts drawn by the Trustee under the Letter of Credit, together with interest
on all such amounts, and to pay to the Bank a commission for issuing the Letter
of Credit; and
WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued and delivered as in this Indenture provided, the legal,
valid, binding and enforceable limited obligations of the Issuer, according to
2
<PAGE> 9
the import thereof , and to create a valid assignment and pledge of the Revenues
to the payment of the principal and purchase price of, and the redemption
premium (if any) and the interest on, the Bonds and a valid assignment of
certain of the rights, title and interest of the Issuer in the Agreement have
been done and performed, and the execution and delivery of this Indenture and
the execution, issuance and delivery of the Bonds, subject to the terms hereof,
have in. all respects been authorized;
NOW, THEREFORE, KNOW ALL BY THESE PRESENTS, THIS INDENTURE WITNESSETH:
That the Issuer, in consideration of the premises and of the acceptance by
the Trustee of the trusts hereby created, and of the purchase and acceptance of
the Bonds by the holders thereof, and of the sum of TEN DOLLARS ($10.00), lawful
money of the United States of America, to it paid by the Trustee, at or before
the execution and delivery of these presents, and for other good and valuable
considerations the receipt of which are hereby acknowledged, in order to secure
the payment of the principal and purchase price of, and the redemption premium
(if any) and the interest on, the Bonds and all other amounts payable by the
Issuer pursuant to the terms of the Bonds and/or this Indenture according to
their tenor and effect and to insure the performance and observance by the
Issuer of all the agreements expressed or implied herein and in the Bonds, has
given, granted, assigned and pledged and does by these presents give, grant,
assign and pledge to the Trustee, and to its successors in the trusts hereby
created, and with respect to GRANTING CLAUSE IV, to the Depository, and its
successors in the trusts hereby created, and to them and their assigns forever:
GRANTING CLAUSE I.
All right, title and interest of the Issuer in the Agreement, together
- -with the Agreement itself, and all amendments, modifications and renewals
thereof, reserving, however, the rights (a) providing that notices, approvals,
consents, requests and other communications be given to the Issuer, and (b) of
the Issuer under Sections 5.3, 5.10 and 6.4 of the Agreement.
GRANTING CLAUSE II
All right, title and interest of the Issuer in the Revenues.
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GRANTING CLAUSE III.
All amounts on deposit from time to time in the Bond Fund, but excluding
any amounts on deposit in the Excess Investment Earnings Account, subject to the
provisions of this Indenture and the Agreement permitting or requiring the
application thereof for the purposes and on the terms and conditions set forth
herein and therein.
GRANTING CLAUSE IV.
All amounts on deposit from time to time in the Construction Fund, but
excluding any amounts on deposit in the Excess Investment Earnings Account,
subject to the provisions of this Indenture and the Agreement permitting or
requiring the application thereof for the purposes and on the terms and
conditions set forth herein and therein.
GRANTING CLAUSE V.
Any and all other property of every name and nature from time to time
hereafter by delivery or by writing of any kind, given, granted, assigned and
pledged as and for additional security hereunder, by the Issuer or by anyone on
its behalf or with its written consent, to the Trustee, which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby given, granted, assigned and pledged or agreed or intended so to be, to
the Trustee and its successors in said trusts and to the Depository and its
successors in said trusts, respectively, to them and their assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, for
the equal and proportionate benefit, security and protection of all holders of
the Bonds issued or to be issued under and secured by this Indenture, without
preference, priority or distinction as to lien or otherwise of any of the Bonds
over any of the others except as herein expressly provided;
PROVIDED, HOWEVER, that when the principal of, and the interest on, all of
the Bonds secured hereby have been paid or shall be deemed to have been paid in
accordance with the terms and provisions of this Indenture, then this indenture
and the rights hereby granted shall cease, determine and be void; otherwise,
this Indenture shall be of full force and effect.
THIS INDENTURE FURTHER WITNESSETH and it is expressly declared that all
Bonds issued and secured hereunder are to
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<PAGE> 11
be issued, authenticated and delivered and all property hereby given, granted,
assigned or pledged is to be dealt with and disposed of under, upon and subject
to the terms, conditions, stipulations, agreements, trusts, uses and purposes as
hereinafter expressed, and the Issuer has agreed and DOES HEREBY AGREE with the
Trustee, the Depository and with the respective holders, from time to time, of
the Bonds or any part thereof, as follows, that is to say:
ARTICLE I.
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 101. Definitions. In addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Agreement shall have the same meanings as assigned to them in the Agreement when
used herein unless the context or use clearly indicates another or different
meaning or intent:
Act - The Development Corporation Act of 1979, Article 5190. 6 V. A. T. C.
S. , as amended and supplemented.
Adjustment Date - After the Conversion Date, the Interest Payment Date
next preceding the Expiration Date of the Alternate Credit Facility or the
Expiration Date of the Letter of Credit, as the case may be.
Agreement - The hereinbefore-mentioned Loan Agreement, of even date
herewith, between the Issuer and the Company, including any amendment thereto.
Alternate Credit Facility - A credit facility other than the Letter of
Credit, including without limitation, an irrevocable letter of credit or bond
insurance policy, which provides for payment of the principal of, and the
interest on, the Bonds, when due.
Alternate Interest Index - For any Interest Period ending prior to the
Conversion Date 65% of the interest rate applicable to 13-week United States
Treasury bills determined by -the Remarketing Agent on the basis of the average
per annum. bond equivalent yield at which such 13-week Treasury bills shall have
been sold at the most recent Treasury auction during the next preceding Interest
Period. If no such auction shall have been conducted during the next preceding
Interest Period, or if the Remarketing Agent shall fail to determine the
Alternate Interest Index, the
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<PAGE> 12
Alternate interest Index during such Interest Period will be the same as for the
preceding Interest Period.
Alternate Letter of Credit - An irrevocable letter of credit issued in
accordance with Section 4.6 of the Agreement.
Available Moneys - Moneys on deposit in trust with the Trustee for a
period of at least one hundred twenty-three (123) days during which no petition
in bankruptcy or similar insolvency proceeding has been filed by or against the
Company.
Bank - The issuer of the Letter of Credit, initially, Wells Fargo Bank,
N.A. , a national banking association.
Bond Fund - The Bond principal and interest payment fund established with
the Trustee and created in Section 702 of this Indenture in which there shall be
established a general account and a special account. Any reference herein to the
"Bond Fund" without further qualification shall constitute a reference to said
general account.
Bond Payment Date - Any date upon which the principal of, and the
redemption premium (if any) or interest on, the Bonds shall be payable pursuant
to the Indenture, whether at stated maturity, lay redemption, by acceleration or
otherwise.
Bond Purchase Agreement - The bond purchase agreement among the Original
Purchasers, the Issuer and the Company, providing for the sale of Bonds to the
Original Purchasers.
Bond Registrar - The Trustee acting in such capacity.
Bond Resolution - The resolution adopted by the Issuer authorizing the
issuance of the Bonds, as the same may be amended, modified or supplemented by
any amendments or modifications thereof and supplements thereto entered into in
accordance with the provisions of the Indenture.
bondholder, owner or holder of the Bonds - The registered owner of any
Bond.
Bonds - The Trinity River Industrial Development Authority Variable Rate
Demand Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A, in the aggregate principal amount of $2,155,000, issued
pursuant to the provisions of this Indenture.
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<PAGE> 13
Business Day - Any day, other than a Saturday or Sunday, on which banks
located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located and in New York, New
York, are not required or authorized by law to remain closed and on which The
New York Stock Exchange, Inc. is not closed.
Code - The Internal Revenue Code of 1954, as amended, and the applicable
Income Tax Regulations thereunder.
Commission - The Texas Economic Development Commission or its successors.
Company - Radiation Sterilizers, Incorporated, a corporation organized
under the laws of the State of California and qualified to do business in the
State, and its lawful successors and assigns, including any surviving, resulting
or transferee entity as provided in Section 5.1 of the Agreement.
Construction Fund - The Construction Fund created in Section 601 of this
Indenture.
Conversion Date - The date upon which the Bonds begin to bear interest at
the Fixed Interest Rate, which date shall be established in accordance with
Section 402.
Date of Taxability - The date as of which all or any part of the interest
on the Bonds is first required to be included in the gross income of any holder
or former holder thereof for Federal income tax purposes by reason of the
occurrence of an Event of Taxability which results in a Determination of
Taxability.
Depository -- Initially First City Bank of Dallas, or such other
depository appointed in accordance with Section 1218 hereof.
Determination of Taxability - A determination that the interest income on
any of the Bonds is subject to Federal income taxation as a result of an Event
of Taxability, which determination shall be deemed to have been made upon the
occurrence of the first to occur of the following:
(a) the date on which the Company files (in compliance with its
obligations under the Agreement) any Supplemental Statement which
discloses that an Event of Taxability has occurred;
(b) the date on which the Company is advised in writing by the
Commissioner or any District Director of
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<PAGE> 14
the Internal Revenue Service that, based upon any filings of the Company,
or upon any review or audit of the Company, or upon any other grounds
whatsoever, an Event of Taxability has occurred;
(c) the date on which the Company receives notice from the Trustee
in writing that the Trustee has been advised by any holder or former
holder of a Bond that the Internal Revenue Service has issued a statutory
notice of deficiency or similar notice to such holder or former holder
which asserts in effect that the interest on the Bonds of such holder or
former holder is includable in the gross income of such holder or former
holder due to the occurrence of an Event of Taxability;
(d) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that
there has been issued a public or private ruling of the Internal Revenue
Service or a technical advice memorandum issued by the national office of
the Internal Revenue Service that the interest on the Bonds is includable
for Federal income tax purposes in the gross income of any holder or
former holder of a Bond due to the occurrence of an Event of Taxability;
or
(e) the date on which the Company is advised in writing that a final
determination, from which no further right of appeal exists, has been made
by a court of competent jurisdiction in the United States of America in a
proceeding with respect to which the Company has been given written notice
and an opportunity to participate and defend that the interest on the
Bonds is includable in the gross income of any holder or former holder of
a Bond due to the occurrence of an Event of Taxability;
provided, however, no Determination of Taxability shall occur under subparagraph
(b), (c) or (d) of this paragraph unless the Company has been afforded the
opportunity, at its expense, to contest any such conclusion and/or assessment
and, further, no Determination of Taxability shall occur until such contest, if
made, has been finally determined. The Company shall be deemed to have been
afforded the opportunity to contest if it shall have been permitted to commence
and maintain any action in the name of any holder or former holder of a Bond to
judgment and through any appeals therefrom or other proceedings related thereto.
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<PAGE> 15
Eligible Investments - Has the the following meanings:
(a) any bonds or other obligations of the United States of America
which as to principal and interest constitute direct obligations of the
United States of America, or any obligations of subsidiary corporations of
the United States of America fully guaranteed as to payment by the United
States of America;
(b) obligations of the Federal Land Bank;
(c) obligations of the Federal Home Loan Bank;
(d) obligations of the Federal Intermediate Credit Bank;
(e) obligations of the Central Bank for Cooperatives;
(f) certificates of deposit of national or state banks located
within the State including the Trustee of any of its affiliates which have
deposits insured by the Federal Deposit Insurance Corporation and
certificates of deposit of Federal savings and loan associations and state
building and loan associations located within the State which have
deposits insured by the Federal Savings and Loan Insurance Corporation
(including the certificates of deposit of any bank, savings and loan
association or building and loan association acting as depository,
custodian or trustee for any proceeds of the Bonds); provided however,
that the portion of such certificates of deposit in excess of the amount
insured by the Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation, if any, shall be secured by
deposit with the Federal Reserve Bank of Dallas, Texas, or other Federal
Reserve Bank or with any national or state bank located within the State,
of any of the obligations included in (a), (b) , (c) , (d) or (e) above;
and
(g) repurchase agreements with respect to obligations included in
(a), (b), (c), (d) or (e) above and any other investments;
provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing on or prior to the date payment is due of the obligation
for which the draw was made.
Event of Default - The events so denominated in Section 1101, subject to
the terms of Section 1109.
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Event of Taxability - The date on which the interest income on any of the
Bonds becomes subject to Federal income taxation as a result of any of the
following conditions or circumstances:
(a) as a result of Section 103(b)(6) (D) Capital Expenditures being
paid or incurred with respect to the Local Facilities, the aggregate face
amount of the Bonds determined in accordance with the provisions of
Section 103(b) (6) (D) of the Code exceeds the limit permitted by said
Section 103 (b) (6) (D); or
(b) the Bonds constitute "arbitrage bonds" within the meaning of
Section 103(c) of the Code; or
(c) the weighted average maturity of the Bonds exceeds the weighted
average estimated economic life of the components comprising the
Facilities by more than 20%, determined pursuant to Section 103(b)(14) of
the Code; or
(d) (i) more than 25% of the net proceeds of the sale of the Bonds
are used to provide a facility the primary purpose of which is one of the
following: retail food and beverage services (including eating and
drinking places, but excluding grocery stores), automobile sales or
service, or the provision of recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
is used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds
is used to provide any airplane, skybox or other luxury box, any
health club facility, any facility primarily used for gambling, or
any store the principal business of which is the sale of alcoholic
beverages for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
is used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25%; or more
of the net proceeds of the sale of the Bonds is used (directly or
indirectly) for the
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<PAGE> 17
acquisition of land (or an interest therein) other than land to be
used for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
is used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of
the portion of the cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(e) the Facilities are operating as a facility the primary purpose
of which causes the Facilities to constitute a prohibited facility within
the meaning of Section 103(b) of the Code; or
(f) the sum of the authorized face amount of the Bonds allocable to
each "test-period beneficiary" (as defined in Section 103(b) (15) (D) of
the Code) plus the respective aggregate face amount of all tax-exempt
industrial development bonds presently outstanding (not including any
obligations which are to be redeemed from the proceeds of the Bonds) which
are allocable to each such test-period beneficiary exceeds $40,000,000; or
(g) less than substantially all of the net proceeds of the sale of
the Bonds are used to pay the costs of land or property of a character
subject to the allowance for depreciation under Section 167 of the Code;
or
(h) the taking of any action by the Issuer, the Company or any
person acting on the Company's behalf or upon the Company's direction, or
the failure of the Issuer, the Company or any such person to take any
action, or any mistake in or untruthfulness of any representation of the
Issuer or the Company contained in the Agreement or in any certificate of
the Issuer or the Company delivered pursuant to the Agreement or this
Indenture or in connection with the issuance of the Bonds, if such act or
omission, or such mistake in or untruthfulness of such representation, has
the effect of causing the interest income on the Bonds to be or become
subject to Federal income taxation;
provided, however, that no Event of Taxability shall be deemed to have occurred
with respect to any Bond if the interest income thereon shall be subject to
Federal income taxation for any period solely because during that period
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<PAGE> 18
such Bond was held by a person who is a Substantial User or a Related Person;
and, provided further, that no Event of Taxability shall be deemed to have
occurred if the interest income on any of the Bonds becomes subject to Federal
income taxation as a result of a Taxability Change.
Excess Investment Earnings Account - The excess investment earnings
account created by Section 804.
Expiration Date of the Alternate Credit Facility - The date established in
the Alternate Credit Facility for the expiration thereof, and in the event such
date is extended, such date as extended.
Expiration Date of the Letter of Credit - The date established in the
Letter of Credit for the expiration thereof in accordance with its terms,
initially December 15, 1988 and in the event such date is extended, such date as
extended.
Extraordinary Services and Extraordinary Expenses - All services rendered
and all expenses incurred by the Trustee under this Indenture other than
Ordinary Services and Ordinary Expenses.
Facilities - The real, personal and mixed property identified in Exhibit A
to the Agreement, together with any additions and improvements thereto,
modifications thereof and substitutions therefor.
Financing Statements - Any and all financing statements (including
continuation statements) filed for record from time to time to perfect the
security interests created or assigned.
First Optional Redemption Date - The November 1 occurring in the year
which is a number of years after the Conversion Date equal to the number of
years between the November 1 immediately following the Conversion Date (unless
the Conversion Date is a November 1, in which case from such November 1) and
November 1, 2005, multiplied by 1/2 and rounded up to the nearest whole number.
Fixed Interest Rate - A fixed interest rate on the Bonds established in
accordance with Section 402.
Government Obligations - (a) direct obligations of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged, or (b) obligations issued by a person controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of, premium,
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if any, and the interest on which is fully guaranteed as a full faith and credit
obligation of the United States of America (including any securities described
in (a) or (b) issued or held in book-entry form on the books of the Department
of the Treasury of the United States of America), which obligations, in either
case, are not subject to redemption prior to maturity at less than par by anyone
other than the holder.
Governmental Unit The Trinity River Authority of Texas, and its successors
and assigns.
Indenture - This Trust Indenture as the same may be amended, modified or
supplemented by any amendments or modifications hereof and supplements hereto
entered into in accordance with the provisions hereof.
Interest Index - For any Interest Period ending prior to the Conversion
Date, the interest index set forth in the Form of Bond included in Section 206
hereof.
Interest Payment Date - With respect to the Bonds prior to and including
the Conversion Date the first (1st) Business Day of each month commencing
January 2, 1986, and after the Conversion Date the first (1st) day of each
November and May.
Interest Period - With respect to the Bonds prior to the Conversion Date a
period from and including the Interest Payment Date in each calendar month to
and including the day next preceding the Interest Payment Date in the following
calendar month, except that the first Interest Period shall be the period from
and including the Original Issuance Date to and including December 31, 1985.
Interest Reserve Requirement - $109,000.
Investment Company - Any open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended.
Issuer - The Trinity River Industrial Development Authority, -a non-profit
industrial development corporation created and existing pursuant to the
provisions of the Act, and its successors and assigns.
Letter of Credit - The irrevocable letter of credit issued by the Bank
contemporaneously with the original issuance of the Bonds, except that upon the
issuance and delivery of an Alternate Letter of Credit, "Letter of Credit" shall
mean such Alternate Letter of Credit, and upon the delivery (of an Alternate
Credit Facility, "Letter of
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<PAGE> 20
Credit" shall, unless the context otherwise requires, include reference to the
Alternate Credit Facility.
Letter of Credit Agreement - The Series A Reimbursement Agreement, dated
as of November 1, 1985, between the Company and the Bank pursuant to which the
Letter of Credit is issued by the Bank and delivered to the Trustee, and any and
all modifications, alterations, amendments and supplements thereto, and includes
any agreement between the Company and the Bank pursuant to which any Alternate
Letter of Credit is issued or any Alternate Credit Facility is made available.
Loan - The loan by the Issuer to the Company of the proceeds from the sale
of the Bonds to the Original Purchasers.
Loan Term - The period commencing on the date of the Agreement and ending
on the date on which the Bonds have been fully paid (or provision for their
payment has been made) in accordance with the provisions of this Indenture.
Moody's - Moody's Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Issuer, Eat the request of the Company, by notice to the
Trustee and the Bank.
Ordinary Services and Ordinary Expenses Those advances and services
normally rendered and those expenses normally incurred by a trustee under
instruments similar hereto, including, but not limited to, counsel fees.
Original Issuance Date - The date on which the Bonds are first
authenticated and delivered to the Original Purchasers against payment therefor.
Original Purchasers - Prudential-Bache Securities Inc., New York, New
York.
Outstanding Bonds or Bonds outstanding - When used with reference to the
Bonds at any date as of which the amount of Outstanding Bonds is to be
determined, means all Bonds which have been authenticated and delivered by the
Trustee hereunder, except:
(a) Bonds cancelled because of payment or redemption or purchase
prior to maturity, or otherwise;
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<PAGE> 21
(b) Bonds for the payment or redemption of which sufficient moneys
and/or Government Obligations meeting the terms and conditions specified
in Section 1002 shall have been theretofore transferred or deposited into
the Bond Fund (whether upon or prior to the maturity or redemption date of
any such Bonds); provided that if such Bonds are to be redeemed prior to
the maturity thereof, notice of such redemption shall. have been given or
arrangements satisfactory to the Trustee shall have been made therefor, or
waiver of such notice satisfactory in form to the Trustee shall have been
filed with the Trustee;
(c) Bonds in lieu of which others have been authenticated under
Section 203, 208 or 209;
(d) For purposes of any consent or other action to be taken by the
holders of a specified percentage of outstanding Bonds hereunder, all
Bonds held by or for the Issuer or the Company; and
(e) Bonds held by the Trustee pursuant to Section 406 hereof, except
that for purposes of any such consent or action the Trustee shall be
obligate to consider as not being outstanding only Bonds known by the
Trustee to be so held,
Paying Agent - The Trustee, and its successors, and any other Paying Agent
or Paying Agents as may be appointed by the Issuer from time to time with the
consent of the Company. "Principal Office" of the Paying Agent means the office
of the Paying Agent designated in writing to the Issuer, the Company, the
Trustee, the Bank, the Bond Registrar and the Remarketing Agent.
Payment in full of the Bonds - Specifically encompasses the situations
referred to in Section 1002.
Person - Any natural person, corporation, cooperative, partnership, trust
or unincorporated organization, government or governmental body or agency,
political subdivision or other legal entity as in the context may be
appropriate.
President - The President of the Issuer.
Principal User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6) (E) of the Code), a "Principal user"
of such "facilities" within the meaning of Section 103(b)(6) of the Code.
Record Date - With respect to any Interest Payment Date on or before the
Conversion Date the fifth (5th) day next preceding such interest Payment Date;
provided that if such day is not a Business Day, then the next preceding
Business
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<PAGE> 22
Day, and with respect to any Interest Payment Date after the Conversion Date the
fifteenth (15th) day of the month next preceding such Interest Payment Date.
Related Person - When used with reference to any Principal User or any
Substantial User, means a "related person" within the meaning of Section 103 (b)
(6) of the Code.
Remarketing Agent - The remarketing agent appointed in accordance with
Section 403. "Principal Office" of the Remarketing Agent shall mean the office
thereof designated in writing to the Trustee, the Paying Agent, the Company, the
Issuer and the Bank.
Replacement Bonds - Any Bonds delivered on or after the Conversion Date to
replace Bonds issued prior to the Conversion Date, as provided in Section 203.
Revenues - (a) the payments and other amounts which under the Agreement
are payable by the Company directly to the Trustee to meet amounts due with
respect to the principal of, and the redemption premium (if any) and the
interest on, the Bonds, (b) all other moneys received by the Issuer, or the
Trustee on behalf of the Issuer, in respect of the repayment of the Loan
including, but not limited to, moneys drawn under the Letter of Credit, and (c)
income and profit from the investment of the payments and moneys described in
(a) and (b) above, all subject, however, to certain provisions in this Indenture
with respect to the Trustee's holding moneys for the benefit of the holders of
particular Bonds and to certain other provisions of this Indenture relating to
excess investment earnings and the rebate thereof to the United States.
S&P - Standard & Poor's Corporation, a corporation organized and existing
under the laws of the State of New York, its successors and their assigns, and,
if such corporation shall be dissolved or liquidated or shall no longer perform
the functions of a securities rating agency, "S&P" shall be deemed to refer to
any other nationally recognized securities rating agency designated by the
Issuer, at the request of the Company, by notice to the Trustee and the Bank.
Secretary -- The Secretary of the Issuer.
Security interest or Security interests - Refers to the security interests
created herein and shall have the meaning set forth in the U. C. C.
State - The State of Texas.
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Substantial User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6) (E) of the Code), a "substantial
user" of such "facilities" within the meaning of Section 103 (b) (13) of the
Code.
Supplemental Statement -- Any statement, supplemental statement or other
tax schedule, return or document filed with the Internal Revenue Service
(whether pursuant to Income Tax Regulations Section 1.103-10(b) (2) (vi), as the
same may be amended or supplemented, or otherwise) .
Taxability Change - Any change in the Constitution or laws of the United
States of America or the applicable Income Tax Regulations thereunder occurring
after the date of issuance of the Bonds which results in the interest on any of
the Bonds being included in the gross income of any holder (other than a holder
who is a Substantial User or a Related Person).
Taxable Period - With respect to a Bond, the period which elapses from the
Event of Taxability until payment in full of such Bond.
Trust Estate - The property described in the granting clauses hereof.
Trustee - Bank One Trust Company, N.A., Columbus, Ohio, and its successors
and any corporation or association resulting from or surviving any consolidation
or merger to which it or its successors may be a party, and any successor
trustee at the time serving as successor trustee under the Indenture. "Principal
Office" of the Trustee means the principal corporate trust office of the
Trustee, which office at the date of acceptance by the Trustee of the duties and
obligations imposed on the Trustee by this Indenture is located at the address
specified in Section 1606.
U.C.C. The Uniform Commercial Code of the State, as now or hereafter
amended.
Section 102. Certain Rules of Interpretation. The definitions set forth in
Section 101 shall be equally applicable to both the singular and plural forms of
the words and terms therein defined and shall cover all genders.
Herein, hereby, hereunder, hereof, hereinbefore, hereinafter and other
equivalent words - Refer to this Indenture and not solely to the particular
Article, Section or subdivision hereof in which such word is used.
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Reference herein to an Article number (e.g. , Article IV) or a Section
number (e.g., Section 702) shall be construed to be a reference to the
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.
ARTICLE II.
THE BONDS
Section 201. Authorized Amount of Bonds. No Bonds may be issued under the
provisions of this Indenture except in accordance with this Article. The total
principal amount of Bonds that may be issued hereunder is expressly limited to
$2,150,000, subject to the provisions of Sections 203, 208 and 209.
Section 202. Issuance of Bonds. The Bonds shall be designated "Trinity
River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project) , Series
1985A", and shall bear interest payable on each Interest Payment Date. The
interest rate on the Bonds shall be as provided for in the form of Bond
contained in Section 206. The Bonds shall mature on November 1, 2005.
Anything herein or in the Bonds to the contrary notwithstanding, the
obligation of the Issuer hereunder shall be subject to the limitation that
payments of interest to the holder of any Bond shall not be required to the
extent that the receipt of any such payment by such holder would be contrary to
the provisions of law applicable to such holder which limit the maximum rate of
interest which may be charged or collected by such holder.
The Bonds shall be issued initially as registered Bonds without coupons in
the denomination of $50,000 each, or any integral multiple thereof, and, after
the Conversion Date, in the denomination of $5,000 each, or any integral
multiple thereof. The Bonds shall be numbered consecutively from R-1 upwards (in
order of the issuance) according to the records of the Bond Registrar.
The Bonds are subject to redemption prior to maturity as provided in
Section 301.
Prior to the Conversion Date, the Bonds may be purchased prior to maturity
as provided in Section 401.
Principal of and redemption premium (if any) and interest on, the Bonds
shall be payable in lawful money of
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<PAGE> 25
the United States of America from funds available therefor under this Indenture,
without deduction for services of any Paying Agent. Principal of, and redemption
premium (if any) on, each Bond shall be paid to the holder thereof upon
presentation and surrender of such Bond as it becomes due at the Principal
Office of the Trustee or any other Paying Agent. Interest on each Bond shall be
payable by check drawn upon the Paying Agent and mailed on each Interest Payment
Date to the holder of such Bond as of the close of business on the Record Date
next preceding the Interest Payment Date at the registered address of such
holder as it shall appear as of the close of business on such Record Date on the
registration books maintained pursuant to this Indenture notwithstanding the
cancellation of any of such Bonds upon any exchange or transfer of registration
thereof subsequent to the Record Date and prior to such Interest Payment Date,
except that, if and to the extent that there shall be a default in the payment
of the interest due on such Interest Payment Date, such defaulted interest shall
be paid to the holder in whose name any such Bond is registered at the close of
business on the fifth (5th) Business Day next preceding the date of payment of
such defaulted interest.
Notwithstanding the provisions of the immediately preceding paragraph, a
holder of Bonds in an aggregate principal amount of $500,000 or more may, by
notice to the Paying Agent, direct the Paying Agent to make payments of interest
on such holder's Bonds by means of wire transfers, in immediately available
funds, to a banking institution located in the United States of America
designated in such notice for the account of such holder. Any fees or charges
for such wire transfers shall be paid by the Company.
The Bonds as originally issued shall be dated the Original Issuance Date.
Bonds subsequently issued shall be dated the date of authentication thereof.
Each Bond shall bear interest from and including the Original Issuance Date, or
if authenticated after the Original Issuance Date from and including the last
date to which interest shall have been paid on the Bonds until payment of the
principal or redemption price thereof shall have been made or provided for in
accordance with the provisions of this Indenture, whether at maturity, upon
redemption or otherwise. Interest on the Bonds shall be paid on (each Interest
Payment Date and, prior to the Conversion Date, shall be computed on the basis
of a year of 365 or 366 days, as appropriate, for the actual number of days
elapsed. After the Conversion Date, interest on the Bonds shall be computed on
the basis of a 360-day year and twelve 30-day months.
Section 203. Replacement Bonds. Replacement Bonds may be issued to replace
Bonds which are not tendered for
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<PAGE> 26
purchase pursuant to the provisions of Section 401. Any such Replacement Bonds
shall be executed and authenticated as provided in this Indenture. Replacement
Bonds shall be issued as registered Bonds without coupons. Replacement Bonds
shall contain the terms and provisions specified herein as to interest rate,
maturity date and redemption and such other provisions as are consistent with
the provisions of this Indenture. Replacement Bonds shall be in form
satisfactory to the Trustee, the Issuer and the Company. The Company shall bear
all expenses in connection with the preparation and delivery of Replacement
Bonds.
Section 204. Execution; Limited Obligation. The Bonds shall be executed on
behalf of the Issuer by the manual or facsimile signature of its President or
Vice President and the Issuer's corporate seal shall be affixed thereto or
printed or otherwise reproduced thereon and attested by the manual or facsimile
signature of its Secretary. If any officer of the Issuer who shall have executed
any Bond shall cease to be such officer before the Bond so executed (by manual
or facsimile signature) shall be authenticated and delivered by the Trustee,
such Bond nevertheless may be authenticated and delivered as though the person
who executed such Bond had not ceased to be such officer of the Issuer, and also
any Bond may be executed on behalf of the Issuer by such persons as at the
actual time of such execution of such Bond shall be the proper officers of the
Issuer, although at the date of such Bond such persons may not have been
officers of the Issuer.
The obligation of the Issuer to pay the Bonds and the interest thereon
shall not be a general obligation of the Issuer but shall be a limited
obligation which shall be payable from, and wholly secured by, the Trust Estate.
Section 205. Authentication. Only such Bonds as shall have endorsed
thereon a certificate of authentication substantially in the form hereinafter
set forth executed by the Trustee shall be entitled to any right or benefit
hereunder. No Bond shall be valid or obligatory for any purpose unless and until
such certificate of authentication shall have been executed by the Trustee, and
such executed certificate of the Trustee upon any such Bond shall be conclusive
evidence that such Bond has been authenticated and delivered hereunder. Said
certificate of authentication on any Bond shall be deemed to have been executed
by the Trustee if signed by an authorized officer of the Trustee, but it shall
not be necessary that the same officer sign the certificate of authentication on
all of the Bonds issued hereunder.
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<PAGE> 27
Section 206. Form of Bonds. The Bonds, the Trustee's certificate of
authentication, the validation certificate and the form of assignment shall, at
the Trustee's discretion, be in substantially the forms and format hereinafter
set forth with such appropriate variations, omissions, substitutions and
insertions as are permitted or required hereby, including without limitation any
deletion of terms no longer applicable after the Conversion Date and the
inclusion of provisions described in Section 203, and may have such letters,
numbers or other marks of identification and such legends and endorsements
placed thereon, as may be required to comply with any applicable laws or rules
or regulations, or as may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution of the Bonds:
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<PAGE> 28
(FORM OF BOND - FRONT]
No. R- $_____
UNITED STATES OF AMERICA
STATE OF TEXAS
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT
REVENUE BOND
(RADIATION STERILIZERS, INCORPORATED PROJECT)
SERIES 1985A
Maturity Date: November 1, 2005
Original Issuance Date: December 18, 1985
CUSIP:____________
Registered Holder:______________________
Principal Amount:______________________ Dollars ($_____________________)
FOR VALUE RECEIVED, the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
(the "Issuer"), a non-profit industrial development corporation organized and
existing pursuant to the Development Corporation Act of 1979, Article 5190.6
V.A.T.C.S., as amended (the "Act"), promises to pay to the Registered Holder
identified above, or registered assigns, but solely from the sources and in the
manner hereinafter set forth, the Principal Amount identified above on the
Maturity Date identified above, and to pay from said sources interest thereon
from the Original Issuance Date identified above, or if this Bond is
authenticated after the Original Issuance Date, from and including the last date
to which interest shall have been paid on the "Bonds" (hereinafter defined), at
the rates and on the dates set forth herein until payment of such principal sum
has been made or provided for, subject to the provisions hereinafter mentioned
with respect to redemption prior to maturity. The principal sum of this Bond is
payable in lawful money of the United States of America without deduction for
services of any paying agent, at the principal corporate trust office of the
Trustee, currently BANK ONE TRUST COMPANY, N.A., Columbus, Ohio, but only upon
presentation and surrender of this Bond at maturity or upon redemption prior to
maturity Interest payable on any "Interest Payment Date" (hereinafter defined)
will be paid, in lawful money of the United States of America without deduction
for services of the paying agent and, subject to certain exceptions provided in
the "Indenture" hereinafter described, to the person in whose name this Bond is
registered at the close of business on the
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<PAGE> 29
"Record Date" (hereinafter defined) for such Interest Payment Date, Except as
otherwise provided in the Indenture, interest on this Bond is payable by check
drawn upon the Trustee and mailed to the registered holder of this Bond at his
address as it appears on the registration books of the Trustee. This Bond shall
be purchased on the demand of the registered holder by the "Paying Agent" and/or
the "Remarketing Agent" as hereinafter described.
This Bond is one of a duly authorized issue of Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project), Series 1985A (the "Bonds"),
issuable under a Series 1985A Trust Indenture, dated as of November 1, 1985
(hereinafter, as the same may be amended and supplemented in accordance with its
terms, referred to as the "Indenture") , duly executed and delivered by the
Issuer to Bank One Trust Company, N.A., a national banking association, as
Trustee (the term "Trustee" where used herein referring to said Trustee or its
successors in said trust appointed pursuant to the Indenture) , aggregating in
principal amount $2,150,000 and issued for the purpose of providing funds to
lend to Radiation Sterilizers, Incorporated, a California corporation qualified
to do business in the State of Texas (the "Company"), so that the Company may
acquire, construct and install property comprising an industrial facility for
the sterilization of packaged products using ionizing radiation, such facility
to be located in the City of Fort Worth, Texas (the "Facilities"). The proceeds
of the Bonds will be lent to the Company pursuant to the terms of the Loan
Agreement (the "Agreement") , dated as of November 1, 1985, between the Issuer
and the Company.
THIS BOND AND THE REDEMPTION PREMIUM (IF ANY) AND THE INTEREST HEREON
SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A GENERAL OBLIGATION OR A PLEDGE OF
THE FAITH AND CREDIT OF THE ISSUER, THE TRINITY RIVER AUTHORITY OF TEXAS, THE
STATE OF TEXAS OR OF ANY POLITICAL SUBDIVISION THEREOF, AND DOES NOT DIRECTLY,
INDIRECTLY OR CONTINGENTLY OBLIGATE THE ISSUER, THE TRINITY RIVER AUTHORITY OF
TEXAS, THE STATE OF TEXAS OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO
PLEDGE ANY FORM OF TAXATION WHATEVER FOR THE PAYMENT OF SUCH PRINCIPAL,
REDEMPTION PREMIUM (IF ANY) AND INTEREST. This Bond is payable solely from the
"Revenues" (defined in the Indenture) and the Issuer is obligated to pay the
principal of, and the redemption premium (if any) and the interest on, this Bond
only from the Trinity River Industrial Development Authority Bond Fund --
Radiation Sterilizers, incorporated Project, 1985A (the "Bond Fund"), created in
the Indenture. No holder of this Bond shall ever have the right to compel the
exercise of the taxing power of the State of Texas or any political subdivision
thereof, including the Trinity
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<PAGE> 30
River Authority of Texas, to pay this Bond or the redemption premium (if any) or
the interest hereon or any other cost incident thereto, or to enforce payment
hereof against any property of said State or any political subdivision thereof.
No recourse shall be had for the payment of the principal of, or the redemption
premium (if any) or the interest on, this Bond against any officer or director
of the Issuer.
This Bond is issued and the Indenture was authorized, executed and
delivered by the Issuer under and pursuant to the Constitution and laws of the
State of Texas, including particularly the Act and a resolution of the Issuer
duly adopted on November 13, 1985. Pursuant to the terms of the Agreement the
Company has agreed to pay to the Issuer such amounts as will be fully sufficient
to pay the principal of, and the redemption premium (if any) and the interest
on, the Bonds as the same become due and to pay certain administrative expenses
in connection with the Bonds.
Reference to the Indenture is hereby made for a description of the
aforesaid Bond Fund which is charged with, and pledged to, the payment of the
principal of, and the redemption premium (if any) and the interest on, the
Bonds, the nature and extent of the security, the rights, duties and obligations
of the Issuer, the Company and the Trustee, the rights of the holders of the
Bonds, the terms and conditions under and upon the occurrence of which the
Indenture and the Agreement may be modified and the terms and conditions under
and upon the occurrence of which the lien of the Indenture may be defeased as to
this Bond prior to the maturity or redemption date hereof, to all of the
provisions of which the holder hereof, by the acceptance of this Bond, assents.
THE TERMS AND PROVISIONS OF THIS BOND AND THE DEFINITIONS OF CERTAIN TERMS
USED HEREIN ARE CONTINUED ON THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS
AND PROVISIONS AND DEFINITIONS SMALL FOR ALL PURPOSES HAVE SUCH EFFECT AS THOUGH
SET FORTH FULLY AT THIS PLACE.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Texas to happen, exist and
be performed precedent to and in the issuance of this Bond, the execution of the
Indenture and the adoption of the aforesaid resolution by the Issuer, have
happened, exist and have been performed in due time, form and manner as required
by law.
This Bond shall not be entitled to any benefit under the Indenture and
shall not become valid or obligatory for any purpose until it shall have been
authenticated by
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<PAGE> 31
execution by the Trustee by manual signature of the certificate hereon endorsed.
IN WITNESS WHEREOF, the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY has
caused this Bond to be executed with the manual or duly authorized reproduced
facsimile signature of its President, and the reproduced facsimile of its
corporate seal to be imprinted hereon and attested by the manual or duly
authorized reproduced facsimile signature of its Secretary.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
By:__________________________
President
(CORPORATE SEAL)
ATTEST:
_______________________________
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
TO APPEAR ON FRONT OF BOND ]
This Bond is one of the Bonds described in the withinmentioned Indenture.
BANK ONE TRUST COMPANY, N.A.,
as Trustee
By:___________________________
Authorized Signature
Date of Authentication:________
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<PAGE> 32
[FORM OF BOND - BACK)
DEFINITIONS
In addition to the words and terms defined on the face of this Bond and in
the Indenture and the Agreement, the following words and terms as used herein
shall have the following meanings unless the context or use indicates another or
different meaning or intent and such definitions shall be equally applicable to
both the singular and plural forms of any of the words and terms herein defined:
Adjustment Date - After the Conversion Date, the Interest Payment Date
next preceding the Expiration Date of the Alternate Credit Facility or the
Expiration Date of the Letter of Credit, as the case may be.
Alternate Credit Facility - A credit facility other than the Letter of
Credit, including without limitation, an irrevocable letter of credit or bond
insurance policy, which provides for payment of the principal of, and interest
on, the Bonds, when due.
Alternate Interest Index - For any Interest Period ending prior to the
Conversion Date 65% of the interest rate applicable to 13-week United States
Treasury bills determined by the Remarketing Agent on the basis of the average
per annum bond equivalent yield at which such 13-week Treasury bills shall have
been sold at the most recent Treasury auction during the next preceding Interest
Period. If no such auction shall have been conducted during the next preceding
Interest Period, or if the Remarketing Agent shall fail to determine the
Alternate Interest Index, the Alternate Interest Index during such Interest
Period will be the same as for the preceding Interest Period.
Alternate Letter of Credit - An irrevocable letter of credit other than
the Letter of Credit issued in accordance with the Agreement.
Bank - The issuer of the Letter of Credit, initially, Wells Fargo Bank,
N.A. , a national banking association.
Business Day - Any day, other than a Saturday or Sunday, on which banks
located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located and in New York, New
York, are not required or authorized by law to remain closed and on which The
New York Stock Exchange, Inc. is not closed.
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<PAGE> 33
Conversion Date - The date upon which the Bonds begin to bear interest at
the Fixed Interest Rate.
Date of Taxability - The date as of which all or any part of the interest
on the Bonds is first required to be included in the gross income of any holder
or former holder thereof for Federal income tax purposes by reason of the
occurrence of an "Event of Taxability" (defined in the Indenture) which results
in a "Determination of Taxability" (defined in the Indenture).
Expiration Date of the Alternate Credit Facility - The date established in
the Alternate Credit Facility for the expiration thereof, and in the event such
date is extended, such date as extended.
Expiration Date of the Letter of Credit - The date established in the
Letter of Credit for the expiration thereof in accordance with its terms,
initially December 15, 1988 and in the event such date is extended, such date as
extended.
First Optional Redemption Date - The November 1 occurring in the year
which is a number of years after the Conversion Date equal to the number of
years between the November 1 immediately following the Conversion Date (unless
the Conversion Date is a November 1, in which case from such November 1.) and
November 1, 2005, multiplied by 1/2 and rounded up to the nearest whole number.
Fixed Interest Rate - A fixed non-floating interest rate on the Bonds.
Interest Index - For any Interest Period ending prior to the Conversion
Date the interest index described below under the heading Interest Rate.
-------------
Interest Payment Date - With respect to the Bonds prior to and including
the Conversion Date the first Business Day of each month commencing January 2,
1986, and after the Conversion Date the first day of each May and November.
Interest Period - With respect to the Bonds prior to the Conversion Date a
period from and including the Interest Payment Date in each calendar month to
and including the day next preceding the Interest Payment Date in the following
calendar month, except that the first Interest Period shall be the period from
and including the Original Issuance Date to and including December 31, 1985.
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<PAGE> 34
Investment Company - Any open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended.
Letter of Credit - The irrevocable letter of credit issued by the Bank
contemporaneously with the original issuance of the Bonds, except that upon the
issuance and delivery of an Alternate Letter of Credit, "Letter of Credit" shall
mean such Alternate Letter of Credit, and upon the delivery of an Alternate
Credit Facility, "Letter of Credit" shall, unless the context otherwise
requires, include reference to the Alternate Credit Facility.
Letter of Credit Agreement - The Series A Reimbursement Agreement dated as
of November 1, 1985, between the Company and the Bank pursuant to which the
Letter of Credit is issued by the Bank and delivered to the Trustee, and any and
all modifications, alterations, amendments and supplements thereto, and includes
any agreement between the Company and the Bank pursuant to which any Alternate
Letter of Credit is issued or any Alternate Credit Facility is made available.
Moody's - Moody's Investors Service, Inc.
Paying Agent - The paying agent appointed in accordance with the
Indenture, initially Bank One Trust Company, N.A. Columbus, Ohio.
Record Date - With respect to any Interest Payment Date on or before the
Conversion Date the fifth (5th) day next preceding such Interest Payment Date;
provided that if such day is not a Business Day, then the next preceding
Business Day, and with respect to any Interest Payment Date after the Conversion
Date the fifteenth (15th) day of the month next preceding such Interest Payment
Date.
Remarketing Agent - The remarketing agent appointed in accordance with the
Indenture, initially Prudential-Bache Securities Inc., New York, New York,
S&P - Standard & Poor's Corporation,
Interest Rate
For the first Interest Period, the Bonds shall bear interest at the rate
of 55% of the Prime Rate of Bank one Trust Company, N.A., Columbus, Ohio.
Thereafter, for each Interest Period ending before the Conversion Date, the
interest rate borne by the Bonds during each Interest Period shall be equal to
the Interest Index as determined as set forth below, The Interest Index shall be
an index, maintained by the Remarketing Agent, which shall be the average
interest rate of a component issue register
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<PAGE> 35
comprised of at least five (5) issues of obligations (i) the interest on which
is exempt from federal income taxation, (ii) having a demand purchase or
redemption feature comparable to that of the Bonds, and (iii) having a
comparable rating from Moody's or from S&P for obligations with demand purchase
features and maturities similar to those of the Bonds. The Remarketing Agent may
substitute component issues to the Interest Index from time to time as it may
deem necessary in order to keep the Interest Index as representative as possible
of the current market interest rate for securities comparable in security,
liquidity and creditworthiness to the Bonds, whenever necessitated by changes in
market conditions or issuance procedures. On or before the fourth Business Day
prior to the effective date of any such change the Remarketing Agent shall
notify the Trustee and the Company by telephone, telex, or telegram, or other
electronic or wire communication, promptly confirmed in writing of each such
change of component issues in the Interest Index.
In the event that the Bonds are rated by neither Moody's nor S&P, or in
the event that the Remarketing Agent no longer computes, or fails to compute,
the Interest Index and no other qualified municipal securities evaluation
service can be appointed by the Issuer, the rate of interest during each
Interest Period shall be the Alternate Interest Index, or, if no such auction
shall have been conducted during the next preceding Interest Period, or if the
Remarketing Agent shall fail or refuse to determine the Interest Index, the
Interest Index during such Interest Period shall be the same as for such
preceding Interest Period.
The computation of the Interest Index by the Remarketing Agent, shall be
conclusive and binding upon the Issuer, the Trustee, the Bank, the Company, the
Paying Agent, the-Registrar, the Remarketing Agent and the Owners of the Bonds.
Notwithstanding anything to the contrary contained herein the interest
rate on the Bonds shall never exceed fifteen percentum (15%) per annum.
Prior to the Conversion Date, interest on the Bonds shall be computed on
the basis of a year of 365 or 366 days, as appropriate, for the actual number of
days elapsed.
Optional Redemption of Bonds
Prior to the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, in whole or in part in integral multiples
of $50,000 on any
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<PAGE> 36
Interest Payment Date, on a date selected by the Company at a price equal to
100% of the principal amount to be redeemed plus accrued interest thereon, if
any., to the redemption date.
After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, in whole at any time or., to the extent
permitted by Section 4.3(c) of the Agreement, in part in integral multiples of
$5,000 on any Interest Payment Date, at a redemption price of 100% of the
principal amount thereof plus accrued interest, if any., to the redemption
date., in the event of (1) condemnation of the Facilities or any part thereof to
the extent provided in Section 4.3(c) of the Agreement, or (2) exercise by the
Company of its prepayment option as provided in Section 4.3(d) of the Agreement,
After the Conversion Date., the Bonds are subject to redemption by the
Issuer, at the option of the Company, on or after the First Optional Redemption
Date, in whole at any time or in part on any Interest Payment Date in integral
multiples of $5,000, on a date selected by the Company at the redemption prices
(expressed as percentages of the principal amount to be redeemed) set forth in
the following table plus accrued interest, if any, to the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date through
the following October 31 103%
First Anniversary of the First Optional
Redemption Date through the following
October 31 102%
Second Anniversary of the First Optional
Redemption Date through the following
October 31 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Mandatory Redemption of Bonds
Upon the occurrence of a Determination of Taxability, the Bonds are
subject to mandatory redemption by the Issuer at a redemption price of 100% of
the principal amount to be redeemed plus accrued interest, if any, to the
redemption date on the fifteenth (15th) Business Day following the date
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<PAGE> 37
of such Determination of Taxability if the date of such Determination of
Taxability precedes the Conversion Date, or on the seventy-fifth (75th) day
following the date of such Determination of Taxability if the date of
Determination of Taxability is on or after the Conversion Date. The Bonds shall
be redeemed in whole unless, in the opinion of "Independent Tax Counsel"
(defined in the Agreement) the redemption of a portion of the outstanding
principal amount of the Bonds would have the result that the interest payable on
the Bonds remaining outstanding after such redemption would not be included in
the gross income for Federal income tax purposes of any holder of the Bonds
(other than a holder who is a "substantial user" of the Facilities or a "related
person" within the meaning of Section 103(b) of the Internal Revenue Code of
1954, as amended), in which event only such portion of the outstanding Bonds
shall be redeemed.
Purchase of Bonds
On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Paying Agent, on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Paying Agent at its principal corporate trust office in Columbus, Ohio, of a
written notice which states (A) that such holder is an Investment Company, (B)
the principal amount of such Bond to be purchased, and (C) the date on which
such Bond or portion thereof shall be purchased pursuant to this paragraph,
which date shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of such notice to the Paying Agent; and (ii)
delivery of such Bond, and, in the case of a Bond or portion thereof to be
purchased prior to an Interest Payment Date and after the Record Date in respect
thereof, a due-bill check, in form satisfactory to the Paying Agent, for
interest due on such Interest Payment Date, at the Paying Agent's principal
office in Columbus, Ohio, at or prior to 10:00 a.m., New York City time, on the
date specified in the aforesaid notice; provided, however, that such Bond or
portion thereof shall be purchased pursuant to this paragraph only if the Bond
so delivered to the Paying Agent shall conform in all respects to the
description thereof in the aforesaid notice. Upon receipt by the Paying Agent of
notice from any Investment Company holder of its intention to require any Bonds
held by such holder to be purchased, the Paying Agent shall notify the
Remarketing Agent by telephone or telegraph and confirmed promptly in writing of
such fact, and the Remarketing Agent shall undertake to remarket any such Bonds
in the same manner as
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<PAGE> 38
in the case of Bonds purchased by the Remarketing Agent pursuant to the next
succeeding paragraph.
On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Remarketing Agent, on the
demand of the holder thereof, on any Business Day, at a purchase price equal to
the principal amount thereof plus accrued interest, if any, to the date of
purchase upon: (i) delivery to the Remarketing Agent at its Principal Office of
a written notice which (A) states the principal amount of such Bond to be
purchased, and (B) states the date on which such Bond or portion thereof shall
be purchased pursuant to this paragraph, which date shall be a Business Day not
prior to the seventh (7th) day next succeeding the date of the delivery of such
notice to the Remarketing Agent; and (ii) delivery of such Bond and, in the case
of a Bond or portion thereof to be purchased prior to the Interest Payment Date
for any Interest Period and after the Record Date in respect thereof, a due-bill
check, in form satisfactory to the Remarketing Agent, for interest due on such
Interest Payment Date, to an office designated by the Remarketing Agent in New
York, New York, presently, c/o Marine Midland Bank, 140 Broadway, New York, New
York 10004, Attention: Clearance Department Level A, at or prior to 10:00 a.m.,
New York City time, on the date specified in the aforesaid notice; provided,
however, that such Bond or portion thereof shall be so purchased pursuant to
this paragraph only if the Bond so delivered to the Remarketing Agent shall
conform in all respects to the description thereof in the aforesaid notice.
All Bonds shall be purchased by the Paying Agent on the Interest Payment
Date next preceding the Expiration Date of the Letter of Credit and on the
Interest Payment Date next preceding the Expiration Date of the Alternate Credit
Facility, at a purchase price equal to the principal amount thereof, except (i)
Bonds, or portions thereof in an integral multiple of $50,000 if prior to the
Conversion Date or $5,000 if on or after the Conversion Date, with respect to
which the Paying Agent shall have received written directions not to so purchase
such Bonds or portions thereof from the holders of the same, (ii) Bonds
delivered to the Paying Agent or the Remarketing Agent as described in the two
preceding paragraphs for purchase on such Interest Payment Date or on any
Business Day in the Interest Period next preceding such Interest Payment Date
and (iii) Bonds issued upon the registration of transfer of Bonds referred to in
clauses (i) or (ii) above. Any Bonds not delivered to the Paying Agent for
purchase as described above (other than Bonds described in clauses (i), (ii) or
(iii) above) shall nonetheless be deemed to be tendered for sale by the holders
thereof and purchased by the Paying Agent.
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<PAGE> 39
All Bonds shall be purchased by the Paying Agent on the Conversion Date at
a purchase price equal to the principal amount thereof except (i) Bonds, or
portions thereof in an integral multiple of $5,000, with respect to which the
Paying Agent shall have received written directions not to so purchase such
Bonds or portions thereof from the holders of the same, (ii) Bonds delivered to
the Remarketing Agent or the Paying Agent as described in the second and third
preceding paragraphs for purchase on any Business Day in the Interest Period
next preceding the Conversion Date, and (iii) Bonds issued upon the registration
of transfer of Bonds referred to in clauses (i) or (ii) above. Any Bonds not
delivered to the Paying Agent for purchase (other than Bonds described in
clauses (i), (ii) or (iii) above) shall nonetheless be deemed to be tendered for
sale by the holders thereof and purchased by the Paying Agent. The provisions of
this paragraph shall not apply if there has occurred and is continuing on the
prospective purchase date an "Event of Default" (defined in the Indenture).
In the event that all Bonds are to be purchased by the Paying Agent
pursuant to either of the two next preceding paragraphs, a holder of Bonds may
direct the Paying Agent not to purchase any Bond or portion thereof owned by
such holder by delivering to the Paying Agent, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Bonds held by such holder, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of the second paragraph under the heading
"Notices" hereinafter set forth, and (iii) directing the Paying Agent not to
purchase such Bonds or portions thereof. Any instrument delivered to the Paying
Agent in accordance with this paragraph shall be irrevocable with respect to the
Bonds for which such instrument is delivered and shall Joe binding upon
subsequent holders of such Bonds.
ANY UNTENDERED BONDS, FOR WHICH THERE SHALL HAVE BEEN IRREVOCABLY
DEPOSITED ON OR BEFORE THE INTEREST PAYMENT DATE NEXT PRECEDING (A) THE
EXPIRATION DATE OF THE LETTER OF CREDIT OR (B) THE EXPIRATION DATE OF THE
ALTERNATE CREDIT FACILITY, OR THE CONVERSION DATE, AS THE CASE MAY BE, IN TRUST
WITH THE TRUSTEE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE OF SUCH BONDS
DUE WITH RESPECT TO THE PURCHASE THEREOF SHALL CEASE TO ACCRUE INTEREST ON THE
INTEREST PAYMENT DATE NEXT PRECEDING (A) THE EXPIRATION DATE OF THE LETTER OF
CREDIT OR (B) THE EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY, OR THE
CONVERSION DATE, AS THE CASE MAY BE, AND SHALL BE DEEMED TO HAVE BEEN TENDERED
FOR PURCHASE AND PURCHASED BY THE PAYING AGENT. REPLACEMENT BONDS SHALL BE
33
<PAGE> 40
ISSUED IN PLACE OF SUCH UNTENDERED BONDS PURSUANT TO SECTION 203 OF THE
INDENTURE.
NO DELIVERY OF BONDS TO THE PAYING AGENT OR THE REMARKETING AGENT OR
PURCHASE OF BONDS BY THE PAYING AGENT OR THE REMARKETING AGENT SHALL CONSTITUTE
A REDEMPTION OF BONDS OR ANY EXTINGUISHMENT OF THE DEBT REPRESENTED THEREBY.
Conversion to Fixed Interest Rate
At any time, the Company may, by notice in writing to the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent and the Bank, direct that a
Fixed Interest Rate be established for the Bonds. The Company's notice shall set
forth: (i) the Conversion Date desired by the Company, which shall be an
Interest Payment Date not less than thirty (30) days after the date of such
notice; and (ii) the date the Fixed Interest Rate shall be established, which
shall be not less than twelve (12) Business Days prior to the Conversion Date.
The notice shall be accompanied by an opinion of Independent Tax Counsel stating
that the conversion to a Fixed Interest Rate is authorized and permitted by the
Indenture and the Act, and that such conversion will not adversely affect the
exemption of interest on the Bonds from Federal income taxation. The Remarketing
Agent shall determine the Fixed Interest Rate on the date specified in such
notice, which rate shall be the lowest rate at which the Remarketing Agent shall
have received bids, not later than the twelfth (12th) Business Day prior to the
Conversion Date, to purchase all of the outstanding Bonds at a purchase price of
100% of the outstanding principal amount thereof on the Conversion Date. Prior
to the Expiration Date of the Letter of Credit, conversion to the Fixed Interest
Rate shall require the prior written consent of the Bank.
Any Bonds purchased by the Remarketing Agent or the Paying Agent pursuant
to the terms of the Indenture after the Trustee has given notice of the
establishment of a Conversion Date shall not be remarketed except to a buyer who
agrees at the time of such purchase either (i) to accept the Fixed Interest Rate
on the Conversion Date, or (ii) to require purchase of such Bonds by the
Remarketing Agent or the Paying Agent on or before the Conversion Date pursuant
to the first two paragraphs under the heading "Purchase of Bonds" set forth
above.
The Letter of Credit shall be cancelled on the fifteenth (15th) day
following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank
34
<PAGE> 41
stating that the Letter of Credit is not to be cancelled on such day.
In the event that the Letter of Credit or an Alternate Credit Facility is
in effect with respect to Bonds following the Conversion Date, the Fixed
Interest Rate shall be adjusted on the Adjustment Date so as to equal the lowest
rate of interest at which the Remarketing Agent shall have received bids on or
prior to the twelfth (12th) Business Day next preceding the Adjustment Date to
purchase all outstanding Bonds on the Adjustment Date at a price of 100% of the
principal amount thereof. Following such adjustment, the Bonds shall bear
interest at the Fixed Interest Rate determined pursuant to this paragraph until
maturity.
THE BONDS SHALL NOT BE SUBJECT TO PURCHASE, AS PROVIDED IN SECTION 401 OF
THE INDENTURE, AFTER THE EXPIRATION DATE OF THE LETTER OF CREDIT.
The owner of this Bond, by the acceptance hereof, hereby covenants, and
consents to and agrees to be bound by the covenant of the Trustee, not to claim
or accept the benefits of any Federal guarantee which would cause any Bond to
become subject to Federal income taxation under the provisions of Section 103(b)
of the Internal Revenue Code of 1954, as amended, and acknowledges and agrees
that in the event of a failure by the Bank to fulfill its obligations, in whole
or in part, with respect to any draw on the Letter of Credit, the Trustee is
prohibited from making any claim on the Federal Deposit Insurance Corporation
with respect to any such failure and agrees that no claim will be made by or on
behalf of such registered owner against the Federal Deposit Insurance
Corporation in the event of a failure by the Bank to fulfill its obligations, in
whole or in part, with respect to any draw on the Letter of Credit.
Notices
In the event any Bonds are called for redemption, the Trustee, on behalf
of the Issuer, shall give notice of such redemption, which notice shall (i)
identify the Bonds or portions thereof to be redeemed, the redemption date, the
redemption price and the place or places where the amounts due upon such
redemption shall be payable (which shall be principal corporate trust office of
the Trustee), and (ii) state that on the redemption date the Bonds to be
redeemed shall cease to bear interest. Such notice shall be given at least ten
(10) Business Days prior to the redemption date if the redemption date is on or
prior to the Conversion Date and at least thirty (30) days prior to the
redemption date if the redemption date is after the Conversion Date.
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<PAGE> 42
The Trustee, on behalf of the Issuer, shall give notice of the
establishment of the Conversion Date, the Expiration Date of the Letter of
Credit or the Expiration Date of the Alternate Credit Facility, which notice
shall include a statement (i) of the date on which the Bonds are to be purchased
by the Paying Agent as a result of the establishment of the Conversion Date or
the expiration of the Letter of Credit or the Alternate Credit Facility, (ii) if
applicable, that the Letter of Credit or the Alternate Credit Facility shall
terminate fifteen (15) days after such purchase date, (iii) that any ratings of
the Bonds by Moody's or S&P may be withdrawn or reduced from the ratings on the
Bonds then prevailing, (iv) that the Indenture provides that Bonds are required
to be delivered to the Paying Agent for purchase on the date specified in such
notice, and that Bonds not delivered to the Paying Agent on such date shall
nonetheless be deemed to have been purchased by the Paying Agent (unless the
holders thereof have directed the Paying Agent not to purchase such Bonds or
portions thereof) and, accordingly, no interest subsequent to the date specified
in such notice shall be payable to such holders, (v) of 'the rights of the
holders to direct the Paying Agent not to purchase Bonds held by them, and the
method of exercising such rights, (vi) that on the purchase date designated in
such notice the Paying Agent shall hold moneys equal to the purchase price for
all Bonds not delivered on such date, in trust, for the holders of such Bonds,
which moneys shall be paid upon surrender of Bonds to the Paying Agent, and
(vii) that, if the purchase of the Bonds will result from the establishment of
the Conversion Date, after the Conversion Date the Bonds will bear interest at
the Fixed Interest Rate and the holders of the Bonds will not have the right to
require the Paying Agent to purchase Bonds. Such notice shall be given at least
ten (10) Business Days prior to the date on which the Bonds are to be purchased
as a result of the establishment of a Conversion Date or the expiration of the
Letter of Credit or the Alternate Credit Facility.
If the Company shall direct the Trustee to notify the Bank and the holders
of outstanding Bonds that an Alternate Letter of Credit or an Alternate Credit
Facility will be delivered to the Trustee, the Trustee shall give such notice,
which notice shall state (i) the proposed date of delivery to the Trustee of the
Alternate Letter of Credit or Alternate Credit Facility, (ii) the date of the
Alternate Letter of Credit or Alternate Credit Facility, (iii) the expiration
date of the Letter of Credit for which the Alternate Letter of Credit or
Alternate Credit Facility is to be substituted, which date shall in no event be
prior to the delivery date of the Alternate Letter of Credit or Alternate Credit
Facility (iv) the expiration date of the
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<PAGE> 43
Alternate Letter of Credit or Alternate Credit Facility, (v) the issuer of
the Alternate Letter of Credit or Alternate Credit Facility, and a brief
description of such issuer, and (vi) if the Bonds are then rated by Moody's or
S&P, either (A) that any ratings of the Bonds by Moody's or S&P may be withdrawn
or reduced from such ratings then prevailing, or (B) such ratings of the Bonds
by Moody's or S&P shall have been based upon such Alternate Letter of Credit or
Alternate Credit Facility. Such notice shall be given at least thirty (30)
Business Days prior to the delivery of the Alternate Letter of Credit or
Alternate Credit Facility to the Trustee.
Any notice required to be given pursuant to any of the three preceding
paragraphs shall be given by mailing a copy thereof by registered or certified
mail to the holder of each Bond (provided, however, that a notice of redemption
need be given only to holders of Bonds to be redeemed in whole or in part) at
the address for such holder shown on the registration books maintained by the
Bond Registrar pursuant to the Indenture. Failure to give such notice by
mailing, or any defect in such notice, to the holder of any Bonds shall not
affect the validity of the proceedings with respect to any other Bonds.
If, because of the temporary or permanent suspension of regular mail
service, or for any other reason, it is impossible or impractical to mail such
notice of redemption or purchase in the manner herein provided, then such other
manner of giving notice in lieu thereof as shall be made with the approval of
the Trustee shall constitute a sufficient notice. Failure to give or receive
such notice with respect to any Bond shall not affect the validity of any
proceedings for the redemption or purchase of any other Bonds.
Miscellaneous
The Bonds are issuable only as fully registered bonds in the denomination
of $50,000 or any integral multiple thereof; provided, however, that any Bonds
issued upon exchange or transfer on or after the Conversion Date shall be in the
denomination of $5,000 or any integral multiple thereof. The Bonds are
interchangeable in equal aggregate principal amounts and in authorized
denominations at the principal corporate trust office of the Trustee, as Bond
Registrar, in the manner, subject to the limitations and on payment of the
charges provided in the Indenture.
This Bond is transferable by the bondholder in person or by his attorney
duly authorized in writing at the principal corporate trust office of the
Trustee, in Columbus,
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<PAGE> 44
Ohio, all subject to the terms and conditions provided in the Indenture.
The Bonds, upon the surrender thereof at the principal corporate trust
office of the Trustee with a written instrument of transfer satisfactory to the
Trustee executed by the bondholder or his duly authorized attorney, may, at the
option of the bondholder, be exchanged for an equal aggregate principal amount
of Bonds of the same maturity and interest rate of any other authorized
denomination, in the manner and subject to the conditions provided in the
Indenture.
The Trustee shall not be required to transfer or exchange any Bond (i)
during the period following the Record Date next preceding any Interest Payment
Date of such Bond and such Interest Payment Date, or (ii) after the giving of
notice calling such Bond for redemption or partial redemption has been made.
No service charge shall be made for any transfer or exchange hereinbefore
referred to, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith as a
condition precedent to the exercise of such privilege.
This Bond is issued with the intent that the laws of the State of Texas
shall govern its construction.
The person in whose name this Bond is registered shall be deemed and
regarded as the absolute owner hereof for all purposes, and payment of or on
account of either principal or interest made to such registered holder shall be
valid and effectual to satisfy and discharge the liability upon this Bond to the
extent of the sum or sums so paid.
The particular Bond of this series, or portion thereof in the case of
certain bonds of a principal amount greater than $50,000, or, on or after the
Conversion Date, $5,000, to be redeemed in the case of a partial redemption
under any of the provisions of the Indenture, shall be selected by the Trustee
by prorating the amount of Bonds to be redeemed among the holders by equalizing,
from time to time, the portions of the Bonds to be redeemed, all in the manner
set forth in the Indenture. Any partial redemption shall be in multiples of
$50,000, or, on or after the Conversion Date, $5,000.
Upon deposit with the Trustee of the moneys required to effect any
redemption, the Bonds or portion thereof thus called and provided for shall not
bear interest after the redemption date and shall not be considered to be
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<PAGE> 45
outstanding or to have any other rights under the Indenture other than the right
to receive payment.
By the acceptance of this Bond, the bondholder agrees that if less than
the entire principal amount of this Bond is to be redeemed, payment of the
redemption price will be made only upon the surrender of this Bond to the
Trustee. Upon surrender hereof, there shall be issued to the bondholder, without
charge therefor, for the un redeemed balance hereof, a Bond or Bonds in any of
the authorized denominations as more fully set out in the Indenture.
The holder of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the agreements therein, or to
take any action with respect to any "Event of Default" as defined in the
Indenture, or to institute, appear in or defend any suit or other proceeding
with respect thereto, except as provided in the Indenture. The stated maturity
of this Bond and the stated dates for the payment of interest may be accelerated
upon the occurrence of certain "Events of Default" as defined in the Indenture.
The occurrence of certain other such "Events of Default" will permit the
acceleration of the stated maturity of this Bond and the stated dates for the
payment of interest as provided in the Indenture. Modifications, amendments or
supplements to the Indenture may be made only to the extent and in the
circumstances permitted by the Indenture.
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<PAGE> 46
[FORM OF ASSIGNMENT
TO APPEAR ON BACK OF BOND]
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFICATION NUMBER OF ASSIGNEE
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
the within bond of the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY and does
hereby constitute and appoint __________________________ attorney to transfer
the said bond of the within named Issuer, with full power of substitution in the
premises.
Dated:
In the presence of:_________________________________________________
Bondholder__________________________________________________________
Signature Guaranteed:
-------------------------------
Section 207. Delivery of Bonds. Upon the execution and delivery hereof,
the Issuer shall execute the Bonds and deliver them to the Trustee, and the
Trustee shall authenticate the Bonds and deliver them to the Original Purchasers
as shall be directed by the Issuer as hereinafter in this Section provided.
Prior to the delivery by the Trustee of any of the Bonds there shall be
filed with the Trustee:
(a) A copy, certified by the Secretary of the Issuer, of all
resolutions adopted and proceedings had by the Issuer authorizing the
issuance of the Bonds, including the Bond Resolution authorizing the
execution, delivery and performance of this Indenture and the Agreement;
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<PAGE> 47
(b) An original executed counterpart of this Indenture, the
Agreement and the Letter of Credit Agreement and the original Letter of
Credit;
(c) Copies of the Financing Statements, if any, filed to perfect the
security interests;
(d) An original executed counterpart of the certification of the
Issuer establishing its reasonable expectations to the effect that the
Bonds will not be "arbitrage bonds" within the meaning of Section 103(c)
of the Code, together with an opinion of McCall, Parkhurst & Horton, Bond
Counsel, to the effect that the Bonds are not "arbitrage bonds";
(e) A copy of completed IRS Form 8038, "Information Return for
Private Activity Bond Issues", filed by or on behalf of the Issuer
pursuant to Section 103(l) of the Code;
(f) A copy of the notice of election filed by or behalf of the
Issuer with the Internal Revenue Service pursuant to Section 103 (b) (6)
(D) of the Code;
(g) The written opinion of Counsel for the Company or other Counsel
satisfactory to the Issuer and the Trustee expressing the opinion that the
Financing Statements referred to in (c) above, if any, have been filed and
said security interests are "perfected" security interests within the
meaning of the U.C.C., as amended, and that there are no other properly
indexed financing statements or liens of record affecting the property as
to which said security interests were created;
(h) An opinion of Counsel for the Company to the effect that the
Agreement and the Letter of Credit Agreement have been duly authorized,
executed and delivered by the Company;
(i) An opinion of McCall, Parkhurst & Horton, Bond Counsel, to the
effect that the Bonds have been duly authorized, executed and delivered by
the Issuer and constitute legal, valid, binding and enforceable limited
obligations of the Issuer entitled to the benefits of and secured by this
Indenture; and
(j) A request and authorization to the Trustee on behalf of the
Issuer and signed by its President or Vice President to authenticate and
deliver the Bonds in such specified denominations as permitted herein to
the Original Purchasers upon payment to the Trustee, but
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<PAGE> 48
for the account of the Issuer, of a specified sum of money. The proceeds
from the sale of the Bonds shall be paid over to the Trustee and deposited
to the credit of the Bond Fund and Construction Fund as hereinafter
provided in Article VI.
Section 208. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is
mutilated, lost, stolen or destroyed, the Issuer may execute and the Trustee
(upon the receipt of a written authorization from the Issuer) may authenticate
and deliver a new Bond of the same maturity, interest rate, aggregate principal
amount and tenor in lieu of and in substitution for the Bond mutilated, lost,
stolen or destroyed; provided that, in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee, as Bond Registrar, and
in the case of any lost, stolen or destroyed Bond, there shall be first
furnished to the Trustee evidence satisfactory to it of the ownership of such
Bond and of such loss, theft or destruction, together with indemnity
satisfactory to it. If any such Bond shall have matured or a redemption date
pertaining thereto shall have passed, instead of issuing a new Bond the Issuer
may pay the same without surrender thereof. The Issuer and the Trustee may
charge the holder of such Bond with their reasonable fees and expenses in this
connection.
In executing a new Bond and in furnishing the Trustee with the written
authorization to authenticate and deliver a new Bond as provided for in this
Section, the Issuer may rely conclusively on a representation of the Trustee
that the Trustee is satisfied with the adequacy of the evidence presented
concerning the mutilation, loss, theft or destruction of any Bond.
Section 209. Exchangeability and Transfer of Bonds; Persons Treated as
owners. The Issuer shall cause books for the registration and for the transfer
of the Bonds as provided herein to be kept by the Trustee which is hereby
constituted and appointed the Bond Registrar of the Issuer.
Bonds may be transferred on the books of registration kept by the Trustee
by the holder in person or by his duly authorized attorney, upon surrender
thereof, together with a written instrument of transfer executed by the holder
or his duly authorized attorney. Upon surrender for transfer of any Bond with
all partial redemptions endorsed thereon at the principal office of the Trustee,
the Issuer shall execute and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Bond or Bonds of the same maturity,
interest rate, aggregate principal amount and tenor and of any authorized
denomination or denominations
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<PAGE> 49
and numbered consecutively in order of issuance according to the records of the
Bond Registrar.
Bonds may be exchanged at the principal office of the Trustee for an equal
aggregate principal amount of Bonds of the same maturity, interest rate,
aggregate principal amount and tenor and of any authorized denomination or
denominations. The Issuer shall execute and the Trustee shall authenticate and
deliver Bonds which the bondholder making the exchange is entitled to receive,
bearing numbers not contemporaneously then outstanding.
Such transfers of registration or exchanges of Bonds shall be without
charge to the holders of such Bonds, but any taxes or other governmental charges
required to be paid with respect to the same shall be paid by the holder of the
Bond requesting such transfer or exchange as a condition precedent to the
exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond (i)
during the period following the record date next preceding any interest payment
date of such Bond and such interest payment date, or (ii) after the giving of
notice calling such Bond for redemption or partial redemption has been made.
The person in whose name any Bond shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of either principal (or interest shall be made only to or upon the order
of the registered owner thereof or his duly authorized attorney, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
All Bonds issued upon any transfer or exchange of Bonds shall be legal,
valid and binding limited obligations of the Issuer, evidencing the same debt,
and entitled to the same security and benefits under this Indenture as the Bonds
surrendered upon such transfer or exchange.
In executing any Bond upon exchange or transfer provided for in this
Section, the Issuer may rely conclusively on a representation of the Trustee
that such execution is required.
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<PAGE> 50
ARTICLE III.
REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption Dates and Prices.
Optional Redemption
(a) Prior to the Conversion Date, the Bonds are subject to redemption by
the Issuer, at the option of the Company, in whole at any time or in part in
integral multiples of $50,000 on any Interest Payment Date on a date selected by
the Company at a price equal to 100% of the principal amount to be redeemed plus
accrued interest thereon, if any, to the redemption date. Prior to the
Expiration Date of the Letter of Credit any such redemption shall be made solely
from Available Moneys.
(b) After the Conversion Date, the Bonds are subject to redemption by the
issuer, at the option of the Company, in whole at any time or, to the extent
permitted by Section 4.3(c) of the Agreement, in part in integral multiples of
$5,000 on any Interest Payment Date, at a redemption price of 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date,
in the event of (1) condemnation of the Facilities or any part thereof to the
extent provided in Section 4.3(c) of the Agreement or, (2) exercise by the
Company of its prepayment option as provided in Section 4.3(d) of the Agreement.
Prior to the Expiration Date of the Letter of Credit, any such redemption shall
be made solely from Available Moneys.
(c) After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, on or after the First Optional Redemption
Date, in whole at any time or in part on any Interest Payment Date in integral
multiples of $5,000, on a date selected by the Company at
44
<PAGE> 51
the redemption prices (expressed as percentages of the principal amount to be
redeemed) set forth in the following table plus accrued interest, if any, to the
redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date through
the following September 30 103%
First Anniversary of the First Optional
Redemption Date through the following
September 30 102%
Second Anniversary of the First Optional
Redemption Date through the following
September 30 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Prior to the Expiration Date of the Letter of Credit, any such redemption
shall be made solely from Available Moneys.
(d) If less than all of the Bonds are called for redemption (regardless of
whether such redemption is at the option of the Company or pursuant to any
mandatory redemption provisions of this Indenture), the selection of Bonds or
portions thereof to be called shall be made by the Trustee in accordance with
Section 305; provided, however, that Bonds held by the Bank as, a result of any
draw under the Letter of Credit shall be selected for redemption prior to any
other Bonds.
(e) Prior to the Conversion Date, the Issuer, or the Company on behalf of
the Issuer, shall give the Trustee written notice of an election to redeem Bonds
at least ten (10) Business Days prior to the latest day on which the Trustee may
give the bondholders notice of redemption pursuant to subsection (a) of Section
302 of this Indenture; provided, however, that prior to the Expiration Date of
the Letter of Credit, no such notice shall be deemed effective unless at the
time such notice is received by the Trustee the Trustee is holding sufficient
Available Moneys to pay the principal of, and interest on, the Bonds to be
redeemed.
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<PAGE> 52
Mandatory Redemption
Upon the occurrence of a Determination of Taxability, the Bonds are
subject to mandatory redemption by the Issuer at a redemption price of 100% of
the principal amount redeemed plus accrued interest, if any, to the redemption
date on the fifteenth (15th) Business Day following the date of such
Determination of Taxability if the date of such Determination of Taxability
precedes the Conversion Date, or on the seventy-fifth (75th) day following the
date of such Determination of Taxability if the date of Determination of
Taxability is on or after the Conversion Date. The Bonds shall be redeemed in
whole unless, in the opinion of Independent Tax Counsel, the redemption of a
portion of the outstanding principal amount of the Bonds would have the result
that the interest payable on the Bonds remaining outstanding after such
redemption would not be included in the gross income for Federal income tax
purposes of any holder of the Bonds (other than a holder who is a "substantial
user" of the Facilities or a "related person" within the meaning of Section
103(b) of the Code), in which event only such portion of the outstanding Bonds
shall be redeemed. Prior to the Expiration Date of the Letter of Credit the
redemption price shall be paid solely with proceeds drawn under the Letter of
Credit.
Section 302. Notices of Redemption, Conversion Date, Expiration Date of
the Letter of Credit, Expiration Date of the Alternate Credit Facility or
Delivery of an Alternate Letter of Credit or Alternate Credit Facility.
(a) In the event any Bonds are called for redemption, the Trustee, on
behalf of the Issuer, shall give notice of such redemption, which notice shall
(i) identify the Bonds or portions thereof to be redeemed, the redemption date,
the redemption price and the place or places where the amounts due upon such
redemption shall be payable (which shall be the Principal Office of the
Trustee), and (ii) state that on the redemption date the Bonds to be redeemed
shall cease to bear interest. Such notice may set forth any additional
information relating to such redemption. Such notice shall be given at least ten
(10) Business Days prior to the redemption date if the redemption date is on or
prior to the Conversion Date and at least thirty (30) days prior to the
redemption date if the redemption is after the Conversion Date.
(b) The Trustee, on behalf of the Issuer, shall give notice of the
establishment of (a) the Conversion Date, or (b) the Expiration Date of the
Letter of Credit or the Expiration Date of the Alternate Credit Facility, which
notice shall be given promptly upon the failure of the
46
<PAGE> 53
Company to provide an Alternate Credit Facility prior to the 60th day preceding
the expiration of the Letter of Credit, which notice shall include a statement
(i) of the date on which the Bonds are to be purchased by the Paying Agent as a
result of the establishment of the Conversion Date or the expiration of the
Letter of Credit or the Alternate Credit Facility, which with respect to the
expiration of the Letter of Credit or Alternate Credit Facility shall be the
interest payment date next preceding such expiration, VA with respect to the
Conversion Date, as opposed to the Expiration Date, that the Letter of Credit or
the Alternate Credit Facility shall terminate fifteen (15) days after such
purchase date, (iii) that any ratings of the Bonds Joy Moody's or S&P may be
withdrawn or reduced from the ratings on the Bonds then prevailing, (iv) that
the Indenture provides that Bonds are required to be delivered to the Paying
Agent for purchase on the date specified in such notice, and that Bonds not
delivered to the Paying Agent on such date shall nonetheless be deemed to have
been purchased by the Paying Agent (unless the holders thereof have directed the
Paying Agent not to purchase such Bonds or portions thereof) and, accordingly,
no interest subsequent to the date specified in such notice shall be payable to
such holders, (v) of the rights of the holders to direct the Paying Agent not to
purchase Bonds held by them, and the method of exercising such rights, (vi) that
on the purchase date designated in such notice the Paying Agent shall hold
moneys equal to the purchase price for all Bonds not delivered on such date, in
trust, for the holders of such Bonds, which moneys shall be paid upon surrender
of Bonds to the Paying Agent, and (vii) that, if the purchase of the Bonds will
result from the establishment of the Conversion Date, after the Conversion Date
the Bonds will bear interest at the Fixed Interest Rate and the holders of the
Bonds will not have the right to require the Paying Agent to purchase Bonds.
Such notice shall be given at least ten (10) Business Days prior to the, date on
which the Bonds are to be purchased as a-result of the establishment of a
Conversion Date or the expiration of the Letter of Credit or the Alternate
Credit Facility.
(c) If the Company, in accordance with Section 4.6 of the Agreement, shall
direct the Trustee to notify the Bank and the holders of Outstanding Bonds that
an Alternate Letter of Credit or an Alternate Credit Facility will be delivered
to the Trustee, the Trustee shall give such notice, which notice shall state (i)
the proposed date of delivery to the Trustee of the Alternate Letter of Credit
or Alternate Credit Facility (ii) the date of the Alternate Letter of Credit or
Alternate Credit Facility, (iii) the expiration date of the Letter of Credit for
which the Alternate Letter of Credit or Alternate Credit Facility is
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to be substituted, which date shall in no event be prior to the date of delivery
of the Alternate Letter of Credit or Alternate Credit Facility (iv) the
expiration date of the Alternate Letter of Credit or Alternate Credit Facility,
(v) the issuer of the Alternate Letter of Credit or Alternate Credit Facility,
and a brief description of such issuer, and (vi) if the Bonds are then rated by
Moody's or S&P, either (A) that any ratings of the Bonds by Moody's or S&P may
be withdrawn or reduced from such ratings then prevailing, or (B) such ratings
of the Bonds by Moody's or S&P shall have been based upon such Alternate Letter
of Credit or Alternate Credit Facility. Such notice shall be given at least
thirty (30) Business Days prior to the delivery of the Alternate Letter of
Credit or Alternate Credit Facility to the Trustee. The Company shall cause a
description of the issuer of the Alternate Letter of Credit or Alternate Credit
Facility to be furnished to the Trustee in time sufficient to permit the Trustee
to give the notice provided for in this subsection (c).
(d) Any notice required to be given pursuant to subsections (a), (b) or
(c) of this Section 302 shall be given by mailing a copy thereof by registered
or certified mail to the holder of each Bond (provided, however, that a notice
of redemption need be given only to holders of Bonds to be redeemed in whole or
in part) at the address for such holder shown on the registration books
maintained by the Bond Registrar pursuant to the Indenture. Failure to give such
notice by mailing, or any defect in such notice, to the holder of any Bonds
shall not affect the validity of the proceedings with respect to any other
Bonds.
(e) If, because of the temporary or permanent suspension of regular mail
service, or for any other reason, it is impossible or impractical to mail such
notice of redemption or purchase in the manner herein provided, then such other
manner of giving notice in lieu thereof as shall be made with the approval of
the Trustee shall constitute a sufficient notice. Failure to give or receive
such notice with respect to any Bond shall not affect the validity of any
proceedings for the redemption or purchase of any other Bonds.
(f) Prior to the Expiration Date of the Letter of Credit, any notice
required to be given pursuant to subsection (a) or (b) of this Section 302 shall
also be given to the Bank. Any such notice and any notice required to be given
to the Bank pursuant to subsection (c) of this Section 302 shall be given to the
Bank by telephone or telegraph promptly confirmed in writing. Immediately after
the redemption or cancellation of any Bonds, the Trustee shall promptly notify
the Bank, in accordance with the provisions of the
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Letter of Credit, of the aggregate principal amount of Bonds redeemed or
cancelled and the aggregate principal amount of Bonds Outstanding after such
cancellation or redemption.
Section 303. Cancellation. All Bonds which have been surrendered for the
purpose of payment, redemption, exchange or transfer shall lot; cancelled by the
Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bond
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Bonds held by the Trustee shall be disposed of as
directed by a written order of the Issuer or the Company.
If any Bonds are deemed to have been purchased by the Trustee pursuant to
subsections (c) or (d) of Section 401 then such Bonds shall be deemed cancelled
whether or not such bonds shall have been delivered to the Trustee; and the
Issuer shall execute and the Trustee shall authenticate and deliver to or upon
the order of the Company, a Replacement Bond or Bonds in the principal amount
equal to the aggregate principal amount of Bonds deemed cancelled in accordance
with this paragraph.
Section 304. Payment of Bonds Upon Redemption. In the case of a redemption
of any Bond or a portion thereof, on the date set for redemption in the written
notice to bondholders required to be given in Section 302, the Trustee, as
paying agent, shall pay the redemption price upon surrender of such Bond to the
Trustee in lawful money of the United States of America. Upon surrender of a
Bond for partial redemption, there shall be issued to such bondholder, without
charge therefor, for the unredeemed balance thereof, a Bond or Bonds in any of
the authorized denominations as provided in Section 209.
Section 305. Pro Rata Redemption. With respect to any partial redemption
of Bonds, the Trustee shall prorate the aggregate principal amount of Bonds to
be redeemed among all holders in proportion to the principal amount of such
Bonds registered in the name of each such holder; provided, however, that in any
such prorating the Trustee shall, according to such method as it shall deem
proper in its discretion, make such adjustments by increasing or decreasing by
not more than $50,000 or, on or after the Conversion Date, $5,000, the amount
which would be allocable on the basis of exact proportion to any one or more
holders of Bonds as may be necessary to the end that the principal amount so
prorated shall be in each instance an integral multiple of $50,000 or, on or
after the Conversion Date, $5,000. On each subsequent partial redemption of
Bonds, the Trustee shall make such adjustments, to the extent practicable, as
will equalize on a cumulative basis, the prorations
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among bondholders. Any partial redemption shall be in a multiple of $50,000 or,
on or after the Conversion Date, $5,000, and the Trustee shall be held harmless
and shall incur no responsibility for any redemption effected in the manner
described herein.
ARTICLE IV.
PURCHASE AND PLACEMENT OF BONDS;
LETTER OF CREDIT
Section 401. Purchase of the Bonds.
(a) On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Paying Agent on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Paying Agent at its Principal Office of a written notice which states (A) that
such holder is an Investment Company, (B) the principal amount of such Bond to
be purchased and (C) the date on which such Bond or portion thereof shall be
purchased pursuant to this subsection (a), which date shall be a Business Day
not prior to the seventh (7th) day next succeeding the date of the delivery of
such notice to the Trustee; and (ii) delivery of such Bond, and, in the case of
a Bond or portion thereof to be purchased prior to an Interest Payment Date and
after the Record Date in respect thereof, a due-bill check, in form satisfactory
to the Paying Agent, for interest due on such Interest Payment Date, at the
Paying Agent's Principal Office at or prior to 10:00 a.m., New York City time,
on the date specified in the aforesaid notice; provided, however, that such Bond
or portion thereof shall be so purchased pursuant to this subsection (a) only if
the Bond so delivered to the Paying Agent shall conform in all respects to the
description thereof in the aforesaid notice. Upon receipt by the Paying Agent of
notice from any Investment Company holder of its intention to require any Bonds
held by such holder to be purchased, the Paying Agent shall notify the
Remarketing Agent by telephone or telegraph and confirmed promptly in writing of
such fact, and the Remarketing Agent shall undertake to remarket any such Bonds
in the same manner as in the case of Bonds purchased by the Remarketing Agent
pursuant to subsection (b) below.
(b) On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Remarketing Agent, on the
demand of the holder thereof, on any Business Day at a purchase price equal to
the principal amount thereof plus accrued interest, if any, to the date of
purchase, upon: (i) delivery to the
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Remarketing Agent at its Principal Office of a written notice which states (A)
the principal amount of such Bond to be purchased, and (B) the date on which
such Bond or portion thereof shall be purchased pursuant to this subsection (b),
which date shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of such notice to the Remarketing Agent; and
(ii) delivery of such Bond and, in the case of a Bond or portion thereof to be
purchased prior to the Interest Payment Date for any Interest Period and after
the Record Date in respect thereof, a due-bill check, in form satisfactory to
the Remarketing Agent, for interest due on such Interest Payment Date, to the
Principal Office of the Remarketing Agent at or prior to 10:00 a.m., New York
City time, on the date specified in the aforesaid notice; provided, however,
that such Bond or portion thereof shall be so purchased pursuant to this
subsection (b) only if the Bond so delivered to the Remarketing Agent shall
conform in all respects to the description thereof in the aforesaid notice.
(c) All Bonds shall be purchased by the Paying Agent on the Interest
Payment Date next preceding the Expiration Date of the Letter of Credit and on
the Interest Payment Date next preceding the Expiration Date of the Alternate
Credit Facility, at a purchase price equal to the principal amount thereof,
except (i) Bonds, or portions thereof in an integral multiple of $50,000 if
prior to the Conversion Date or $5,000 if on or after the Conversion Date, with
respect to which the Paying Agent shall have received written directions not to
so purchase such Bonds or portions thereof from the holders of the same, (ii)
Bonds delivered to the Paying Agent or the Remarketing Agent as described in
subsection (a) or (b) of this Section 401 for purchase on such Interest Payment
Date, or on any Business Day in the Interest Period next preceding such Interest
Payment Date, and (iii) Bonds issued upon the registration of transfer of Bonds
referred to in clauses (i) or (ii) above. Any Bonds not delivered to the Paying
Agent for purchase as described above (other than Bonds described in clauses
(i), (ii) or (iii) above) shall nonetheless be deemed to be tendered for sale by
the holders thereof and purchased by the Paying Agent,
(d) All Bonds shall be purchased by the Paying Agent on the Conversion
Date at a purchase price equal to the principal amount thereof except (i) Bonds,
or portions thereof in an integral multiple of $5,000, with respect to which the
Paying Agent shall have received written directions not to so purchase such
Bonds or portions thereof from the holders of the same, (ii) Bonds delivered to
the Paying Agent or the Remarketing Agent as described in subsection (a) or (b)
of this Section 401 for purchase on the Conversion Date or on any Business Day
in the Interest Period next preceding the
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Conversion Date, and (iii) Bonds issued upon the registration of transfer of
Bonds referred to in clauses (i) or (ii) above. Any Bonds not delivered to the
Paying Agent for purchase (other than Bonds described in clauses (i), (ii) or
(iii) above) shall nonetheless be deemed to be tendered for sale by the holders
thereof and purchased by the Paying Agent. The provisions of this paragraph (d)
shall not apply if there has occurred and is continuing on the prospective
purchase date an Event of Default.
(e) In the event that all Bonds are to be purchased by the Paying Agent
pursuant to subsections (c) or (d) of this Section 401, a holder of Bonds nay
direct the Paying Agent not to purchase any Bonds or portions thereof owned by
such holder by delivering to the Paying Agent, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Bonds held by such holder, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of Section 302(b) of this Indenture, and
(iii) directing the Paying Agent not to purchase such Bonds or portions thereof.
Any instrument delivered to the Paying Agent in accordance with this subsection
(e) shall be irrevocable with respect to the Bonds for which such instrument is
delivered and shall be binding upon subsequent holders of such Bonds. Any Bond
purchased by the Remarketing Agent or the Paying Agent pursuant to the terms of
this Indenture after the Trustee has given notice of the Expiration Date of the
Letter of Credit, the Expiration Date of the Alternate Credit Facility or the
Conversion Date, pursuant to subsection (b) of Section 302 of this Indenture,
shall not be remarketed except to a buyer who either (i) specifically
acknowledges, in writing, on the date of purchase each of the matters set forth
in clauses (i) through (vii) of subsection (b) of Section 302 of this Indenture,
or (ii) agrees to require purchase of such Bonds by the Remarketing Agent or the
Paying Agent on or before the Expiration Date of the Letter of Credit or the
Expiration Date of the Alternate Credit Facility, as the case may be.
(f) Upon delivery to the Paying Agent of Bonds in accordance with
subsection (a) or by the Remarketing Agent of Bonds in accordance with
subsection (b) of this Section 401, the Remarketing Agent shall offer such Bonds
for sale and shall use its best efforts to sell such Bonds, any such sale to be
at a price equal to 100% of the principal amount thereof on the date stated in
the notice provided by the holder of such Bonds; provided that to the extent any
moneys described in clause (i) of subsection (g) of this Section 401 or moneys
which constitute Available Moneys derived from the sale of Bonds to the Company,
Charles King & Associates,
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a California limited partnership, or Charles King, its general partner, shall be
on deposit with the Trustee, any Bonds delivered to the Remarketing Agent shall
be purchased with such moneys and shall not be sold by the Remarketing Agent.
(g) On the date Bonds are to be purchased by the Paying Agent in
accordance with subsection (a) or by the Remarketing Agent in accordance with
subsection (b) of this Section 401, the Paying Agent or the Remarketing Agent
shall purchase such Bonds with immediately available funds at a purchase price
equal to the principal amount thereof plus accrued interest, if any, to the date
of purchase. Funds for the payment of such purchase price shall be derived
solely from the following sources in the order of priority indicated, and
neither the Issuer, the Paying Agent nor the Remarketing Agent shall be
obligated to provide funds from any other source:
(i) Available Moneys representing proceeds described in Section 5.11
of the Agreement;
(ii) proceeds of the sale of such Bonds by the Remarketing Agent,
excluding proceeds of any such sale of Bonds to the Company, Charles far,
& Associates, a California limited partnership, or Charles King, its
general partner;
(iii) moneys representing proceeds of a drawing by the Trustee
pursuant to the Letter of Credit; and
(iv) moneys representing moneys furnished by the Company pursuant to
Section 4.11 of the Agreement.
The Remarketing Agent shall direct the Trustee, by telephone or telegraph and
confirmed promptly in writing, to provide such money, to the Paying Agent or the
Remarketing Agent (and to draw moneys under the Letter of Credit, if necessary)
to the extent necessary to make timely payments required to be made in
accordance with this subsection (g). Such direction shall describe the amounts
available in immediately available funds from each category described above, and
further, specifically identify the amount to be drawn under the Letter of
Credit, if required.
(h) On any date on which Bonds are to be purchased by the Paying Agent in
accordance with subsection (c) or (d) of this Section 401, the Paying Agent
shall purchase such Bonds with immediately available funds at the purchase price
specified therein. Funds for the payment of such purchase price shall be derived
solely from the following sources in the order of priority indicated, and
neither the Issuer nor
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the Trustee nor the Paying Agent shall be obligated to provide funds from any
other source:
(i) Available Moneys representing proceeds described in Section 5.11
of the Agreement;
(ii) moneys representing proceeds of a drawing by the Trustee
pursuant to the Letter of Credit; and
(iii) moneys furnished by the Company to the Trustee pursuant to
Section 4.11 of the Agreement.
(i) The Remarketing Agent and the Paying Agent shall hold in a separate
account moneys representing the purchase price of Bonds purchased in accordance
with this Section 401 until such Bonds have been delivered to the Remarketing
Agent or the Paying Agent, as the case may be, by the holders thereof. The
Remarketing Agent and the Paying Agent shall invest such moneys only in
Government Obligations maturing riot more than thirty (30) days after purchase,
as directed by the Company by telephone and confirmed in writing. Earnings from
such investments shall be paid into the Bond Fund.
(j ) Bonds sold by the Remarketing Agent pursuant to subsection (f) of
this Section 401 shall be delivered to the purchaser thereof. Bonds purchased by
the Remarketing Agent with moneys described in clause (i) of subsection (g) of
this Section 401 and Bonds purchased with moneys derived from the Company,
Charles King & Associates, a California limited partnership, or Charles King,
its general partner, shall be delivered to the Trustee for cancellation. Bonds
purchased by the Remarketing Agent with moneys described in clause (iii) of
subsection (g) of this Section 401 shall be registered in the name of, and
delivered to, the Bank or its nominee. Bonds purchased by the Remarketing Agent
with moneys described in clause (iv) of subsection (g) of this Section 401
shall, at the direction of the Company, be (A) held by the Remarketing Agent for
the account of the Company, (B) delivered to the Trustee for cancellation, or
(C) delivered to the Company; provided, however, that any Bonds so purchased
after the selection thereof by the Trustee for redemption shall be cancelled;
and, provided further, that any Bonds so purchased shall be registered in the
name of and delivered to, the Bank or its nominee if the Trustee shall have
received notice from the Bank of the occurrence of an Event of Default under the
Letter of Credit Agreement. The Remarketing Agent shall deliver to the person to
whom any Bond is delivered the due-bill check relating to such Bond, if any,
delivered to the Remarketing Agent in accordance with subsection (b) of this
Section 401.
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(k) Bonds purchased by the Trustee with moneys described in clause (i) of
subsection (h) of this Section 401 shall be cancelled. Bonds purchased by the
Trustee with moneys described in clause (ii) of subsection (h) of this Section
401 shall be registered in the name of, and delivered to, the Bank or its
nominee. Bonds purchased by the Trustee with moneys described in clause (iii) of
subsection (h) of this Section 401 shall, at the direction of the Company, be
(A) cancelled, or (B) delivered to the Company; provided, however, that any
Bonds so purchased after the selection thereof by the Trustee for redemption
shall be cancelled; and, provided further, that any Bonds so purchased shall be
registered in the name of, and delivered to, the Bank or its nominee if the
Trustee shall have received notice from the Bank of the occurrence of an Event
of Default under the Letter of Credit Agreement.
(1) The Paying Agent shall deliver to the Bank the due-bill checks, if
any, delivered to the Paying Agent in accordance with subsection (a) of this
Section 401.
(m) Bonds delivered as provided in subsections (j) or (k) of this Section
401 shall be registered in the manner directed by the recipient thereof.
(n) Whenever Bonds are delivered to the Bank pursuant to subsections (j)
or (k) of this Section 401, the Trustee, as Bond Registrar, shall notify the
Company of the principal amount of such Bonds and the date of delivery thereof
to the Bank (which date of delivery shall be deemed to be the date upon which
the draw on the Letter of Credit resulting in such delivery was made).
(o) The Trustee shall upon receipt of any direction by the Remarketing
Agent pursuant to subsection (g) of this Section 401, draw moneys under the
Letter of Credit in accordance with the terms thereof in the amounts specified
in such direction and furnish such moneys to the Remarketing Agent, or to the
Paying Agent if under subsections (a), (c) and (d) of Section 401, for same day
payment.
(p) Any Bonds delivered to the Remarketing Agent or the Paying Agent
pursuant to the terms of this Indenture during the period commencing on the date
that the Trustee has given the first notice described in Section 302(c) of this
Indenture and ending on the date of delivery to the Trustee of an Alternate
Letter of Credit or Alternate Credit Facility shall not be remarketed except to
a buyer who expressly acknowledges at the time of such purchase each of the
matters set forth in the notice required by Section 302(c) of this Indenture and
agrees to purchase such Bonds notwithstanding the proposed delivery of an
Alternate Letter of Credit or Alternate Credit Facility.
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ANY UNTENDERED BONDS, FOR WHICH THERE SHALL HAVE BEEN IRREVOCABLY
DEPOSITED ON OR BEFORE THE INTEREST PAYMENT DATE NEXT PRECEDING (A) THE
EXPIRATION DATE OF THE LETTER OF CREDIT OR (B) THE EXPIRATION DATE OF THE
ALTERNATE CREDIT FACILITY, OR THE CONVERSION DATE, AS THE CASE MAY BE, IN TRUST
WITH THE TRUSTEE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE OF SUCH BONDS
DUE WITH RESPECT TO THE PURCHASE THEREOF SHALL CEASE TO ACCRUE INTEREST ON THE
INTEREST PAYMENT DATE NEXT PRECEDING (A) THE EXPIRATION DATE OF THE LETTER OF
CREDIT OR (B) THE EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY, OR THE
CONVERSION DATE, AS THE CASE MAY BE, AND SHALL BE DEEMED TO HAVE BEEN TENDERED
FOR PURCHASE AND PURCHASED BY THE PAYING AGENT. REPLACEMENT BONDS SHALL BE
ISSUED IN PLACE OF SUCH UNTENDERED BONDS PURSUANT TO SECTION 203 HEREOF.
NO DELIVERY OF BONDS TO THE PAYING AGENT OR THE REMARKETING AGENT OR
PURCHASE OF BONDS BY THE PAYING AGENT OR THE REMARKETING AGENT SHALL CONSTITUTE
A REDEMPTION OF BONDS OR ANY EXTINGUISHMENT OF THE DEBT REPRESENTED THEREBY.
Section 402. Conversion to Fixed Interest Rate.
(a) At any time, the Company may, by notice in writing to the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent and the Bank direct that a
Fixed Interest Rate be established for the Bonds. The Company's notice shall set
forth: (i) the Conversion Date desired by the Company, which shall be an
Interest Payment Date not less than thirty (30) days after the date of such
notice; and (ii) the date the Fixed Interest Rate shall be established, which
shall be not less than twelve (12) Business Days prior to the Conversion Date.
The notice shall be accompanied by an opinion of Independent Tax Counsel stating
that the conversion to a Fixed Interest Rate is authorized and permitted by this
Indenture and the Act, and that such conversion will not adversely affect the
exemption of interest on the Bonds from Federal income taxation. The Remarketing
Agent shall determine the Fixed Interest Rate on the date specified in such
notice, which rate shall be the lowest rate at which the Remarketing Agent shall
have received bids, not later than the twelfth (12th) Business Day prior to the
Conversion Date, to purchase all of the Outstanding Bonds at a purchase price of
100% of the outstanding principal amount thereof on the Conversion Date. Prior
to the Expiration Date of the Letter of Credit, conversion to the Fixed Interest
Rate shall require the prior written consent of the Bank.
(b) Any Bonds purchased by the Remarketing Agent or the Paying Agent
pursuant to the terms of this Indenture after the Trustee has given notice of
the establishment of a Conversion Date, pursuant to subsection (b) of Section
302
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of this Indenture, shall not be remarketed except to a buyer who agrees at the
time of such purchase either (i) to accept the Fixed Interest Rate on the
Conversion Date, or (ii) to require purchase of such Bonds by the Remarketing
Agent or the Paying Agent on or before the Conversion Date pursuant to
subsection (a) or (b) of Section 401 of this Indenture.
(c) The Letter of Credit shall be cancelled on the fifteenth (15th) day
following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank stating that
the Letter of Credit is not to be cancelled on such day.
(d) In the event that the Letter of Credit or an Alternate Credit Facility
is in effect with respect to Bonds following the Conversion Date, the Fixed
Interest Rate shall be adjusted on the Adjustment Date so as to equal the lowest
rate of interest at which the Remarketing Agent shall have received bids on or
prior to the twelfth (12th) Business Day next preceding the Adjustment Date to
purchase all Outstanding Bonds on the Adjustment Date at a price of 100% of the
principal amount thereof. Following such adjustment, the Bonds shall bear
interest at the Fixed Interest Rate determined pursuant to this Section 402(d)
until maturity.
THE BONDS SHALL NOT BE SUBJECT TO PURCHASE, AS PROVIDED IN SECTION 401 OF
THIS INDENTURE, AFTER THE EXPIRATION DATE OF THE LETTER OF CREDIT.
Section 403. Remarketing Agent. Prudential-Bache Securities Inc., New
York, New York, has been appointed by the Company as the Remarketing Agent for
the Bonds. The Remarketing Agent shall designate to the Trustee, the Paying
Agent, the Company, the Issuer and the Bank its principal office and signify the
acceptance of the duties and obligations imposed upon it under the Indenture by
a written instrument of acceptance delivered to the Issuer and the Trustee under
which the Remarketing Agent will agree, particularly:
(a) to hold all Bonds delivered to it pursuant to the Indenture in trust
for the benefit of the respective bondholders who shall have so delivered such
Bonds until moneys representing the purchase price of such Bonds shall have been
delivered to or for the account of or to the order of such bondholders;
(b) to hold all moneys delivered to it for the purchase of Bonds in trust
for the benefit of the person who shall have so delivered such moneys until the
Bonds purchased with
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such moneys shall have been delivered to or for the account of such person;
(c) to keep such books and records as shall be consistent with prudent
industry practice and to make such books and records available for inspection by
the Issuer, the Company, the Bank, the Trustee and the Paying Agent at all
reasonable times;
(d) not later than the fourth (4th) Business Day preceding each Interest
Payment Date, to give telegraphic or telephonic notice, promptly confirmed by a
written notice, to the Company, the Trustee and the Bank specifying the interest
rate on the Bonds for the Interest Period commencing on such Interest Payment
Date, determined pursuant to and in accordance with the provisions contained in
the form of Bond contained in Section 206 of this Indenture;
(e) to deliver to the Company, the Trustee, the Paying Agent and the Bank
a copy of each notice delivered to it in accordance with Section 401 (b) of this
Indenture and, immediately upon the delivery to it of Bonds in accordance with
said Section 401 (b), to give telephonic or telegraphic notice to the Company,
the Trustee, the Paying Agent and the Bank specifying the principal amount of
the Bonds so delivered and the principal amount of such Bonds remarketed; and
(f) to deliver all Bonds and due-bill checks delivered to it pursuant to
the Indenture to the persons to whom the same are to be delivered in accordance
with Section 401 (j) of this Indenture.
The Issuer shall cooperate with the Trustee to cause the necessary
arrangements to be made and to be thereafter continued whereby Bonds executed by
the Issuer and authenticated by the Trustee shall be made available to the
Remarketing Agent to the extent necessary for delivery to purchasers thereof.
The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least ninety (90)
days written notice to the Issuer, the Company, the Bank, the Trustee and the
Paying Agent. The Remarketing Agent may be removed at any time, at the direction
of the Company, by an instrument signed by the Issuer and filed with the
Remarketing Agent the Bank, the Trustee and the Paying Agent. In the event of
the resignation or removal of the Remarketing Agent, a successor Remarketing
Agent shall be designated by the Issuer, at the direction of the Company and
with the consent of the Bank. Any successor Remarketing Agent shall be
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authorized by law to perform all the duties imposed upon it by this Indenture
and shall be a commercial bank having an aggregate of capital, paid in surplus
and retained earnings of not less than FIFTY MILLION DOLLARS ($50,000,000) or a
member of the National Association of Securities Dealers, Inc. having a
capitalization of at least FIFTEEN MILLION DOLLARS ($15,000,000) or having a
line of credit with a commercial bank in the amount of at least FIFTEEN MILLION
DOLLARS ($15,000,000). In addition, any successor Remarketing Agent (or its
parent corporation, if such successor is a subsidiary of a holding company)
shall have outstanding securities rated not lower than Baa3 (or a substantially
equivalent rating) by Moody's if such a requirement is a condition to the
maintenance of the then existing Moody's rating of the Bonds.
Section 404. Letter of Credit.
(a) The Trustee shall draw moneys under the Letter of Credit in accordance
with the terms thereof to the extent necessary to make timely payments of
principal of and interest on the Bonds and to pay the purchase price of Bonds
purchased pursuant to Section 401 of this Indenture.
(b) If at any time there shall have been delivered to
the Trustee (i) an Alternate Letter of Credit or an Alternate Credit
Facility and (ii) an opinion of Independent Tax Counsel stating that the
delivery of such Alternate Letter of Credit or Alternate Credit Facility to the
Trustee is authorized under the Agreement and the Act, complies with the terms
of the Agreement, and will not adversely affect the tax-exempt status of the
Bonds, then the Trustee shall accept such Alternate Letter of Credit or
Alternate Credit Facility and immediately surrender the previously held Letter
of Credit to the Bank, in accordance with the terms of such Letter of Credit,
for cancellation. Unless the Company and the Bank shall have given written
notice to the Trustee to the contrary, the Trustee shall fifteen (15) days after
the Conversion Date surrender the Letter of Credit to the Bank, in accordance
with the terms of the Letter of Credit, for cancellation. If at any time there
shall cease to be any Bonds outstanding under the Indenture, other than Bonds
delivered to the Bank pursuant to any draw under the Letter of Credit, the
Trustee shall immediately surrender the Letter of Credit to the Bank, in
accordance with the terms of the Letter of Credit, for cancellation. The Trustee
shall comply with the procedures set forth in the Letter of Credit Agreement and
the Letter of Credit (including, but not limited to, execution and delivery of
appropriate certificates) relating to the extension, reduction, reinstatement or
termination of the Letter of Credit.
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Section 405. No Federal Guarantee. Notwithstanding any other provision of
this Indenture, neither the Issuer, the Trustee nor any bondholder shall claim
or accept the benefits of any Federal guarantee which would cause the Bonds to
become Subject to Federal income taxation under the provisions of Section 103(h)
of the Code, including, without limitation, insurance of the Federal Deposit
Insurance Corporation, if any, applicable to the Letter of Credit, in the event
of the failure by the Bank to fulfill its obligations, in whole or in part, with
respect to any draw on the Letter of Credit, the Trustee shall have no power or
right to make any claim against the Federal Deposit Insurance Corporation with
respect to any such failure by the Bank.
Section 406. Treatment of bonds not remarketed. As described more fully in
the Pledge Agreement (as defined in the Letter of Credit Agreement), Bonds
purchased by the Trustee with monies described in subsections (g) (iii) and (h)
(ii) of Section 401 shall constitute Pledged Bonds only if, and for so long as,
the Company has failed to pay the Bank all amounts owing in connection with the
corresponding drawing under the Letter of Credit. Upon payment of all such
amounts, the Bank shall release such Bonds from the lien of the Pledge
Agreement, deliver (or require the Trustee to deliver) such Bonds to the
Company, and reinstate the Letter of Credit in the amount of the drawing used to
purchase such Bonds and thereupon such Bonds shall cease to In Pledged Bonds and
shall be; Outstanding Bonds for all purposes. The following provisions shall
apply to all Pledged Bonds, but only for so long as they remain Pledged Bonds:
(a) Pledged Bonds shall not earn interest, nor shall any payment ever be
made on account of the principal of any Pledged Bond.
(b) Pledged Bonds shall not be redeemed but shall instead be cancelled
without payment in any instance where they would, if not Pledged
Bonds, be redeemed.
ARTICLE V.
GENERAL COVENANTS
Section 501. Payment of Principal, Purchase Price, Redemption Premium (If Any)
and Interest, The Issuer covenants that it will promptly pay (but only from the
funds
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hereinafter described) the principal or purchase price of, and the redemption
premium (if any) and the interest on, the Bonds at the place, on the dates and
in the manner provided herein and in the Bonds. The Bonds are payable solely out
of the Revenues in the manner and to the extent herein specified, and nothing in
the Bonds or in this Indenture should be considered to be an assignment or
pledge of any other funds or assets of the Issuer other than the Trust Estate.
The Bonds and the interest and redemption premium (if any) thereon shall not now
or ever be deemed to constitute or to create in any manner a debt, liability or
obligation of the State or of any political subdivision thereof or a pledge of
the faith and credit of the State or any such political subdivision nor a
general obligation of the Issuer but shall be limited obligations of the Issuer
payable solely from the Revenues and other funds pledged therefor in accordance
with the Agreement and this Indenture and shall not be payable from any assets
or funds of the Issuer other than the Revenues and other funds pledged therefor,
and neither the faith and credit nor the taxing power of the State or any
political subdivision thereof is pledged to the payment of the principal or
purchase price of, or the redemption premium (if any) or the interest on, the
Bonds.
Section 502. Performance of Covenants; Authority. The Issuer covenants
that it will faithfully perform at all times any and all covenants, agreements,
undertakings, stipulations and provisions contained in this Indenture, in any
and every Bond, and in all proceedings of the Issuer pertaining thereto. The
Issuer covenants that it is duly authorized under the Constitution and laws of
the State including particularly the Act, (a) to issue the Bonds, (b) to
execute, deliver and perform this Indenture, and (c) to assign and pledge the
Trust Estate in the manner and to the extent herein set forth; and that all
action on its part for the issuance of the Bonds and the execution, delivery and
performance of this Indenture has been duly and effectively taken; and that the
Bonds are and will be legal, valid, binding and enforceable limited obligations
of the Issuer according to the import thereof.
Section 503. Filing of Financing Statements. The Issuer agrees that it
will cause all Financing Statements (other than continuation statements) to be
filed, at the request of the Trustee and if required by an opinion of counsel as
set forth in Section 1213, in such manner and in such places as may be required
by law in order to fully protect and preserve the priority of the interest of
the bondholders in the property conveyed thereunder and the rights, privileges
and options of the Trustee thereunder. Pursuant to Section 1213, the Trustee has
agreed to file or cause to be filed certain continuation statements.
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Section 504. Priority of Pledge and Security Interest. The pledge herein
made of the Trust Estate and the security interest created herein with respect
thereto constitutes a first and prior pledge of, and a security interest in, the
Trust Estate. Said pledge and security interest shall at no time be impaired
directly or indirectly by the Issuer or the Trustee, and the Trust Estate shall
not otherwise be pledged and, except as provided herein and in the Agreement, no
persons shall have any rights with respect thereto.
Section 505. Rights Under Agreement. The Agreement sets forth the
respective obligations of the Issuer and the Company, including a provision that
subsequent to the initial issuance of the Bonds and prior to payment in full of
the Bonds, the Agreement may not be effectively amended, changed, modified,
altered or terminated other than as provided in Article XIV. Reference is hereby
made to the Agreement for detailed statements of the obligations of the Company
thereunder, and the Issuer agrees that the Trustee in its own name or in the
name of the Issuer may enforce all rights of the Issuer and all obligations of
the Company under and pursuant to the Agreement (except certain rights reserved
by the Issuer under the terms hereof) for and on behalf of the bondholders,
whether or not the Issuer is in default hereunder.
Section 506. Maintenance of Insurance; Payment of Taxes, Charges, etc.
Pursuant to the provisions of Section 5.7 of the Agreement, the Company has
agreed to maintain certain insurance and to pay all lawful taxes, assessments
and charges at any time levied or assessed upon or against the Facilities or any
part thereof. The Company shall furnish evidence of such insurance annually to
the Trustee upon request.
Section 507. Maintenance and Repair. Pursuant to the provisions of Section
5.5 of the Agreement, the Company has agreed at its own expense to maintain and
operate the Facilities.
Section 508. Issuer's Election to Issue Bonds Pursuant to Section
103(b)(6)(D) of the Code. Prior to the issuance and delivery of the Bonds, all
necessary filings to effect an election with respect to the Bonds under Section
103(b) (6) (D) of the Code will have been made.
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ARTICLE VI.
CUSTODY AND APPLICATION
OF PROCEEDS OF BONDS
Section 601. Creation of the Construction Fund. There is hereby created by
the Issuer and ordered established with the Depository a trust fund to be
designated "Trinity River Industrial Development Authority Construction
Fund--Radiation Sterilizers, Incorporated Project, 1985A".
Section 602. Disposition of Bond Proceeds. Upon the issuance and delivery
of the Bonds, an amount equal to the Interest Reserve Requirement shall be
transferred by the Depository to the Trustee and deposited in the Bond Fund and
the balance of the proceeds of the sale of the Bonds shall be deposited in the
Construction Fund.
Section 603. Disbursements from Construction Fund. Moneys in the
Construction Fund shall be disbursed in accordance with the provisions of the
Agreement, and particularly Section 3.3 thereof. The Issuer agrees to promptly
take all necessary and appropriate action in approving and certifying all such
disbursements. The Depository is hereby authorized and directed to issue its
checks for each disbursement to be made pursuant to the provisions of the
Agreement and the Depository shall be relieved of all liability with respect to
(disbursements made in accordance with the provisions of Section 3.3 of the
Agreement.
The Depository shall maintain adequate records pertaining to the
Construction Fund and all disbursements therefrom, and after the Facilities have
been completed and a certificate of payment of all costs filed as provided in
Section 604, the Trustee shall file with the Issuer such certificate of payment.
Section 604. Completion of the Facilities. The completion of the
Facilities and the payment of all costs and expenses incident thereto shall be
evidenced by the filing with the Depository of the certificate signed by the
Authorized Company Representative (designated pursuant to the terms of the
Agreement), which certificate shall state that all costs and expenses in
connection with the Facilities and payable out of the Construction Fund have
been paid except for costs and expenses not then due and payable with respect to
which funds are being retained in the Construction Fund with the approval of the
Company for the payment of the same. As soon as practicable, and in any event
not later than sixty (60) days from the date of the latter certificate referred
to in the preceding sentence, any moneys remaining in the Construction Fund
(other than
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moneys retained to pay costs and expenses not then due and payable) shall be
used as specified in Section 3.3(h) of the Agreement relating to the use of
moneys in the Construction Fund. Any balance remaining of moneys retained to pay
costs and expenses after full payment of such costs and expenses shall be used
as specified in Section 3.3(h) of the Agreement. Unless there shall be delivered
to the Trustee an opinion of Independent Tax Counsel, amounts held for
application under this Section shall not, after the completion of the Facilities
be invested at a yield in excess of the yield on the Bonds.
ARTICLE VII.
REVENUES AND FUNDS
Section 701. Source of Payment of Bonds. The obligation of the Issuer to
pay the principal of, and the redemption premium (if any) and the interest on,
the Bonds is not a general obligation of the Issuer but is a limited obligation
payable solely from the Revenues.
The payments required to be made by the Company under Sections 4.1 and 4.3
of the Agreement are to be remitted directly to the Trustee for the benefit of
the owners of the Bonds and are to be deposited in the Bond Fund. Said payments
are sufficient in amount and become due in a timely manner so as to insure the
prompt payment of the principal of, and the redemption premium (if any) and the
interest on, the Bonds.
Section 702. Creation of the Bond Fund. There is hereby created by the
Issuer and ordered established with the Trustee a trust fund to be designated
"Trinity River Industrial Development Authority Bond Fund - Radiation
Sterilizers, Incorporated Project, 1985A", which shall be used to pay the
principal of, and the redemption premium (if any) and interest on, the Bonds.
There shall be established as trust accounts within the Bond Fund a general
account and a special account. Any reference in this Indenture to "Bond Fund"
without further qualification or explanation shall constitute a reference to
said general account.
Section 703. Payments into the Bond Fund. There shall be paid into the
Bond Fund, as and when received:
(a) from the proceeds derived from the sale of the Bonds, an amount
equal to the Interest Reserve Requirement,
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(b) all payments made by the Company pursuant to Sections 4. 1 and
4.3 of the Agreement,
(c) prior to the Expiration Date of the Letter of Credit, all
amounts drawn by the Trustee under the Letter of Credit to pay principal
of, or interest on, the Bonds, and
(d) all other moneys received by the Trustee when accompanied by the
directions that such moneys are to be paid into the Bond Fund.
Notwithstanding any provision hereof to the contrary, all amounts received by
the Trustee as amounts drawn under the Letter of Credit shall not be commingled
but shall be held in trust in a segregated account in the special account in the
Bond Fund by the Trustee and used solely to pay amounts due in respect of the
Bonds. The Issuer covenants that so long as any of the Bonds are outstanding it
will pay, or cause to be paid, into the Bond Fund all moneys received pursuant
to the Agreement (except for funds received pursuant to Sections 5.3 and 5.4 of
the Agreement) to pay promptly the principal of, the redemption premium (if any)
and interest on, the Bonds as the same become due and payable and to this end
the Issuer covenants and agrees that if there occurs an Event of Default under
the Agreement, the Issuer will fully cooperate with the Trustee and with the
bondholders to the end of fully protecting the rights and security of the
bondholders. Nothing herein shall be construed as requiring the Issuer to
operate the Facilities or to use any funds from any source to pay the principal
or purchase price of, and the redemption premium (if any) and the interest on,
the Bonds or to pay the costs of maintaining and insuring the Facilities other
than the payments to be received pursuant to the Agreement and the Revenues.
Section 704. Use of Moneys in the Bond Fund.
(a) Except as provided in Sections 707, 802 and 1202, moneys in the Bond
Fund shall be used solely for the payment of the principal of, redemption
premium (if any) and interest on, the Bonds. At the direction of the Company,
any moneys in the Bond Fund may be used to redeem (as herein otherwise
permitted) a portion of the Bonds so long as the Company is not in default with
respect to any payments due under the Agreement and to the extent that such
moneys are in excess of the amount required for the payment of Bonds theretofore
matured or called for redemption and the payment of interest then due in all
cases where such Bonds have not been presented for payment. No part of the
payments required to be paid into the Bond Fund under the Agreement shall be
used to redeem, prior to maturity, a portion of the Bonds;
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provided, that whenever after the Conversion Date the moneys held in the Bond
Fund (in the general account and the special account) from any source whatsoever
are sufficient to redeem all of the Bonds and to pay interest to accrue thereon
prior to such redemption, the Issuer agrees to take and cause to be taken the
necessary steps to redeem all of the Bonds on the next succeeding redemption
date for which the required redemption notice can be given, and, provided,
further, that any moneys in the Bond Fund may be used after the Conversion Date
to redeem a portion of the Bonds so long as the Company has made all required
payments under the Agreement.
(b) At the maturity date or redemption date prior to maturity of each Bond
and at the due date of each installment of interest on each Bond the Trustee
shall transfer from the general account in the Bond Fund to the special account
in the Bond Fund sufficient moneys to pay all principal of, the redemption
premium (if any) and the interest then due and payable with respect to, each
such Bond. Moneys so transferred into said special account shall not thereafter
be invested in any manner but shall be held by the Trustee without liability on
the part of the Trustee or the Issuer for interest thereon until actually paid
out for the purposes intended.
The Issuer hereby authorizes and directs the Trustee to withdraw, from
time to time, sufficient moneys from the special account in the Bond Fund to pay
the principal of the redemption premium (if any) and the interest on, the Bonds
as the same become due and payable, which authorization and direction the
Trustee thereby accepts. Funds for such payments of the principal of, the
redemption premium (if any) and the interest on, the Bonds shall be derived from
the following sources in the order of priority indicated:
(1) Available Moneys constituting proceeds described in Section 5.11
of the Agreement;
(2) all payments made by the Company pursuant to Sections 4.1 and
4.3 of the Agreement and amounts derived from the investment of such
amounts to the extent that they constitute Available Moneys;
(3) prior to the Expiration Date of the Letter of Credit, all
amounts drawn by the Trustee under the Letter of Credit; and
(4) all other amounts received by the Trustee under and pursuant to
the Agreement or from any other source when accompanied by directions by
the Company
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that such amounts are to be paid into the Bond Fund, and amounts derived
from the investment of such amounts.
Section 705. Custody of the Bond Fund. The Bond Fund shall be held by the
Trustee as a trust fund for the benefit of the bondholders. The general account
and the special account established in the Bond Fund shall also constitute trust
accounts. All moneys paid over to the Trustee for the account of the Bond Fund
(to be held in the general account or the special account therein) under any
provision of this Indenture shall be held in trust by the Trustee for the
benefit of the owners of the Bonds entitled to be paid therefrom.
Section 706. Non-presentment of Bonds at Maturity. If any Bond shall not
be presented for payment when the principal thereof becomes due, either at
stated maturity, at the date fixed for redemption prior to stated maturity, or
upon maturity by declaration, provided moneys sufficient to pay such Bond shall
have been made available to the Trustee to be held in the special account in the
Bond Fund for the benefit of the owner thereof, all liability of the Issuer to
the holder thereof for the payment of such florid shall forthwith cease,
determine and be completely discharged, and thereupon it shall be the duty of
the Trustee to hold such moneys, subject to the provisions of Section 707(b), in
said special account, without liability for interest thereon, for the benefit of
the owner of such Bond, who shall thereafter be restricted exclusively to such
moneys held in said special account, or paid by the Trustee to the Company or
the Bank pursuant to the provisions of Section 707(b), for any claim of whatever
nature on his part under this Indenture or on, or with respect to, such Bond.
Section 707. Payments to the Company from the Bond Fund.
(a) Any moneys remaining in the general account in the Bond Fund after
Payment in Full of the Bonds (taking into consideration that sufficient moneys
or obligations such as are described in Section 1001 have been transferred to or
deposited in the special account in the Bond Fund to pay all principal of, and
interest then due and payable with respect to, each Bond not yet presented for
payment and to pay all principal and redemption premium (if any) and interest
relating to each Bond which is not yet due and payable but with respect to which
the lien of this Indenture has been defeased upon compliance with Article X),
the fees advances, charges and expenses of the Trustee, the Paying Agent and the
Bond Registrar which have accrued and which will accrue and all other items
required to be paid
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hereunder (other than items payable from the special account in the Bond Fund)
shall be paid to the Bank to the extent that any moneys are owed to the Bank
pursuant to the Letter of Credit Agreement and, otherwise, to the Company upon
the expiration or sooner termination of the Agreement.
(b) Any moneys held by the Trustee; in the special account in the Bond
Fund shall be retained by the Trustee for the payment or the redemption of Bonds
not yet presented for payment or redemption . If after three (3) years such
moneys held for the owners of certain Bonds have not been claimed, then, it
shall be the duty of the Trustee forthwith to return to the Bank to the extent
that any moneys are owed to the Bank pursuant to the Letter of Credit Agreement
and, otherwise, to the Company all moneys held by the Trustee in said special
account, subject to any other requirements of law as may be applicable to such
funds, and any such owner shall thereafter, as an unsecured general creditor,
look only to the Company for the payment of any such Bond and all liability of
the Trustee shall thereupon cease.
ARTICLE VIII.
INVESTMENTS
Section 801. Construction Fund Investments. Moneys held in the
Construction Fund or in any other trust fund or account held by the Depository
or the Trustee hereunder (except the Bond Fund or an account in the Bond Fund)
shall be invested and reinvested by the Depository or the Trustee in Eligible
Investments as directed by the Company pursuant to Section 3.8 of the Agreement.
Such investments shall be held by or under the control of the Depository or the
Trustee and shall be deemed at all times a part of the Construction Fund or
other pertinent trust fund and the interest accruing thereon and any profit
resulting therefrom shall be credited to the Construction Fund or other
pertinent trust fund and any loss resulting therefrom shall be charged to the
Construction Fund or other pertinent trust fund. The Depository or the Trustee
at the direction of the Company shall sell and convert to cash a sufficient
amount of such investments whenever the cash held in the Construction Fund or
other pertinent trust fund is insufficient to pay a requisition when presented
or to otherwise make a timely disbursement required to be made therefrom. The
provisions of this Section 801 shall be subject to the provisions of Section 804
of this Indenture and Section 5. 12(b) of the Agreement.
Section 802. Bond Fund Investments. Moneys held in the Bond Fund (other
than moneys held in the special account in the Bond Fund referred to in Section
702) shall be invested and reinvested by the Trustee in Eligible Investments as
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directed by the Company pursuant to Section 3.8 of the Agreement. Such
investments shall be held by or under the control of the Trustee and shall be
deemed at all times a part of the Bond Fund and the interest accruing thereon
and any profit realized therefrom shall be credited to the Bond Fund and any
loss resulting therefrom shall be charged to the Bond Fund. So long as there is
no default hereunder, the Trustee at the direction of the Company shall sell and
convert to cash a sufficient amount of such investments in the Bond Fund
whenever the cash held in the Bond Fund is insufficient to provide for the
payment of the principal of (whether at the maturity date or the redemption date
prior to maturity) and the interest on the Bonds as the same become due and
payable. Any interest or gain received from such investments shall be credited
to and held in the Bond Fund and any loss from such investments shall be charged
against the Bond Fund and paid by the Company. The provisions of this Section
802 shall be subject to the provisions of Section 804 of this Indenture and
Section 5.12(b) of the Agreement.
Section 803. Non-Arbitrage Covenant; Compliance with Special Arbitrage
Rules. The Issuer covenants and agrees with the Trustee, the Depository and with
the holders of any of the Bonds from time to time outstanding that so long as
any of the Bonds remain outstanding, moneys on deposit in any fund or account
created and held in connection with the Bonds, whether or not such moneys were
derived from the "gross proceeds" (defined in Section 5.12(c) of the Agreement)
of the Bonds or from any other sources, will not be used in a manner which will
cause the Bonds to be classified as "arbitrage bonds" within the meaning of
Section 103(c) of the Code.
The Issuer and the Trustee jointly and severally covenant and agree with
each other, with the Company and with the holders of any of the Bonds from time
to time outstanding that so long as any of the Bonds remain outstanding, they
will cooperate with the Company in complying with Section 5.12(b) of the
Agreement to the extent reasonably possible.
Section 804. Excess Investment Earnings Account. There is hereby
established a special trust account to be designated the "Trinity River
Industrial Development Authority Excess Investment Earnings Account - Radiation
Sterilizers, Incorporated Project, 1985" (hereinafter referred to as the "Excess
Investment Earnings Account"), to be held by the Trustee. The Company has
covenanted and agreed that it will (a) prepare and file with the Trustee, the
Depository and the Issuer a report setting forth the "Rebate Amount" determined
in accordance with Section 5.12(b) of the Agreement, and (b) deposit or cause to
be deposited into the
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Excess Investment Earnings Account any and all Rebate Amounts promptly following
a determination of any such Rebate Amount.
The Trustee and the Depository, as custodians of the Bond Fund and the
Construction Fund, respectively, covenant and agree that they will, on or before
each anniversary of the date of issuance of the Bonds, prepare and file with the
Issuer and the Company a report with respect to the Construction Fund and the
Bond Fund setting forth the total amounts invested during the preceding bond
year, the investments made with the moneys in the Construction Fund and the Bond
Fund and the investment earnings (and losses) resulting from the investments in
each such Fund, respectively, together with such additional information
concerning such Funds and the investments therein, respectively, as the Issuer
or the Company shall reasonably request.
The Trustee and the Depository agree that they will, to the extent
practicable, keep all moneys in the Excess Investment Earnings Account fully
invested in Eligible Investments and that they will disburse all moneys in the
Excess Investment Earnings Account to the United States at the times and in the
manner set forth in Section 5.12(b) of the Agreement.
Moneys in the Excess Investment Earnings Account, including investment
earnings thereon, if any, shall not be subject to the pledge of this Indenture
and shall not constitute part of the Trust Estate held for the benefit of the
holders of the Bonds and shall be, at the direction of the Company, paid to the
United States.
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ARTICLE IX
SUBORDINATION TO RIGHTS OF COMPANY
Section 901. Subordination to Rights of the Company. So long as there
exists no Event of Default under the Agreement, this Indenture and the rights,
options and privileges hereunder of the Trustee and the bondholders are
specifically made subject and subordinate to the rights, options and privileges
of the Company set forth in the Agreement.
ARTICLE X.
DISCHARGE OF LIEN
Section 1001. Discharge of Lien and Security Interests. If the Issuer
shall pay or cause to be paid the principal of, and the redemption premium (if
any) and the interest on, the Bonds at the times and in the manner stipulated
therein and herein, and shall pay or cause to be paid all fees and expenses of
the Trustee, the Depository, the Bond Registrar and the Paying Agent due or to
become due in connection with the payment of the Bonds and all other amounts due
or to become due hereunder, and if the Issuer shall keep, perform and observe
all and singular the covenants and agreements in the Bonds and in this Indenture
expressed as to be kept, performed and observed by it or on its part, then the
lien of this Indenture, these presents and the Trust Estate shall cease,
terminate and be discharged, and thereupon the Trustee shall execute and deliver
to the Issuer such instruments in writing as shall be required to cancel and
discharge this Indenture and the Agreement and assign and deliver to the Issuer
so much of the Trust Estate as may be in its possession or subject to its
control, except moneys or Government Obligations deposited with the Trustee for
the payment of the principal of, and the redemption premium (if any) and the
interest on, the Bonds which have become due but have not yet been presented for
payment and moneys in the Bond Fund required to be paid to the Company or the
Bank pursuant to Section 707; provided, however, such cancellation and discharge
of this Indenture shall not terminate the powers and rights granted to the
Trustee with respect to the payment, registration of transfer and exchange of
the Bonds or payment of fees, advances, expenses and cost of Trustee incurred
hereunder.
Section 1002. Provision for Payment of Bonds. Bonds shall be deemed to
have been paid within the meaning of Section 1001 if
(a) (i) the principal of, redemption premium (if any) and all interest on
all Bonds have been paid in accordance with the terms thereof; or
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(ii) there shall have been irrevocably deposited in the special
account in the Bond Fund either:
(A) sufficient moneys, or
(B) Government Obligations of such maturities and interest payment
dates and bearing such interest as will, without further investment or
reinvestment of either the principal amount thereof or the interest
earnings thereon (said earnings to be held in trust also), be sufficient
together with any moneys referred to in subsection (i) above,
for the payment at their respective maturities or redemption dates prior to
maturity, of the principal thereof and the interest to accrue thereon to such
maturity or redemption dates, as the case may be; provided, however, that Bonds
will be deemed to be paid by making the deposit pursuant to clause (ii) only
after the Expiration Date of the Letter of Credit;
(b) there shall have been paid to the Trustee all Trustees, Bond
Registrar's and Paying Agent's fees and expenses due or to become due in
connection with the payment or redemption of the Bonds or there shall be
sufficient moneys in said special account to make said payments; and
(c) if any Bonds are to be redeemed on any date prior to their maturity,
the Issuer shall have given to the Trustee in form satisfactory to the Trustee
irrevocable instructions to redeem such Bonds on such date and either evidence
satisfactory to the Trustee that all redemption notices required by this
Indenture have been given or irrevocable power authorizing the Trustee to give
such redemption notices.
Limitations elsewhere specified herein regarding the investment of moneys
held by the Trustee in the special account in the Bond Fund shall not be
construed to prevent the depositing and holding in said special account of the
obligations described in the preceding subparagraph (a) (ii) (B) for the purpose
of defeasing the lien of this Indenture as to Bonds which have not yet become
due and payable.
Section 1003. Discharge of the Indenture. Notwithstanding the fact that
the lien of this Indenture upon the Trust Estate may have been discharged and
cancelled in accordance with Section 1001, this Indenture and the rights granted
and duties imposed hereby, to the extent not inconsistent with the fact that the
lien upon the Trust Estate may have been discharged and cancelled, shall
nevertheless continue and subsist until the principal of, the redemption
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premium (if any) and the interest on, all of the Bonds shall have been paid in
full or the Trustee shall have returned to the Company or the Bank pursuant to
Section 707(b) all funds theretofore held by the Trustee for payment of any
Bonds not theretofore presented for payment and all of the Company's obligations
to the Issuer as to expense reimbursement and indemnification under this
Indenture have been fulfilled.
ARTICLE XI.
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
--------------------------
Section 1101. Defaults; Events of Default. If any of the following events
occurs, subject to the provisions of Section 1109, it is hereby defined as and
declared to be and to constitute an "Event of Default" hereunder:
(a) failure in the payment of the principal of or any interest or
redemption premium on any Bond when and as the same shall have become due,
whether at the stated maturity thereof, by acceleration or call for redemption;
(b) the occurrence of an Event of Default specified in subsection (a) of
Section 6.1 of the Agreement;
(c) failure in the performance or observance of any covenant, agreement or
condition on the part of the Issuer included in this Indenture, in the Bonds or
in the Agreement, other than as set forth in subsection (a) or (b) above, which
materially adversely affects the lien of this Indenture on the Revenues, the
Bond Fund or the Construction Fund; provided, however, that prior to the
Expiration Date of the Letter of Credit such failure shall not constitute an
Event of Default;
(d) the occurrence of any Event of Default specified in subsections (b),
(c), (d) or (e) of Section 6.1 of the Agreement; provided, however, that prior
to the Expiration Date of the Letter of Credit such occurrences shall not
constitute an Event of Default;
(e) failure to pay amounts due to holders of Bonds who have delivered
Bonds to the Trustee for purchase for a period of five (5) days after such
payment has become due and payable; or
(f) receipt by the Trustee of notice from the Bank Of the occurrence of an
"Event of Default" under the Letter of Credit Agreement and Bank direction to
accelerate.
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The term "default" shall mean (i) any Event of Default described above;
and (ii) the occurrence of an event specified in subsections (b), (c), (d) or
(e) of Section 6.1 of the Agreement exclusive of any period of grace required to
constitute such occurrence an "Event of Default" as defined in the Agreement.
If a default or an Event of Default shall occur under the provisions of
this Section, the Trustee shall, within two (2) Business Days after having
actual knowledge of such default or Event of Default or being deemed to have
notice thereof under subsection (e) (iv) of Section 1201, give written notice of
such default or Event of Default to the Issuer, the Company, the Bank and the
Original Purchasers of the Bonds.
Section 1102. Acceleration. Upon the occurrence of any Event of Default
described in subsections (a) through (e), inclusive, of Section 1101 the Trustee
may, and upon the written request of the holders of not less than twenty-five
percentum (25%) in aggregate principal amount of Bonds then outstanding the
Trustee shall, by notice in writing delivered to the Issuer and the Company,
declare the principal of all Bonds then outstanding and the redemption premium
(if any) on Bonds called for redemption, and the interest accrued thereon
immediately due and payable. Upon the occurrence of an Event of Default
described in subsection (f) of Section 1101, the Trustee shall, by notice in
writing delivered to the Issuer and the Company, declare the principal of all
Bonds then outstanding, and the interest accrued thereon immediately due and
payable. Any such principal and interest shall thereupon become and be
immediately due and payable. Upon such declaration of acceleration and if an
Event of Default under Section 6.1 of the Agreement shall have happened and be
subsisting, the Trustee shall immediately declare all amounts payable under
Sections 4.1 or 4.3 of the Agreement to be immediately due and payable in
accordance with Section 6.2 of the Agreement, and prior to the Expiration Date
of the Letter of Credit, shall draw moneys under the Letter of Credit in
accordance with Section 6.2 of the Agreement, in either case to pay the
principal of all outstanding Bonds and the accrued interest thereon to the date
of acceleration.
The provisions of this Section are subject, however, to the condition that
after the Expiration Date of the Letter of Credit if, at any time after the
principal of, and the redemption premium (if any) and the interest accrued on,
the Bonds shall have been so declared due and payable, all sums payable
hereunder except the principal of the Bonds which have not reached their
maturity date shall have been duly paid and all existing Events of Default shall
have been
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cured, all before a judgment or decree for payment of moneys due has been
obtained by the Trustee, then and in every such case such payment or cure of
such Event of Default shall constitute a waiver of such Event of Default and its
consequences and an automatic rescission and annulment of such declaration but
no such waiver shall extend to or affect any subsequent Event of Default or
impair any rights consequent thereon.
The provisions of this Section are further subject to the condition that
any waiver of any Event of Default under the Letter of Credit Agreement and a
rescission and annulment of its consequences shall constitute a waiver of the
corresponding Event of Default under this Indenture and a rescission and
annulment of the consequences thereof. If notice of such Event of Default under
the Letter of Credit Agreement shall have been given and if the Trustee shall
thereafter have received notice that such Event of Default shall have been
waived, and further, the Trustee shall have received written evidence that the
Letter of Credit shall have been reinstated, the Trustee shall promptly give
written notice of such waiver, rescission and annulment to the Issuer, the
Company and the Remarketing Agent, and shall give notice thereof to holders of
the Bonds in the same manner as a notice of redemption; but no such waiver,
rescission and annulment shall extend to or affect any subsequent Event of
Default under this Indenture or impair any right or remedy consequent thereon.
Section 1103. Other Remedies. Upon the occurrence of an Event of Default
the Trustee may pursue any available remedy to enforce the payment of the
principal of, and any redemption premium and interest on, the Bonds then
outstanding.
If an Event of Default shall have occurred, and if (a) requested to do so
by (i) the holders of twenty-five percentum (25%) in aggregate principal amount
of Bonds then outstanding, and (ii) prior to the Expiration Date of the Letter
of Credit, the Bank if it is not then in default in making any payment under the
Letter of Credit and (b) indemnified as provided in Section 1201, the Trustee
shall be obligated to exercise such one or more of the rights and powers
conferred by this Section as the Trustee, being advised by counsel, shall deem
most expedient in the interests of the owners of the Bonds.
No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee (or to the owners of the Bonds) is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the owners of the Bonds
hereunder or now or hereafter existing.
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No delay or omission to exercise any right or power accruing upon any
default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein; and every such right and power may be exercised from time to time and
as often as may be deemed expedient.
No waiver of any Event of Default hereunder, whether by the Trustee or by
the owners of the Bonds shall extend to or shall affect any subsequent default
or Event of Default or shall impair any rights or remedies consequent thereon.
Section 1104. Right of Bondholders to Direct Proceeding. Anything in this
Indenture to the contrary notwithstanding, the holders of a majority in
aggregate principal amount of Bonds then outstanding shall have the right, at
any time, by an instrument or instruments in writing executed and delivered to
the Trustee, to annul or overrule any direction given to the Trustee by holders
of less than a majority in aggregate principal amount of Bonds or to direct the
method and place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture or any other
proceedings hereunder; provided, that (a) such direction shall not be otherwise
than in accordance with the provisions of law and of this Indenture, (b) the
Trustee shall be indemnified to its satisfaction, and (c) prior to the
Expiration Date of the Letter of Credit and so long as the Bank is not then in
default in. making any payment under the Letter of Credit, the Bank shall have
the exclusive right to annul or overrule or give any such direction to the
Trustee.
Section 1105. Application of Moneys. If, prior to the Completion Date, all
of the Bonds should be called for redemption or there shall occur a declaration
by the Trustee that the principal of all Bonds then outstanding and the
redemption premium (if any) on Bonds called for redemption, and the interest
accrued thereon are immediately due and payable, then the Trustee shall
immediately transfer all moneys and investments then on deposit in the
Construction Fund to the Bond Fund and shall hold the same in the special
account in the Bond Fund and use such moneys and those resulting from the
liquidation of such investments for the retirement of principal of the Bonds
ratably to the principal amount of Bonds then outstanding. All moneys, including
all moneys received pursuant to the next preceding sentence, received by the
Trustee pursuant to any right given or action taken under the provisions of this
Article shall, after payment of the fees, costs and expenses of the proceedings
resulting in the collection of such moneys and of the fees, expenses,
liabilities and advances incurred or made by the Trustee, including, without
limitation, any
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amounts payable to the Trustee pursuant to Section 1202, be deposited in the
Bond Fund and all such moneys in the Bond Fund shall be applied, as follows:
(a) unless the principal of all the Bonds shall have become or have been
declared due and payable, all such moneys shall be applied:
FIRST--To the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, in the order of the
maturity of the installments of such interest and, if the amount
available shall not be sufficient to pay in full any particular
installment, then to the payment ratably, according to the amounts
due on such installment, to the persons entitled thereto, without
any discrimination or privilege; and
SECOND--To the payment to the persons entitled thereto of the unpaid
principal of any of the Bonds which shall have become due (other
than Bonds previously called for redemption for the payment of which
moneys and/or Government Obligations are held pursuant to the
provisions of this Indenture), in the order of their due date, with
interest on such Bonds from the respective dates upon which they
become due and if the amount available shall not be sufficient to
pay in full all Bonds due on any particular date, together with such
interest, then to the payment ratably, according to the amount of
principal due on such date, to the persons entitled thereto without
any discrimination or privilege;
(b) if the principal of all the Bonds shall have become due or shall
have been declared due and payable, all such moneys shall be applied to
the payment of the principal and interest then due and unpaid upon the
Bonds, without preference or priority of principal over interest or of
interest over principal, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and interest, to
the persons entitled thereto without any discrimination or privilege; and
(c) if the principal of all the Bonds shall have been declared due
and payable, and if such declaration shall thereafter have been rescinded
and annulled under the provisions of Section 1102 or 1109 then, subject to
the provisions of subsection (b) of this Section in the event that the
principal of all the Bonds shall later
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become due or be declared due and payable, the moneys shall be applied in
accordance with the provisions of subsection (a) of this Section.
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied as soon as practicable in the manner
hereinabove set forth. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any moneys and of the fixing of any such
date, and may make payment but shall not be required to make payment to the
holder of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement, or for cancellation if fully paid.
Whenever all Bonds and interest thereon have been paid under the
provisions of this Section and all fees, expenses and charges of the Trustee,
Paying Agent and Bond Registrar have been paid, any balance remaining in the
Bond Fund shall be paid to the Bank or the Company as provided in Section 707.
Notwithstanding the provisions of this Section proceeds of a draw on the
Letter of Credit received by the Trustee pursuant to the exercise of any right
or action taken under this Article shall be applied only to the payment of
principal of and interest on the Bonds.
The Trustee shall take into account such amounts as are payable to it in
determining the amount otherwise available hereunder to pay amounts due on the
Bonds before computing the amount necessary to be drawn under the Letter of
Credit.
Section 1106. Rights and Remedies Vested in Trustee. All rights of action
(including the right to file proof of claims) under this Indenture or under any
of -the Bonds may be enforced by the Trustee without the possession of any of
the Bonds or the production thereof in any trial or other proceeding relating
thereto and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any holders of the Bonds, and any recovery of judgment shall (except
for any amounts payable to the Trustee pursuant to Section 1202) be applied
first for the ratable benefit of the holders of the outstanding Bonds and when
all such Bonds have been paid or provision for their payment has been made in
accordance with the Indenture then for the benefit of the Bank or the Company
pursuant to Section 707.
Section 1107. Rights and Remedies of Bondholders. No holder of any Bond
shall have any right to institute any suit, action or proceeding for the
enforcement of this
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Indenture or for the execution of any trust hereof or any other remedy
hereunder, unless an Event of Default has occurred of which the Trustee has been
notified as provided in subsection (e) (iv) of Section 1201, or of which by said
subsection it is deemed to have notice, and the holders of a majority in
aggregate principal amount of Bonds then outstanding, or the Bank, in accordance
with the provisions of Section 1104 shall have made written request to the
Trustee and shall have offered reasonable opportunity either to proceed to
exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name, nor unless also they have offered to the Trustee
indemnity as provided in Section 1201 nor unless the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its, his, her or their own name or names; and such
notification, request and offer of indemnity are hereby declared in every case
at the option of the Trustee to be conditions precedent to any action or cause
of action for the enforcement of this Indenture or for any other remedy
hereunder; it being further understood and intended that no one or more holders
of the Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by its, his, her or their action or to
enforce any right hereunder except in the manner herein provided and that
proceedings shall be instituted, had and maintained in the manner herein
provided and for the ratable benefit of the holders and owners of all Bonds then
outstanding. Nothing in this Indenture contained shall, however, affect or
impair the right of any bondholder to enforce the payment of the principal of,
and interest on, any Bond at and after the maturity thereof, or the obligation
of the Issuer to pay the principal of, and redemption premium (if any) and
interest on, each of the Bonds issued hereunder to the respective holders
thereof at the time, place, from the source and in the manner provided in the
Bonds.
No holder of any Bond shall have the right to institute any suit, action
or proceeding in equity or at law to enforce a drawing under the Letter of
Credit to make any payment on the Bonds.
Section 1108. Termination of Proceedings. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer and the Trustee shall be restored to their former
positions and rights hereunder with respect to the Trust Estate, and (subject to
such determination) all rights, remedies and powers of the
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Trustee shall continue as if no such proceedings had been taken.
Section 1109. Waivers of Events of Default. The Trustee may in its
discretion waive any Event of Default hereunder and its consequences and rescind
any declaration of maturity of principal, and shall do so upon the written
request of (a) the holders of (i) a majority in aggregate principal amount of
all the Bonds then outstanding in respect of which an Event of Default in the
payment of principal or interest exists, or (ii) a majority in aggregate
principal amount of all Bonds then outstanding in case of any other default or
Event of Default, and (b) prior to the Expiration Date of the Letter of Credit,
the Bank; provided, however, that there shall not be waived any Event of Default
after the Trustee has drawn on the Letter of Credit to provide funds for the
payment of the principal of, and the interest on, the Bonds called for
redemption pursuant to Section 1102; and there shall not be waived (A) an Event
of Default in respect of any failure in the payment of the principal of any
outstanding Bonds when due, whether at the date of maturity specified therein,
by acceleration or by call for redemption, or (B) an Event of Default in respect
of any failure in the payment when due of the interest on any such Bonds unless
prior to such waiver or rescission, all arrears of payments of principal,
redemption premium and interest (with interest to the extent permitted by law at
the rate borne by the Bonds in respect of which such failure shall have occurred
on overdue installments of interest), as the case may be, and all expenses of
the Trustee, in connection with such Event of Default, shall have been paid or
provided for. In case of any such waiver or rescission or in case any proceeding
taken by the Trustee on account of any such Event of Default shall have been
discontinued or abandoned or determined adversely, then and in every such case
the Issuer, the Trustee, the Bank and the bondholders shall be restored to their
former positions and rights hereunder, respectively, but no such waiver or
rescission shall extend to any subsequent or other Event of Default, or impair
any right consequent thereon.
ARTICLE XII.
THE TRUSTEE; PAYING AGENT; DEPOSITORY
AND BOND REGISTRAR
------------------
Section 1201. Acceptance of the Trusts. The Trustee hereby accepts the
trusts imposed upon it hereby, and agrees to perform said trusts, but only upon
and subject to the following express terms and conditions:
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(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have Occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture, and no implied agreements or obligations shall be read into this
Indenture against the Trustee. In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform
any of its duties by or through attorneys, agents, receivers or employees but
shall be answerable for the conduct of the same in accordance with the standard
specified in subsection (a) above, except that as to attorneys, agents or
receivers the Trustee shall only be answerable for the selection of same in
accordance with said standard, and shall be entitled to advice of counsel
concerning all matters of trusts hereof and the duties hereunder, and may in all
cases pay such reasonable compensation to all such attorneys, agents, receivers
and employees as may reasonably be employed in connection with the trusts
hereof. The Trustee may act upon the opinion or advice of counsel (who may be
the counsel for the Issuer or the Company), approved by the Trustee in the
exercise of reasonable care. The Trustee shall not be responsible for any loss
or damage resulting from any action or non-action in good faith in reliance upon
such opinion or advice.
(c) Except as is specifically provided in Section 1213 with respect to the
filing of continuation statements, the Trustee shall not be responsible for any
recital herein, or in the Bonds (except in respect to the authentication
certificate of the Trustee endorsed on the Bonds), or for insuring the Trust
Estate or any part of the Facilities or collecting any insurance moneys, or for
the validity of the execution hereof by the Issuer or of any supplements hereto
or instruments of further assurance, or for the sufficiency of the security for
the Bonds; and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any agreements or conditions on the part of the
Issuer or on the part of the Company under the Agreement, except as hereinafter
set forth; but the Trustee may require of the Issuer or the Company full
information and advice as to the performance of the agreements and conditions
aforesaid and as to the condition of the Trust Estate. The Trustee shall not be
responsible or liable for any loss suffered in connection with any investment of
funds made by it in accordance with the provisions of Article VIII.
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(d) Except to the extent herein specifically provided in sections 601, 602
and 804, the Trustee shall not be accountable for the use of the proceeds of any
of the Bonds. The Trustee, the Paying Agent, the Bond Registrar or the
Remarketing Agent, in its individual capacity, may in good faith buy, sell, own,
hold or deal in any of the Bonds issued hereunder, and may join in any action
which any bondholder may be entitled to take with like effect as if it did not
act in any capacity hereunder. The Trustee, the Paying Agent, the Bond Registrar
or the Remarketing Agent, in its individual capacity, either as principal or
agent, may also engage in or be interested in any financial or other transaction
with the Issuer or the Company, and may act as depositary, trustee or agent for
any committee or body of bondholders secured thereby or other obligations of the
Issuer as freely as if it did not act in any capacity hereunder.
(e) Except as is otherwise provided in subsection (a) above:
(i) The Trustee shall be protected in acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram or other
paper or document believed to be genuine and correct and to have been
signed or sent by the proper person or persons. Any action taken by the
Trustee, pursuant hereto upon the request, authority or consent of any
person who at the time of making such request or giving such authority or
consent is the holder of any Bond, shall be conclusive and binding upon
all future holders of the same Bond and upon Bonds issued in exchange
therefor or in place thereof.
(ii) As to the existence or non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the
Trustee shall be entitled to rely upon a certificate signed on behalf of
the Issuer by its Chairman or Vice Chairman and attested by its Secretary
or Assistant Secretary under its seal as sufficient evidence of the facts
therein contained and prior to the occurrence of a default or an Event of
Default of which the Trustee has been notified as provided in subsection
(e)(iv) of this Section, or of which by said subsection it is deemed to
have notice, shall also be at liberty to accept a similar certificate to
the effect that any particular dealing, transaction or action is necessary
or expedient, but may at its discretion secure such further evidence
deemed necessary or advisable, but shall in no case be bound to secure the
same. The Trustee may accept a certificate of the Secretary or Assistant
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Secretary of the Issuer under its seal to the effect that a resolution in
the form therein set forth has been adopted by the Issuer as conclusive
evidence that such resolution has been adopted and is in full force and
effect.
(iii) The right of the Trustee to do things enumerated herein shall
not be construed as a duty and the Trustee shall not be answerable for
other than its gross negligence or willful misconduct.
(iv) The Trustee shall not be required to take notice or be deemed
to have notice of any default or Event of Default hereunder, except Events
of Default defined in subsection (a) of Section 6.1 of the Agreement or
subsections (a) or (b) of Section 1101 of this Indenture, unless the
Trustee shall be specifically notified in writing of such default or Event
of Default by the Bank, the Issuer or by the holders of at least
twenty-five per centum (25%) in principal amount of the Bonds. All notices
or other instruments required to be delivered to the Trustee must, in
order to be effective, be delivered at the Principal Office of the
Trustee, and in the absence of such notice so delivered the Trustee may
conclusively assume there is no default or Event of Default except as
aforesaid. In the event that any payment required to be made under the
Agreement is not paid when due, the Trustee shall immediately notify the
Company by telephonic notice that such payment has not been made and shall
immediately confirm such notice to the Company.
(f) At reasonable times and as often as reasonably requested in connection
with its rights under this Indenture, the Trustee and its duly authorized agents
who are acceptable to the Company shall have the right to inspect all books,
papers and records of the Issuer and the Company pertaining to the Bonds and to
make copies of such memoranda from and in regard thereto as may be desired.
(g) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in respect
of the premises.
(h) Notwithstanding anything elsewhere herein contained, the Trustee shall
have the right, but shall not be required, to demand, in respect of the
authentication of any Bonds, the withdrawal of any cash or any, action
whatsoever within the purview hereof, any showings, certificates, opinions,
appraisals or other information, or corporate action or evidence thereof, in
addition to that required by the terms hereof as a condition of such action by
the
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Trustee which the Trustee deems desirable for the purpose of establishing the
right of the Issuer to the authentication of any Bonds, the withdrawal of any
cash, or the taking of any other action by the Trustee.
(i) Before taking such action at the direction of the bondholder
hereunder, the Trustee may require that a satisfactory indemnity bond be
furnished for the reimbursement of all expenses to which it may be put and to
protect it against all liability, except liability which is adjudicated to have
resulted from the gross negligence or willful misconduct of the Trustee by,
reason of any action so taken.
(j) All moneys received by the Trustee, the Paying Agent or the
Remarketing Agent for the Bonds shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received
but need not be segregated from other funds except to the extent required herein
or by law. Neither the Trustee, the Paying Agent nor the Remarketing Agent shall
be under any liability for interest on any moneys received hereunder except such
as may be agreed upon in writing signed by such parties.
(k) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers hereunder.
(1) The Trustee agrees, for the benefit of the bondholders, to do and
perform all acts and things contemplated in the Agreement to be done or
performed by it.
Section 1202. Fees, Charges and Expenses of Trustee. The Trustee shall he
entitled to payment or reimbursement for reasonable fees for its Ordinary
Services rendered hereunder and all advances, counsel fees and other Ordinary
Expenses reasonably and necessarily made or incurred by the Trustee in
connection with such services and, if it should become necessary that the
Trustee perform Extraordinary Services, it shall be entitled to reasonable extra
compensation therefor, and to reimbursement for reasonable and necessary
Extraordinary Expenses in connection therewith; provided, that if such
Extraordinary Services or Extraordinary Expenses are occasioned by its gross
negligence or willful misconduct, it shall not be entitled to compensation or
reimbursement therefor. The Trustee shall be entitled to payment and
reimbursement for the reasonable fees and charges of the Trustee as Paying Agent
and Bond Registrar for the Bonds as hereinabove provided. Upon the occurrence of
an Event of Default, but only upon such occurrence, the Trustee shall have a
first lien on the Trust Estate with
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right of payment prior to payment of, the principal of, and the interest on, any
Bond for the foregoing advances, fees, costs and expenses incurred.
Notwithstanding any provision hereof to the contrary, the Trustee shall have no
lien upon or right to receive payment of its fees and expenses from amounts
drawn under the Letter of Credit.
Section 1203. Notice to Bondholders If Event of Default Occurs. If an
Event of Default occurs of which the Trustee is by subsection (e) (iv) of
Section 1201 required to take notice or if notice of an Event of Default be
given as in said subsection (e)(iv) provided, then the Trustee shall give
written notice thereof by first class mail to the holders of all Bonds then
outstanding.
Section 1204. Intervention by Trustee. In any judicial proceeding to which
the Issuer is a party which, in the opinion of the Trustee and its counsel, has
a substantial bearing on the interest of the bondholders, the Trustee may
intervene on behalf of the bondholders and shall do so if requested in writing
by the holders of at least twenty-five percentum (25%) in principal amount of
the Bonds. The rights and obligations of the Trustee under this Section are
subject to the approval of a court of competent jurisdiction if such approval is
required by law as a condition to such intervention.
Section 1205. Successor Trustee. Any corporation or association into which
the Trustee may be converted or merged, or with which it may be consolidated, or
to which it may sell or transfer its trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, merger, consolidation, sale or transfer to which it is a party,
ipso facto, shall be and become successor Trustee hereunder and be vested with
all of the title to the Trust Estate and all the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 1206. Resignation by the Trustee; judicial Appointment of
Successor Trustee. The Trustee and any successor Trustee may at any time resign
from the trusts hereby created by giving sixty (60) days written notice to the
Issuer and the Company and by first class mail to each bondholder, and such
resignation shall take effect at the end of such sixty (60) day period, or upon
the earlier appointment of a successor Trustee by the bondholders or by the
Issuer as provided in Section 1208; provided, however, such resignation shall
not take effect until a successor
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shall have been appointed and assumed the duties of Trustee hereunder. Such
notice to the Issuer may be served personally or sent by registered or certified
mail.
In case at any time the Trustee shall resign and no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of this
Article XII prior to the date specified in the notice of resignation as the date
when such resignation is to take effect, the resigning Trustee may forthwith
apply to a court of competent jurisdiction for the appointment of a successor
Trustee. If no appointment of a successor Trustee shall be made pursuant to the
foregoing provisions of this Article XII within six (6) months after a vacancy
shall have occurred in the office of Trustee, any bondholder may apply to any
court of competent jurisdiction to appoint a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
Section 1207. Removal of the Trustee. The Trustee may be removed at any
time, by an instrument or concurrent instruments in writing delivered to the
Trustee and to the Issuer, the Company, the Remarketing Agent and the Bank and
signed by the holders of a majority in principal amount of the Bonds
outstanding.
Section 1208. Appointment of Successor Trustee by the Bondholders;
Temporary Trustee. If the Trustee shall resign, be removed, be dissolved, be in
course of dissolution or liquidation, or shall otherwise become incapable of
acting hereunder or in case it shall be taken under the control of any public
officer, officers or a receiver appointed by a court, a successor may be
appointed by the holders of a majority in principal amount of the Bonds, by an
instrument or concurrent instruments in writing signed by such holders, or by
their attorneys-in-fact, duly authorized; provided, nevertheless, that in case
of such vacancy the Issuer, by an instrument signed by the Chairman or Vice
Chairman of the Issuer and attested by the Secretary or Assistant Secretary of
the Issuer under its seal, may appoint a temporary Trustee to fill such vacancy
until a successor Trustee shall be appointed by the bondholders in the manner
above provided; and any such temporary Trustee shall immediately and without
further act be superseded by the Trustee so appointed by such bondholders;
provided further, however, that unless an Event of Default has occurred and is
continuing hereunder, no such appointment by the bondholders or the Issuer shall
be effective without the consent of the Company and the Bank which shall not be
unreasonably withheld. In the case of any appointment of a successor Trustee
hereunder, the Trustee then acting shall not resign, be removed, or otherwise
cease to act hereunder, until such
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successor Trustee has assumed its duties hereunder. Every such Trustee appointed
pursuant to the provisions of this Section shall be a trust company or bank
(having trust powers) in good standing, shall be located within or outside the
State and shall have an unimpaired capital and surplus of not less than
TWENTY-FIVE MILLION DOLLARS ($25,000,000), if there be such an institution
willing, qualified and able to accept the trusts upon reasonable or customary
terms.
Section 1209. Concerning Any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Issuer an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, trusts, duties and obligations of its predecessor; but such predecessor
shall, nevertheless, on the written request of the Issuer, or of its successor,
execute and deliver an instrument transferring to such successor Trustee all the
estates, properties, rights, powers and trusts of such predecessor hereunder;
and every predecessor Trustee shall deliver all securities and moneys held by it
as Trustee hereunder to its successor. Should any instrument in writing from the
Issuer be required by any successor Trustee in order to more fully and certainly
vest in such successor the estates, properties, rights, powers and trusts hereby
vested or intended to be vested in the predecessor any and all such instruments
in writing shall, on request, be executed, acknowledged and delivered by the
Issuer. The resignation of any Trustee and the instrument or instruments
removing any Trustee and appointing a successor hereunder, together with all
other instruments provided for in this Article, shall be filed or recorded by
the successor Trustee in each recording office where the Financing Statements
shall have been filed or recorded.
Section 1210. Trustee Protected in Relying Upon Resolutions, etc. The
resolutions, opinions, certificates and other instruments provided for herein
may be accepted by the Trustee as conclusive evidence of the facts and
conclusions stated therein and shall be full warrant, protection and authority
to the Trustee for the withdrawal of moneys and for any other action taken
hereunder.
Section 1211. Successor Trustee as Custodian of Funds, Paying Agent and
Bond Registrar. Upon a change in the office of Trustee the predecessor Trustee
which has resigned or has been removed shall cease to be the holder of the Bond
Fund and the Paying Agent for the principal of, the redemption premium (if any)
and the interest on, the Bonds and Bond
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Registrar, and the successor Trustee shall become such holder, Paying Agent and
Bond Registrar.
Section 1212. Trust Estate May Be Vested in Co-Trustee. It is the purpose
hereof that there shall be no violation of any law of any jurisdiction
(including particularly the laws of the State) denying or restricting the right
of ban king corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation hereunder and in
particular in case of the enforcement of this Indenture upon the occurrence of
an Event of Default, it may be necessary that the Trustee and the Issuer enter
into a supplemental indenture to appoint an additional individual or institution
as a separate Trustee or Co-Trustee as permitted in Section 1301 (e) . The
following provisions of this Section are adapted to these ends.
Upon the incapacity or lack of authority of the Trustee, by reason of any
present or future law of any jurisdiction, to exercise any of the rights, powers
and trusts herein granted to the Trustee or to hold the Trust Estate or to take
any other action which may be necessary or desirable in connection therewith,
each and every remedy, power, right, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable
by and vest in a separate Trustee or Co-Trustee appointed by the Trustee but
only to the extent necessary to enable the separate Trustee or Co-Trustee to
exercise such rights, powers and trusts, and every agreement and obligation
necessary to the exercise thereof by such separate Trustee or Co-Trustee shall
run to and be enforceable by either of them.
Should any deed, conveyance or instrument in writing from the Issuer be
required by the separate Trustee or Co-Trustee so appointed by the Trustee in
order to more fully and certainly vest in and confirm to him or it such
properties, rights, powers, trusts, duties and obligations, any and all such
deeds, conveyances and instruments shall, on request, be executed, acknowledged
and delivered by the Issuer. In case any separate Trustee or Co-Trustee, or a
successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate Trustee or Co-Trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.
Section 1213. Filing of Certain Continuation Statements. Annually, the
Company shall deliver to the Trustee
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an opinion of counsel stating whether the filing of any continuation statements
are necessary hereunder and if such filing is necessary, specifically
identifying the nature of such filing and the proper place for such filing. From
time to time, the Trustee shall file or cause to be filed continuation
statements for the purpose of continuing without lapse the effectiveness of (i)
those Financing Statements which shall have been filed at or prior to the
issuance of the Bonds in connection with the security for the Bonds pursuant to
the authority of the U.C.C., and (ii) any previously filed continuation
statements which shall have been filed as herein required. The Issuer shall sign
and deliver to the Trustee or its designee such continuation statements as may
be requested of it from time to time by the Trustee. Upon the filing of any such
continuation statement the Trustee shall immediately notify the Issuer that the
same has been accomplished.
Section 1214. Adoption of Authentication. In case any of the Bonds
contemplated to be issued hereunder shall have been authenticated but not
delivered, any successor Trustee may adopt the certificate of authentication of
the original Trustee or of any successor of it as Trustee hereunder and deliver
the said Bonds so authenticated as hereinbefore provided; and in case any of
such Bonds shall not have been authenticated, any successor Trustee may
authenticate such Bonds in its own name. In all such cases such certificate of
authentication shall have the same force and effect as provided in the Bonds or
in this Indenture with respect to tin certificate of authentication of the
Trustee.
Section 1215. Succession of Paying Agents. Any bank or trust company with
or into which any Paying Agent may be merged or consolidated, or to which the
assets and business of such Paying Agent may be sold, shall be deemed the
successor of such Paying Agent for the purposes of this Indenture. If the
position of Paying Agent shall become vacant for any reason. The Issuer shall,
within thirty (30) days thereafter, appoint a bank or trust company selected by
the Company (and, prior to the Expiration Date of the Letter of Credit, approved
by the Bank) and located in the same city as such Paying Agent to fill such
vacancy; provided, however, that if the Issuer shall fail to select such
successor within said period, the Trustee shall make such appointment.
The Paying Agents shall enjoy the same protective provisions in the
performance of their duties hereunder as are specified in Section 1201 with
respect to the Trustee, in so far as such provisions may be applicable.
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Section 1216. Right of Trustee to Pay Taxes and Other Charges. In case any
tax, assessment or governmental or other charge upon any part of the Facilities,
is not paid as required therein, the Trustee may, but shall not be obligated to,
pay such tax, assessment or governmental charge without prejudice, however, to
any rights of the Trustee or the holders of the Bonds hereunder arising in
consequence of such failure; and any amount at any time so paid under this
Section, with interest thereon from the date of payment at the Interest Rate for
Advances, shall become so much additional indebtedness secured by this
Indenture, and the same shall be given preference in payment over any of the
Bonds, and shall be paid out of the Revenues, if not otherwise caused to be
paid; provided, however, that such amounts shall not be paid with proceeds from
a draw on the Letter of Credit.
Section 1217. Several Capacities. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Paying Agent or a co-Paying Agent, the Bond Registrar or a co-Bond
Registrar, the Remarketing Agent and in any other combination of such
capacities, to the extent permitted by law.
Section 1218. Appointment of Depository. First City Bank of Dallas,
Dallas, Texas, to act as Depository as provided in this Indenture. Depository
shall accept and agree to such appointment by its execution of the certificate
set forth on the signature page of this Indenture. No implied covenants or
obligations shall be read into this Indenture against Depository, to all of
which Issuer agrees and the respective owners of the Bonds agree by their
acceptance of delivery of any of the Bonds.
Section 1219. Termination of the Depository. All rights and duties of the
Depository under this Indenture and the Agreement shall cease and be of no
further force and effect upon the delivery by Company of the completion
certificate to the Depository pursuant to Section 3.5 of the Agreement and the
subsequent transfer to Trustee of any balance remaining in the Construction Fund
pursuant to Section 6.04 of this Indenture.
ARTICLE XIII
SUPPLEMENTAL INDENTURES
Section 1301. Supplemental Indentures Not Requiring Consent of
Bondholders. Except as hereinafter set forth, the Issuer and the Trustee may
without the consent of, or notice
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to, any of the bondholders, enter into an indenture or indentures supplemental
to this Indenture for any one or more of the following purposes, provided that
in the opinion of Independent Counsel the change effected thereby is not to the
prejudice of the interests of the Trustee or the bondholders:
(a) to cure any ambiguity or formal defect or omission in this Indenture;
(b) to grant to or confer upon the Trustee for the benefit of the
bondholders any additional rights, remedies, power or authorities that may
lawfully be granted to or conferred upon the bondholders or the Trustee or
either of them;
(c) to subject to the pledge of this Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to permit the qualification hereof and
thereof under the Trust Indenture Act of 1939, as amended, or any similar
Federal statute hereafter in effect or to permit the qualification of the Bonds
for sale under the securities laws of any of the states of the United States of
America, and, if they so determine, to add hereto or to any indenture
supplemental hereto such other terms, conditions and provisions as may be
permitted by said Trust Indenture Act of 1939 or similar Federal statute;
(e) to evidence the appointment of a separate Trustee or Co-Trustee or the
succession of a new Trustee or Paying Agent hereunder;
(f) to add to, delete or modify any provision required by Moody's or S&P
in order to assign a rating to the Bonds by either such agency; or
(g) to change the method for determining the Interest Index or the
Alternate Interest Index or to eliminate such indices or to implement the Fixed
Interest Rate; provided, however, no such supplemental indenture shall be
entered into in connection with this clause (g) unless the Trustee shall have
received an opinion of Independent Tax Counsel to the effect that the execution
of such supplemental indenture will not adversely affect the exemption of the
interest on the Bonds from Federal income taxation.
Section 1302. Supplemental Indentures Requiring Consent of Bondholders.
Exclusive of supplemental indentures covered by Section 1301 and subject to the
terms and provisions
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contained in this Section, and not otherwise, the owners of not less than a
majority in principal amount of the Bonds shall have the right, from time to
time, anything contained in this Indenture to the contrary notwithstanding, to
consent to and approve of the execution by the Issuer and the Trustee of such
other indenture or indentures supplemental hereto for the purpose of modifying,
altering,
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amending, adding to or rescinding, in any particular, any of the terms or
provisions contained in this Indenture or in any supplemental Indenture;
provided, however, that nothing in this Section contained shall permit, or be
construed as permitting without the approval of the holders of all the Bonds
outstanding (a) an extension of the maturity date on which the principal of or
the interest on any Bond is, or is to become, due and payable, (b) a reduction
in the principal amount of any Bond, the rate of interest thereon or any
redemption premium, (c) a preference or priority of any Bond or Bonds over any
other Bond or Bonds, or (d) a reduction in the principal amount of the Bonds
required for consent to such supplemental indenture.
If the Issuer shall request the Trustee to enter into any such
supplemental indenture for any of the purposes of this Section, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
written notice of the proposed execution of such supplemental indenture together
with a copy of such proposed supplemental indenture to be given by first class
mail, postage prepaid, to the holders of the Bonds at their addresses shown on
the Trustee's books of registration. If, within sixty (60) days or such longer
period as shall be prescribed by the Issuer following the mailing of such
notice, the holders of not less than a majority in principal amount of the Bonds
shall have consented to and approved the execution of such supplemental
indenture as herein provided, no holder of any Bond shall have any right to
object to any of the terms and provisions contained therein, or the operation
thereof, or in any manner to question the propriety of the execution thereof, or
to enjoin or restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof. Upon the execution of any
such supplemental indenture as in this Section permitted and provided, this
Indenture shall be modified and amended in accordance therewith.
Anything herein to the contrary notwithstanding, a supplemental indenture
under this Article XIII which affects any right of the Company under the
Agreement shall not become effective unless and until the Company shall have
consented to the execution and delivery of such supplemental indenture. In this
regard, the Trustee shall cause notice of the proposed execution and delivery of
any such supplemental indenture together with a copy of the proposed
supplemental indenture to be mailed by certified or registered mail to the
Company at least fifteen (15) days prior to the proposed date of execution and
delivery of any such supplemental indenture. The Company shall be deemed to have
consented to the execution and delivery of any such supplemental indenture if
the Trustee does not receive written notice of
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protest or objection thereto signed by or on behalf of the Company on or before
4:30 p.m., prevailing Eastern time, of the fifteenth (15th) day after the
mailing of said notice and a copy of the proposed supplemental indenture.
This Indenture may not be amended, changed or modified except lay the
execution and delivery of a supplemental indenture entered into in accordance
with the provisions of this Article XIII.
Section 1303. Trustee Authorized to join in Supplements; Reliance on
Counsel. The Trustee is authorized to join with the Issuer in the execution and
delivery of any supplemental indenture permitted by this Article XIII and, in so
doing, shall be fully protected by an opinion of counsel that such supplemental
indenture is so permitted and has been duly authorized by the Issuer and that
all things necessary to make it a valid and binding supplemental indenture have
been done.
Section 1304. Approval of Bank. Anything contained in this Article XIII to
the contrary notwithstanding, so long as the Letter of Credit shall be in effect
there shall be entered into no indenture supplemental to this Indenture without
the prior written consent of the Bank.
ARTICLE XIV.
AMENDMENT OF AGREEMENT
AND LETTER OF CREDIT
Section 1401. Amendments, etc., to Agreement and Letter of Credit Not
Requiring Consent of Bondholders. If required, the Trustee shall without the
consent of, or notice to, the bondholders consent to any amendment, change or
modification of the Agreement or the Letter of Credit as may be required
(a) by the provisions of the Agreement, the Letter of Credit or this
Indenture,
(b) for the purposes of curing any ambiguity or formal defect or
omission in the Agreement or the Letter of Credit,
(c) in connection with any other change therein which, in the
judgment of the Trustee, is not to the prejudice of the Trustee or the
bondholders, or
(d) to add to, delete or modify any provision required by Moody's or
S&P in order to assign a rating to the Bonds by either such rating agency.
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Section 1402. Amendments, etc., to Agreement and Letter of Credit
Requiring Consent of Bondholders. Except for the amendments, changes or
modifications as provided in Section 1401, neither the Issuer nor the Trustee
shall consent to any other amendment, change or modification of the Agreement or
the Letter of Credit without the giving of notice and the written approval or
consent of the holders of not less than a. majority in principal amount of the
Bonds given and procured as in Section 1302; provided, however, that nothing
contained in this Article shall permit, or be construed as permitting, any
amendment, change or modification of the Company's unconditional obligation to
make payments under the Agreement and the Company's covenants with respect to
the use and investment of the proceeds of the Bonds (except as specifically
provided for therein). If at any time the Issuer and the Company shall request
the consent of the Trustee to any such proposed amendment, change or
modification of the Agreement or the Letter of Credit, the Trustee shall, upon
being satisfactorily indemnified with respect to expenses, cause notice of such
proposed amendment, change or modification to be given in the same manner as
provided by Section 1302 with respect to proposed supplemental indentures. Such
notice shall briefly set forth the nature of such proposed amendment, change or
modification and shall state that copies of the instrument embodying the same
are on file at the Principal Office of the Trustee for inspection by
bondholders.
Section 1403. Trustee Authorized to join in Amendments; Reliance on
Counsel. The Trustee is authorized to join with the Issuer in the execution and
delivery of any amendment permitted by this Article XIV and, in so doing, shall
be fully protected by an opinion of counsel that such amendment is so permitted
and has been duly authorized by the Issuer and that all things necessary to make
it a valid and binding agreement have been done.
Section 1404. Approval of Bank. Anything contained in this Article XIV to
the contrary notwithstanding, so long as the Letter of Credit shall be in
effect, the Agreement may not be amended, changed or modified without the prior
written consent of the Bank.
ARTICLE XV.
MEETINGS OF BONDHOLDERS
Section 1501. Purposes for Which Bondholders' Meetings May Be Called. A
meeting of bondholders may be called at any time and from time to time for any
of the following pur-poses:
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(a) to give any notice to the Issuer, the Company, the Bank or the
Trustee, or to give any directions to the Trustee, or to consent to the
waiving of any default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by bondholders pursuant
to Section 1107;
(b) to remove the Trustee pursuant to Section 1207, and to appoint a
successor trustee pursuant to Section 1208;
(c) to consent to the execution of a supplemental indenture pursuant
to Section 1302, or to consent to the execution of an amendment, change or
modification of the Agreement pursuant to Section 1402; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified principal amount of the Bonds under any
other provision hereof or under applicable law.
Section 1502. Place of Meetings of Bondholders. Meetings of bondholders
may be held at such place or places as the Trustee or, in case of its failure to
act, the bondholders calling the meeting shall from time to time determine.
Section 1503. Call and Notice of Bondholders' Meetings.
(a) The Trustee may at any time call a meeting of bondholders to be held
at such time and at such place as the Trustee shall determine. Notice of every
meeting of bondholders, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be by
first class mail postage prepaid, to the bondholders at the address shown on the
registration books.
(b) In case at any time the holders of at least ten percentum (10%) in
aggregate principal amount of the Bonds outstanding shall have requested the
Trustee to call a meeting of the bondholders by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have given the notice of such meeting within twenty (20) days
after receipt of such request, then such bondholders may determine the time and
the place for such meeting and may call such meeting to take any action
authorized in Section 1501 by giving notice thereof as provided in subsection
(a) of this Section.
Section 1504. Persons Entitled to Vote at Bondholders' Meetings. To be
entitled to vote at any meeting of
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bondholders, a person shall be a holder of one or more Bonds outstanding, or a
person appointed by an instrument in writing as proxy for a bondholder by such
bondholder. The only persons who shall be entitled to be present or to speak at
any meeting of bondholders shall be the persons entitled to vote at such meeting
and their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel and any representatives of the
Issuer and its counsel.
Section 1505. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions hereof, the Trustee may make such
reasonable regulations as it may deem advisable for any meeting of bondholders
in regard to proof of the holding of Bonds and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it shall
deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Bonds shall be proved in the manner specified in
Section 1601 and the appointment of any proxy shall be proved in the manner
specified in Section 1601 or by having the signature of the person executing the
proxy witnessed or guaranteed by any bank, banker or trust company authorized by
Section 1601 to certify to the holding of Bonds. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 1601 or other
proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by
bondholders as provided in subsection (b) of Section 1503, in which case the
bondholders calling the meeting shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority of the Bonds represented at the
meeting and entitled to vote.
(c) At any meeting each bondholder or proxy shall be entitled to one vote
for each $5,000 principal amount of Bonds outstanding held or represented by,
him; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Bond challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote, except as a bondholder or proxy.
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(d) At any meeting of bondholders, the presence of persons holding or
representing Bonds in an aggregate principal amount sufficient under the
appropriate provision hereof to take action upon the business for the
transaction of which such meeting was called shall constitute a quorum. Any
meeting of bondholders called pursuant to Section 1503 may be adjourned from
time to time by vote of the holders (or proxies for the holders) of a majority
of the Bonds represented at the meeting and entitled to vote, whether or not a
quorum shall be present; and the meeting may be held as so adjourned without
further notice,
Section 1506. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of bondholders shall be by written
ballots on which shall be subscribed the signatures of the bondholders or of
their representatives by proxy and the number or numbers of the Bonds
outstanding held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in triplicate, of the proceedings
of each meeting of bondholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken there at and affidavits by one
or more persons having knowledge of the facts setting forth a copy of the notice
of the meeting and showing that said notice was published or mailed as provided
in Section 1503. Each copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Issuer, another to the Company and another to the Trustee to be
preserved by the Trustee, which copy shall have attached thereto the ballots
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
Section 1507, Revocation by Bondholders. At any time prior to (but not
after) the evidencing to the Trustee, in the manner provided in Section 1506, of
the taking of any action by the holders of the percentage in aggregate principal
amount of the Bonds specified herein in connection with such action, any holder
of a Bond the number of which is included in the Bonds the holders of which have
consented to such action may, by filing written notice with the Trustee at its
Principal Office and upon proof of holding as provided in. Section 1601, revoke
such consent so far as concerns such Bond. Except as aforesaid any such consent
given by the holder of any Bond shall be conclusive and binding upon such holder
and upon all future holders of such
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Bond and of any Bond issued in exchange therefor or in lieu thereof,
irrespective of whether (or not any notation in regard thereto is made upon such
Bond. Any action taken by the holders of the percentage in principal amount of
the Bonds specified herein in connection with such action shall be conclusively
binding upon the Issuer, the Company, the Trustee, the Bank and the holders of
all the Bonds.
ARTICLE XVI.
MISCELLANEOUS
Section 1601. Consents, etc., of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided to be given or taken by bondholders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such bondholders in person or by agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer and the Company. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose hereof and conclusive in favor of the Trustee, the
Company and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution by the certificate of any notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Bonds shall be proved by the registration books kept
by the Trustee as Bond Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by any bondholder shall bind every future holder of the same
Bond in respect of anything done or suffered to be done by the Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Bond.
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Section 1602. Issuer's Obligations Limited. No recourse under or upon any
obligation or agreement contained in this Indenture or in any Bond or under any
judgment obtained against the Issuer, or by the enforcement of any assessment or
by any legal or equitable proceeding by virtue of any constitution or statute or
otherwise or under any circumstances, cinder or independent of this Indenture,
shall be had against the Issuer.
Anything in this Indenture to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that (a) the Issuer may
rely conclusively on the truth and accuracy of any certificate, opinion, notice
or other instrument furnished to the Issuer by the Trustee or the Company as to
the existence of any fact or state of affairs required hereunder to be noticed
by the Issuer; (b) the Issuer shall not be under any obligation hereunder to
perform any record-keeping or to provide any legal services, it being understood
that such services shall be performed either by the Trustee or the Company; and
(c) none of the provisions of this Indenture shall require the Issuer to expend
or risk its own funds or to otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers hereunder, unless it shall first have been adequately indemnified to its
satisfaction against the cost, expenses and liability which may be incurred
thereby.
Notwithstanding anything herein contained to the contrary, any obligation
which the Issuer may incur under this Indenture or under any instrument executed
in connection herewith which shall entail the expenditure of money shall not be
a general obligation of the Issuer but shall be a limited obligation payable
solely from the Revenues.
Section 1603. Immunity of Directors, Officers and Employees of Issuer. No
recourse shall be had for the enforcement of any obligation, promise or
agreement of the issuer contained in the Agreement, this Indenture or in any
Bond issued hereunder for any claim based thereon or otherwise in respect
thereof, against any director, officer or employee, as such, in his individual
capacity, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitutional provision, statute or rule of law, or by
the enforcement of any assignment or penalty or otherwise; it being expressly
agreed and understood that the Bonds, the Agreement and this Indenture are
solely corporate obligations, and that no personal liability whatsoever shall
attach to, or be incurred by, any director, officer or employee as such, past,
present or future, of the Issuer or of any successor
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corporation, either directly or th rough the Issuer or any successor
corporation, under or by reason of any of the obligations, promises or
agreements entered into between the Issuer and the Company whether contained in
the Agreement or to be implied therefrom as being supplemental hereto or
thereto, and that all personal liability of that character against every such
director, officer and employee is, by the execution of the Agreement and this
Indenture, and as a condition of, and as part of the consideration for, the
execution of the Agreement and this Indenture, expressly waived and released.
Section 1604. Limitation of Rights. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied herefrom
or from the Bonds is intended or shall be construed to give to any person other
than the parties hereto, the Company, the Bank and the holders of the Bonds, any
legal or equitable right, remedy or claim under or in respect hereto or any
agreements, conditions and provisions herein contained; this Indenture and all
of the agreements, conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto, the Company, the
Bank and the holders of the Bonds as herein provided.
Section 1605. Severability. If any provision hereof shall be held or
deemed to be or shall, in fact, be inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question invalid, inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever.
Section 1606. Notices. It shall be sufficient service of any notice,
approval, consent, request, complaint, demand or other communication if the same
shall be delivered or mailed by first class registered or certified mail, return
receipt requested, postage prepaid, and addressed, as follows:
(a) If to the Issuer: Trinity River Industrial
Development Authority
5300 S. Collins
Arlington, Texas 76010
Attention: Secretary/Treasurer
100
<PAGE> 108
(b) If to the Company: Radiation Sterilizers, Incorporated
Attention : President
3000 Sand Hill Road
Menlo Park, California 94025
(c) If to the Trustee: Bank One Trust Company, N.A.
Attention : Corporate Trust
Administration
100 East Broad Street
Columbus, Ohio 43271-0181
(d) If to the Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
Attention: George Huxtable,
Vice President
2055 Gateway Plaza, Suite 200
San Jose, California 95110
A duplicate copy of each notice, approval, consent, request, complaint, demand
or other communication given hereunder by the Issuer, the Company, the Trustee
or the Bank to any one of the others shall also be given to all of the others.
The Issuer, the Company, the Trustee and the Bank may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, approvals, consents, requests, complaints, demands or other
communications shall be sent or persons to whose attention the same shall be
directed.
Upon the occurrence of any Event of Taxability or upon the occurrence of
an Event of Default hereunder, the Trustee shall further promptly provide notice
to the Commission at the following address:
Texas Economic Development Corporation
410 East Fifth Street
Austin, Texas 78711
Section 1607. Trustee as Paying Agent and Bond Registrar, The Trustee is
hereby designated and agrees to act as Paying Agent and Bond Registrar for and
in respect to the Bonds.
Section 1608. Payments Due on Days Other Than Business Days. After the
Conversion Date, in any case where the date of maturity of principal of and/or
interest on the Bonds or the date fixed for the redemption of any Bonds shall
not be a Business Day, then payment of principal, redemption premium (if any)
and/or interest need not be made on such date but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
101
<PAGE> 109
maturity or the date fixed for the redemption, and if made on such next
succeeding Business Day no interest shall accrue for the period after such date.
Section 1609. Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute cone and the same instrument.
Section 1610. Priority Over Other Liens. It is intended that this
Indenture shall be superior to any other lien which may be placed upon the
Revenues, the Bond Fund, the Construction Fund or any other funds or accounts
created pursuant to this Indenture.
Section 1611. Binding Effect. This instrument shall inure to the benefit
of and shall be binding upon the Issuer and the Trustee and their respective
successors and assigns, subject, however, to the limitations contained in this
Indenture.
Section 1612. Captions. The captions or headings in this Indenture are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Indenture.
Section 1613. Notice to S&P. The Trustee hereby agrees to notify S&P in
writing, signed by an authorized officer of the Trustee, with respect to: (a)
any change in the office of Trustee under the Indenture; (b) any amendment of or
supplement to the Indenture or the Agreement; (c) redemption, in full, of the
Bonds; (d) conversion of the interest rate borne by the Bonds to a Fixed
Interest Rate; (e) the expiration of the Letter of Credit; or (f) any amendment
to the Letter of Credit.
Section 1614. References to Bank. After the Letter of Credit is no longer
in effect and all amounts owing to the Bank under the Letter of Credit Agreement
and related documents have been paid, any provision of this Indenture requiring
notification to be given to the Bank, or requiring that the Bank consent to any
action, shall become ineffective.
Section 1615. Laws Governing Indenture, The effect and meaning hereof and
the rights of all parties hereunder shall be governed by, and construed
according to, the laws of the State of Texas except that the duties,
responsibilities, obligations and powers of the Trustee hereunder shall be
governed by and construed according to the laws of the State of Ohio, but it is
the intention of the Issuer that the situs of the trust created by this
Indenture be in the state
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<PAGE> 110
in which is located the principal office of the Trustee from time to time acting
under this Indenture. The word "Trustee" as used in the preceding sentence shall
not be deemed to include any additional individual or institution appointed as a
separate or Co-Trustee pursuant to Section 1211 of this Indenture. It is the
further intention of the Issuer that the Trustee administer said trust in the
state in which is located, from time to time, the situs of said trust.
IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed in
its corporate name and its corporate seal to be affixed hereto and attested by
its authorized officers, and to evidence its acceptance of the trusts hereby
created the Trustee has caused these presents to be executed in its corporate
name and its corporate seal to be affixed hereto and attested by its authorized
officers, all as of the date first above written.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
(CORPORATE SEAL)
By: [SIG]
----------------------------------
President
Attest:
/s/ RAMONA A. NINER
-----------------------------
Secretary
BANK ONE TRUST COMPANY, N.A.
as Trustee
BY: [SIG]
-------------------------------------
Title: Trust Administration
103
<PAGE> 111
ACKNOWLEDGMENT AND CONSENT OF COMPANY
The undersigned, on behalf of RADIATION STERILIZERS, INCORPORATED, a
California corporation, HEREBY ACKNOWLEDGES NOTICE OF, AND HEREBY CONSENTS TO
(a) the assignment provisions contained with the Granting Clauses of the
foregoing Trust Indenture, and (b) all terms and conditions set forth in said
Trust Indenture, and intending to be legally bound, HEREBY AGREES with the
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY and BANK ONE TRUST COMPANY, N.A.,
as Trustee, to perform, accept or be bound by any applicable terms and
conditions set forth in said Trust Indenture,
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of November 1, 1985.
RADIATION STERILIZERS,
INCORPORATED
By: [SIG]
------------------------------
Assistant Secretary
104
<PAGE> 112
ACKNOWLEDGMENT BY DEPOSITORY
The undersigned, on behalf of First City Bank of Dallas, hereby accepts
the duties and obligations imposed upon it as Depository hereunder and agrees to
be bound by the terms and provisions of this Indenture.
First City Bank of Dallas,
as Depository
By: [SIG]
------------------------------
ATTEST:
/s/ Doris Turner
- ------------------------------
105
<PAGE> 113
[Prudential Bache LETTERHEAD]
ACCEPTANCE LETTER
December 18, 1985
To Whom it May Concern:
Re: $4,600,000 (combined) Trinity River Industrial Development Authority
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985-A and Series 1985-B
In reference to the Trust Indentures dated November 1, 1985 for the referenced
financings Prudential-Bache designates its principal office as 100 Gold Street,
New York, New York 10292 and signifies its acceptance of the duties and
obligations as described in the Section 403 of the hereto referenced Trust
Indentures.
Very truly yours,
PRUDENTIAL-BACHE SECURITIES INC.
By: /s/ WILLIAM B. JAMES
-------------------------------
Vice President
Prudential-Bache Securities Inc.,
100 Gold Street, New York, NY 10292 Tel. 212 791-1000
<PAGE> 1
EXHIBIT 10.8
SERIES 1985B TRUST INDENTURE
Between
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
And
BANK ONE TRUST COMPANY, N.A.,
As Trustee
Dated as of November 1, 1985
----------------------
Trinity River Industrial Development Authority
Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project),
Series 1985B
$2,450,000
----------------------
JWR: FIFTH DRAFT 12/9/85
<PAGE> 2
TRUST INDENTURE
TABLE OF CONTENTS
(The Table of Contents is not a part of the Trust Indenture but is for
convenience of reference only)
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PARTIES 1
RECITALS 1
GRANTING CLAUSES 3
HABENDUM 4
GRANT IN TRUST 4
GENERAL COVENANT 4
ARTICLE I. DEFINITIONS AND CERTAIN
RULES OF INTERPRETATION
Section 101. Definitions 5
Section 102. Certain Rules of Interpretation 17
ARTICLE II THE BONDS
Section 201. Authorized Amount of Bonds 18
Section 202. Issuance of Bonds 18
Section 203. Replacement Bonds 19
Section 204. Execution; Limited obligation 20
Section 205. Authentication 20
Section 206. Form of Bonds 21
Section 207. Delivery of Bonds 40
Section 208. Mutilated, Lost, Stolen
or Destroyed Bonds 42
Section 209. Exchangeability and Transfer of
Bonds; Persons Treated as Owners 42
ARTICLE III. REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption Dates and Prices 44
Section 302. Notices of Redemption, Conversion
Date, Expiration Date of the letter
of Credit, Expiration Date of the
Alternate Credit Facility or Delivery
of an Alternate Letter of Credit
or Alternate Credit Facility 46
Section 303. Cancellation 48
Section 304. Payment of Bonds Upon Redemption 49
Section 305. Pro Rata Redemption 49
</TABLE>
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ARTICLE IV. PURCHASE AND PLACEMENT OF
BONDS; LETTER OF CREDIT
Section 401. Purchase of the Bonds 50
Section 402. Conversion to Fixed Interest Rate 56
Section 403. Remarketing Agent 57
Section 404. Letter of Credit 59
Section 405. No Federal Guarantee 60
ARTICLE V. GENERAL COVENANTS
Section 501. Payment of Principal
Purchase Price, Redemption Premium
(if Any) and Interest 60
Section 502. Performance of Covenants; Authority 60
Section 503. Filing of Financing Statements 61
Section 504. Priority of Pledge
and Security Interest 61
Section 505. Rights Under Agreement 61
Section 506. Maintenance of Insurance;
Payment of Taxes, Charges, etc, 61
Section 507. Maintenance and Repair 62
Section 508. issuer's Election to Issue Bonds
Pursuant to Section 103(b)(6)(D)
of the Code 62
ARTICLE VI. CUSTODY AND APPLICATION
OF PROCEEDS OF BONDS
Section 601. Creation of the Construction Fund 62
Section 602. Disposition of Bond Proceeds 62
Section 603. Disbursements from Construction Fund 62
Section 604. Completion of the Facilities 63
ARTICLE VII. REVENUES AND FUNDS
Section 701. Source of Payment of Bonds 63
Section 702. Creation of the Bond Fund 63
Section 703. Payments into the Bond Fund 64
Section 704. Use of Moneys in the Bond Fund 65
Section 705. Custody of the Bond Fund 66
Section 706. Non-presentment of Bonds at Maturity 66
Section 707. Payments to the Company
from the Bond Fund 67
ARTICLE VIII. INVESTMENTS
Section 801. Construction Fund Investments 67
Section 802. Bond Fund Investments 68
Section 803. Non-Arbitrage Covenant; Compliance
with Special Arbitrage Rules 68
Section 804. Excess Investment Earnings Account 69
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ARTICLE IX. SUBORDINATION TO RIGHTS OF COMPANY
Section 901. Subordination to Rights of the Company 70
ARTICLE X. DISCHARGE OF LIEN
Section 1001. Discharge of Lien
and Security Interests 70
Section 1002. Provision for Payment of Bonds 70
Section 1003. Discharge of the Indenture 71
ARTICLE Xl. DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 1101. Defaults; Events of Default 72
Section 1102. Acceleration 73
Section 1103. Other Remedies 74
Section 1104. Right of Bondholders
to Direct Proceeding 75
Section 1105. Application of Moneys 75
Section 1106. Rights and Remedies Vested in Trustee 77
Section 1107. Rights and Remedies of Bondholders 78
Section 1108. Termination of Proceedings 78
Section 1109. Waivers of Events of Default 79
ARTICLE XII. THE TRUSTEE; PAYING AGENT;
AND BOND REGISTRAR
Section 1201. Acceptance of the Trusts 80
Section 1202. Fees, Charges and Expenses of Trustee 83
Section 1203. Notice to Bondholders
If Event of Default Occurs 84
Section 1204. Intervention by Trustee 84
Section 1205. Successor Trustee 84
Section 1206. Resignation by the Trustee; judicial
Appointment of Successor Trustee 85
Section 1207. Removal of the Trustee 85
Section 1208. Appointment of Successor Trustee by
the Bondholders; Temporary Trustee 85
Section 1209. Concerning Any Successor Trustee 86
Section 1210. Trustee Protected in Relying
Upon Resolutions, etc. 86
Section 1211. Successor Trustee as Custodian of
Funds, Paying Agent and Bond Registrar 87
Section 1212. Trust Estate May Be
Vested in Co-Trustee 87
Section 1213. Filing of Certain
Continuation Statements 88
Section 1214. Adoption of Authentication 88
Section 1215. Succession of Paying Agents 88
Section 1216. Right of Trustee to Pay
Taxes and other Charges 89
Section 1217. Several Capacities 89
</TABLE>
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ARTICLE XIII. SUPPLEMENTAL INDENTURES
Section 1301. Supplemental Indentures Not
Requiring Consent of Bondholders 89
Section 1302. Supplemental Indentures Requiring
Consent of Bondholders 90
Section 1303. Trustee Authorized to join in
Supplements; Reliance on Counsel 92
Section 1304. Approval of Bank 92
ARTICLE XIV. AMENDMENT OF AGREEMENT
AND LETTER OF CREDIT
Section 1401. Amendments, etc., to Agreement and
Letter of Credit Not Requiring
Consent of Bondholders 92
Section 1402. Amendments, etc., to Agreement
and Letter of Credit Not Requiring
Consent of Bondholders 92
Section 1403. Trustee Authorized to join in
Amendments; Reliance on Counsel 93
Section 1404. Approval of Bank 93
ARTICLE XV. MEETINGS OF BONDHOLDERS
Section 1501. Purposes for Which Bondholders'
Meetings May Be Called
Section 1502. Place of Meetings of Bondholders 94
Section 1503. Call and Notice of
Bondholders' Meetings 94
Section 1504. Persons Entitled to Vote
at Bondholders' Meetings 94
Section 1505. Determination of Voting Rights;
Conduct and Adjournment of Meetings 95
Section 1506. Counting Votes and Recording
Action of Meetings 96
Section 1507. Revocation by Bondholders 96
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ARTICLE XVI. MISCELLANEOUS
Section 1601. Consents, etc., of Bondholders 97
Section 1602. Issuer's Obligations Limited 97
Section 1603. Immunity of Directors, Officers
and Employees of Issuer 98
Section 1604. Limitation of Rights 99
Section 1605. Severability 99
Section 1606. Notices 99
Section 1607. Trustee as Paying Agent
and Bond Registrar 100
Section 1608. Payments Due on Days
Other Than Business Days 100
Section 1609. Counterparts 100
Section 1610. Priority Over Other Liens 100
Section 1611. Binding Effect 101
Section 1612. Captions 101
Section 1613. Notice to S&P 101
Section 1614. References to Bank 101
Section 1615. Laws Governing Indenture 101
</TABLE>
TESTIMONUIM
SIGNATURES AND SEALS
ACKNOWLEDGMENT AND CONSENT OF COMPANY
<PAGE> 7
SERIES 1985B TRUST INDENTURE
THIS SERIES 1985B TRUST INDENTURE (the "Indenture") dated as of November
l, 1985, made and entered into by and between TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY, a non-profit industrial development corporation created
and existing under the laws of the State of Texas (the "Issuer"), and BANK ONE
TRUST COMPANY, N.A., a national banking association organized and existing under
and by virtue of the laws of the United States of America, having power and
authority to accept and execute trusts, and having a principal. corporate trust
office in Columbus, Ohio, as trustee (the "Trustee"),
WITNESSETH:
WHEREAS, the Issuer has been created pursuant to the Development
Corporation Act of 1979, being Article 5190.6, V.A.T.C.S., as amended (the
"Act"), and is empowered under the Act to issue its revenue bonds, as further
set forth herein; and
WHEREAS, the Issuer, by due corporate action has authorized the financing
of the acquisition, construction and installation of an industrial facility in
Fort Worth, Texas (the "Facilities"), pursuant to plans and specifications
therefor, such Facilities to be financed by the Issuer for Radiation
Sterilizers, Incorporated, a California corporation qualified to do business in
the State of Texas (the "Company"), pursuant to a Loan Agreement, dated as of
November 1, 1985 (the "Agreement"); and
WHEREAS, after careful study and investigation of the nature of the
proposed Facilities, the Issuer has determined that, in assisting with the
financing of the Facilities, it will be acting in furtherance of the public
purposes intended to be served by the Act; and
WHEREAS, the Issuer has been advised by the Company that the amount
necessary to finance the cost of the acquisition, construction and installation
of the Facilities, including expenses incidental thereto, is $2,450,000 and, by
proper corporate action, the Issuer has authorized the issuance and sale of
$2,450,000 in aggregate principal amount of its Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project), Series 1985B (the "Bonds"), the
proceeds of which will be used to finance the cost of the acquisition,
construction and installation of the Facilities; and
WHEREAS, the Issuer has entered into the Agreement with the Company under
the terms of which the Issuer has agreed
<PAGE> 8
to finance the cost of acquiring, constructing and installing the Facilities
through the issuance of the Bonds and, in consideration thereof, the Company has
agreed to pay to the Issuer moneys sufficient (i) to pay the principal of, and
the redemption premium (if any) and the interest on, the Bonds as the same
become due and payable, (ii) to pay the purchase price of any Bonds required to
be purchased hereunder, and (iii) to pay certain administrative expenses in
connection with the Bonds; and
WHEREAS, as security for the payment of the Bonds, the Issuer has agreed
to assign and pledge to the Trustee and, with respect to certain funds of the
Issuer, to the Depository (as defined herein) all right, title and interest of
the Issuer in (a) the Agreement (except certain rights reserved by the Issuer
under the terms of this Indenture), together with the Agreement, (b) all amounts
on deposit from time to time in the "Bond Fund" and the Construction Fund (each
being hereinafter defined), but excluding any amounts on deposit in the "Excess
Investment Earnings Account" (hereinafter defined), and (c) the "Revenues"
(hereinafter defined); and.
WHEREAS, Wells Fargo Bank, N.A., a national banking association (the
"Bank"), is issuing its irrevocable standby Letter of Credit, dated the date of
delivery of the Bonds (the "Letter of Credit"), in favor of the Trustee, for the
account of the Company, obligating the Bank to pay to the Trustee for the period
described therein upon request and in accordance with the terms thereof, up to
(i) an amount equal to the aggregate principal amount of the Bonds then
outstanding (A) to pay the principal of the Bonds, whether at maturity, upon
redemption or otherwise, and (B) to enable the Trustee to pay the purchase price
of any Bonds required to be purchased under the terms of this Indenture, plus
(ii) an amount equal to fifty-five (55) days accrued and unpaid interest at the
maximum rate which may be borne by the Bonds on all outstanding Bonds (other
than Bonds held by the Bank as a result of a drawing under the Letter of
Credit); and
WHEREAS., the Bank and the Company will enter into a Series B
Reimbursement Agreement, dated as of November 1, 1985 (the "Letter of Credit
Agreement"), under the terms of which the Company will agree to reimburse the
Bank for all amounts drawn by the Trustee under the Letter of Credit, together
with interest on all such amounts, and to pay to the Bank a commission for
issuing the Letter of Credit; and
WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued and delivered as in this Indenture provided, the legal,
valid, binding and enforceable limited obligations of the Issuer, according to
2
<PAGE> 9
the import thereof, and to create a valid assignment and pledge of the Revenues
to the payment of the principal and purchase price of, and the redemption
premium (if any) and the interest on, the Bonds and a valid assignment of
certain of the rights, title and interest of the Issuer in the Agreement have
been done and performed, and the execution and delivery of this Indenture and
the execution, issuance and delivery of the Bonds, subject to the terms hereof,
have in all respects been authorized;
NOW, THEREFORE, KNOW ALL BY THESE PRESENTS, THIS INDENTURE WITNESSETH:
That the Issuer, in consideration of the premises and of the acceptance by
the Trustee of the trusts hereby created, and of the purchase and acceptance of
the Bonds by the holders thereof, and of the sum of TEN DOLLARS ($10.00), lawful
money of the United States of America, to it paid by the Trustee, at or before
the execution and delivery of these presents, and for other good and valuable
considerations the receipt of which are hereby acknowledged, in order to secure
the payment of the principal and purchase price of, and the redemption premium
(if any) and the interest on, the Bonds and all other amounts payable by the
Issuer pursuant to the terms of the Bonds and/or this Indenture according to
their tenor and effect and to insure the performance and observance by the
Issuer of all the agreements expressed or implied herein and in the Bonds, has
given, granted, assigned and pledged and does by these presents give, grant,
assign and pledge to the Trustee, and to its successors in the trusts hereby
created, and with respect to GRANTING CLAUSE IV, to the Depository, and its
successors in the trusts hereby created, and to them and their assigns forever:
GRANTING CLAUSE I.
All right, title and interest of the Issuer in the Agreement, together
with the Agreement itself, and all amendments, modifications and renewals
thereof, reserving, however, the rights (a) providing that notices, approvals,
consents, requests and other communications be given to the Issuer, and (b) of
the Issuer under Sections 5.3,5.10 and 6.4 of the Agreement.
GRANTING CLAUSE II.
All right, title and interest of the Issuer in the Revenues.
3
<PAGE> 10
GRANTING CLAUSE III.
All amounts on deposit from time to time in the Bond Fund, but excluding
any amounts on deposit in the Excess Investment Earnings Account, subject to the
provisions of this Indenture and the Agreement permitting or requiring the
application thereof for the purposes and on the terms and conditions set forth
herein and therein.
GRANTING CLAUSE IV.
All amounts on deposit from time to time in the Construction Fund, but
excluding any amounts on deposit in the Excess Investment Earnings Account,
subject to the provisions of this Indenture and the Agreement permitting or
requiring the application thereof for the purposes and on the terms and
conditions set forth herein and therein.
GRANTING CLAUSE V.
Any and all other property of every name and nature from time to time
hereafter by delivery or by writing of any kind, given, granted, assigned and
pledged as and for additional security hereunder, by the Issuer or by anyone on
its behalf or with its written consent, to the Trustee which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby given, granted, assigned and pledged or agreed or intended so to be, to
the Trustee and its successors in said trusts and to the Depository and its
successors in said trusts, respectively, to them and their assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, for
the equal and proportionate benefit, security and protection of all holders of
the Bonds issued or to be issued under and secured by this Indenture, without
preference, priority or distinction as to lien or otherwise of any of the Bonds
over any of the others except as herein expressly provided;
PROVIDED, HOWEVER, that when the principal of, and the interest on, all of
the Bonds secured hereby have been paid or shall be deemed to have been paid in
accordance with the terms and provisions of this Indenture, then this indenture
and the rights hereby granted shall cease, determine and be void; otherwise,
this Indenture shall be of full force and effect .
THIS INDENTURE FURTHER WITNESSETH and it is expressly declared that all
Bonds issued and secured hereunder are to
4
<PAGE> 11
be issued, authenticated and delivered and all property hereby given, granted,
assigned or pledged is to be dealt with and disposed of under, upon and subject
to the terms, conditions, stipulations, agreements, trusts, uses and purposes as
hereinafter expressed, and the Issuer has agreed and DOES HEREBY AGREE with the
Trustee, the Depository and with the respective holders, from time to time, of
the Bonds or any part thereof, as follows, that is to say:
ARTICLE I.
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 101. Definitions. In addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Agreement shall have the same meanings as assigned to them in the Agreement when
used herein unless the context or use clearly indicates another or different
meaning or intent:
Act - The Development Corporation Act of 1979, Article 5190.6 V.A.T.C.S.,
as amended and supplemented.
Adjustment Date - After the Conversion Date, the Interest Payment Date
next preceding the Expiration Date of the Alternate Credit Facility or the
Expiration Date of the Letter of Credit, as the case may be.
Agreement - The hereinbefore-mentioned Loan Agreement, of even date
herewith, between the Issuer and the Company, including any amendment thereto.
Alternate Credit Facility - A credit facility other than the Letter of
Credit, including without limitation, an irrevocable letter of credit or bond
insurance policy, which provides for payment of the principal of and the
interest on, the Bonds, when due.
Alternate Interest Index - For any Interest Period ending prior to the
Conversion Date 65% of the interest rate applicable to 13-week United States
Treasury bills determined by the Remarketing Agent on the basis of the average
per annum bond equivalent yield at which such 13-week Treasury bills shall have
been sold at the most recent Treasury auction during the next preceding Interest
Period. If no such auction shall have been conducted during the next preceding
Interest Period, or if the Remarketing Agent shall fail to determine the
Alternate Interest Index, the
5
<PAGE> 12
Alternate Interest Index during such Interest Period will be the same as for the
preceding Interest Period.
Alternate Letter of Credit - An irrevocable letter of credit issued in
accordance with Section 4.6 of the Agreement.
Available Moneys - Moneys on deposit in trust with the Trustee for a
period of at least one hundred twenty-three (123) days during which no petition
in bankruptcy or similar insolvency proceeding has been filed by or against the
Company.
Bank - The issuer of the Letter of Credit, initially, Wells Fargo Bank,
N.A. , a national banking association.
Bond Fund - The Bond principal and interest payment fund established with
the Trustee and created in Section 702 of this Indenture in which there shall be
established a general account and a special account. Any reference herein to the
"Bond Fund" without further qualification shall constitute a reference to said
general account.
Bond Payment Date - Any date upon which the principal of and the
redemption premium (if any) or interest on, the Bonds shall be payable pursuant
to the Indenture, whether at stated maturity, by redemption, by acceleration or
otherwise.
Bond Purchase Agreement - The bond purchase agreement among the Original
Purchasers, the Issuer and the Company, providing for the sale of Bonds to the
Original Purchasers.
Bond Registrar - The Trustee acting in such capacity.
Bond Resolution - The resolution adopted by the Issuer authorizing the
issuance of the Bonds, as the same may be amended, modified or supplemented by
any amendments or modifications thereof and supplements thereto entered into in
accordance with the provisions of the Indenture.
bondholder, owner or holder of the Bonds - The registered owner of any
Bond.
Bonds - The Trinity River Industrial Development Authority Variable Rate
Demand Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985B, in the aggregate principal amount of $2,445,000, issued
pursuant to the provisions of this Indenture.
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<PAGE> 13
Business Day - Any day, other than a Saturday or Sunday, on which banks located
in the cities in which the principal corporate trust office of the Trustee and
the principal office of the Bank are located and in New York, New York, are not
required or authorized by law to remain closed and on which The New York Stock
Exchange, Inc. is not closed.
Code - The Internal Revenue Code of 1954, as amended, and the applicable
Income Tax Regulations thereunder.
Commission - The Texas Economic Development Commission or its successors.
Company - Radiation Sterilizers, Incorporated, a corporation organized
under the laws of the State of California and qualified to do business in the
State, and its lawful successors and assigns, including any surviving, resulting
or transferee entity as provided in Section 5.1 of the Agreement.
Construction Fund - The Construction Fund created in Section 601 of this
Indenture.
Conversion Date - The date upon which the Bonds begin to bear interest at
the Fixed Interest Rate, which date shall be established in accordance with
Section 402.
Date of Taxability - The date as of which all or any part of the interest
on the Bonds is first required to be included in the gross income of any holder
or former holder thereof for Federal income tax purposes by reason of the
occurrence of an Event of Taxability which results in a Determination of
Taxability.
Depository - Initially First City Bank of Dallas, or such other depository
appointed in accordance with Section 1218 hereof.
Determination of Taxability - A determination that the interest income on
any of the Bonds is subject to Federal income taxation as a result of an Event
of Taxability, which determination shall be deemed to have been made upon the
occurrence of the first to occur of the following:
(a) the date on which the Company files (in compliance with its
obligations under the Agreement) any Supplemental Statement which
discloses that an Event of Taxability has occurred;
(b) the date on which the Company is advised in writing by the
Commissioner or any District Director of
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<PAGE> 14
the Internal Revenue Service that, based upon any filings of the Company,
or upon any review or audit of the Company, or upon any other grounds
whatsoever, an Event of Taxability has occurred;
(c) the date on which the Company receives notice from the Trustee
in writing that the Trustee has been advised by, any holder or former
holder of a Bond that the Internal Revenue Service has issued a statutory
notice of deficiency or similar notice to such holder or former holder
which asserts in effect that the interest on the Bonds of such holder or
former holder is includable in the gross income of such holder or former
holder due to the occurrence of an Event of Taxability;
(d) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that
there has been issued a public or private ruling of the Internal Revenue
Service or a technical advice memorandum issued by the national office of
the Internal Revenue Service that the interest on the Bonds is includable
for Federal income tax purposes in the gross income of any holder or
former holder of a Bond due to the occurrence of an Event of Taxability;
or
(e) the date on which the Company is advised in writing that a final
determination, from which no further right of appeal exists, has been made
by a court of competent jurisdiction in the United States of America in a
proceeding with respect to which the Company has been given written notice
and an opportunity to participate and defend that the interest on the
Bonds is includable in the gross income of any holder or former holder of
a Bond due to the occurrence of an Event of Taxability;
provided, however, no Determination of Taxability shall occur under subparagraph
(b), (c) or (d) of this paragraph unless the Company has been afforded the
opportunity, at its expense, to contest any such conclusion and/or assessment
and, further, no Determination of Taxability shall occur until such 'contest, if
made, has been finally determined. The Company shall be deemed to have been
afforded the opportunity to contest if it shall have been permitted to commence
and maintain any action in the name of any holder or former holder of a Bond to
judgment and through any appeals therefrom or other proceedings related thereto.
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<PAGE> 15
Eligible Investments - Has the following meanings:
(a) any bonds or other obligations of the United States of America
which as to principal and interest constitute direct obligations of the
United States of America, or any obligations of subsidiary corporations of
the United States of America fully guaranteed as to payment by the United
States of America;
(b) obligations of the Federal Land Bank;
(c) obligations of the Federal Home Loan Bank;
(d) obligations of the Federal Intermediate Credit Bank;
(e) obligations of the Central Bank for Cooperatives;
(f) certificates of deposit of national or state banks located
within the State including the Trustee of any of its affiliates which have
deposits insured by the Federal Deposit Insurance Corporation and
certificates of deposit of Federal savings and loan associations and state
building and loan associations located within the State which have
deposits insured by the Federal Savings and Loan Insurance Corporation
(including the certificates of deposit of any bank, savings and loan
association or building and loan association acting as depository,
custodian or trustee for any proceeds of the Bonds); provided however,
that the portion of such certificates of deposit in excess of the amount
insured by the Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation, if any, shall be secured by
deposit with the Federal Reserve Bank of Dallas, Texas, or other Federal
Reserve Bank or with any national or state bank located within the State,
of any of the obligations included in (a), (b), (c), (d) or (e) above; and
(g) repurchase agreements with respect to obligations included in
(a), (b), (c), (d) or (e) above and any other Investments;
provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing on or prior to the date payment is due of the obligation
for which the draw was made.
Event of Default - The events so denominated in Section 1101, subject to
the terms of Section 1109.
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<PAGE> 16
Event of Taxability - The date on which the interest income on any of the
Bonds becomes subject to Federal income taxation as a result of any of the
following conditions or circumstances:
(a) as a result of Section 103(b)(6) (D) Capital Expenditures being
paid or incurred with respect to the Local Facilities, the aggregate face
amount of the Bonds determined in accordance with the provisions of
Section 103(b) (6) (D) of the Code exceeds the limit permitted by said
Section 103(b) (6) (D); or
(b) the Bonds constitute "arbitrage bonds" within the meaning of
Section 103(c) of the Code; or
(c) the weighted average maturity of the Bonds exceeds the weighted
average estimated economic life of the components comprising the
Facilities by more than 20%, determined pursuant to Section 103(b)(14) of
the Code; or
(d) (i) more than 25% of the net proceeds of the sale of the Bonds
are used to provide a facility the primary purpose of which is one of the
following: retail food and beverage services (including eating and
drinking places, but excluding grocery stores), automobile sales or
service, or the provision of recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
is used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds
is used to provide any airplane, skybox or other luxury box, any
health club facility, any facility primarily used for gambling, or
any store the principal business of which is the sale of alcoholic
beverages for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
is used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25%; or more
of the net proceeds of the sale of the Bonds is used (directly or
indirectly) for the
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<PAGE> 17
acquisition of land (or an interest therein) other than land to be
used for farming purposes; (or
(v) any portion of the net proceeds of the sale of the Bonds
is used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of
the portion of the cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(e) the Facilities are operating as a facility the primary purpose
of which causes the Facilities to constitute a prohibited facility within
the meaning of Section 103(b) of the Code; or
(f) the sum of the authorized face amount of the Bonds allocable to
each "test-period beneficiary" (as defined in Section 103(b) (15) (D) of
the Code) plus the respective aggregate face amount of all tax-exempt
industrial development bonds presently outstanding (not including any
obligations which are to be redeemed from the proceeds of the Bonds) which
are allocable to each such test-period beneficiary exceeds $40,000,000; or
(g) less than substantially all of the net proceeds of the sale of
the Bonds are used to pay the costs of land or property of a character
subject to the allowance for depreciation under Section 167 of the Code;
or
(h) the taking of any action by the Issuer, the Company or any
person acting on the Company's behalf or upon the Company's direction, or
the failure of the Issuer, the Company or any such person to take any
action, or any mistake in or untruthfulness of any representation of the
Issuer or the Company contained in the Agreement or in any certificate of
the Issuer or the Company delivered pursuant to the Agreement or this
Indenture or in connection with the issuance of the Bonds, if such act or
omission, or such mistake in or untruthfulness of such representation, has
the effect of causing the interest income on the Bonds to be or become
subject to Federal income taxation;
provided, however, that no Event of Taxability shall be deemed to have occurred
with respect to any Bond if the interest income thereon shall be subject to
Federal income taxation for any period solely because during that period
11
<PAGE> 18
such Bond was held by a person who is a Substantial User or a Related Person;
and, provided further, that no Event of Taxability shall be deemed to have
occurred if the interest income on any of the Bonds becomes subject to Federal
income taxation as a result of a Taxability Change.
Excess Investment Earnings Account - The excess investment earnings
account created by Section 804.
Expiration Date of the Alternate Credit Facility - The date established in
the Alternate Credit Facility for the expiration thereof, and in the event such
date is extended, such date as extended.
Expiration Date of the Letter of Credit - The date established in the
Letter of Credit for the expiration thereof in accordance with its terms,
initially December 15, 1988 and in the event such date is extended, such date as
extended.
Extraordinary Services and Extraordinary Expenses - All services rendered
and all expenses incurred by the Trustee under this Indenture other than
Ordinary Services and Ordinary Expenses.
Facilities - The real, personal and mixed property identified in Exhibit A
to the Agreement, together with any additions and improvements thereto,
modifications thereof and substitutions therefor.
Financing Statements - Any and all financing statements (including
continuation statements) filed for record from time to time to perfect the
security interests created or assigned.
First Optional Redemption Date - The November 1 occurring in the year
which is a number of years after the Conversion Date equal to the number of
years between the November 1 immediately following the Conversion Date (unless
the Conversion Date is a November 1, in which case from such November 1) and
November 1, 2005, multiplied by 1/2 and rounded up to the nearest whole number.
Fixed Interest Rate - A fixed interest rate on the Bonds established in
accordance with Section 402.
Government Obligations - (a) direct obligations of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged, or (b) obligations issued by a person controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of, premium,
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<PAGE> 19
if any, and the interest on which is fully guaranteed as a full faith and credit
obligation of the United States of America (including any securities described
in (a) or (b) issued or held in book-entry form on the books of the Department
of the Treasury of the United States of America), which obligations, in either
case, are not subject to redemption prior to maturity at less than par by anyone
other than the holder.
Governmental Unit - The Trinity River Authority of Texas, and its
successors and assigns.
Indenture - This Trust Indenture as the same may be amended, modified or
supplemented by any amendments or modifications hereof and supplements hereto
entered into in accordance with the provisions hereof.
Interest Index - For any Interest Period ending prior to the Conversion
Date, the interest index set forth in the Form of Bond included in Section 206
hereof.
Interest Payment Date - With respect to the Bonds prior to and including
the Conversion Date the first (1st) Business Day of each month commencing
January 2, 1986, and after the Conversion Date the first (1st) day of each
November and May.
Interest Period - With respect to the Bonds prior to the Conversion Date a
period from and including the Interest Payment Date if each calendar month to
and including the day next preceding the Interest Payment Date in the following
calendar month, except that the first Interest Period shall be the period from
and including the Original Issuance Date to and including December 31, 1985.
Interest Reserve Requirement - $124,000.
Investment Company - Any open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended.
Issuer - The Trinity River Industrial Development Authority, it non-profit
industrial development corporation created and existing pursuant to the
provisions of the Act, and its successors and assigns.
Letter of Credit - The irrevocable letter of credit issued by the Bank
contemporaneously with the original issuance of the Bonds, except that upon the
issuance and delivery of an Alternate Letter of Credit, "Letter of Credit" shall
mean such Alternate Letter of Credit, and upon the delivery of an Alternate
Credit Facility, "Letter of
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<PAGE> 20
Credit" shall, unless the context otherwise requires, include reference to the
Alternate Credit Facility.
Letter of Credit Agreement - The Series B Reimbursement Agreement, dated
as of November 1, 1985, between the Company and the Bank pursuant to which the
Letter of Credit is issued by the Bank and delivered to the Trustee, and any and
all modifications, alterations, amendments and supplements thereto, and includes
any agreement between the Company and the Bank pursuant to which any Alternate
Letter of Credit is issued or any Alternate Credit Facility is made available.
Loan - The loan by the Issuer to the, Company of the proceeds from the
sale of the Bonds to the Original Purchasers.
Loan Term - The period commencing on the date of the Agreement and ending
on the date on which the Bonds have been fully paid (or provision for their
payment has been made) in accordance with the provisions of this Indenture.
Moody's - Moody's Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Issuer, at the request of the Company, by notice to the
Trustee and the Bank.
Ordinary Services and Ordinary Expenses - Those advances and services
normally rendered and those expenses normally incurred by a trustee under
instruments similar hereto, including, but not limited to, counsel fees.
Original Issuance Date - The date on which the Bonds are first
authenticated and delivered to the Original Purchasers against payment therefor.
Original Purchasers - Prudential-Bache Securities Inc., New York,
New York.
Outstanding Bonds or Bonds outstanding - When used with reference to the
Bonds at any date as of which the amount of Outstanding Bonds is to be
determined, means all Bonds which have been authenticated and delivered by the
Trustee hereunder, except:
(a) Bonds cancelled because of payment or redemption or purchase
prior to maturity, or otherwise;
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<PAGE> 21
(b) Bonds for the payment or redemption of which sufficient moneys
and/or Government obligations meeting the terms and conditions specified
in Section 1002 shall have been theretofore transferred or deposited into
the Bond Fund (whether upon or prior to the maturity or redemption date of
any such Bonds); provided that if such Bonds are to be redeemed prior to
the maturity thereof, notice of such redemption shall have been given or
arrangements satisfactory to the Trustee shall have been made therefor, or
waiver of such notice satisfactory in form to the Trustee shall have been
filed with the Trustee;
(c) Bonds in lieu of which others have been authenticated under
Section 203, 208 or 209;
(d) For purposes of any consent or other action to be taken by the
holders of a specified percentage of outstanding Bonds hereunder, all
Bonds held by or for the Issuer or the Company; and
(e) Bonds held by the Trustee pursuant to Section 406 hereof, except
that for purposes of any such consent or action the Trustee shall be
obligated to consider as not being outstanding only Bonds known by the
Trustee to be so held.
Paying Agent - The Trustee, and its successors, and any other Paying Agent
or Paying Agents as may be appointed by the Issuer from time to time with the
consent of the Company. "Principal Office" of the Paying Agent means the office
of the Paying Agent designated in writing to the Issuer, the Company, the
Trustee, the Bank, the Bond Regis-trar and the Remarketing Agent.
Payment in full of the Bonds - Specifically encompasses the situations
referred to in Section 1002.
Person - Any natural person, corporation, cooperative, partnership, trust
or unincorporated organization, government or governmental body or agency,
political subdivision or other legal entity as in the context may be
appropriate.
President - The President of the Issuer.
Principal User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6) (E) of the Code), a "principal user"
of such "facilities" within the meaning of Section 103(b)(6) of the Code.
Record Date - With respect to any interest Payment Date on or before the
Conversion Date the fifth (5th) day next preceding such Interest Payment Date;
provided that if such day is not a Business Day, then the next preceding
Business
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<PAGE> 22
Day, and with respect to any Interest Payment Date after the Conversion Date the
fifteenth (15th) day of the month next preceding such Interest Payment Date.
Related Person - When used with reference to any Principal User or any
Substantial User, means a "related person" within the meaning of Section 103 (b)
(6) of the Code.
Remarketing Agent - The remarketing agent appointed in accordance with
Section 403. "Principal Office" of the Remarketing Agent shall mean the office
thereof designated in writing to the Trustee, the Paying Agent, the Company, the
Issuer and the Bank.
Replacement Bonds - Any Bonds delivered on or after the Conversion Date to
replace Bonds issued prior to the Conversion Date, as provided in Section 203.
Revenues - (a) the payments and other amounts which under the Agreement
are payable by the Company directly to the Trustee to meet amounts due with
respect to the principal of, and the redemption premium (if any) and the
interest on, the Bonds, (b) all other moneys received by the Issuer, or the
Trustee on behalf of the Issuer, in respect of the repayment of the Loan
including, but not limited to, moneys drawn under the Letter of Credit, and (c)
income and profit from the investment of the payments and moneys described in
(a) and (b) above, all subject, however, to certain provisions in this Indenture
with respect to the Trustee's holding moneys for the benefit of the holders of
particular Bonds and to certain other provisions of this Indenture relating to
excess investment earnings and the rebate thereof to the United States.
S&P - Standard & Poor's Corporation, a corporation organized and existing
under the laws of the State of New York, its successors and their assigns, and,
if such corporation shall be dissolved or liquidated or shall no longer perform
the functions of a securities rating agency, "S&P" shall be deemed to refer to
any other nationally recognized securities rating agency designated by the
Issuer, at the request of the Company, by notice to the Trustee and the Bank.
Secretary - The Secretary of the Issuer.
Security interest or Security interests - Refers to the security interests
created herein and shall have the meaning set forth in the U.C.C.
State - The State of Texas.
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<PAGE> 23
Substantial User - With respect to any "facilities" (as the term
"facilities" is used in Section 103(b) (6) (E) of the Code), a "substantial
user" of such "facilities" within the meaning of Section 103(b) (13) of the
Code.
Supplemental Statement - Any statement, supplemental statement or other
tax schedule, return or document filed with the Internal Revenue Service
(whether pursuant to Income Tax Regulations Section 1.103-10(b) (2) (vi), as the
same may be amended or supplemented, or otherwise).
Taxability Change - Any change in the Constitution or laws of the United
States of America or the applicable Income Tax Regulations thereunder occurring
after the date of issuance of the Bonds which results in the interest on any of
the Bonds being included in the gross income of any holder (other than a holder
who is a Substantial User or a Related Person).
Taxable Period - With respect to a Bond, the period which elapses from the
Event of Taxability until payment in full of such Bond.
Trust Estate - The property described in the granting clauses hereof.
Trustee - Bank One Trust Company, N.A., Columbus, Ohio, and its successors
and any corporation or association resulting from or surviving any consolidation
or merger to which it or its successors may be a party, and any successor
trustee at the time serving as successor trustee under the Indenture. "Principal
office" of the Trustee means the principal corporate trust office of the
Trustee, which office at the date of acceptance by the Trustee of the duties and
obligations imposed on the Trustee by this Indenture is located at the address
specified in Section 1606.
U.C.C. - The Uniform Commercial Code of the State, as now or hereafter
amended.
Section 102, Certain Rules of Interpretation. The definitions set forth in
Section 101 shall be equally applicable to both the singular and plural forms of
the words and terms therein defined and shall cover all genders.
Herein, hereby, hereunder, hereof, hereinbefore, hereinafter and other
equivalent words - Refer to this Indenture and not solely to the particular
Article, Section or subdivision hereof in which such word is used.
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<PAGE> 24
Reference herein to an Article number (eg. , Article IV) or a Section
number (e.g., Section 702) shall be construed to be a reference to the
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.
ARTICLE II.
THE BONDS
Section 201. Authorized Amount of Bonds. No Bonds may be issued under the
provisions of this Indenture except in accordance with this Article. The total
principal amount of Bonds that may be issued hereunder is expressly limited to
$2,450,000, subject to the provisions of Sections 203, 208 and 209.
Section 202. Issuance of Bonds. The Bonds shall be designated "Trinity
River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985B", and shall bear interest payable on each Interest Payment Date. The
interest rate on the Bonds shall be as provided for in the form of Bond
contained in Section 206. The Bonds shall mature on November 1, 2005.
Anything herein or in the Bonds to the contrary notwithstanding, the
obligation of the Issuer hereunder shall be subject to the limitation that
payments of interest to the holder of any Bond shall not be required to the
extent that the receipt of any such payment by such holder would be contrary to
the provisions of law applicable to such holder which limit the maximum rate of
interest which may be charged or collected by such holder.
The Bonds shall be issued initially as registered Bonds without coupons in
the denomination of $50,000 each, or any integral multiple thereof, and, after
the Conversion Date, in the denomination of $5,000 each, or any integral
multiple thereof. The Bonds shall be numbered consecutively from R-1 upwards (in
order of the issuance) according to the records of the Bond Registrar.
The Bonds are subject to redemption prior to maturity as provided in
Section 301.
Prior to the Conversion Date; the Bonds may be purchased prior to maturity
as provided in Section 401.
Principal of and redemption premium (if any) and interest on, the Bonds
shall be payable in lawful money of
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<PAGE> 25
the United States of America from funds available therefor under this Indenture,
without deduction for services of any Paying Agent. Principal of, and redemption
premium (if any) on, each Bond shall be paid to the holder thereof upon
presentation and surrender of such Bond as it becomes due at the Principal
Office of the Trustee or any other Paying Agent. Interest on each Bond shall be
payable by check drawn upon the Paying Agent and mailed on each Interest Payment
Date to the holder of such Bond as of the close of business on the Record Date
next preceding the Interest Payment Date at the registered address of such
holder as it shall appear as of the close of business on such Record Date on the
registration books maintained pursuant to this Indenture notwithstanding the
cancellation of any of such Bonds upon any exchange or transfer of registration
thereof subsequent to the Record Date and prior to such Interest Payment Date,
except that, if and to the extent that there shall be a default in the payment
of the interest due on such Interest Payment Date, such defaulted interest shall
be paid to the holder in whose name any such Bond is registered at the close of
business on the fifth (5th) Business Day next preceding the date of payment of
such defaulted interest.
Notwithstanding the provisions of the immediately preceding paragraph, a
holder of Bonds in an aggregate principal amount of $500,000 or more may, by
notice to the Paying Agent, direct the Paying Agent to make payments of interest
on such holder's Bonds by means of wire transfers, in immediately available
funds, to a banking institution located in the United States of America
designated in such notice for the account of such holder. Any fees or charges
for such wire transfers shall be paid by the Company.
The Bonds as originally issued shall be dated the Original Issuance Date.
Bonds subsequently issued shall be dated the date of authentication thereof.
Each Bond shall bear interest from and including the Original Issuance Date, or
if authenticated after the Original Issuance Date from and including the last
date to which interest shall have been paid on the Bonds until payment of the
principal or redemption price thereof shall have been made or provided for in
accordance with the provisions of this Indenture, whether at maturity, upon
redemption or otherwise. Interest on the Bonds shall be paid on each Interest
Payment Date and, prior to the Conversion Date, shall be computed on the basis
of a year of 365 or 366 days, as appropriate, for the actual number of days
elapsed. After the Conversion Date, interest on the Bonds shall be computed on
the basis of a 360-day year and twelve 30-day months.
Section 203. Replacement Bonds. Replacement Bonds may to issued to replace
Bonds which are not tendered for
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<PAGE> 26
purchase pursuant to the provisions of Section 401. Any such Replacement Bonds
shall be executed and authenticated as provided in this Indenture. Replacement
Bonds shall be issued as registered Bonds without coupons. Replacement Bonds
shall contain the terms and provisions, specified herein as to interest rate,
maturity date and redemption and such other provisions as are consistent with
the provisions of this Indenture. Replacement Bonds shall be in form
satisfactory to the Trustee, the Issuer and the Company. The Company shall bear
all expenses in connection with the preparation and delivery of Replacement
Bonds.
Section 204. Execution; Limited Obligation. The Bonds shall be executed on
behalf of the Issuer by the manual or facsimile signature of its President or
Vice President and the Issuer's corporate seal shall be affixed thereto or
printed or otherwise reproduced thereon and attested by the manual or facsimile
signature of its Secretary. If any officer of the Issuer who shall have executed
any Bond shall cease to be such officer before the Bond so executed (by manual
or facsimile signature) shall be authenticated and delivered by the Trustee,
such Bond nevertheless may be authenticated and delivered as though the person
who executed such Bond had not ceased to be such officer of the Issuer, and also
any Bond may be executed on behalf of the Issuer by such persons as at the
actual time of such execution of such Bond shall be the proper officers of the
Issuer, although at the date of such Bond such persons may not have been
officers of the Issuer.
The obligation of the Issuer to pay the Bonds and the interest thereon
shall not be a general obligation of the Issuer but shall be a limited
obligation which shall be payable from, and wholly secured by, the Trust Estate,
Section 205. Authentication. Only such Bonds as shall have endorsed
thereon a certificate of authentication substantially in the form hereinafter
set forth executed by the Trustee shall be entitled to any right or benefit
hereunder. No Bond shall be valid or obligatory for any purpose unless and until
such certificate of authentication shall have been executed by the Trustee, and
such executed certificate of the Trustee upon any such Bond shall be conclusive
evidence that such Bond has been authenticated and delivered hereunder. Said
certificate of authentication on any Bond shall be deemed to have been executed
by the Trustee if signed by an authorized officer of the Trustee, but it shall
not be necessary that the same officer sign the certificate of authentication on
all of the Bonds issued hereunder.
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<PAGE> 27
Section 206. Form of Bonds. The Bonds, the Trustee's certificate of
authentication, the validation certificate and the form of assignment shall, at
the Trustee's discretion, be in substantially the forms and format hereinafter
set forth with such appropriate variations, omissions, substitutions and
insertions as are permitted or required hereby, including without limitation any
deletion of terms no longer applicable after the Conversion Date and the
inclusion of provisions described in Section 203, and may have such letters,
numbers or other marks of identification and such legends and endorsements
placed thereon, as may be required to comply with any applicable laws or rules
or regulations, or as may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution of the Bonds:
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<PAGE> 28
[FORM OF BOND - FRONT]
No. R- $____
UNITED STATES OF AMERICA
STATE OF TEXAS
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND INDUSTRIAL
DEVELOPMENT REVENUE BOND
(RADIATION STERILIZERS, INCORPORATED PROJECT)
SERIES 1985B
Maturity Date: November 1, 2005
original Issuance Date: December 18, 1985
CUSIP: _____________
Registered Holder:____________
Principal Amount: ____________________ Dollars ($_______________
FOR VALUE RECEIVED, the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
(the "Issuer"), a nonprofit industrial development corporation organized and
existing pursuant to the Development Corporation Act of 1979, Article 5190.6
V.A.T.C.S., as amended (the "Act"), promises to pay to the Registered Holder
identified above, or registered assigns, but solely from the sources and in the
manner hereinafter set forth, the Principal Amount identified above on the
Maturity Date identified above, and to pay from said sources interest thereon
from the Original Issuance Date identified above, or if this Bond is
authenticated after the Original Issuance Date, from and including the last date
to which interest shall have been paid on the "Bonds" (hereinafter defined), at
the rates and on the dates set forth herein until payment of such principal sum
has been made or provided for, subject to the provisions hereinafter mentioned
with respect to redemption prior to maturity. The principal sum of this Bond is
payable in lawful money of the United States of America without deduction for
services of any paying agent, at the principal corporate trust office of the
Trustee, currently BANK ONE TRUST COMPANY, N.A., Columbus, Ohio, but only upon
presentation and surrender of this Bond at maturity or upon redemption prior to
maturity. Interest payable on any "Interest Payment Date" (hereinafter defined)
will be paid, in lawful money of the United States of America without deduction
for services of the paying agent and, subject to certain exceptions provided in
the "Indenture" hereinafter described, to the person in whose name this Bond is
registered at the close of business on the
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<PAGE> 29
"Record Date" (hereinafter defined) for such Interest Payment Date. Except as
otherwise provided in the Indenture, interest on this Bond is payable by check
drawn upon the Trustee and mailed to the registered holder of this Bond at his
address as it appears on the registration books of the Trustee. This Bond shall
be purchased on the demand of the registered holder by the "Paying Agent" and/or
the "Remarketing Agent" as hereinafter described.
This Bond is one of a duly authorized issue of Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project), Series 1985B (the "Bonds"),
issuable under a Series 1985B Trust Indenture, dated as of November 1, 1985
(hereinafter, as the same may be amended and supplemented in accordance with its
terms, referred to as the "Indenture"), duly executed and delivered by the
issuer to Bank One Trust Company, N.A., a national banking association, as
Trustee (the term "Trustee" where used herein referring to said Trustee or its
successors in said trust appointed pursuant to the Indenture), aggregating in
principal amount $2,450,000 and issued for the purpose of providing funds to
lend to Radiation Sterilizers, Incorporated, a California corporation qualified
to do business in the State of Texas (the "Company"), so that the Company may
acquire, construct and install property comprising an industrial facility for
the sterilization of packaged products using ionizing radiation, such facility
to be located in the City of Fort Worth, Texas (the "Facilities"). The proceeds
of the Bonds will be lent to the Company pursuant to the terms of the Loan
Agreement (the "Agreement"), dated as of November 1, 1985, between the Issuer
and the Company.
THIS BOND AND THE REDEMPTION PREMIUM (IF ANY) AND THE INTEREST HEREON
SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A GENERAL OBLIGATION OR A PLEDGE OF
THE FAITH AND CREDIT OF THE ISSUER, THE TRINITY RIVER AUTHORITY OF TEXAS, THE
STATE OF TEXAS OR OF ANY POLITICAL SUBDIVISION THEREOF, AND DOES NOT DIRECTLY,
INDIRECTLY OR CONTINGENTLY OBLIGATE THE ISSUER, THE TRINITY RIVER AUTHORITY OF
TEXAS, THE STATE OF TEXAS OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO
PLEDGE ANY FORM OF TAXATION WHATEVER FOR THE PAYMENT OF SUCH PRINCIPAL,
REDEMPTION PREMIUM (IF ANY) AND INTEREST. This Bond is payable solely from the
"Revenues" (defined in the Indenture) and the issuer is obligated to pay the
principal of, and the redemption premium (if any) and the interest on, this Bond
only from the Trinity River Industrial Development Authority Bond Fund --
Radiation Sterilizers, Incorporated Project, 1985B (the "Bond Fund"), created in
the Indenture. No holder of this Bond shall ever have the right to compel the
exercise of the taxing power of the State of Texas or any political subdivision
thereof, including the Trinity
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<PAGE> 30
River Authority of Texas, to pay this Bond or the redemption premium (if any) or
the interest hereon or any other cost incident thereto, or to enforce payment
hereof against any property of said State or any political subdivision thereof.
No recourse shall be had for the payment of the principal of, or the redemption
premium (if any) or the interest on, this Bond against any officer or director
of the Issuer.
This Bond is issued and the Indenture was authorized, executed and
delivered by the Issuer under and pursuant to the Constitution and laws of the
State of Texas, including particularly the Act and a resolution of the Issuer
duly adopted on November 13, 1985. Pursuant to the terms of the Agreement the
Company has agreed to pay to the Issuer such amounts as will be fully sufficient
to pay the principal of, and the redemption premium (if any) and the interest
on, the Bonds as the same become due and to pay certain administrative expenses
in connection with the Bonds.
Reference to the Indenture is hereby made for a description of the
aforesaid Bond Fund which is charged with, and pledged to, the payment of the
principal of, and the redemption premium (if any) and the interest on, the
Bonds, the nature and extent of the security, the rights, duties and obligations
of the Issuer, the Company and the Trustee, the rights of the holders of the
Bonds, the terms and conditions under and upon the occurrence of which the
Indenture and the Agreement may be modified and the terms and conditions under
and upon the occurrence of which the lien of the Indenture may be defused as to
this Bond prior to the maturity or redemption date hereof, to all of the
provisions of which the holder hereof, by the acceptance of this Bond, assents.
THE TERMS AND PROVISIONS OF THIS BOND AND THE DEFINITIONS OF CERTAIN TERMS
USED HEREIN ARE CONTINUED ON THE REVERSE SIDE HEREOF AND SUCH CONTINUED TERMS
AND PROVISIONS AND DEFINITIONS SHALL FOR ALL PURPOSES HAVE SUCH EFFECT AS THOUGH
SET FORTH FULLY AT THIS PLACE.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things
required by the Constitution and laws of the State of Texas to happen, exist and
be performed precedent to and in the issuance of this Bond, the execution of the
Indenture and the adoption of the aforesaid resolution by the Issuer, have
happened, exist and have been performed in due time, form and manner as required
by law.
This Bond shall not be entitled to any benefit under the Indenture and
shall not become valid or obligatory for any purpose until it shall have been
authenticated by
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<PAGE> 31
execution by the Trustee by manual signature of the certificate hereon endorsed.
IN WITNESS WHEREOF, the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY has
caused this Bond to be executed with the manual or duly authorized reproduced
facsimile signature of its President, and the reproduced facsimile of its
corporate seal to be imprinted hereon and attested by the manual or duly
authorized reproduced facsimile signature of its Secretary.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
By: __________________________
President
(CORPORATE SEAL)
ATTEST:
___________________________
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
TO APPEAR ON FRONT OF BOND)
This Bond is one of the Bonds described in the within mentioned Indenture.
BANK ONE TRUST COMPANY, N.A.
as Trustee
By: ____________________________
Authorized Signature
Date of Authentication: ________
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<PAGE> 32
[FORM OF BOND - BACK]
DEFINITIONS
In addition to the words and terms defined on the face of this Bond and in
the Indenture and the Agreement, the following words and terms as used herein
shall have the following meanings unless the context or use indicates another or
different meaning or intent and such definitions shall be equally applicable to
both the singular and plural forms of any of the words and terms herein defined:
Adjustment Date - After the Conversion Date, the Interest Payment Date
next preceding the Expiration Date of the Alternate Credit Facility or the
Expiration Date of the Letter of Credit, as the case may be.
Alternate Credit Facility - It credit facility other than the Letter of
Credit, including without limitation, an irrevocable letter of credit or bond
insurance policy, which provides for payment of the principal of, and interest
on, the Bonds, when due.
Alternate Interest Index - For any Interest Period ending prior to the
Conversion Date 65% of the interest rate applicable to 13-week United States
Treasury bills determined by the Remarketing Agent on the basis of the average
per annum bond equivalent yield at which such 13-week Treasury bills shall have
been sold at the most recent Treasury auction during the next preceding Interest
Period. If no such auction shall have been conducted during the next preceding
Interest Period, or if the Remarketing Agent shall fail to determine the
Alternate Interest Index, the Alternate Interest Index during such Interest
Period will be the same as for the preceding Interest Period,
Alternate Letter of Credit - An irrevocable letter of credit other than
the Letter of Credit issued in accordance with the Agreement.
Bank - The issuer of the Letter of Credit, initially, Wells Fargo Bank,
N.A. , a national banking association.
Business Day - Any day, other than a Saturday or Sunday, on which banks
located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located and in New York, New
York, are not required or authorized by law to remain closed and on which The
New York Stock Exchange, Inc. is not closed.
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<PAGE> 33
Conversion Date - The date upon which the Bonds begin to bear interest at
the Fixed Interest Rate.
Date of Taxability - The date as of which all or any part of the interest
on the Bonds is first required to be included in the gross income of any holder
or former holder thereof for Federal income tax purposes by reason of the
occurrence of an "Event of Taxability" (defined in the Indenture) which results
in a "Determination of Taxability" (defined in the Indenture).
Expiration Date of the Alternate Credit Facility - The date established in
the Alternate Credit Facility for the expiration thereof, and in the event such
date is extended, such date as extended.
Expiration Date of the Letter of Credit - The date established in the
Letter of Credit for the expiration thereof in accordance with its terms,
initially December 15, 1988 and in the event such date is extended, such date as
extended.
First Optional Redemption Date - The November 1 occurring in the year
which is a number of years after the Conversion Date equal to the number of
years between the November 1 immediately following the Conversion Date (unless
the Conversion Date is a November 1, in which case from such November 1) and
November 1, 2005, multiplied by 1/2 and rounded up to the nearest whole number.
Fixed Interest Rate - A fixed non-floating interest rate on the Bonds.
Interest Index - For any Interest Period ending prior to the Conversion
Date the interest index described below under the heading Interest Rate.
Interest Payment Date - With respect to the Bonds prior to and including
the Conversion Date the first Business Day of each month commencing January 2,
1986, and after the Conversion Date the first day of each May and November.
Interest Period - With respect to the Bonds prior to the Conversion Date a
period from and including the Interest Payment Date in each calendar month to
and including the day next preceding the Interest Payment Date in the following
calendar month, except that the first Interest Period shall be the period from
and including the Original Issuance Date to and including December 31, 1985.
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<PAGE> 34
Investment Company - Any open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended.
Letter of Credit - The irrevocable letter of credit issued by the Bank
contemporaneously with the original issuance of the Bonds, except that upon the
issuance and delivery of an Alternate Letter of Credit, "Letter of Credit" shall
mean such Alternate Letter of Credit, and upon the delivery of an Alternate
Credit Facility, "Letter of Credit" shall, unless the context otherwise
requires, include reference to the Alternate Credit Facility.
Letter of Credit Agreement - The Series B Reimbursement Agreement dated as
of November 1, 1985, between the Company and the Bank pursuant to which the
Letter of Credit is issued by the Bank and delivered to the Trustee, and any and
all modifications, alterations, amendments and supplements thereto, and includes
any agreement between the Company and the Bank pursuant to which any Alternate
Letter of Credit is issued or any Alternate Credit Facility is made available.
Moody's - Moody's Investors Service, Inc.
Paying Agent - The paying agent appointed in accordance with the
Indenture, initially Bank One Trust Company, N.A., Columbus, Ohio.
Record Date - With respect to any Interest Payment Date on or before the
Conversion Date the fifth (5th) day next preceding such Interest Payment Date;
provided that if such day is not a Business Day, then the next preceding
Business Day, and with respect to any Interest Payment Date after the Conversion
Date the fifteenth (15th) day, of' the month next preceding such Interest
Payment Date.
Remarketing Agent - The remarketing agent appointed in accordance with the
Indenture, initially Prudential-Bache Securities Inc., New York, New York.
S&P - Standard & Poor's Corporation.
Interest Rate
For the first Interest Period, the Bonds shall bear interest at the rate
of 55% of the Prime Rate of Bank One Trust Company, N.A., Columbus, Ohio.
Thereafter, for each Interest Period ending before the Conversion Date, the
interest rate borne by the Bonds during each Interest Period shall be equal to
the Interest Index as determined as set forth below. The Interest Index shall be
an index, maintained by the Remarketing Agent, which shall be the average
interest rate of a component issue register
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<PAGE> 35
comprised of at least five (5) issues of obligations (i) the interest on which
is exempt from federal income taxation, (ii) having a demand purchase or
redemption feature comparable to that of the Bonds, and (iii) having a
comparable rating from Moody's or from S&P for obligations with demand purchase
features and maturities similar to those of the Bonds. The Remarketing Agent may
substitute component issues to the Interest Index from time to time as it may
deem necessary in order to keep the Interest Index as representative as possible
of the current market interest rate for securities comparable in security,
liquidity and creditworthiness to the Bonds, whenever necessitated by changes in
market conditions or issuance procedures. On or before the fourth Business Day
prior to the effective date of any such change the Remarketing Agent shall
notify the Trustee and the Company by telephone, telex, or telegram, or other
electronic or wire communication, promptly confirmed in writing of each such
change of component issues in the Interest Index.
In the event that the Bonds are rated by neither Moody's nor S&P, or in
the event that the Remarketing Agent no longer computes, or fails to compute,
the Interest Index and no other qualified municipal securities evaluation
service can be appointed by the Issuer, the rate of interest during each
Interest Period shall be the Alternate Interest Index, or, if no such auction
shall have been conducted during the next preceding Interest Period, or if the
Remarketing Agent shall fail or refuse to determine the Interest Index, the
Interest Index during such Interest Period shall be the same as for such
preceding Interest Period.
The computation of the Interest Index by the Remarketing Agent, shall be
conclusive and binding upon the Issuer, the Trustee, the Bank, the Company, the
Paying Agent, the Registrar, the Remarketing Agent and the Owners of the Bonds.
Notwithstanding anything to the contrary contained herein the interest
rate on the Bonds shall never exceed fifteen percentum (15%) per annum.
Prior to the Conversion Date, interest on the Bonds shall be computed on
the basis of a year of 365 or 366 days, as appropriate, for the actual number of
days elapsed.
Optional Redemption of Bonds
Prior to the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, in whole or in part in integral multiples
of $50,000 on any
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<PAGE> 36
Interest Payment Date, on a date selected by the Company at a price equal to
100% of the principal amount to be redeemed plus accrued interest thereon, if
any, to the redemption date.
After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, in whole at any time or, to the extent
permitted by Section 4.3(c) of the Agreement, in part in integral multiples of
$5,000 on any Interest Payment Date, at a redemption price of 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date,
in the event of (1) condemnation of the Facilities or any part thereof to the
extent provided in Section 4.3(c) of the Agreement, or (2) exercise by the
Company of its prepayment option as provided in Section 4.3(d) of the Agreement.
After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, on or after the First Optional Redemption
Date, in whole at any time or in part on any Interest Payment Date in integral
multiples of $5,000, on a date selected by the Company at the redemption prices
(expressed as percentages of the principal amount to be redeemed) set forth in
the following table plus accrued interest, if any, to the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
--------------- -----------
<S> <C>
First Optional Redemption Date through
the following October 31 103%
First Anniversary of the First Optional
Redemption Date through the following
October 31 102%
Second Anniversary of the First Optional
Redemption Date through the following
October 31 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Mandatory Redemption of Bonds
Upon the occurrence of at Determination of Taxability, the Bonds are
subject to mandatory redemption by the Issuer at a redemption price of 100% of
the principal amount to be redeemed plus accrued interest, if any, to the
redemption date on the fifteenth (15th) Business Day following the date
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<PAGE> 37
of such Determination of Taxability if the date of such Determination of
Taxability precedes the Conversion Date, or on the seventy-fifth (75th) day
following the date of such Determination of Taxability if the date of
Determination of Taxability is on or after the Conversion Date. The Bonds shall
be redeemed in whole unless, in the opinion of "Independent Tax Counsel"
(defined in the Agreement) the redemption of a portion of the outstanding
principal amount of the Bonds would have the result that the interest payable on
the Bonds remaining outstanding after such redemption would not be included in
the gross income for Federal income tax purposes of any holder of the Bonds
(other than a holder who is a "substantial user" of the Facilities or a "related
person" within the meaning of Section 103(b) of the Internal Revenue Code of
1954, as amended), in which event only such portion of the outstanding Bonds
shall be redeemed.
Purchase of Bonds
- -----------------
On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Paying Agent, on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Paying Agent at its principal corporate trust office in Columbus, Ohio, of a
written notice which states (A) that such holder is an Investment Company, (B)
the principal amount of such Bond to be purchased, and (C) the date on which
such Bond or portion thereof shall be purchased pursuant to this paragraph,
which date shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of such notice to the Paying Agent; and (ii)
delivery of such Bond, and, in the case of a Bond or portion thereof to be
purchased prior to an Interest Payment Date and after the Record Date in respect
thereof, a due-bill check, in form satisfactory to the Paying Agent, for
interest due on such Interest Payment Date, at the Paying Agent's principal
office in Columbus, Ohio, at or prior to 10:00 a.m., New York City time, on the
date specified in the aforesaid notice; provided, however, that such Bond or
portion thereof shall be purchased pursuant to this paragraph only if the Bond
so delivered to the Paying Agent shall conform in all respects to the
description thereof in the aforesaid notice. Upon receipt by the Paying Agent of
notice from any Investment Company holder of its intention to require any Bonds
held by such holder to be purchased, the Paying Agent shall notify the
Remarketing Agent by telephone or telegraph and confirmed promptly in writing of
such fact, and the Remarketing Agent shall undertake to remarket any such Bonds
in the same manner as
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<PAGE> 38
in the case of Bonds purchased by the Remarketing Agent pursuant to the next
succeeding paragraph.
On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Remarketing Agent, on the
demand of the holder thereof, on any Business Day, at a purchase price equal to
the principal amount thereof plus accrued interest, if any, to the date of
purchase upon: (i) delivery to the Remarketing Agent at its Principal Office of
a written notice which (Postates the principal amount of such Bond to be
purchased, and (B) states the date on which such Bond or portion thereof shall
be purchased pursuant to this paragraph, which date shall be a Business Day not
prior to the seventh (7th) day next succeeding the date of the delivery of such
notice to the Remarketing Agent; and (ii) delivery of such Bond and, in the case
of a Bond or portion thereof to be purchased prior to the Interest Payment Date
for any Interest Period and after the Record Date in respect thereof, a due-bill
check, in form satisfactory to the Remarketing Agent, for interest due on such
Interest Payment Date, to an office designated by the Remarketing Agent in New
York, New York, presently, c/o Marine Midland Bank, 140 Broadway, New York, New
York 10004, Attention: Clearance Department Level A, at or prior to 10:00 a.m.,
New York City time, on the date specified in the aforesaid notice; provided,
however, that such Bond or portion thereof shall be so purchased pursuant to
this paragraph only if the Bond so delivered to the Remarketing Agent shall
conform in all respects to the description thereof in the aforesaid notice.
All Bonds shall be purchased by the Paying Agent on the Interest Payment
Date next preceding the Expiration Date of the Letter of Credit and on the
Interest Payment Date next preceding the Expiration Date of the Alternate Credit
Facility, at a purchase price equal to the principal amount thereof, except (i)
Bonds, or portions thereof in an integral multiple of $50,000 if prior to the
Conversion Date or $5,000 if on or after the Conversion Date, with respect to
which the Paying Agent shall have received written directions not to so purchase
such Bonds or portions thereof from the holders of the same, (ii) Bonds
delivered to the Paying Agent or the Remarketing Agent as described in the two
preceding paragraphs for purchase on such Interest Payment Date or on any
Business Day in the Interest Period next preceding such Interest Payment Date
and (iii) Bonds issued upon the registration of transfer of Bonds referred to in
clauses (i) or (ii) above, Any Bonds not delivered to the Paying Agent for
purchase as described above (other than Bonds described in clauses (i), (ii) or
(iii) above) shall nonetheless be deemed to be tendered for sale by the holders
thereof and purchased by the Paying Agent.
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<PAGE> 39
All Bonds shall be purchased by the Paying Agent on the Conversion Date at
a purchase price equal to the principal amount thereof except (i) Bonds, or
portions thereof in an integral multiple of $5,000, with respect to which the
Paying Agent shall have received written directions not to so purchase such
Bonds or portions thereof from the holders of the same, (ii) Bonds delivered to
the Remarketing Agent or the Paying Agent as described in the second and third
preceding paragraphs for purchase on any Business Day in the Interest Period
next preceding the Conversion Date, and (iii) Bonds issued upon the registration
of transfer of Bonds referred to in clauses (i) or (ii) above, Any Bonds not
delivered to the Paying Agent for purchase (other than Bonds described in
clauses (i), (ii) or (iii) above) shall nonetheless be deemed to be tendered for
sale by the holders thereof and purchased by the Paying Agent. The provisions of
this paragraph shall not apply if there has occurred and is continuing on the
prospective purchase date an "Event of Default" (defined in the Indenture).
In the event that all Bonds are to be purchased by the Paying Agent
pursuant to either of the two next preceding paragraphs, a holder of Bonds may
direct the Paying Agent not to purchase any Bond or portion thereof owned by
such holder by delivering to the Paying Agent, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Bonds held by such holder, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of the second paragraph under the heading
"Notices" hereinafter set forth, and (iii) directing the Paying Agent not to
purchase such Bonds or portions thereof. Any instrument delivered to the Paying
Agent in accordance with this paragraph shall be irrevocable with respect to the
Bonds for which such instrument is delivered and shall be binding upon
subsequent holders of such Bonds.
ANY UNTENDERED BONDS, FOR WHICH THERE SHALL HAVE BEEN IRREVOCABLY
DEPOSITED ON OR BEFORE THE INTEREST PAYMENT DATE NEXT PRECEDING (A) THE
EXPIRATION DATE OF THE LETTER OF CREDIT OR (B) THE EXPIRATION DATE OF THE
ALTERNATE CREDIT FACILITY, OR THE CONVERSION DATE, AS THE CASE MAY BE, IN TRUST
WITH THE TRUSTEE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE OF SUCH BONDS
DUE WITH RESPECT TO THE PURCHASE THEREOF SHALL CEASE TO ACCRUE INTEREST ON THE
INTEREST PAYMENT DATE NEXT PRECEDING (A) THE EXPIRATION DATE OF THE LETTER OF
CREDIT OR (B) THE EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY, OR THE
CONVERSION DATE, AS THE CASE MAY BE, AND SHALL BE DEEMED TO HAVE BEEN TENDERED
FOR PURCHASE AND PURCHASED BY THE PAYING AGENT. REPLACEMENT BONDS SHALL BE
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<PAGE> 40
ISSUED IN PLACE OF SUCH UNTENDERED BONDS PURSUANT TO SECTION 203 OF THE
INDENTURE.
NO DELIVERY OF BONDS TO THE PAYING AGENT OR THE REMARKETING AGENT OR
PURCHASE OF BONDS BY THE PAYING AGENT OR THE REMARKETING AGENT SHALL CONSTITUTE
A REDEMPTION OF BONDS OR ANY EXTINGUISHMENT OF THE DEBT REPRESENTED THEREBY.
Conversion to Fixed Interest Rate
At any time, the Company may, by notice in writing to the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent and the Bank, direct that a
Fixed Interest Rate be established for the Bonds. The Company's notice shall set
forth: (i) the Conversion Date desired by the Company, which shall be an
Interest Payment Date not less than thirty (30) days after the date of such
notice; and (ii) the date the Fixed Interest Rate shall be established, which
shall be not less than twelve (12) Business Days prior to the Conversion Date.
The notice shall be accompanied by an opinion of Independent Tax Counsel stating
that the conversion to a Fixed Interest Rate is authorized and permitted by the
Indenture and the Act, and that such conversion will not adversely affect the
exemption of interest on the Bonds from Federal income taxation. The Remarketing
Agent shall determine the Fixed Interest Rate on the date specified in such
notice, which rate shall be the lowest rate at which the Remarketing Agent shall
have received bids, not later than the twelfth (12th) Business Day prior to the
Conversion Date, to purchase all of the outstanding Bonds at a purchase price of
100% of the outstanding principal amount thereof on the Conversion Date. Prior
to the Expiration Date of the Letter of Credit, conversion to the Fixed Interest
Rate shall require the prior written consent of the Bank.
Any Bonds purchased by the Remarketing Agent or the Paying Agent pursuant
to the terms of the Indenture after the Trustee has given notice of the
establishment of a Conversion Elate shall not be remarketed except to a buyer
who agrees at the time of such purchase either (i) to accept the Fixed Interest
Rate on the Conversion Date, or (ii) to require purchase of such Bonds by the
Remarketing Agent or the Paying Agent on or before the Conversion Date pursuant
to the first two paragraphs under the heading "Purchase of Bonds" set forth
above.
The Letter of Credit shall be cancelled on the fifteenth (15th) day
following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank
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<PAGE> 41
stating that the Letter of Credit is not to be cancelled on such day.
In the event that the Letter of Credit or an Alternate Credit Facility is
in effect with respect to Bonds following the Conversion Date, the Fixed
Interest Rate shall be adjusted on the Adjustment Date so as to equal the lowest
rate of interest at which the Remarketing Agent shall have received bids on or
prior to the twelfth (12th) Business Day next preceding the Adjustment Date to
purchase all outstanding Bonds on the Adjustment Date at a price of 100% of the
principal amount thereof. Following such adjustment, the Bonds shall bear
interest at the Fixed Interest Rate determined pursuant to this paragraph until
maturity.
THE BONDS SHALL NOT BE SUBJECT TO PURCHASE, AS PROVIDED IN SECTION 401 OF
THE INDENTURE, AFTER THE EXPIRATION DATE OF THE LETTER OF CREDIT.
The owner of this Bond, by the acceptance hereof, hereby covenants, and
consents to and agrees to be bound by the covenant of the Trustee, not to claim
or accept the benefits of any Federal guarantee which would cause any Bond to
become subject to Federal income taxation under the provisions of Section 103(b)
of the Internal Revenue Code of 1954, as amended, and acknowledges and agrees
that in the event of a failure by the Bank to fulfill its obligations, in whole
or in part, with respect to any draw on the Letter of Credit, the Trustee is
prohibited from making any claim on the Federal Deposit Insurance Corporation
with respect to any such failure and agrees that no claim will be made by or on
behalf of such registered owner against the Federal Deposit Insurance
Corporation in the event of a failure by the Bank to fulfill its obligations, in
whole or in part, with respect to any draw on the Letter of Credit.
Notices
In the event any Bonds are called for redemption, the Trustee, on behalf
of the Issuer, shall give notice of such redemption, which notice shall (i)
identify the Bonds or portions thereof to be redeemed, the redemption date, the
redemption price and the place or places where the amounts due upon such
redemption shall be payable (which shall be principal corporate trust office of
the Trustee), and (ii) state that on the redemption date the Bonds to be
redeemed shall cease to bear interest. Such notice shall be given at least ten
(10) Business Days prior to the redemption date if the redemption date is on or
prior to the Conversion Date and at least thirty (30) days prior to the
redemption date if the redemption date is after the Conversion Date.
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<PAGE> 42
The Trustee, on behalf of the Issuer, shall give notice of the
establishment of the Conversion Date, the Expiration Date of the Letter of
Credit or the Expiration Date of the Alternate Credit Facility, which notice
shall include a statement (i) of the date on which the Bonds are to be purchased
by the Paying Agent as a result of the establishment of the Conversion Date or
the expiration of the Letter of Credit or the Alternate Credit Facility, (ii) if
applicable, that the Letter of Credit or the Alternate Credit Facility shall
terminate fifteen (15) days after such purchase date, (iii) that any ratings of
the Bonds by Moody's or S&P may be withdrawn or reduced from the ratings on the
Bonds then prevailing, (iv) that the Indenture provides that Bonds are required
to be delivered to the Paying Agent for purchase on the date specified in such
notice, and that Bonds not delivered to the Paying Agent on such date shall
nonetheless be deemed to have been purchased by the Paying Agent (unless the
holders thereof have directed the Paying Agent not to purchase such Bonds or
portions thereof) and, accordingly, no interest subsequent to the date specified
in such notice shall be payable to such holders, (v) of the rights of the
holders to direct the Paying Agent not to purchase Bonds held by them, and the
method of exercising such rights, (vi) that on the purchase date designated in
such notice the Paying Agent shall hold moneys equal to the purchase price for
all Bonds not delivered on such date, in trust, for the holders of such Bonds,
which moneys shall be paid upon surrender of Bonds to the Paying Agent, and
(vii) that, if the purchase of the Bonds will result from the establishment of
the Conversion Date, after the Conversion Date the Bonds will bear interest at
the Fixed Interest Rate and the holders of the Bonds will not have the right to
require the Paying Agent to purchase Bonds. Such notice shall be given at least
ten (10) Business Days prior to the date on which the Bonds are to be purchased
as a result of the establishment of a Conversion Date or the expiration of the
Letter of Credit or the Alternate Credit Facility.
If the Company shall direct the Trustee to notify the Bank and the holders
of outstanding Bonds that an Alternate Letter of Credit or an Alternate Credit
Facility will be delivered to the Trustee, the Trustee shall give such notice,
which notice shall state (i) the proposed date of delivery to the Trustee of the
Alternate Letter of Credit or Alternate Credit Facility, (ii) the date of the
Alternate Letter of Credit or Alternate Credit Facility, (iii) the expiration
date of the Letter of Credit for which the Alternate Letter of Credit or
Alternate Credit Facility is to be substituted, which date shall in no event be
prior to the delivery (late of the Alternate Letter of Credit or Alternate
Credit Facility (iv) the expiration date of the
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<PAGE> 43
Alternate Letter of Credit or Alternate Credit Facility, (v) the issuer of
the Alternate Letter of Credit or Alternate Credit Facility, and a brief
description of such issuer, and (vi) if the Bonds are then rated by Moody's or
S&P, either (A) that any ratings of the Bonds by Moody's or S&P may be withdrawn
or reduced from such ratings then prevailing, or (B) such ratings of the Bonds
by Moody's or S&P shall have been based upon such Alternate Letter of Credit or
Alternate Credit Facility. Such notice shall be given at least thirty (30)
Business Days prior to the delivery of the Alternate Letter of Credit or
Alternate Credit Facility to the Trustee.
Any notice required to be given pursuant to any of the three preceding
paragraphs shall be given by mailing a copy thereof by registered or certified
mail to the holder of each Bond (provided, however, that a notice of redemption
need be given only to holders of Bonds to be redeemed in whole or in part) at
the address for such holder shown on the registration books maintained by the
Bond Registrar pursuant to the Indenture. Failure to give such notice by
mailing, or any defect in such notice, to the holder of any Bonds shall not
affect the validity of the proceedings with respect to any other Bonds.
If, because of the temporary or permanent suspension of regular mail
service, or for any other reason, it is impossible or impractical to mail such
notice of redemption or purchase in the manner herein provided, then such other
manner of giving notice in lieu thereof as shall be made with the approval of
the Trustee shall constitute a sufficient notice. Failure to give or receive
such notice with respect to any Bond shall not affect the validity of any
proceedings for the redemption or purchase of any other Bonds.
Miscellaneous
The Bonds are issuable only as fully registered bonds in the denomination
of $50,000 or any integral multiple thereof; provided, however, that any Bonds
issued upon exchange or transfer on or after the Conversion Date shall be in the
denomination of $5,000 or any integral multiple thereof. The Bonds are
interchangeable in equal aggregate principal amounts and in authorized
denominations at the principal corporate trust office of the Trustee, as Bond
Registrar, in the manner, subject to the limitations and on payment of the
charges provided in the Indenture.
This Bond is transferable by the bondholder in person or by his attorney
duly authorized in writing at the principal corporate trust office of the
Trustee, in Columbus,
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<PAGE> 44
Ohio, all subject to the terms and conditions provided in the Indenture.
The Bonds, upon the surrender thereof at the principal corporate trust
office of the Trustee with a written instrument of transfer satisfactory to the
Trustee executed by the bondholder or his duly authorized attorney, may, at the
option of the bondholder, be exchanged for an equal aggregate principal amount
of Bonds of the same maturity and interest rate of any other authorized
denomination, in the manner and subject to the conditions provided in the
Indenture.
The Trustee shall not be required to transfer or exchange any Bond (i)
during the period following the Record Date next preceding any Interest Payment
Date of such Bond and such Interest Payment Date, or (ii) after the giving of
notice calling such Bond for redemption or partial redemption has been made.
No service charge shall be made for any transfer or exchange hereinbefore
referred to, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith as a
condition precedent to the exercise of such privilege.
This Bond is issued with the intent that the laws of the State of Texas
shall govern its construction.
The person in whose name this Bond is registered shall be deemed and
regarded as the absolute owner hereof for all purposes, and payment of or on
account of either principal or interest made to such registered holder shall be
valid and effectual to satisfy and discharge the liability upon this Bond to the
extent of the sum or sums so paid.
The particular Bond of this series, or portion thereof in the cave of
certain bonds of a principal amount greater than $50,000, or, on or after the
Conversion Date, $5,000 to be redeemed in the case of a partial redemption under
any of the provisions of the Indenture, shall be selected by the Trustee by
prorating the amount of Bonds to be redeemed among the holders by equalizing,
from time to time, the portions of the Bonds to be redeemed, all in the manner
set forth in the Indenture. Any partial redemption shall be in multiples of
$50,000, or, on or after the Conversion Date, $5,000.
Upon deposit with the Trustee of the moneys required to effect any
redemption, the Bonds or portion thereof thus called and provided for shall not
bear interest after the redemption date and shall not be considered to be
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<PAGE> 45
outstanding or to have any other rights under the Indenture other than the right
to receive payment.
By the acceptance of this Bond, the bondholder agrees that if less than
the entire principal amount of this Bond is to be redeemed, payment of the
redemption price will be made only upon the surrender of this Bond to the
Trustee. Upon surrender hereof, there shall be issued to the bondholder, without
charge therefor, for the unredeemed balance hereof, a Bond or Bonds in any of
the authorized denominations as more fully set out in the Indenture.
The holder of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the agreements therein, or to
take any action with respect to any "Event of Default" as defined in the
Indenture, or to institute, appear in or defend any suit or other proceeding
with respect thereto, except as provided in the Indenture. The stated maturity
of this Bond and the stated dates for the payment of interest may be accelerated
upon the occurrence of certain "Events of Default" as defined in the Indenture.
The occurrence of certain other such "Events of Default" will permit the
acceleration of the stated maturity of this Bond and the stated dates for the
payment of interest as provided in the Indenture. Modifications, amendments or
supplements to the Indenture may be made only to the extent and in the
circumstances permitted by the Indenture.
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<PAGE> 46
[FORM OF ASSIGNMENT
TO APPEAR ON BACK OF BOND]
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFICATION NUMBER OF ASSIGNEE
- ---------------------------------
- ---------------------------------
- ---------------------------------
- ---------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within bond of the TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY and does
hereby constitute and appoint ___________________ attorney to transfer the said
bond of the within named Issuer, with full power of substitution in the
premises.
Dated:
In the presence of: ________________________________________
Bondholder _________________________________________________
Signature Guaranteed:
------------------------------------
Section 207. Delivery of Bonds. Upon the execution and delivery hereof,
the Issuer shall execute the Bonds and deliver them to the Trustee, and the
Trustee shall authenticate the Bonds and deliver them to the Original Purchasers
as shall be directed by the Issuer as hereinafter in this Section provided.
Prior to the delivery by the Trustee of any of the Bonds there shall be
filed with the Trustee:
(a) A copy, certified by the Secretary of the Issuer, of all
resolutions adopted and proceedings had by the Issuer authorizing the
issuance of the Bonds, including the Bond Resolution authorizing the
execution, delivery and performance of this Indenture and the Agreement;
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<PAGE> 47
(b) An original executed counterpart of this Indenture, the
Agreement and the Letter of Credit Agreement and the original Letter of
Credit;
(c) Copies of the Financing Statements, if any, filed to perfect the
security interests;
(d) An original executed counterpart of the certification of the
Issuer establishing its reasonable expectations to the effect that the
Bonds will not be "arbitrage bonds" within the meaning of Section 103(c)
of the Code, together with an opinion of McCall, Parkhurst & Horton, Bond
Counsel, to the effect that the Bonds are not "arbitrage bonds";
(e) A copy of completed IRS Form 8038, "Information Return for
Private Activity Bond Issues", filed by or on behalf of the Issuer
pursuant to Section 103(l) of the Code;
(f) A copy of the notice of election filed by or on. behalf of the
Issuer with the Internal Revenue Service pursuant to Section 103 (b) (6)
(D) of the Code;
(g) The written opinion of Counsel for the Company or other Counsel
satisfactory to the Issuer and the Trustee expressing the opinion that the
Financing Statements referred to in (c) above, if any, have been filed and
said security interests are "perfected" security interests within the
meaning of the U.C.C., as amended, and that there are no other properly
indexed financing statements or liens of record affecting the property as
to which said security interests were created;
(h) An opinion of Counsel for the Company to the effect that the
Agreement and the Letter of Credit Agreement have been duly authorized,
executed and delivered by the Company;
(i) An opinion of McCall, Parkhurst & Horton, Bond Counsel, to the
effect that the Bonds have been duly authorized, executed and delivered by
the Issuer and constitute legal, valid, binding and enforceable limited
obligations of the Issuer entitled to the benefits of and secured by this
Indenture; and
(j) A request and authorization to the Trustee on behalf of the
Issuer and signed by its President or Vice President to authenticate and
deliver the Bonds in such specified denominations as permitted herein to
the Original Purchasers upon payment to the Trustee, but
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<PAGE> 48
for the account of the Issuer, of a specified sum of money. The proceeds
from the sale of the Bonds shall be paid over to the Trustee and deposited
to the credit of the Bond Fund and Construction Fund as hereinafter
provided in Article VI.
Section 208. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is
mutilated, lost, stolen or destroyed, the Issuer may execute and the Trustee
(upon the receipt of a written authorization from the Issuer) may authenticate
and deliver a new Bond of the same maturity, interest rate, aggregate principal
amount and tenor in lieu of and in substitution for the Bond mutilated, lost,
stolen or destroyed; provided that, in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee, as Bond Registrar, and
in the case of any lost, stolen or destroyed Bond, there shall be first
furnished to the Trustee evidence satisfactory to it of the ownership of such
Bond and of such loss, theft or destruction, together with indemnity
satisfactory to it. If any such Bond shall have matured or a redemption date
pertaining thereto shall have passed, instead of issuing a new Bond the Issuer
may pay the same without surrender thereof, The Issuer and the Trustee may
charge the holder of such Bond with their reasonable fees and expenses in this
connection.
In executing a new Bond and in furnishing the Trustee with the written
authorization to authenticate and deliver a new Bond as provided for in this
Section, the Issuer may rely conclusively on a representation of the Trustee
that the Trustee is satisfied with the adequacy of the evidence presented
concerning the mutilation, loss, theft or destruction of any Bond.
Section 209. Exchangeability and Transfer of Bonds; Persons Treated as
Owners. The Issuer shall cause books for the registration and for the transfer
of the Bonds as provided herein to be kept by the Trustee which is hereby
constituted and appointed the Bond Registrar of the Issuer.
Bonds may be transferred on the books of registration kept by the Trustee
by the holder in person or by his duly authorized attorney, upon surrender
thereof, together with a written instrument of transfer executed by the holder
or his duly authorized attorney. Upon surrender for transfer of any Bond with
all partial redemptions endorsed thereon at the principal office of the Trustee,
the Issuer shall execute and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Bond or Bonds of the same maturity,
interest rate, aggregate principal amount and tenor and of any authorized
denomination or denominations
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<PAGE> 49
and numbered consecutively in order of issuance according to the records of the
Bond Registrar.
Bonds may be exchanged at the principal office of the Trustee for an equal
aggregate principal amount of Bonds of the same maturity, interest rate,
aggregate principal amount and tenor and of any authorized denomination or
denominations. The Issuer shall execute and the Trustee shall authenticate and
deliver Bonds which the bondholder making the exchange is entitled to receive,
bearing numbers not contemporaneously then outstanding.
Such transfers of registration or exchanges of Bonds shall be without
charge to the holders of such Bonds, but any taxes or other governmental charges
required to be paid with respect to the same shall be paid by the holder of the
Bond requesting such transfer or exchange as a condition precedent to the
exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond (i)
during the period following the record date next preceding any interest payment
date of such Bond and such interest payment date, or (ii) after the giving of
notice calling such Bond for redemption or partial redemption has been made.
The person in whose name any Bond shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of either principal or interest shall be made only to or upon the order
of the registered owner thereof or his duly authorized attorney, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
All Bonds issued upon any transfer or exchange of Bonds shall be legal,
valid and binding limited obligations of the Issuer, evidencing the same debt,
and entitled to the same security and benefits under this Indenture as the Bonds
surrendered upon such transfer or exchange.
In executing any Bond upon exchange or transfer provided for in this
Section, the Issuer may rely conclusively on a representation of the Trustee
that such execution is required.
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<PAGE> 50
ARTICLE III.
REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption Dates and Prices.
Optional Redemption
(a) Prior to the Conversion Date, the Bonds are subject to redemption by
the Issuer, at the option of the Company, in whole at any time or in part in
integral multiples of $50,000 on any Interest Payment Date on a date selected by
the Company at a price equal to 100% of the principal amount to be redeemed plus
accrued interest thereon, if any, to the redemption date. Prior to the
Expiration Date of the Letter of Credit any such redemption shall be made solely
from Available Moneys.
(b) After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, in whole at any time or, to the extent
permitted by Section 4.3(c) of the Agreement, in part in integral multiples of
$5,000 on any Interest Payment Date, at a redemption price of 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date,
in the event of (1) condemnation of the Facilities or any part thereof to the
extent provided in Section 4.3(c) of the Agreement or, (2) exercise by the
Company of its prepayment option as provided in Section 4.3(d) of the Agreement.
Prior to the Expiration Date of the Letter of Credit, any such redemption shall
be made solely from Available Moneys.
(c) After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, on or after the First Optional Redemption
Date, in whole at any time or in part on any Interest Payment Date in integral
multiples of $5,000, on a date selected by the Company at
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<PAGE> 51
the redemption prices (expressed as percentages of the principal amount to be
redeemed) set forth in the following table plus. accrued interest, if any, to
the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
--------------- -----------
<S> <C>
First Optional Redemption Date through
the following September 30 103%
First Anniversary of the First Optional
Redemption Date through the following
September 30 102%
Second Anniversary of the First Optional
Redemption Date through the following
September 30 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Prior to the Expiration Date of the Letter of Credit, any such redemption
shall be made solely from Available Moneys.
(d) If less than all of the Bonds are called for redemption (regardless of
whether such redemption is at the option of the Company or pursuant to any
mandatory redemption provisions of this Indenture), the selection of Bonds or
portions thereof to be called shall be made by the Trustee in accordance with
Section 305; provided, however, that Bonds held by the Bank as a result of any
draw under the Letter of Credit shall be selected for redemption prior to any
other Bonds.
(e) Prior to the Conversion Date, the Issuer, or the Company on behalf of
the Issuer, shall give the Trustee written notice of an election to redeem Bonds
at least ten (10) Business Days prior to the latest day on which the Trustee may
give the bondholders notice of redemption pursuant to subsection (a) of Section
302 of this Indenture; provided, however, that prior to the Expiration Date of
the Letter of Credit, no such notice shall be deemed effective unless at the
time such notice is received by the Trustee the Trustee is holding sufficient
Available Moneys to pay the principal of, and interest on, the Bonds to be
redeemed.
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<PAGE> 52
Mandatory Redemption
Upon the occurrence of a Determination of Taxability, the Bonds are
subject to mandatory redemption by the Issuer at a redemption price of 100% of
the principal amount redeemed plus accrued interest, if any, to the redemption
date on the fifteenth (15th) Business Day following the date of such
Determination of Taxability if the date of such Determination of Taxability
precedes the Conversion Date, or on the seventy-fifth (75th) day following the
date of such Determination of Taxability if the date of Determination of
Taxability is on or after the Conversion Date. The Bonds shall be redeemed in
whole unless, in the opinion of Independent Tax Counsel, the redemption of a
portion of the outstanding principal amount of the Bonds would have the result
that the interest payable on the Bonds remaining outstanding after such
redemption would not be included in the gross income for Federal income tax
purposes of any holder of the Bonds (other than a holder who is a "substantial
user" of the Facilities or a "related person" within the meaning of Section
103(b) of the Code), in which event only such portion of the outstanding Bonds
shall be redeemed. Prior to the Expiration Date of the Letter of Credit the
redemption price shall be paid solely with proceeds drawn under the Letter of
Credit.
Section 302. Notices of Redemption, Conversion Date, Expiration Date of
the Letter of Credit, Expiration Date of the Alternate Credit Facility or
Delivery of an Alternate Letter of Credit or Alternate Credit Facility.
(a) In the event any Bonds are called for redemption, the Trustee, on
behalf of the Issuer, shall give notice of such redemption, which notice shall
(i) identify the Bonds or portions thereof to be redeemed, the redemption date,
the redemption price and the place or places where the amounts due upon such
redemption shall be payable (which shall be the Principal office of the
Trustee), and (ii) state that on the redemption date the Bonds to be redeemed
shall cease to bear interest. Such notice may set forth any additional
information relating to such redemption, Such notice shall be given at least ten
(10) Business Days prior to the redemption date if the redemption date is on or
prior to the Conversion Date and at least thirty (30) days prior to the
redemption date if the redemption is after the Conversion Date.
(b) The Trustee, on behalf of the Issuer, shall give notice of the
establishment of (a) the Conversion Date, or (b) the Expiration Date of the
Letter of Credit or the Expiration Date of the Alternate Credit Facility, which
notice shall be given promptly upon the failure of the
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<PAGE> 53
Company to provide an Alternate Credit Facility prior to the 60th day preceding
the expiration of the Letter of Credit, which notice shall include a statement
(i) of the date on which the Bonds are to be purchased by the Paying Agent as a
result of the establishment of the Conversion Date or the expiration of the
Letter of Credit or the Alternate Credit Facility, which with respect to the
expiration of the Letter of Credit or Alternate Credit Facility shall be the
interest payment date next preceding such expiration, (ii) with respect to the
Conversion Date, as opposed to the Expiration Date, that the Letter of Credit or
the Alternate Credit Facility shall terminate fifteen (15) days after such
purchase date, (iii) that any ratings of the Bonds by Moody's or S&P may be
withdrawn or reduced from the ratings on the Bonds then prevailing, (iv) that
the Indenture provides that Bonds are required to be delivered to the Paying
Agent for purchase on the date specified in such notice, and that Bonds not
delivered to the Paying Agent on such date shall nonetheless be deemed to have
been purchased by the Paying Agent (unless the holders thereof have directed the
Paying Agent not to purchase such Bonds or portions thereof) and, accordingly,
no interest subsequent to the date specified in such notice shall be payable to
such holders, (v) of the rights of the holders to direct the Paying Agent not to
purchase Bonds held by them, and the method of exercising such rights, (vi) that
on the purchase date designated in such notice the Paying Agent shall hold
moneys equal to the purchase price for all Bonds not delivered on such date, in
trust, for the holders of such Bonds, which moneys shall be paid upon surrender
of Bonds to the Paying Agent, and (vii) that, if the purchase of the Bonds will
result from the establishment of the Conversion Date, after the Conversion Date
the Bonds will bear interest at the Fixed Interest Rate and the holders of the
Bonds will not have the right to require the Paying Agent to purchase Bonds.
Such notice shall be given at least ten (10) Business Days prior to the date on
which the Bonds are to be purchased as a result of the establishment of a
Conversion Date or the expiration of the Letter of Credit or the Alternate
Credit Facility.
(c) If the Company, in accordance with Section 4.6 of the Agreement, shall
direct the Trustee to notify the Bank and the holders of Outstanding Bonds that
an Alternate Letter of Credit or an Alternate Credit Facility will be delivered
to the Trustee, the Trustee shall give such notice, which notice shall state (i)
the proposed date of delivery to the Trustee of the Alternate Letter of Credit
or Alternate Credit Facility, (ii) the date of the Alternate Letter of Credit or
Alternate Credit Facility, (iii) the expiration date of the Letter of Credit for
which the Alternate Letter of Credit or Alternate Credit Facility is
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<PAGE> 54
to be substituted, which date shall in no event be prior to the date of delivery
of the Alternate Letter of Credit or Alternate Credit Facility (iv) the
expiration date of the Alternate Letter of Credit or Alternate Credit Facility,
(v) the issuer of the Alternate Letter of Credit or Alternate Credit Facility,
and a brief description of such issuer, and (vi) if the Bonds are then rated by
Moody's or S&P, either (A) that any ratings of the Bonds by Moody's or S&P may
be withdrawn or reduced from such ratings then prevailing, or (B) such ratings
of the Bonds by Moody's or S&P shall have been based upon such Alternate Letter
of Credit or Alternate Credit Facility. Such notice shall be given at least
thirty (30) Business Days prior to the delivery of the Alternate Letter of
Credit or Alternate Credit Facility to the Trustee. The Company shall cause a
description of the issuer of the Alternate Letter of Credit or Alternate Credit
Facility to be furnished to the Trustee in time sufficient to permit the Trustee
to give the notice provided for in this subsection (c).
(d) Any notice required to be given pursuant to subsections (a), (b) or
(c) of this Section 302 shall be given by mailing a copy thereof by registered
or certified mail to the holder of each Bond (provided, however, that a notice
of redemption need be given only to holders of Bonds to be redeemed in whole or
in part) at the address for such holder shown on the registration books
maintained by the Bond Registrar pursuant to the Indenture. Failure to give such
notice by mailing, or any defect in such notice, to the holder of any Bonds
shall not affect the validity of the proceedings with respect to any other
Bonds.
(e) If, because of the temporary or permanent suspension of regular mail
service, or for any other reason, it is impossible or impractical to mail such
notice of redemption or purchase in the manner herein provided, then such other
manner of giving notice in lieu thereof as shall be made with the approval of
the Trustee shall constitute a sufficient notice, Failure to give or receive
such notice with respect to any Bond shall not affect the validity of any
proceedings for the redemption (or purchase of any other Bonds.
(f) Prior to the Expiration Date of the Letter of Credit, any notice
required to be given pursuant to subsection (a) or (b) of this Section 302 shall
also be given to the Bank. Any such notice and any notice required to be given
to the Bank pursuant to subsection (c) of this Section 302 shall be given to the
Bank by telephone or telegraph, promptly confirmed in writing. Immediately after
the redemption or cancellation of any Bonds, the Trustee shall promptly notify
the Bank, in accordance with the provisions of the
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<PAGE> 55
Letter of Credit, of the aggregate principal amount of Bonds redeemed or
cancelled and the aggregate principal amount of Bonds Outstanding after such
cancellation or redemption.
Section 303. Cancellation. All Bonds which have been surrendered for the
purpose of payment, redemption, exchange or transfer shall be cancelled by the
Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bond
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Bonds held by the Trustee shall be disposed of as
directed by a written order of the Issuer or the Company.
If any Bonds are deemed to have been purchased by the Trustee pursuant to
subsections (c) or (d) of Section 401, then such Bonds shall be deemed cancelled
whether or not such bonds shall have been delivered to the Trustee; and the
Issuer shall execute and the Trustee shall authenticate and deliver to or upon
the order of the Company, a Replacement Bond or Bonds in the principal amount
equal to the aggregate principal amount of Bonds deemed cancelled in accordance
with this paragraph.
Section 304. Payment of Bonds Upon Redemption. In the case of a redemption
of any Bond or a portion thereof, on the date set for redemption in the written
notice to bondholders required to be given in Section 302, the Trustee, as
paying agent, shall pay the redemption price upon surrender of such Bond to the
Trustee in lawful money of the United States of America. Upon surrender of a
Bond for partial redemption, there shall be issued to such bondholder, without
charge therefor, for the unredeemed balance thereof, a Bond or Bonds in any of
the authorized denominations as provided in Section 209.
Section 305. Pro Rata Redemption. With respect to any partial redemption
of Bonds, the Trustee shall prorate the aggregate principal amount of Bonds to
be redeemed among all holders in proportion to the principal amount of such
Bonds registered in the name of each such holder; provided, however, that in any
such prorating the Trustee shall, according to such method as it shall deem
proper in its discretion, make such adjustments by increasing or decreasing by
not more than $50,000 or, on or after the Conversion Date, $5,000, the amount
which would be allocable on the basis of exact proportion to any (one or more
holders of Bonds as may be necessary to the end that the principal amount so
prorated shall be in each instance an integral multiple of $50,000 or, on or
after the Conversion Date, $5,000. On each subsequent partial redemption of
Bonds, the Trustee shall make such adjustments, to the extent practicable, as
will equalize on a cumulative basis, the prorations
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<PAGE> 56
among bondholders. Any partial redemption shall be in a multiple of $50,000 or,
on or after the Conversion Date, $5,000, and the Trustee shall be held harmless
and shall incur no responsibility for any redemption effected in the manner
described herein.
ARTICLE IV.
PURCHASE AND PLACEMENT OF BONDS;
LETTER OF CREDIT
Section 401. Purchase of the Bonds.
(a) On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Paying Agent on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Paying Agent at its Principal Office of a written notice which states (A) that
such holder is an Investment Company, (B) the principal amount of such Bond to
be purchased and (C) the date on which such Bond or portion thereof shall be
purchased pursuant to this subsection (a), which date shall be a Business Day
not prior to the seventh (7th) day next succeeding the date of the delivery of
such notice to the Trustee; and (ii) delivery of such Bond, and, in the case of
a Bond or portion thereof to be purchased prior to an Interest Payment Date and
after the Record Date in respect thereof, a due-bill check, in form satisfactory
to the Paying Agent, for interest (lie on such Interest Payment Date, at the
Paying Agent's Principal Office at or prior to 10:00 a.m., New York City time,
on the date specified in the aforesaid notice; provided, however, that such Bond
or portion thereof shall be so purchased pursuant to this subsection (a) only if
the Bond so delivered to the Paying Agent shall conform in all respects to the
description thereof in the aforesaid notice. Upon receipt by the Paying Agent of
notice from any Investment Company holder of its intention to require any Bonds
held by such holder to be purchased, the Paying Agent shall notify the
Remarketing Agent by telephone or telegraph and confirmed promptly in writing of
such fact, and the Remarketing Agent shall undertake to remarket any such Bonds
in the same manner as in the case of Bonds purchased by the Remarketing Agent
pursuant to subsection (b) below,
(b) On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Remarketing Agent, on the
demand of the holder thereof, on any Business Day at a purchase price equal to
the principal amount thereof plus accrued interest, if any, to the date of
purchase, upon: (i) delivery to the
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Remarketing Agent at its Principal Office of a written notice which states (A)
the principal amount of such Bond to be purchased, and (B) the date on which
such Bond or portion thereof shall be purchased pursuant to this subsection (b),
which date shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of such notice to the Remarketing Agent; and
(ii) delivery of such Bond and, in the case of a Bond or portion thereof to be
purchased prior to the Interest Payment Date for any Interest Period and after
the Record Date in respect thereof, a due-bill check, in form satisfactory to
the Remarketing Agent, for interest due on such Interest Payment Date, to the
Principal Office of the Remarketing Agent at or prior to 10:00 a.m., New York
City time, on the date specified in the aforesaid notice; provided, however,
that such Bond or portion thereof shall be so purchased pursuant to this
subsection (b) only if the Bond so delivered to the Remarketing Agent shall
conform in all respects to the description thereof in the aforesaid notice.
(c) All Bonds shall be purchased by the Paying Agent on the Interest
Payment Date next preceding the Expiration Date of the Letter of Credit and on
the Interest Payment Date next preceding the Expiration Date of the Alternate
Credit Facility, at a purchase price equal to the principal amount thereof,
except (i) Bonds, or portions thereof in an integral multiple of $50,000 If
prior to the Conversion Date or $5,000 if on or after the Conversion Date, with
respect to which the Paying Agent shall have received written directions not to
so purchase such Bonds or portions thereof from the holders of the same, (ii)
Bonds delivered to the Paying Agent or the Remarketing Agent as described in
subsection (a) or (b) of this Section 401 for purchase on such Interest Payment
Date, or on any Business Day in the Interest Period next preceding such Interest
Payment Date, and (iii) Bonds issued upon the registration of transfer of Bonds
referred to in clauses (i) or (ii) above. Any Bonds not delivered to the Paying
Agent for purchase as described above (other than Bonds described in clauses
(i), (ii) or (iii) above) shall nonetheless be deemed to be tendered for sale by
the holders thereof and purchased by the Paying Agent.
(d) All Bonds shall be purchased by the Paying Agent on the Conversion
Date at a purchase price equal to the principal amount thereof except (i) Bonds,
or portions thereof in an integral multiple of $5,000, with respect to which the
Paying Agent shall have received written directions not to so purchase such
Bonds or portions thereof from the holders of the same, (ii) Bonds delivered to
the Paying Agent or the Remarketing Agent as described in subsection (a) or (b)
of this Section 401 for purchase on the Conversion Date or on any Business Day
in the Interest Period next preceding the
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Conversion Date, and (iii) Bonds issued upon the registration of transfer of
Bonds referred to in clauses (i) or (ii) above. Any Bonds not delivered to the
Paying Agent for purchase (other than Bonds described in clauses (i), (ii) or
(iii) above) shall nonetheless be deemed to be tendered for sale by the holders
thereof and purchased by the Paying Agent. The provisions of this paragraph (d)
shall not apply if there has occurred and is continuing on the prospective
purchase date an Event of Default.
(e) In the event that all Bonds are to be purchased by the Paying Agent
pursuant to subsections (c) or (d) of this Section 401, a holder of Bonds may
direct the Paying Agent not to purchase any Bonds or portions thereof owned by
such holder by delivering to the Paying Agent, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Bonds held by such holder, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of Section 302(b) of this Indenture, and
(iii) directing the Paying Agent not to purchase such Bonds or portions thereof.
Any instrument delivered to the Paying Agent in accordance with this subsection
(e) shall be irrevocable with respect to the Bonds for which such instrument is
delivered and shall be binding upon subsequent holders of such Bonds. Any Bond
purchased by the Remarketing Agent or the Paying Agent pursuant to the terms of
this Indenture after the Trustee has given notice of the Expiration Date of the
Letter of Credit, the Expiration Date of the Alternate Credit Facility or the
Conversion Date, pursuant to subsection (b) of Section 302 of this Indenture,
shall not be remarketed except to a buyer who either (i) specifically
acknowledges, in writing, on the date of purchase each of the matters set forth
in clauses (i) through (vii) of subsection (b) of Section 302 of this Indenture,
or (ii) agrees to require purchase of such Bonds by the Remarketing Agent or the
Paying Agent on or before the Expiration Date of the Letter of Credit or the
Expiration Date of the Alternate Credit Facility, as the case may be.
(f) Upon delivery to the Paying Agent of Bonds in accordance with
subsection (a) or by the Remarketing Agent of Bonds in accordance with
subsection (b) of this Section 401, the Remarketing Agent shall offer such Bonds
for sale and shall use its best efforts to sell such Bonds, any such sale to be
at a price equal to 100% of the principal amount thereof on the date stated in
the notice provided by the holder of such Bonds; provided that to the extent any
moneys described in clause (i) of subsection (g) of this Section 401 or moneys
which constitute Available Moneys derived from the sale of Bonds to the Company,
Charles King & Associates,
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a California limited partnership, or Charles King, its general partner, shall be
on deposit with the Trustee, any Bonds delivered to the Remarketing Agent shall
be purchased with such moneys and shall not be sold by the Remarketing Agent.
(g) On the date Bonds are to be purchased by the Paying Agent in
accordance with subsection (a) or by the Remarketing Agent in accordance with
subsection (b) of this Section 401, the Paying Agent or the Remarketing Agent
shall purchase such Bonds with immediately available funds at a purchase price
equal to the principal amount thereof plus accrued interest, if any, to the date
of purchase. Funds for the payment of such purchase price shall be derived
solely from the following sources in the order of priority indicated, and
neither the Issuer, the Paying Agent nor the Remarketing Agent shall be
obligated to provide funds from any other source:
(i) Available Moneys representing proceeds described in Section 5.11
of the Agreement;
(ii) proceeds of the sale of such Bonds by the Remarketing Agent,
excluding proceeds of any such sale of Bonds to the Company, Charles King
& Associates, a California "limited partnership, or Charles King, its
general partner;
(iii) moneys representing proceeds of a drawing by the Trustee
pursuant to the Letter of Credit; and
(iv) moneys representing moneys furnished by the Company pursuant to
Section 4.11 of the Agreement.
The Remarketing Agent shall direct the Trustee, by telephone or telegraph
and confirmed promptly in writing, to provide such moneys to the Paying Agent or
the Remarketing Agent (and to draw moneys under the Letter of Credit, if
necessary) to the extent necessary to make timely payments required to be made
in accordance with this subsection (g). Such direction shall describe the
amounts available in immediately available funds from each category described
above, and further, specifically identify the amount to be drawn under the
Letter of Credit, if required.
(h) On any date on which Bonds are to be purchased by the Paying Agent in
accordance with subsection (c) or (d) of this Section 401, the Paying Agent
shall purchase such Bonds with immediately available funds at the purchase price
specified therein. Funds for the payment of such purchase price shall be derived
solely from the following sources in the order of priority indicated, and
neither the Issuer nor
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the Trustee nor the Paying Agent shall be obligated to provide funds from any
other source:
(i) Available Moneys representing proceeds described in Section 5.11
of the Agreement;
(ii) moneys representing proceeds of a drawing by the Trustee
pursuant to the Letter of Credit; and
(iii) moneys furnished by the Company to the Trustee pursuant to
Section 4.11 of the Agreement.
(i) The Remarketing Agent and the Paying Agent shall hold in a separate
account moneys representing the purchase price of Bonds purchased in accordance
with this Section 401 until such Bonds have been delivered to the Remarketing
Agent or the Paying Agent, as the case may be, by the holders thereof. The
Remarketing Agent and the Paying Agent shall invest such. moneys only in
Government Obligations maturing not more than thirty (30) days after purchase,
as directed by the Company by telephone and confirmed in writing. Earnings from
such investments shall be paid into the Bond Fund.
(j) Bonds sold by the Remarketing Agent pursuant to subsection (f) of this
Section 401 shall be delivered to the purchaser thereof. Bonds purchased by the
Remarketing Agent with moneys described in clause (i) of subsection (g) of this
Section 401 and Bonds purchased with moneys derived from the Company, Charles
King & Associates, a California limited partnership, or Charles King, its
general partner, shall be delivered to the Trustee for cancellation, Bonds
purchased by the Remarketing Agent with moneys described in clause (iii) of
subsection (g) of this Section 401 shall be registered in the name of, and
delivered to, the Bank or its nominee. Bonds purchased by the Remarketing Agent
with moneys described in clause (iv) of subsection (g) of this Section 401
shall, at the direction of the Company, be (A) held by the Remarketing Agent for
the account of the Company, (B) delivered to the Trustee for cancellation, or
(C) delivered to the Company; provided, however, that any Bonds so purchased
after the selection thereof by the Trustee for redemption shall be cancelled;
and, provided further, that any Bonds so purchased shall be registered in the
name of, and delivered to, the Bank or its nominee if the Trustee shall have
received notice from the Bank of the occurrence of an Event of Default under the
Letter of Credit Agreement. The Remarketing Agent shall deliver to the person to
whom any Bond A delivered the due-bill check relating to such Bond, if any,
delivered to the Remarketing Agent in accordance with subsection (b) of this
Section 401.
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(k) Bonds purchased by the Trustee with moneys described in clause (i) of
subsection (h) of this Section 401 shall be cancelled. Bonds purchased by the
Trustee with moneys described in clause (ii) of subsection (h) of this Section
401 shall be registered in the name of, and delivered to, the Bank or its
nominee. Bonds purchased by the Trustee with moneys described in clause (iii) of
subsection (h) of this Section 401 shall, at the direction of the Company, be
(A) cancelled, or (B) delivered to the Company; provided, however, that any
Bonds so purchased after the selection thereof by the Trustee for redemption
shall be cancelled; and, provided further, that any Bonds so purchased shall be
registered in the name of and delivered to, the Bank or its nominee if the
Trustee shall have received notice front the Bank of the occurrence of an Event
of Default under the Letter of Credit Agreement.
(1) The Paying Agent shall deliver to the Bank the due-bill checks, if
any, delivered to the Paying Agent in accordance with subsection (a) of this
Section 401.
(m) Bonds delivered as provided in subsections (j) or (k) of this Section
401 shall be registered in the manner directed lay the recipient thereof.
(n) Whenever Bonds are delivered to the Bank pursuant to subsections (j)
or (k) of this Section 401, the Trustee, as Bond Registrar, shall notify the
Company of the principal amount of such Bonds and the date of delivery thereof
to the Bank (which date of delivery shall be deemed to be the date upon which
the draw on the Letter of Credit resulting in such delivery was made).
(o) The Trustee shall upon receipt of any direction by the Remarketing
Agent pursuant to subsection (g) of this Section 401, draw moneys under the
Letter of Credit in accordance with the terms thereof in the amounts specified
in such direction and furnish such moneys to the Remarketing Agent, or to the
Paying Agent if under subsections (a), (c) and (d) of Section 401, for same day
payment.
(p) Any Bonds delivered to the Remarketing Agent or the Paying Agent
pursuant to the terms of this Indenture during the period commencing on the date
that the Trustee has given the first notice described in Section 302(c) of this
Indenture and ending on the date of delivery to the Trustee of an Alternate
Letter of Credit or Alternate Credit Facility shall not be remarketed except to
a buyer who expressly acknowledges at the time of such purchase each of the
matters set forth in the notice required by Section 302(c) of this Indenture and
agrees to purchase such Bonds notwithstanding the proposed delivery of an
Alternate Letter of Credit or Alternate Credit Facility.
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ANY UNTENDERED BONDS, FOR WHICH THERE SHALL HAVE BEEN IRREVOCABLY
DEPOSITED ON OR BEFORE THE INTEREST PAYMENT DATE NEXT PRECEDING (A) THE
EXPIRATION DATE OF THE LETTER OF CREDIT OR (B) THE EXPIRATION DATE OF THE
ALTERNATE CREDIT FACILITY, OR THE CONVERSION DATE, AS THE CASE MAY BE, IN TRUST
WITH THE TRUSTEE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE OF SUCH BONDS
DUE WITH RESPECT TO THE PURCHASE THEREOF SHALL CEASE TO ACCRUE INTEREST ON THE
INTEREST PAYMENT DATE NEXT PRECEDING (A) THE EXPIRATION DATE OF THE LETTER OF
CREDIT OR (B) THE EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY, OR THE
CONVERSION DATE, AS THE CASE MAY BE, AND SHALL BE DEEMED TO HAVE BEEN TENDERED
FOR PURCHASE AND PURCHASED BY THE PAYING AGENT. REPLACEMENT BONDS SHALL BE
ISSUED IN PLACE OF SUCH UNTENDERED BONDS PURSUANT TO SECTION 203 HEREOF.
NO DELIVERY OF BONDS TO THE PAYING AGENT OR THE REMARKETING AGENT OR
PURCHASE OF BONDS BY THE PAYING AGENT OR THE REMARKETING AGENT SHALL CONSTITUTE
A REDEMPTION OF BONDS OR ANY EXTINGUISHMENT OF THE DEBT REPRESENTED THEREBY.
Section 402. Conversion to Fixed Interest Rate.
(a) At any time, the Company may, by notice in writing to the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent and the Bank direct that a
Fixed Interest Rate be established for the Bonds. The Company's notice shall set
forth: (i) the Conversion Date desired by the Company, which shall be an
Interest Payment Date not less than thirty (30) days after the date of such
notice; and (ii) the date the Fixed Interest Rate shall be established, which
shall be not less than twelve (12) Business Days prior to the Conversion Date.
The notice shall be accompanied by an opinion of Independent Tax Counsel stating
that the conversion to a Fixed Interest Rate is authorized and permitted by this
Indenture and the Act, and that such conversion will not adversely affect the
exemption of interest on the Bonds from Federal income taxation. The Remarketing
Agent shall determine the Fixed Interest Rate on the date specified in such
notice, which rate shall be the lowest rate at which the Remarketing Agent shall
have received bids, not later than the twelfth (12th) Business Day prior to the
Conversion Date, to purchase all of the Outstanding Bonds at a purchase price of
100% of the outstanding principal amount thereof on the Conversion Date. Prior
to the Expiration Date of the Letter of Credit, conversion to the Fixed Interest
Rate shall require the prior written consent of the Bank.
(b) Any Bonds purchased by the Remarketing Agent or the Paying Agent
pursuant to the terms of this Indenture after the Trustee has given notice of
the establishment of a Conversion Date, pursuant to subsection (b) of Section
302
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of this Indenture, shall not be remarketed except to a buyer who agrees at the
time of such purchase either (i) to accept the Fixed Interest Rate on the
Conversion Date, or (ii) to require purchase of such Bonds by the Remarketing
Agent or the Paying Agent on or before the Conversion Date pursuant to
subsection (a) or (b) of Section 401 of this Indenture.
(c) The Letter of Credit shall be cancelled on the fifteenth (15th) day
following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank stating that
the Letter of Credit is not to be cancelled on such day.
(d) In the event that the Letter of Credit or an Alternate Credit Facility
is in effect with respect to Bonds following the Conversion Date, the Fixed
Interest Rate shall be adjusted on the Adjustment Date so as to equal the lowest
rate of interest at which the Remarketing Agent shall have received bids on or
prior to the twelfth (12th) Business Day next preceding the Adjustment Date to
purchase all Outstanding Bonds on the Adjustment Date at a price of 100% of the
principal amount thereof. Following such adjustment, the Bonds shall bear
interest at the Fixed Interest Rate determined pursuant to this Section 402(d)
until maturity.
THE BONDS SHALL NOT BE SUBJECT TO PURCHASE, AS PROVIDED IN SECTION 401 OF
THIS INDENTURE, AFTER THE EXPIRATION DATE OF THE LETTER OF CREDIT.
Section 403. Remarketing Agent. Prudential-Bache Securities Inc., New
York, New York, has been appointed by the Company as the Remarketing Agent for
the Bonds. The Remarketing Agent shall designate to the Trustee, the Paying
Agent, the Company, the Issuer and the Bank its principal office and signify the
acceptance of the duties and obligations imposed upon it under the Indenture by
a written instrument of acceptance delivered to the Issuer and the Trustee under
which the Remarketing Agent will agree, particularly:
(a) to hold all Bonds delivered to it pursuant to the Indenture in trust
for the benefit of the respective bondholders who shall have so delivered such
Bonds until moneys representing the purchase price of such Bonds shall have been
delivered to or for the account of or to the order of such bondholders;
(b) to hold all moneys delivered to it for the purchase of Bonds in trust
for the benefit of the person who shall have so delivered such moneys until the
Bonds purchased with
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such moneys shall have been delivered to or for the account of such person;
(c) to keep such books and records as shall be consistent with prudent
industry practice and to make such books and records available for inspection by
the Issuer, the Company, the Bank, the Trustee and the Paying Agent at all
reasonable times;
(d) not later than the fourth (4th) Business Day preceding each Interest
Payment Date, to give telegraphic or telephonic notice, promptly confirmed by a
written notice, to the Company, the Trustee and the Bank specifying the interest
rate on the Bonds for the Interest Period commencing on such Interest Payment
Date, determined pursuant to and in accordance with the provisions contained in
the form of Bond contained in Section 206 of this Indenture;
(e) to deliver to the Company, the Trustee, the Paying Agent and the Bank
a copy of each notice delivered to it in accordance with Section 401 (b) of this
Indenture and, immediately upon the delivery to it of Bonds in accordance with
said Section 401 (b), to give telephonic or telegraphic notice to the Company,
the Trustee, the Paying Agent and the Bank specifying the principal amount of
the Bonds so delivered and the principal amount of such Bonds remarketed; and
(f) to deliver all Bonds and due-bill checks delivered to it pursuant to
the Indenture to the persons to whom the same are to be delivered in accordance
with Section 401 (j) of this Indenture.
The Issuer shall cooperate with the Trustee to cause the necessary
arrangements to be made and to be thereafter continued whereby Bonds executed by
the Issuer and authentim cated by the Trustee shall be made available to the
Remarketing Agent to the extent necessary for delivery to purchasers thereof.
The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least ninety (90)
days written notice to the Issuer, the Company, the Bank, the Trustee and the
Paying Agent. The Remarketing Agent may be removed at any time, at the direction
of the Company, by an instrument signed by the Issuer and filed with the
Remarketing Agent, the Bank, the Trustee and the Paying Agent. In the event of
the resignation or removal of the Remarketing Agent, a successor Remarketing
Agent shall be designated by the Issuer, at the direction of the Company and
with the consent of the Bank. Any successor Remarketing Agent shall be
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authorized by law to perform all the duties imposed upon it by this Indenture
and shall be a commercial bank having an aggregate of capital, paid in surplus
and retained earnings of not less than FIFTY MILLION DOLLARS ($50,000,000) or as
member of the National Association of Securities Dealers, Inc. having at
capitalization of at least FIFTEEN MILLION DOLLARS ($15,000,000) or having a
line of credit with a commercial bank in the amount of at least FIFTEEN MILLION
DOLLARS ($15,000,000). In addition, any successor Remarketing Agent (or its
parent corporation, if such successor is a subsidiary of a holding company)
shall have outstanding securities rated not lower than Baa3 (or at substantially
equivalent rating) by Moody's if such a requirement is a condition to the
maintenance of the then existing Moody's rating of the Bonds.
Section 404. Letter of Credit.
(a) The Trustee shall draw moneys under the Letter of Credit in accordance
with the terms thereof to the extent necessary to make timely payments of
principal of and interest on the Bonds and to pay the purchase price of Bonds
purchased pursuant to Section 401 of this Indenture.
(b) If at any time there shall have been delivered to the Trustee (i) an
Alternate Letter of Credit or an Alternate Credit Facility and (ii) an opinion
of Independent Tax Counsel stating that the delivery of such Alternate Letter of
Credit or Alternate Credit Facility Ito the Trustee is authorized tinder the
Agreement and the Act, complies with the terms of the Agreement, and will not
adversely affect the tax-exempt status of the Bonds, then the Trustee shall
accept such Alternate Letter of Credit or Alternate Credit Facility and
immediately surrender the previously held Letter of Credit to the Bank, in
accordance with the terms of such Letter of Credit, for cancellations Unless the
Company and the Bank shall have given written notice to the Trustee to the
contrary, the Trustee shall fifteen (15) days after the Conversion Date
surrender the Letter of Credit to the Bank, in accordance with the terms of the
Letter of Credit, for cancellation. If at any time there shall cease to be any
Bonds outstanding under the Indenture, other than Bonds delivered to the Bank
pursuant to any draw under the Letter of Credit, the Trustee shall immediately
surrender the Letter of Credit to the Bank, in accordance with the terms of the
Letter of Credit, for cancellation, The Trustee shall comply with the procedures
set forth in the Letter of Credit Agreement and the Letter of Credit (including,
but not limited to, execution and delivery of appropriate certificates) relating
to the extension, reduction, reinstatement or termination of the Letter of
Credit.
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Section 405. No Federal Guarantee. Notwithstanding any other provision of
this Indenture, neither the Issuer, the Trustee nor any bondholder shall claim
or accept the benefits of any Federal guarantee which would cause the Bonds to
become subject to Federal income taxation under the provisions of Section 103(h)
of the Code, including, without limitation, insurance of the Federal Deposit
Insurance Corporation, if any, applicable to the Letter of Credit. In the event
of the failure by the Bank to fulfill its obligations, in whole or in part, with
respect to any draw on the Letter of Credit, the Trustee shall have no power or
right to make any claim against the Federal Deposit Insurance Corporation with
respect to any such failure by the Bank.
Section 406. Treatment of bonds not remarketed. As described more fully in
the Pledge Agreement (as defined in the Letter of Credit Agreement), Bonds
purchased by the Trustee with monies described in subsections (g) (iii) and (h)
(ii) of Section 401 shall constitute Pledged Bonds only if, and for so long as,
the Company has failed to pay the Bank all amounts owing in connection with the
corresponding drawing under the Letter of Credit. Upon payment of all such
amounts, the Bank shall release such Bonds from the lien of the Pledge
Agreement, deliver (or require the Trustee to deliver) such Bonds to the
Company, and reinstate the Letter of Credit in the amount of the drawing used to
purchase such Bonds and thereupon such Bonds shall cease to be Pledged Bonds and
shall be Outstanding Bonds for all purposes. The following provisions shall
apply to all Pledged Bonds, but only for so long as they remain Pledged Bonds:
(a) Pledged Bonds shall not earn interest, nor shall any payment
ever be made on account of the principal of any Pledged Bond.
(b) Pledged Bonds shall not be redeemed but shall instead be
cancelled without payment in any instance where they would, if
not Pledged Bonds, be redeemed.
ARTICLE V.
GENERAL COVENANTS
Section 501. Payment of Principal, Purchase Price, Redemption Premium (If
Any) and Interest. The Issuer covenants that it will promptly pay (but only from
the funds
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hereinafter described) the principal or purchase price of, and the redemption
premium (if any) and the interest on, the Bonds at the place, on the dates and
in the manner provided herein and in the Bonds. The Bonds are payable solely out
of the Revenues in the manner and to the extent herein specified, and nothing in
the Bonds or in this Indenture should be considered to be an assignment or
pledge of any other funds or assets of the Issuer other than the Trust Estate
The Bonds and the interest and redemption premium (if any) thereon shall not now
or ever be deemed to constitute or to create in any manner a debt, liability or
obligation of the State or of any political subdivision thereof or a pledge of
the faith and credit of the State or any such political subdivision nor a
general obligation of the Issuer but shall be limited obligations of the Issuer
payable solely from the Revenues and other funds pledged therefor in accordance
with the Agreement and this Indenture and shall not be payable from any assets
or funds of the Issuer other than the Revenues and other funds pledged therefor,
and neither the faith and credit nor the taxing power of the State or any
political subdivision thereof is pledged to the payment of the principal or
purchase price of, or the redemption premium (if any) or the interest on, the
Bonds.
Section 502. Performance of Covenants; Authority. The Issuer covenants
that it will faithfully perform at all times any and all covenants, agreements,
undertakings, stipulations and provisions contained in this Indenture, in any
and every Bond, and in all proceedings of the Issuer pertaining thereto. The
Issuer covenants that it is duly authorized under the Constitution and laws of
the State including particularly the Act, (a) to issue the Bonds, (b) to
execute, deliver and perform this Indenture, and (c) to assign and pledge the
Trust Estate in the manner and to the extent herein set forth; and that all
action on its part for the issuance of the Bonds and the execution, delivery and
performance of this Indenture has been duly and effectively taken; and that the
Bonds are and will be legal, valid, binding and enforceable limited obligations
of the Issuer according to the import thereof.
Section 503. Filing of Financing Statements. The Issuer agrees that it
will cause all Financing Statements (other than continuation statements) to be
filed, at the request of the Trustee and if required by an opinion of counsel as
set forth in Section 1213, in such manner and in such places as may be required
by law in order to fully protect and preserve the priority of the interest of
the bondholders in the property conveyed thereunder and the rights, privileges
and options of the Trustee thereunder. Pursuant to Section 1213, the Trustee has
agreed to file or cause to be filed certain continuation statements.
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Section 504. Priority of Pledge and Security Interest. The pledge herein
made of the Trust Estate and the security interest created herein with respect
thereto constitutes a first and prior pledge of, and a security interest in, the
Trust Estate. Said pledge and security interest shall at no time be impaired
directly or indirectly by the Issuer or the Trustee, and the Trust Estate shall
not otherwise be pledged and, except as provided herein and in the Agreement, no
persons shall have any rights with respect thereto.
Section 505. Rights Under Agreement. The Agreement sets forth the
respective obligations of the Issuer and the Company, including a provision that
subsequent to the initial issuance of the Bonds and prior to payment in full of
the Bonds, the Agreement may not be effectively amended, changed, modified,
altered or terminated other than as provided in Article XIV. Reference is hereby
made to the Agreement for detailed statements of the obligations of the Company
thereunder, and the Issuer agrees that the Trustee in its own name or in the
name of the Issuer may enforce all rights of the Issuer and all obligations of
the Company under and pursuant to the Agreement (except certain rights reserved
by the Issuer under the terms hereof) for and on behalf of the bondholders,
whether or not the Issuer is in default hereunder.
Section 506. Maintenance of Insurance; Payment of Taxes, Charges, etc.
Pursuant to the provisions of Section 5.7 of the Agreement, the Company has
agreed to maintain certain insurance and to pay all lawful taxes, assessments
and charges at any time levied or assessed upon or against the Facilities or any
part thereof. The Company shall furnish evidence of such insurance annually to
the Trustee upon request.
Section 507. Maintenance and Repair. Pursuant to the provisions of Section
5.5 of the Agreement, the Company has agreed at its own expense to maintain and
operate the Facilities.
Section 508. Issuer's Election to Issue Bonds Pursuant to Section
103(b)(6)(D) of the Code. Prior to the issuance and delivery of the Bonds, all
necessary filings to effect an election with respect to the Bonds under Section
103(b) (6) (D) of the Code will have been made.
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ARTICLE VI.
CUSTODY AND APPLICATION
OF PROCEEDS OF BONDS
Section 601. Creation of the Construction Fund. There is hereby created by
the Issuer and ordered established with the Depository a trust fund to be
designated "Trinity River Industrial Development Authority Construction
Fund--Radiation Sterilizers, Incorporated Project, 1985B".
Section 602. Disposition of Bond Proceeds. Upon the issuance and delivery
of the Bonds, an amount equal to the Interest Reserve Requirement shall be
transferred by the Depository to the Trustee and deposited in the Bond Fund and
the balance of the proceeds of the sale of the Bonds shall to deposited in the
Construction Fund.
Section 603. Disbursements from Construction Fund. Moneys in the
Construction Fund shall be disbursed in accordance with the provisions of the
Agreement, and particularly Section 3.3 thereof. The Issuer agrees to promptly
take all necessary and appropriate action in approving and certifying all such
disbursements. The Depository is hereby authorized and directed to issue its
checks for each disbursement to be made pursuant to the provisions of the
Agreement and the Depository shall be relieved of all liability with respect to
disbursements made in accordance with the provisions of Section 3.3 of the
Agreement.
The Depository shall maintain adequate records pertaining to the
Construction Fund and all disbursements therefrom, and after the Facilities have
been completed and a certificate of payment of all costs filed as provided in
Section 604, the Trustee shall file with the Issuer such certificate of payment.
Section 604. Completion of the Facilities. The completion of the
Facilities and the payment of all costs and expenses incident thereto shall be
evidenced by the filing with the Depository of the certificate signed by the
Authorized Company Representative (designated pursuant to the terms of the
Agreement), which certificate shall state that all costs and expenses in
connection with the Facilities and payable out of the Construction Fund have
been paid except for costs and expenses not then due and payable with respect to
which funds are being retained in the Construction Fund with the approval of the
Company for the payment of the same. As soon as practicable, and in any event
not later than sixty (60) days from the date of the latter certificate referred
to in the preceding sentence, any moneys remaining in the Construction Fund
(other than
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moneys retained to pay costs and expenses not then due and payable) shall be
used as specified in Section 3.3(h) of the Agreement relating to the use of
moneys in the Construction Fund. Any balance remaining of moneys retained to pay
costs and expenses after full payment of such costs and expenses shall be used
as specified in Section 3.3(h) of the Agreement. Unless there shall be delivered
to the Trustee an opinion of Independent Tax Counsel, amounts held for
application under this Section shall not, after the completion of the Facilities
be invested at a yield in excess of the yield on the Bonds.
ARTICLE VII.
REVENUES AND FUNDS
Section 701. Source of Payment of Bonds. The obligation of the Issuer to
pay the principal of, and the redemption premium (if any) and the interest on,
the Bonds is not a general obligation of the Issuer but is a limited obligation
payable solely from the Revenues.
The payments required to be made by the Company under Sections 4.1 and 4.3
of the Agreement are to be remitted directly to the Trustee for the benefit of
the owners of the Bonds and are to be deposited in the Bond Fund. Said payments
are sufficient in amount and become due in a timely manner so as to insure the
prompt payment of the principal of, and the redemption premium (if any) and the
interest on, the Bonds.
Section 702. Creation of the Bond Fund. There is hereby created by the
Issuer and ordered established with the Trustee a trust fund to be designated
"Trinity River Industrial Development Authority Bond Fund - Radiation
Sterilizers, Incorporated Project, 1985B", which shall be used to pay the
principal of, and the redemption premium (if any) and interest on, the Bonds.
There shall be established as trust accounts within the Bond Fund a general
account and a special account. Any reference in this Indenture to "Bond Fund"
without further qualification or explanation shall constitute a reference to
said general account.
Section 703. Payments into the Bond Fund. There shall be paid into the
Bond Fund, as and when received:
(a) from the proceeds derived from the sale of the Bonds, an amount
equal to the Interest Reserve Requirement,
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(b) all payments made by the Company pursuant to Sections 4. 1 and
4. 3 of the Agreement,
(c) prior to the Expiration Date of the Letter of Credit, all
amounts drawn by the Trustee under the Letter of Credit to pay principal
of, or interest on, the Bonds, and
(d) all other moneys received by the Trustee when accompanied by the
directions that such moneys are to be paid into the Bond Fund.
Notwithstanding any provision hereof to the contrary, all amounts received
by the Trustee as amounts drawn under the Letter of Credit shall not be
commingled but shall be held in trust in a segregated account in the special
account in the Bond Fund by the Trustee and used solely to pay amounts due in
respect of the Bonds. The Issuer covenants that so long as any of the Bonds are
outstanding it will pay, or cause to be paid, into the Bond Fund all moneys
received pursuant to the Agreement (except for funds received pursuant to
Sections 5.3 and 5.4 of the Agreement) to pay promptly the principal of, the
redemption premium (if any) and interest on, the Bonds as the same become due
and payable and to this end the Issuer covenants and agrees that if there occurs
an Event of Default under the Agreement, the Issuer will fully cooperate with
the Trustee and with the bondholders to the end of fully protecting the rights
and security of the bondholders. Nothing herein shall be construed as requiring
the Issuer to operate the Facilities or to use any funds from any source to pay
the principal or purchase price of, and the redemption premium (if any) and the
interest on, the Bonds or to pay the costs of maintaining and insuring the
Facilities other than the payments to he received pursuant to the Agreement and
the Revenues.
Section 704. Use of Moneys in the Bond Fund.
(a) Except as provided in Sections 707, 802 and 1202, moneys in the Bond
Fund shall be used solely for the payment of the principal of, redemption
premium (if any) and interest on, the Bonds. At the direction of the Company,
any moneys in the Bond Fund may be used to redeem (as herein otherwise
permitted) a portion of the Bonds so long as the Company is not in default with
respect to any payments due under the Agreement and to the extent that such
moneys are in excess of the amount required for the payment of Bonds theretofore
matured or called for redemption and the payment of interest then due in all
cases where such Bonds have not been presented for payment. No part of the
payments required to be paid into the Bond Fund under the Agreement shall be
used to redeem, prior to maturity, a portion of the Bonds;
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provided, that whenever after the Conversion Date the moneys held in the Bond
Fund (in the general account and the special account) from any source whatsoever
are sufficient to redeem all of the Bonds and to pay interest to accrue thereon
prior to such redemption, the Issuer agrees to take and cause to be taken the
necessary steps to redeem all of the Bonds on the next succeeding redemption
date for which the required redemption notice can be given, and, provided,
further, that any moneys in the Bond Fund may be used after the Conversion Date
to redeem a portion of the Bonds so long as the Company has made all required
payments under the Agreement.
(b) At the maturity date or redemption date prior to maturity of each Bond
and at the due date of each installment of interest on each Bond the Trustee
shall transfer from the general account in the Bond Fund to the special account
in the Bond Fund sufficient moneys to pay all principal of, the redemption
premium (if any) and the interest then due and payable with respect to, each
such Bond. Moneys so transferred into said special account shall not thereafter
be invested in any manner but shall be held by the Trustee without liability on
the part of the Trustee or the Issuer for interest thereon until actually paid
out for the purposes intended.
The Issuer hereby authorizes and directs the Trustee to withdraw, from
time to time, sufficient moneys from the special account in the Bond Fund to pay
the principal of, the redemption premium (if any) and the interest on, the Bonds
as the same become due and payable, which authorization and direction the
Trustee hereby accepts. Funds for such payments of the principal of, the
redemption premium (if any) and the interest on, the Bonds shall be derived from
the following sources in the order of priority indicated:
(1) Available Moneys constituting proceeds described in Section 5.11
of the Agreement;
(2) all payments made by the Company pursuant to Sections 4.1 and
4.3 of the Agreement and amounts derived from the investment of such
amounts to the extent that they constitute Available Moneys;
(3) prior to the Expiration Date of the Letter of Credit, all
amounts drawn by the Trustee under the Letter of Credit; and
(4) all other amounts received by the Trustee under and pursuant to
the Agreement or from any other source when accompanied by directions by
the Company
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that such amounts are to be paid into the Bond Fund, and amounts derived
from the investment of such amounts.
Section 705. Custody of the Bond Fund. The Bond Fund shall be held by the
Trustee as a trust fund for the benefit of the bondholders. The general account
and the special account established in the Bond Fund shall also constitute trust
accounts. All moneys paid over to the Trustee for the account of the Bond Fund
(to be held in the general account or the special account therein) under any
provision of this Indenture shall be held in trust by the Trustee for the
benefit of the owners of the Bonds entitled to be paid therefrom.
Section 706. Non-presentment of Bonds at Maturity. If any Bond shall not
be presented for payment when the principal thereof becomes due, either at
stated maturity, at the date fixed for redemption prior to stated maturity, or
upon maturity by declaration, provided moneys sufficient to pay such Bond shall
have been made available to the Trustee to be held in the special account in the
Bond Fund for the benefit of the owner thereof, all liability of the Issuer to
the holder thereof for the payment of such Bond shall forthwith cease, determine
and be completely discharged, and thereupon it shall be the duty of the Trustee
to hold such moneys, subject to the provisions of Section 707(b), in said
special account, without liability for interest thereon, for the benefit of the
owner of such Bond, who shall thereafter be restricted exclusively to such
moneys held in said special account, or paid by the Trustee to the Company or
the Bank pursuant to the provisions of Section 707(b), for any claim of whatever
nature on his part under this Indenture or on, or with respect to, such Bond.
Section 707. Payments to the Company from the Bond Fund.
(a) Any moneys remaining in the general account in the Bond Fund after
Payment in Full of the Bonds (taking into consideration that sufficient moneys
or obligations such as are described in Section 1001 have been transferred to or
deposited in the special account in the Bond Fund to pay all principal of, and
interest then due and payable with respect to, each Bond not yet presented for
payment and to pay all principal and redemption premium (if any) and interest
relating to each Bond which is not yet due and payable but with respect to which
the lien of this Indenture has been defeased upon compliance with Article X),
the fees, advances, charges and expenses of the Trustee, the Paying Agent and
the Bond Registrar which have accrued and which will accrue and all other items
required to be paid
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hereunder (other than items payable from the special account in the Bond Fund)
shall be paid to the Bank to the extent that any moneys are owed to the Bank
pursuant to the Letter of Credit Agreement and, otherwise, to the Company upon
the expiration or sooner termination of the Agreement.
(b) Any moneys held by the Trustee in the special account in the Bond Fund
shall be retained by the Trustee for the payment or the redemption of Bonds not
yet presented for payment or redemption. If after three (3) years such moneys
held for the owners of certain Bonds have not been claimed, then, it shall be
the duty of the Trustee forthwith to return to the Bank to the extent that any
moneys are owed to the Bank pursuant to the Letter of Credit Agreement and,
otherwise, to the Company all moneys held by the Trustee in said special
account, subject to any other requirements of law as may be applicable to such
funds, and any such owner shall thereafter, as an unsecured general creditor,
look only to the Company for the payment of any such Bond and all liability of
the Trustee shall thereupon cease.
ARTICLE VIII.
INVESTMENTS
Section 801. Construction Fund Investments. Moneys held in the
Construction Fund or in any other trust fund or account held by the Depository
or the Trustee hereunder (except the Bond Fund or an account in the Bond Fund)
shall be invested and reinvested by the Depository or the Trustee in Eligible
Investments as directed by the Company pursuant to Section 3.8 of the Agreement.
Such investments shall be held by or under the control of the Depository or the
Trustee and shall be deemed at all times a part of the Construction Fund or
other pertinent trust fund and the interest accruing thereon and any profit
resulting therefrom shall be credited to the Construction Fund or other
pertinent trust fund and any loss resulting therefrom shall be charged to the
Construction Fund or other pertinent trust fund. The Depository or the Trustee
at the direction of the Company shall sell and convert to cash a sufficient
amount of such investments whenever the cash held in the Construction Fund or
other pertinent trust fund is insufficient to pay a requisition when presented
or to otherwise make at timely disbursement required to be made therefrom. The
provisions of this Section 801 shall be subject to the provisions of Section 804
of this Indenture and Section 5. 12(b) of the Agreement.
Section 802. Bond Fund Investments. Moneys held in the Bond Fund (other
than moneys held in the special account in the Bond Fund referred to in Section
702) shall be invested and reinvested by the Trustee in Eligible Investments as
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directed by the Company pursuant to Section 3.8 of the Agreement. Such
investments shall be held by or under the control of the Trustee and shall be
deemed at all times a part of the Bond Fund and the interest accruing thereon
and any profit realized therefrom shall be credited to the Bond Fund and any
loss resulting therefrom shall be charged to the Bond Fund. So long as there is
no default hereunder, the Trustee at the direction of the Company shall sell and
convert to cash a sufficient amount of such investments in the Bond Fund
whenever the cash held in the Bond Fund is insufficient to provide for the
payment of the principal of (whether at the maturity date or the redemption date
prior to maturity) and the interest on the Bonds as the same become due and
payable. Any interest or gain received from such investments shall be credited
to and held in the Bond Fund and any loss from such investments shall be charged
against the Bond Fund and paid by the Company. The provisions of this Section
802 shall be subject to the provisions of Section 804 of this Indenture and
Section 5. 12(b) of the Agreement.
Section 803. Non-Arbitrage Covenant; Compliance with Special Arbitrage
Rules. The Issuer covenants and agrees with the Trustee, the Depository and with
the holders of any of the Bonds from time to time outstanding that so long as
any of the Bonds remain outstanding, moneys on deposit in any fund or account
created and held in connection with the Bonds, whether or not such moneys were
derived from the "gross proceeds" (defined in Section 5. 12(c) of the Agreement)
of the Bonds or from any other sources, will not be used in a manner which will
cause the Bonds to be classified as "arbitrage bonds" within the meaning of
Section 103(c) of the Code.
The Issuer and the Trustee jointly and severally covenant and agree with
each other, with the Company and with the holders of any of the Bonds from time
to time outstanding that so long as any of the Bonds remain outstanding, they
will cooperate with the Company in complying with Section 5.12(b) of the
Agreement to the extent reasonably possible.
Section 804. Excess Investment Earnings Account. There is hereby
established a special trust account to be designated the "Trinity River
Industrial Development Authority Excess Investment Earnings Account - Radiation
Sterilizers, Incorporated Project, 1985" (hereinafter referred to as the "Excess
Investment Earnings Account"), to be held by the Trustee. The Company has
covenanted and agreed that it will (a) prepare and file with the Trustee, the
Depository and the Issuer a report setting forth the "Rebate Amount" determined
in accordance with Section 5. 12(b) of the Agreement, and (b) deposit or cause
to be deposited into the
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Excess Investment Earnings Account any and all Rebate Amounts promptly following
a determination of any such Rebate Amount.
The Trustee and the Depository, as custodians of the Bond Fund and the
Construction Fund, respectively, covenant and agree that they will, on or before
each anniversary of the date of issuance of the Bonds, prepare and file with the
Issuer and the Company a report with respect to the Construction Fund and the
Bond Fund setting forth the total amounts invested during the preceding bond
year, the investments made with the moneys in the Construction Fund and the Bond
Fund and the investment earnings (and losses) resulting from the investments in
each such Fund, respectively, together with such additional information
concerning such Funds and the investments therein, respectively, as the Issuer
or the Company shall reasonably request.
The Trustee and the Depository agree that they will, to the extent
practicable, keep all moneys in the Excess Investment Earnings Account fully
invested in Eligible Investments and that they will disburse all moneys in the
Excess Investment Earnings Account to the United States at the times and in the
manner set forth in Section 5. 12(b) of the Agreement.
Moneys in the Excess Investment Earnings Account, including investment
earnings thereon, if any, shall not be subject to the pledge of this Indenture
and shall not constitute part of the Trust Estate held for the benefit of the
holders of the Bonds and shall be, at the direction of the Company, paid to the
United States.
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ARTICLE IX
SUBORDINATION TO RIGHTS OF COMPANY
Section 901. Subordination to Rights of the Company. So long as there
exists no Event of Default under the Agreement, this Indenture and the rights,
options and privileges hereunder of the Trustee and the bondholders are
specifically made subject and subordinate to the rights, options and privileges
of the Company set forth in the Agreement.
ARTICLE X.
DISCHARGE OF LIEN
Section 1001. Discharge of Lien and Security Interests. If the Issuer
shall pay or cause to be paid the principal of, and the redemption premium (if
any) and the interest on, the Bonds at the times and in the manner stipulated
therein and herein, and shall pay or cause to be paid all fees and expenses of
the Trustee, the Depository, the Bond Registrar and the Paying Agent due or to
become due in connection with the payment of the Bonds and all other amounts due
or to become due hereunder, and if the Issuer shall keep, perform and observe
all and singular the covenants and agreements in the Bonds and in this Indenture
expressed as to be kept, performed and observed by it or on its part, then the
lien of this Indenture, these presents and the Trust Estate shall cease,
terminate and be discharged, and thereupon the Trustee shall execute and deliver
to the Issuer such instruments in writing as shall be required to cancel and
discharge this Indenture and the Agreement and assign and deliver to the Issuer
so much of the Trust Estate as may be in its possession or subject to its
control, except moneys or Government Obligations deposited with the Trustee for
the payment of the principal of, and the redemption premium (if any) and the
interest on, the Bonds which have become due but have not yet been presented for
payment and moneys in the Bond Fund required to be paid to the Company or the
Bank pursuant to Section 707; provided, however, such cancellation and discharge
of this Indenture shall not terminate the powers and rights granted to the
Trustee with respect to the payment, registration of transfer and exchange of
the Bonds or payment of fees, advances, expenses and cost of Trustee incurred
hereunder.
Section 1002. Provision for Payment of Bonds. Bonds shall be deemed to
have been paid within the meaning of Section 1001 if
(a) (i) the principal of, redemption premium (if any) and all interest on
all Bonds have been paid in accordance with the terms thereof; or
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(ii) there shall have been irrevocably deposited in the special
account in the Bond Fund either:
(A) sufficient moneys, or
(B) Government Obligations of such maturities and interest payment
dates and bearing such interest as will, without further investment or
reinvestment of either the principal amount thereof or the interest
earnings thereon (said earnings Ito be held in trust also), be sufficient
together with any moneys referred to in subsection (i) above,
for the payment at their respective maturities or redemption dates prior to
maturity, of the principal thereof and the interest to accrue thereon to such
maturity or redemption dates, as the case may be; provided, however, that Bonds
will be deemed to be paid by making the deposit pursuant to clause (ii) only
after the Expiration Date of the Letter of Credit;
(b) there shall have been paid to the Trustee all Trustees, Bond
Registrar's and Paying Agent's fees and expenses due or to become due in
connection with the payment or redemption of the Bonds or there shall be
sufficient moneys in said special account to make said payments; and
(c) if any Bonds are to be redeemed on any date prior to their maturity,
the Issuer shall have given to the Trustee in form satisfactory to the Trustee
irrevocable instructions to redeem such Bonds on such date and either evidence
satisfactory to the Trustee that all redemption notices required by this
Indenture have been given or irrevocable power authorizing the Trustee to give
such redemption notices.
Limitations elsewhere specified herein regarding the investment of moneys
held by the Trustee in the special account in the Bond Fund shall not be
construed to prevent the depositing and holding in said special account of the
obligations described in the preceding subparagraph (a) (ii) (B) for the purpose
of defeasing the lien of this Indenture as to Bonds which have not yet become
due and payable.
Section 1003. Discharge of the Indenture. Notwithstanding the fact that
the lien of this Indenture upon the Trust Estate may have been discharged and
cancelled in accordance with Section 1001, this Indenture and the rights granted
and duties imposed hereby, to the extent not inconsistent with the fact that the
lien upon the Trust Estate may have been discharged and cancelled, shall
nevertheless continue and subsist until the principal of, the redemption
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premium (if any) and the interest on, all of the Bonds shall have been paid in
full or the Trustee shall have returned to the Company or the Bank pursuant to
Section 707(b) all funds theretofore held by the Trustee for payment of any
Bonds not theretofore presented for payment and all of the Company's obligations
to the Issuer as to expense reimbursement and indemnification under this
Indenture have been fulfilled.
ARTICLE XI.
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 1101. Defaults; Events of Default. If any of the following invents
occurs, subject to the provisions of Section 1109, it is hereby defined as and
declared to be and to constitute an "Event of Default" hereunder:
(a) failure in the payment of the principal of or any interest or
redemption premium on any Bond when and as the same shall have become due,
whether at the stated maturity thereof, by acceleration or call for redemption;
(b) the occurrence of an Event of Default specified in subsection (a) of
Section 16.1 of the Agreement;
(c) failure in the performance or observance of any covenant, agreement or
condition on the part of the Issuer included in this Indenture, in the Bonds or
in the Agreement, other than as set forth in subsection (a) or (b) above, which
materially adversely affects the lien of this Indenture on the Revenues, the
Bond Fund or the Construction Fund; provided, however, that prior to the
Expiration Date of the Letter of Credit such failure shall not constitute an
Event of Default;
(d) the occurrence of any Event of Default specified in subsections (b),
(c), (d) or (e) of Section 6.1 of the Agreement; provided, however, that prior
to the Expiration Date of the Letter of Credit such occurrences shall not
constitute an Event of Default;
(e) failure to pay amounts due to holders of Bonds who have delivered
Bonds to the Trustee for purchase for a period of five (5) days after such
payment has become due and payable; or
(f) receipt by the Trustee of notice from the Bank of the occurrence of an
"Event of Default" under the Letter of Credit Agreement and Bank direction to
accelerate.
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The term "default" shall mean (i) any Event of Default described above;
and (ii) the occurrence of an event specified in subsections (b), (c), (d) or
(e) of Section 6.1 of the Agreement exclusive of any period of grace required to
constitute such occurrence an "Event of Default" as defined in the Agreement.
If a default or an Event of Default shall occur under the provisions of
this Section, the Trustee Shall, within two (2) Business Days after having
actual knowledge of such default or Event of Default or being deemed to have
notice thereof under subsection (e) (iv) of Section 1201, give written notice of
such default or Event of Default to the Issuer, the Company, the Bank and the
Original Purchasers of the Bonds.
Section 1102. Acceleration. Upon the occurrence of any Event of Default
described in subsections (a) through (e), inclusive, of Section 1101 the Trustee
may, and upon the written request of the holders of not less than twenty-five
percentum (25%) in aggregate principal amount of Bonds then outstanding the
Trustee shall, by notice in writing delivered to the Issuer and the Company,
declare the principal of all Bonds then outstanding and the redemption premium
(if any) on Bonds called for redemption, and the interest accrued thereon
immediately due and payable. Upon the occurrence of an Event of Default
described in subsection (f) of Section 1101, the Trustee shall, by notice in
writing delivered to the Issuer and the Company, declare the principal of all
Bonds then outstanding, and the interest accrued thereon immediately due and
payable. Any such principal and interest shall thereupon become and be
immediately due and payable. Upon such declaration of acceleration and if an
Event of Default under Section 6.1 of the Agreement shall have happened and be
subsisting, the Trustee shall immediately declare all amounts payable under
Sections 4.1 or 4.3 of the Agreement to be immediately due and payable in
accordance with Section 6.2 of the Agreement, and prior to the Expiration Date
of the Letter of Credit, shall draw moneys under the Letter of Credit in
accordance with Section 6.2 of the Agreement, in either case to pay the
principal of all outstanding Bonds and the accrued interest thereon to the date
of acceleration.
The provisions of this Section are subject, however, to the condition that
after the Expiration Date of the Letter of Credit if, at any time after the
principal of, and the redemption premium (if any) and the interest accrued on,
the Bonds shall have been so declared due and payable, all sums payable
hereunder except the principal of the Bonds which have not reached their
maturity date shall have been duly paid and all existing Events of Default shall
have been
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cured, all before a judgment or decree for payment of moneys due has been
obtained by the Trustee, then and in every such case such payment or cure of
such Event of Default shall constitute a waiver of such Event of Default and its
consequences and an automatic rescission and annulment of such declaration but
no such waiver shall extend to or affect any subsequent Event of Default or
impair any rights consequent thereon.
The provisions of this Section are further subject to the condition that
any waiver of any Event of Default under the Letter of Credit Agreement and a
rescission and annulment of its consequences shall constitute a waiver of the
corresponding Event of Default under this Indenture and a rescission and
annulment of the consequences thereof. If notice of such Event of Default under
the Letter of Credit Agreement shall have been given and if the Trustee shall
thereafter have received notice that such Event of Default shall have been
waived, and further, the Trustee shall have received written evidence that the
Letter of Credit shall have been reinstated, the Trustee shall promptly give
written notice of such waiver, rescission and annulment to the Issuer, the
Company and the Remarketing Agent, and shall give notice thereof to holders of
the Bonds in the same manner as a notice of redemption; but no such waiver,
rescission and annulment shall extend to or affect any subsequent Event of
Default under this Indenture or impair any right or remedy consequent thereon.
Section 1103. Other Remedies. Upon the occurrence of an Event of Default
the Trustee may pursue any available remedy to enforce the payment of the
principal of, and any redemption premium and interest on, the Bonds then
outstanding,
If an Event of Default shall have occurred, and if (a) requested to do so
by (i) the holders of twenty-five percentum (25%) in aggregate principal amount
of Bonds then outstanding, and (ii) prior to the Expiration Date of the Letter
of Credit, the Bank if it is not then in default in making any payment under the
Letter of Credit and (b) indemnified as provided in Section 1201, the Trustee
shall be obligated to exercise such one or more of the rights and powers
conferred Jay this Section as the Trustee, being advised by counsel, shall deem
most expedient in the interests of the owners of the Bonds.
No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee (or to the owners of the Bonds) is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the owners of the Bonds
hereunder or now or hereafter existing.
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No delay or omission to exercise any right or power accruing upon any
default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein; and every such right and power may be exercised from time to time and
as often as may be deemed expedient.
No waiver of any Event of Default hereunder, whether by the Trustee or by
the owners of the Bonds shall extend to or shall affect any subsequent default
or Event of Default or shall impair any rights or remedies consequent thereon .
Section 1104. Right of Bondholders to Direct Proceeding. Anything in this
Indenture to the contrary notwithstanding, the holders of a majority in
aggregate principal amount of Bonds then outstanding shall have the right, at
any time, by an instrument or instruments in writing executed and delivered to
the Trustee, to annul or overrule any direction given to the Trustee by holders
of less than a majority in aggregate principal amount of Bonds or to direct the
method and place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture or any other
proceedings hereunder; provided, that (a) such direction shall not be otherwise
than in accordance with the provisions of law and of this Indenture, (b) the
Trustee shall be indemnified to its satisfaction, and (c) prior to the
Expiration Date of the Letter of Credit and so long as the Bank is not then in
default in making any payment under the Letter of Credit, the Bank shall have
the exclusive right to annul or overrule or give any such direction to the
Trustee.
Section 1105. Application of Moneys. If, prior to the Completion Date, all
of the Bonds should be called for redemption or there shall occur a declaration
by the Trustee that the principal of all Bonds then outstanding and the
redemption premium (if any) on Bonds called for redemption, and the interest
accrued thereon are immediately due and payable, then the Trustee shall
immediately transfer all moneys and investments then on deposit in the
Construction Fund to the Bond Fund and shall hold the same in the special
account in the Bond Fund and use such moneys and those resulting from the
liquidation of such investments for the retirement of principal of the Bonds
ratably to the principal amount of Bonds then outstanding. All moneys, including
all moneys received pursuant to the next preceding sentence, received lay the
Trustee pursuant to any right given or action taken under the provisions of this
Article shall, after payment of the fees, costs and expenses of the proceedings
resulting in the collection of such moneys and of the fees, expenses,
liabilities and advances incurred or made by the Trustee, including, without
limitation, any
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amounts payable to the Trustee pursuant to Section 1202, be deposited in the
Bond Fund and all such moneys in the Bond Fund shall be applied, as follows:
(a) unless the principal of all the Bonds shall have become or have
been declared due and payable, all such moneys shall be applied:
FIRST--To the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, in the order of the
maturity of the installments of such interest and, if the amount
available shall not be sufficient to pay in full any particular
installment, then to the payment ratably, according to the amounts
due on such installment, to the persons entitled thereto, without
any discrimination or privilege; and
SECOND--To the payment to the persons entitled thereto of the unpaid
principal of any of the Bonds which shall have become due (other
than Bonds previously called for redemption for the payment of which
moneys and/or Government Obligations are held pursuant to the
provisions of this Indenture), in the order of their due date, with
interest on such Bonds from the respective dates upon which they
become due and if the amount available shall not be sufficient to
pay in full all Bonds due on any particular date, together with such
interest, then to the payment ratably, according to the amount of
principal due on such date, to the persons entitled thereto without
any discrimination or privilege;
(b) if the principal of all the Bonds shall have become due or shall
have been declared due and payable, all such moneys shall be applied to
the payment of the principal and interest then due and unpaid upon the
Bonds, without preference or priority of principal over interest or of
interest over principal, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and interest, to
the persons entitled thereto without any discrimination or privilege; and
(c) if the principal of all the Bonds shall have been declared due
and payable, and if such declaration shall thereafter have been rescinded
and annulled under the provisions of Section 1102 or 1109 then, subject to
the provisions of subsection (b) of this Section in the event that the
principal of all the Bonds shall later
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become due or be declared due and payable, the moneys shall be applied in
accordance with the provisions of subsection (a) of this Section.
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied as soon as practicable in the manner
hereinabove set forth. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any moneys and of the fixing of any such
date, and may make payment but shall not be required to make payment to the
holder of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement, or for cancellation if fully paid.
Whenever all Bonds and interest thereon have been paid under the
provisions of this Section and all fees, expenses and charges of the Trustee,
Paying Agent and Bond Registrar have been paid, any balance remaining in the
Bond Fund shall be paid to the Bank or the Company as provided in Section 707.
Notwithstanding the provisions of this Section proceeds of a draw on the
Letter of Credit received by the Trustee pursuant to the exercise of any right
or action taken under this Article shall be applied only to the payment of
principal of and interest on the Bonds.
The Trustee shall take into account such amounts as are payable to it in
determining the amount otherwise available hereunder to pay amounts due on the
Bonds before computing the amount necessary to be drawn under the Letter of
Credit.
Section 1106. Rights and Remedies Vested in Trustee. All rights of action
(including the right to file proof of claims) under this Indenture or under any
of the Bonds may be enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any trial or other proceeding relating
thereto and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any holders of the Bonds, and any recovery of judgment shall (except
for any amounts payable to the Trustee pursuant to Section 1202) be applied
first for the ratable benefit of the holders of the outstanding Bonds and when
all such Bonds have been paid or provision for their payment has been made in
accordance with the Indenture then for the benefit of the Bank or the Company
pursuant to Section 707.
Section 1107. Rights and Remedies of Bondholders. No holder of any Bond
shall have any right to institute any suit, action or proceeding for the
enforcement of this
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Indenture or for the execution of any trust hereof or any other remedy
hereunder, unless an Event of Default has occurred of which the Trustee has been
notified as provided in subsection (e) (iv) of Section 1201, or of which by said
subsection it is deemed to have notice, and the holders of a majority in
aggregate principal amount of Bonds then outstanding, I or the Bank, in
accordance with the provisions of Section 1104 shall have made written request
to the Trustee and shall have offered reasonable opportunity either to proceed
to exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name, nor unless also they have offered to the Trustee
indemnity as provided in Section 1201 nor unless the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its, his, her or their own name or names; and such
notification, request and offer of indemnity are hereby declared in every case
at the option of the Trustee to be conditions precedent to any action or cause
of action for the enforcement of this Indenture or for any other remedy
hereunder; it being further understood and intended that no one or more holders
of the Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by its, his, her or their action or to
enforce any right hereunder except in the manner herein provided and that
proceedings shall be instituted, had and maintained in the manner herein
provided and for the ratable benefit of the holders and owners of all Bonds then
outstanding. Nothing in this Indenture contained shall, how ever, affect or
impair the right of any bondholder to enforce the payment of the principal of,
and interest on, any Bond at and after the maturity thereof, or the obligation
of the Issuer to pay the principal of, and redemption premium (if any) and
interest on, each of the Bonds issued hereunder to the respective holders
thereof at the time, place, from the source and in the manner provided in the
Bonds.
No holder of any Bond shall have the right to institute any suit, action
or proceeding in equity or at law to enforce a drawing under the Letter of
Credit to make any payment on the Bonds.
Section 1108. Termination of Proceedings. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer and the Trustee shall be restored to their former
positions and rights hereunder with respect to the Trust Estate, and (subject to
such determination) all rights, remedies and powers of the
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Trustee shall continue as if no such proceedings had been taken.
Section 1109. Waivers of Events of Default. The Trustee may in its
discretion waive any Event of Default hereunder and its consequences and rescind
any declaration of maturity of principal, and shall do so upon the written
request of (a) the holders of (i) a majority in aggregate principal amount of
all the Bonds then outstanding in respect of which an Event of Default in the
payment of principal or interest exists, or (ii) a majority in aggregate
principal amount of all Bonds then outstanding in case of any other default or
Event of Default, and (b) prior to the Expiration Date of the Letter of Credit,
the Bank; provided, however, that there shall not be waived any Event of Default
after the Trustee has drawn on the Letter of Credit to provide funds for the
payment of the principal of, and the interest on, the Bonds called for
redemption pursuant to Section 1102; and there shall not be waived (A) an Event
of Default in respect of any failure in the payment of the principal of any
outstanding Bonds when due, whether at the date of maturity specified therein,
by acceleration or by call for redemption, or (B) an Event of Default in respect
of any failure in the payment when due of the interest on any such Bonds unless
prior to such waiver or rescission, all arrears of payments of principal,
redemption premium and interest (with interest to the extent permitted by law at
the rate borne by the Bonds in respect of which such failure shall have occurred
on overdue installments of interest), as the case may be, and all expenses of
the Trustee, in connection with such Event of Default, shall have been paid or
provided for. In case of any such waiver or rescission or in case any proceeding
taken by the Trustee on account of any such Event of Default shall have been
discontinued or abandoned or determined adversely, then and in every such case
the Issuer, the Trustee, the Bank and the bondholders shall be restored to their
former positions and rights hereunder, respectively, but no such waiver or
rescission shall extend to any subsequent or other Event of Default, or impair
any right consequent thereon.
ARTICLE XII.
THE TRUSTEE; PAYING AGENT; DEPOSITORY
AND BOND REGISTRAR
Section 1201. Acceptance of the Trusts. The Trustee hereby accepts the
trusts imposed upon it hereby, and agrees to perform said trusts, but only upon
and subject to the following express terms and conditions:
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(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture, and no implied agreements or obligations shall be read into this
Indenture against the Trustee. In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform
any of its duties by or through attorneys, agents, receivers or employees but
shall be answerable for the conduct of the same in accordance with the standard
specified in subsection (a) above, except that as to attorneys, agents or
receivers the Trustee shall only be answerable for the selection of same in
accordance with said standard, and shall be entitled to advice of counsel
concerning all matters of trusts hereof and the duties hereunder, and may in all
cases pay such reasonable compensation to all such attorneys, agents, receivers
and employees as may reasonably be employed in connection with the trusts
hereof. The Trustee may act upon the opinion or advice of counsel (who may be
the counsel for the Issuer or the Company), approved by the Trustee in the
exercise of reasonable care. The Trustee shall not be responsible for any loss
or damage resulting from any action or non-action in good faith in reliance upon
such opinion or advice.
(c) Except as is specifically provided in Section 1213 with respect to the
filing of continuation statements, the Trustee shall not be responsible for any
recital herein, or in the Bonds (except in respect to the authentication
certificate of the Trustee endorsed on the Bonds), or for insuring the Trust
Estate or any part of the Facilities or collecting any insurance moneys, or for
the validity of the execution hereof by the Issuer or of any supplements hereto
or instruments of further assurance or for the sufficiency of the security for
the Bonds; and the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any agreements or conditions on the part of the
Issuer or on the part of the Company under the Agreement, except as hereinafter
set forth; but the Trustee may require of the Issuer or the Company full
information and advice as to the performance of the agreements and conditions
aforesaid and as to the condition of the Trust Estate The Trustee shall not be
responsible or liable for any loss suffered in connection with any investment of
funds made by it in accordance with the provisions of Article VIII.
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(d) Except to the extent herein specifically provided in Sections 601, 602
and 804, the Trustee shall not be accountable for the use of the proceeds of any
of the Bonds. The Trustee, the Paying Agent, the Bond Registrar or the
Remarketing Agent, in its individual capacity, may in good faith buy, sell, own,
hold or deal in any of the Bonds issued hereunder, and may join in any action
which any bondholder may be entitled to take with like effect as if it did not
act in any capacity hereunder. The Trustee, the Paying Agent, the Bond Registrar
or the Remarketing Agent in. its individual capacity, either as principal or
agent, may also engage in or be interested in any financial or other transaction
with the Issuer or the Company, and may act as depository, trustee or agent for
any committee or body of bondholders secured thereby or other obligations of the
Issuer as freely as if it did not act in any capacity hereunder.
(e) Except as is otherwise provided in subsection (a) above:
(i) The Trustee shall be protected in acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram or other
paper or document believed to the genuine and correct and to have been
signed or sent by the proper person or persons. Any action taken by the
Trustee, pursuant hereto upon the request, authority or consent of any
person who at the time of making such request or giving such authority or
consent is the holder of any Bond, shall be conclusive and binding upon
all future holders of the same Bond and upon Bonds issued in exchange
therefor or in place thereof.
(ii) As to the existence or non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the
Trustee shall be entitled to rely upon a certificate signed on behalf of
the Issuer by its Chairman or Vice Chairman and attested by its Secretary
or Assistant Secretary under its seal as sufficient evidence of the facts
therein contained and prior to the occurrence of a default or an Event of
Default of which the Trustee has been notified as provided in subsection
(e)(iv) of this Section, or of which by said subsection it is deemed to
have notice, shall also be at liberty to accept a similar certificate to
the effect that any particular dealing, transaction or action is necessary
or expedient, but may at its discretion secure such further evidence
deemed necessary or advisable, but shall in no case be bound to secure the
same, The Trustee may accept a certificate of the Secretary or Assistant
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Secretary of the Issuer under its seal to the effect that a resolution in
the form therein set forth has been adopted by the Issuer as conclusive
evidence that such resolution has been adopted and is in full force and
effect.
(iii) The right of the Trustee to do things enumerated herein shall
not be construed as a duty and the Trustee shall not be answerable for
other than its gross negligence or willful misconduct.
(iv) The Trustee shall not be required to take notice or be deemed
to have notice of any default or Event of Default hereunder, except Events
of Default defined in subsection (a) of Section 6.1 of the Agreement or
subsections (a) or (b) of Section 1101 of this Indenture, unless the
Trustee shall be specifically notified in writing of such default or Event
of Default by the Bank, the Issuer or by the holders of at least
twenty-five per centum (25%) in principal amount of the Bonds. All notices
or other instruments required to be delivered to the Trustee must, in
order to be effective, be delivered at the Principal Office of the
Trustee, and in the absence of such notice so delivered the Trustee may
conclusively assume there is no default or Event of Default except as
aforesaid. In the event that any payment required to be made under the
Agreement is not paid when due, the Trustee shall immediately notify the
Company by telephonic notice that such payment has not been made and shall
immediately confirm such notice to the Company.
(f) At reasonable times and as often as reasonably requested in connection
with its rights under this Indenture, the Trustee and its duly authorized agents
who are acceptable to the Company shall have the right to inspect all books,
papers and records of the Issuer and the Company pertaining to the Bonds and to
make copies of such memoranda from and in regard thereto as may be desired.
(g) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in respect
of the premises.
(h) Notwithstanding anything elsewhere herein contained, the Trustee shall
have the right, but shall not be required, to demand, in respect of the
authentication of any Bonds, the withdrawal of any cash or any action whatsoever
within the purview hereof, any showings, certificates, opinions, appraisals or
other information, or corporate action or evidence thereof, in addition to that
required by the terms hereof as a condition of such action by the
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Trustee which the Trustee deems desirable for the purpose of establishing the
right of the Issuer to the authentication of any Bonds, the withdrawal of any
cash, or the taking of any other action by the Trustee.
(i) Before taking such action at the direction of the bondholder
hereunder, the Trustee may require that a satisfactory indemnity bond be
furnished for the reimbursement of all expenses to which it may be put and to
protect it against all liability, except liability which is adjudicated to have
resulted from the gross negligence or willful misconduct of the Trustee by
reason of any action so taken.
(j) All moneys received by the Trustee, the Paying Agent or the
Remarketing Agent for the Bonds shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received
but need not be segregated from other funds except to the extent required herein
or by law. Neither the Trustee, the Paying Agent nor the Remarketing Agent shall
be under any liability for interest on any moneys received hereunder except such
as may be agreed upon in writing signed by such parties.
(k) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers hereunder.
(1) The Trustee agrees, for the benefit of the bondholders, to do and
perform all acts and things contemplated in the Agreement to be done or
performed by it.
Section 1202. Fees, Charges and Expenses of Trustee. The Trustee shall be
entitled to payment or reimbursement for reasonable fees for its Ordinary
Services rendered hereunder and all advances, counsel fees and other Ordinary
Expenses reasonably and necessarily made or incurred by the Trustee in
connection with such services and, if it should become necessary that the
Trustee perform Extraordinary Services, it shall be entitled to reasonable extra
compensation therefor, and to reimbursement for reasonable and necessary
Extraordinary Expenses in connection therewith; provided, that if such
Extraordinary Services or Extraordinary Expenses are occasioned by its gross
negligence or willful misconduct, it shall not be entitled to compensation or
reimbursement therefor. The Trustee shall be entitled to payment and
reimbursement for the reasonable fees and charges of the Trustee as Paying Agent
and Bond Registrar for the Bonds as hereinabove provided. Upon the occurrence of
an Event of Default, but only upon such occurrence, the Trustee shall have a
first lien on the Trust Estate with
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right of payment prior to payment of, the principal of, and the interest on, any
Bond for the foregoing advances, fees, costs and expenses incurred.
Notwithstanding any provision hereof to the contrary, the Trustee shall have no
lien upon or right to receive payment of its fees and expenses from amounts
drawn under the Letter of Credit.
Section 1203. Notice to Bondholders If Event of Default Occurs. If an
Event of Default occurs of which the Trustee is by subsection (e) (iv) of
Section 1201 required to take notice or if notice of an Event of Default be
given as in said subsection (e)(iv) provided, then the Trustee shall give
written notice thereof by first class mail to the holders of all Bonds then
outstanding.
Section 1204. Intervention by Trustee. In any judicial proceeding to which
the Issuer is a party which, in the opinion of the Trustee and its counsel, has
a substantial bearing on the interest of the bondholders, the Trustee may
intervene on behalf of the bondholders and shall do so if requested in writing
by the holders of at least twenty-five percentum (25%) in principal amount of
the Bonds. The rights and obligations of the Trustee under this Section are
subject to the approval of a court of competent jurisdiction if such approval is
required by law as a condition to such intervention.
Section 1205. Successor Trustee. Any corporation or association into which
the Trustee may be converted or merged, or with which it may be consolidated, or
to which it may sell or transfer its trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, merger, consolidation, sale or transfer to which it is a party,
ipso facto, shall be and become successor Trustee hereunder and be vested with
all of the title to the Trust Estate and all the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the
execution A filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding,
Section 1206. Resignation by the Trustee; judicial Appointment of
Successor Trustee. The Trustee and any successor Trustee may at any time resign
from the trusts hereby created by giving sixty (60) days written notice to the
Issuer and the Company and by first class mail to each bondholder, and such
resignation shall take effect at the end of such sixty (60) day period, or upon
the earlier appointment of a successor Trustee by the bondholders or by the
Issuer as provided in Section 1208; provided, however, such resignation shall
not take effect until a successor
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shall have been appointed and assumed the duties of Trustee hereunder. Such
notice to the Issuer may be served personally or sent by registered or certified
mail.
In case at any time the Trustee shall resign and no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of this
Article XII prior to the date specified in the notice of resignation as the date
when such resignation is to take effect, the resigning Trustee may forthwith
apply to a court of competent jurisdiction for the appointment of a successor
Trustee. If no appointment of a successor Trustee shall be made pursuant to the
foregoing provisions of this Article XII within six (6) months after a vacancy
shall have occurred in the office of Trustee, any bondholder may apply to any
court of competent jurisdiction to appoint a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
Section 1207. Removal of the Trustee. The Trustee may be removed at any
time, by an instrument or concurrent instruments in writing delivered to the
Trustee and to the Issuer, the Company, the Remarketing Agent and the Bank and
signed by the holders of a majority in principal amount of the Bonds
outstanding.
Section 1208. Appointment of Successor Trustee by the Bondholders;
Temporary Trustee. If the Trustee shall resign, be removed, be dissolved, be in
course of dissolution or liquidation, or shall otherwise become incapable of
acting hereunder or in case it shall be taken under the control of any public
officer, officers or a receiver appointed by a court, a successor may be
appointed by the holders of a majority in principal amount of the Bonds, by an
instrument or concurrent instruments in writing signed by such holders, or by
their attorneys-in-fact, duly authorized; provided, nevertheless, that in case
of such vacancy the Issuer, by an instrument signed by the Chairman or Vice
Chairman of the Issuer and attested by the Secretary or Assistant Secretary of
the Issuer under its seal, may appoint a temporary Trustee to fill such vacancy
until a successor Trustee shall be appointed by the bondholders in the manner
above provided; and any such temporary Trustee shall immediately and without
further act be superseded by the Trustee so appointed by such bondholders;
provided further, however, that unless an Event of Default has occurred and is
continuing hereunder, no such appointment by the bondholders or the Issuer shall
be effective without the consent of the Company and the Bank which shall not be
unreasonably withheld. In the case of any appointment of a successor Trustee
hereunder, the Trustee then acting shall not resign, be removed, or otherwise
cease to act hereunder, until such
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successor Trustee has assumed its duties hereunder. Every such Trustee appointed
pursuant to the provisions of this Section shall be a trust company or bank
(having trust powers) in good standing, shall be located within or outside the
State and shall have an unimpaired capital and surplus of not less than
TWENTY-FIVE MILLION DOLLARS ($25,000,000), if there be such an institution
willing, qualified and able to accept the trusts Upon reasonable or customary
terms.
Section 1209. Concerning Any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Issuer an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, trusts, duties and obligations of its predecessor; but such predecessor
shall, nevertheless, on the written request of the Issuer, or of its successor,
execute and deliver an instrument transferring to such successor Trustee all the
estates, properties, rights, powers and trusts of such predecessor hereunder;
and every predecessor Trustee shall deliver all securities and moneys held by it
as Trustee hereunder to its successor. Should any instrument in writing from the
Issuer be required by any successor Trustee in order to more fully and certainly
vest in such successor the estates, properties, rights, powers and trusts hereby
vested or intended to be vested in the predecessor any and all such instruments
in writing shall, on request, be executed, acknowledged and delivered by the
Issuer. The resignation of any Trustee and the instrument or instruments
removing any Trustee and appointing a successor hereunder, together with all
other instruments provided for in this Article, shall be filed or recorded by
the successor Trustee in each recording office where the Financing Statements
shall have been filed or recorded.
Section 1210. Trustee Protected in Relying Upon Resolutions, etc. The
resolutions, opinions, certificates and other instruments provided for herein
may be accepted by the Trustee as conclusive evidence of the facts and
conclusions stated therein and shall be full warrant, protection and authority
to the Trustee for the withdrawal of moneys and for any other action taken
hereunder.
Section 1211. Successor Trustee as Custodian of Funds, Paying Agent and
Bond Registrar. Upon a change in the office of Trustee the predecessor Trustee
which has resigned or has been removed shall cease to be the holder of the Bond
Fund and the Paying Agent for the principal of, the redemption premium (if any)
and the interest on, the Bonds and Bond
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Registrar, and the successor Trustee shall become such holder, Paying Agent and
Bond Registrar.
Section 1212. Trust Estate May Be Vested in Co-Trustee. It is the purpose
hereof that there shall be no violation of any law of any jurisdiction
(including particularly the laws of the State) denying or restricting the right
of ban king corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation hereunder and in
particular in case of the enforcement of this Indenture upon the occurrence of
an Event of Default, it may be necessary that the Trustee and the Issuer enter
into a supplemental indenture to appoint an additional individual or institution
as at separate Trustee or Co-Trustee as permitted in Section 1301 (e) . The
following provisions of this Section are adapted to these ends.
Upon the incapacity or lack of authority of the Trustee, by reason of any
present or future law of any jurisdiction, to exercise any of the rights, powers
and trusts herein granted to the Trustee or to hold the Trust Estate or to take
any other action which may be necessary or desirable in connection therewith,
each and every remedy, power, right, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable
by and vest in a separate Trustee or Co-Trustee appointed by the Trustee but
only to the extent necessary to enable the separate Trustee or Co-Trustee to
exercise such rights, powers and trusts, and every agreement and obligation
necessary to the exercise thereof by such separate Trustee or Co-Trustee shall
run to and be enforceable by either of them.
Should any deed, conveyance or instrument in writing from the Issuer be
required by the separate Trustee or Co-Trustee. so appointed by the Trustee in
order to more fully and certainly vest in and confirm to him or it such
properties, rights, powers, trusts, duties and obligations, any and all such
deeds, conveyances and instruments shall, on request, be executed, acknowledged
and delivered by the Issuer. In case any separate Trustee or Co-Trustee, or a
successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights powers, trusts, duties and
obligations of such separate Trustee or Co-Trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.
Section 1213. Filing of Certain Continuation Statements. Annually, the
Company shall deliver to the Trustee an
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opinion of counsel stating whether the filing of any continuation statements are
necessary hereunder and if any such filing is necessary, specifically
identifying the nature of such filing and the proper place for such filing. From
time to time, the Trustee shall file or cause to be filed continuation
statements for the purpose of continuing without lapse the effectiveness of (i)
those Financing Statements which shall have been filed at or prior to the
issuance of the Bonds in connection with the security for the Bonds pursuant to
the authority of the U.C.C., and (ii) any previously filed continuation
statements which shall have been filed as herein required. The Issuer shall sign
and deliver to the Trustee or its designee such continuation statements as may
be requested of it from time to time by the Trustee. Upon the filing of any such
continuation statement the Trustee shall immediately notify the Issuer that the
same has been accomplished.
Section 1214. Adoption of Authentication. In case any of the Bonds
contemplated to be issued hereunder shall have been authenticated but not
delivered, any successor Trustee may adopt the certificate of authentication of
the original Trustee or of any successor of it as Trustee hereunder and deliver
the said Bonds so authenticated as hereinbefore provided; and in case any of
such Bonds shall not have been authenticated, any successor Trustee may
authenticate such Bonds in its own name. In all such cases such certificate of
authentication shall have the same force and effect as provided in the Bonds or
in this Indenture with respect to the certificate of authentication of the
Trustee.
Section 1215. Succession of Paying Agents. Any bank or trust company with
or into which any Paying Agent may be merged or consolidated, or to which the
assets and business of such Paying Agent may be sold, shall be deemed the
successor of such Paying Agent for the purposes of this Indenture. If the
position of Paying Agent shall become vacant for any reason. The Issuer shall,
within thirty (30) days thereafter, appoint a bank or trust company selected by
the Company (and, prior to the Expiration Date of the Letter of Credit, approved
by the Bank) and located in the same city as such Paying Agent to fill such
vacancy; provided, however, that if the Issuer shall fail to select such
successor within said period, the Trustee shall make such appointment.
The Paying Agents shall enjoy the same protective provisions in the
performance of their duties hereunder as are specified in Section 1201 with
respect to the Trustee, in so far as such provisions may be applicable.
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Section 1216. Right of Trustee to Pay Taxes and Other Charges. In case any
tax, assessment or governmental or other charge upon any part of the Facilities,
is not paid as required therein, the Trustee may, but shall not be obligated to,
pay such tax, assessment or governmental charge without prejudice, however, to
any rights of the Trustee or the holders of the Bonds hereunder arising in
consequence of such failure; and any amount at any time so paid under this
Section, with interest thereon from the date of payment at the Interest Rate for
Advances, shall become so much additional indebtedness secured by this
Indenture, and the same shall be given preference in payment over any of the
Bonds, and shall be paid out of the Revenues, if not otherwise caused to be
paid; provided, however, that such amounts shall not be paid with proceeds from
a draw on the Letter of Credit.
Section 1217. Several Capacities. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Paying Agent or a co-Paying Agent, the Bond Registrar or a co-Bond
Registrar, the Remarketing Agent and in any other combination of such
capacities, to the extent permitted by law.
Section 1218. Appointment of Depository. First City Bank of Dallas,
Dallas, Texas, to act as Depository as provided in this Indenture. Depository
shall accept and agree to such appointment by its execution of the certificate
set forth on the signature page of this Indenture. No implied covenants or
obligations shall be read into this Indenture against Depository, to all of
which Issuer agrees and the respective Owners of the Bonds agree by their
acceptance of delivery of any of the Bonds.
Section 1219. Termination of the Depository. All rights and duties of the
Depository under this Indenture and the Agreement shall cease and be of no
further force and effect upon the delivery by Company of the completion
certificate to the Depository pursuant to Section 3.5 of the Agreement and the
subsequent transfer to Trustee of any balance remaining in the Construction Fund
pursuant to Section 6.04 of this Indenture.
ARTICLE XIII.
SUPPLEMENTAL INDENTURES
Section 1301. Supplemental Indentures Not Requiring Consent of
Bondholders. Except as hereinafter set forth, the Issuer and the Trustee may
without the consent of, or notice
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to, any of the bondholders, enter into an indenture or indentures supplemental
to this Indenture for any one or more of the following purposes, provided that
in the opinion of Independent Counsel the change effected thereby is not to the
prejudice of the interests of the Trustee or the bondholders:
(a) to cure any ambiguity or formal defect or omission in this Indenture;
(b) to grant to or confer upon the Trustee for the benefit of the
bondholders any additional rights, remedies, power or authorities that may
lawfully be granted to or conferred upon the bondholders or the Trustee or
either of them;
(c) to subject to the pledge of this Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to permit the qualification hereof and
thereof under the Trust Indenture Act of 1939, as amended, or any, similar
Federal statute hereafter in effect or to permit the qualification of the Bonds
for sale under the securities laws of any of the states of the United States of
America, and, if they so determine, to add hereto or to any indenture
supplemental hereto such other terms, conditions and provisions as may be
permitted by said Trust Indenture Act of 1939 or similar Federal statute;
(e) to evidence the appointment of a separate Trustee or Co-Trustee or the
succession of a new Trustee or Paying Agent hereunder;
(f) to add to, delete or modify any provision required by Moody's or S&P
in order to assign a rating to the Bonds by either such agency; or
(g) to change the method for determining the Interest Index or the
Alternate Interest Index or to eliminate such indices or to implement the Fixed
Interest Rate; provided, however, no such supplemental indenture shall be
entered into in connection with this clause (g) unless the Trustee shall have
received an opinion of Independent Tax Counsel to the effect that the execution
of such supplemental indenture will not adversely affect the exemption of the
interest on the Bonds from Federal income taxation.
Section 1302. Supplemental Indentures Requiring Consent of Bondholders.
Exclusive of supplemental indentures covered by Section 1301 and subject to the
terms and provisions
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contained in this Section, and not otherwise, the owners of not less than a
majority in principal amount of the Bonds shall have the right, from time to
time, anything contained in this Indenture to the contrary notwithstanding, to
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consent to and approve of the execution by the Issuer and the Trustee of such
other indenture or indentures supplemental hereto for the purpose of modifying,
altering, amending, adding to or rescinding, in any particular, any of the terms
or provisions contained in this Indenture or in any supplemental Indenture;
provided, however, that nothing in this Section contained shall permit, or be
construed as permitting without the approval of the holders of all the Bonds
outstanding (a) an extension of the maturity date on which the principal of or
the interest on any Bond is, or is to become, due and payable, (b) a reduction
in the principal amount of any Bond, the rate of interest thereon or any
redemption premium, (c) a preference or priority of any Bond or Bonds over any
other Bond or Bonds, or (d) a reduction in the principal amount of the Bonds
required for consent to such supplemental indenture.
If the Issuer shall request the Trustee to enter into any such
supplemental indenture for any of the purposes of this Section, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
written notice of the proposed execution of such supplemental indenture together
with a copy of such proposed supplemental indenture to be given by first class
mail, postage prepaid, to the holders of the Bonds at their addresses shown on
the Trustee's books of registration. If, within sixty (60) days or such longer
period as shall be prescribed by the Issuer following the mailing of such
notice, the holders of not less than a majority in principal amount of the Bonds
shall have consented to and approved the execution of such supplemental
indenture as herein provided, no holder of any Bond shall have any right to
object to any of the terms and provisions contained therein, or the operation
thereof, or in any manner to question the propriety of the execution thereof, or
to enjoin or restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof. Upon the execution of any
such supplemental indenture as in this Section permitted and provided, this
Indenture shall be modified and amended in accordance therewith.
Anything herein to the contrary notwithstanding, a supplemental indenture
under this Article XIII which affects any right of the Company under the
Agreement shall not become effective unless and until the Company shall have
consented to the execution and delivery of such supplemental indenture. In this
regard, the Trustee shall cause notice of the proposed execution and delivery of
any such supplemental indenture together with a copy of the proposed
supplemental indenture to be mailed by certified or registered mail to the
Company at least fifteen (15) days prior to the proposed date of execution and
delivery of any such supplemental
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indenture. The Company shall be deemed to have consented to the execution and
delivery of any such supplemental indenture if the Trustee does not receive
written notice of protest or objection thereto signed by or on behalf of the
Company on or before 4:30 p.m., prevailing Eastern time, of the fifteenth (15th)
day after the mailing of said notice and a copy of the proposed supplemental
indenture.
This Indenture may not be amended, changed or modified except by the
execution and delivery of a supplemental indenture entered into in accordance
with the provisions of this Article XIII.
Section 1303. Trustee Authorized to join in Supplements; Reliance on
Counsel. The Trustee is authorized to join with the Issuer in the execution and
delivery of any supplemental indenture permitted by this Article XIII and, in so
doing, shall be fully protected by an opinion of counsel that such supplemental
indenture is so permitted and has been duly authorized by the Issuer and that
all things necessary to make it a valid and binding supplemental indenture have
been done.
Section 1304. Approval of Bank. Anything contained in this Article XIII to
the contrary notwithstanding, so long as the Letter of Credit shall be in effect
there shall be entered into no indenture supplemental to this Indenture without
the prior written consent of the Bank.
ARTICLE XIV.
AMENDMENT OF AGREEMENT
AND LETTER OF CREDIT
Section 1401. Amendments, etc., to Agreement and Letter of Credit Not
Requiring Consent of Bondholders. If required, the Trustee shall without the
consent of, or notice to, the bondholders consent to any amendment, change or
modification of the Agreement or the Letter of Credit as may be required
(a) by the provisions of the Agreement, the Letter of Credit or this
Indenture,
(b) for the purposes of curing any ambiguity or formal defect or
omission in the Agreement or the Letter of Credit,
(c) in connection with any other change therein which, in the
judgment of the Trustee, is not to the prejudice of the Trustee or the
bondholders, or
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(d) to add to, delete or modify any provision required by Moody's or
S&P in order to assign a rating to the Bonds by either such rating agency.
Section 1402. Amendments, etc, to Agreement and Letter of Credit Requiring
Consent of Bondholders. Except for the amendments, changes or modifications as
provided in Section 1401, neither the Issuer nor the Trustee shall consent to
any other amendment, change or modification of the Agreement or the Letter of
Credit without the giving of notice and the written approval or consent of the
holders of not less than a majority in principal amount of the Bonds given and
procured as in Section 1302; provided, however, that nothing contained in this
Article shall permit, or be construed as permitting, any amendment, change co
modification of the Company's unconditional obligation to make payments under
the Agreement and the Company's covenants with respect to the use and investment
of the proceeds of the Bonds (except as specifically provided for therein). If
at any, time the Issuer and the Company shall request the consent of the Trustee
to any such proposed amendment, change or modification of the Agreement or the
Letter of Credit, the Trustee shall, upon being satisfactorily indemnified with
respect to expenses, cause notice of such proposed amendment, change or
modification to be given in the same manner as provided by Section 1302 with
respect to proposed supplemental indentures. Such notice shall briefly set forth
the nature of such proposed amendment, change or modification and shall state
that copies of the instrument embodying the same are on file at the Principal
Office of the Trustee for inspection by bondholders.
Section 1403. Trustee Authorized to join in Amendments; Reliance on
Counsel. The Trustee is authorized to join with the Issuer in the execution and
delivery of any amendment permitted by this Article XIV and, in so doing, shall
be fully protected by an opinion of counsel that such amendment is so permitted
and has been duly authorized by the Issuer and that all things necessary to make
it a valid and binding agreement have been done.
Section 1404. Approval of Bank. Anything contained in this Article XIV to
the contrary notwithstanding, so long as the Letter of Credit shall be in
effect, the Agreement may not be amended, changed or modified without the prior
written consent of the Bank,
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ARTICLE XV.
MEETINGS OF BONDHOLDERS
Section 1501. Purposes for Which Bondholders' Meetings May Be Called. A
meeting of bondholders may be called at any time and from time to time for any
of the following purposes:
(a) to give any notice to the Issuer, the Company, the Bank or the
Trustee, or to give any directions to the Trustee, or to consent to the
waiving of any default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by bondholders pursuant
to Section 1107;
(b) to remove the Trustee pursuant to Section 1207, and to appoint a
successor trustee pursuant to Section 1208;
(c) to consent to the execution of a supplemental indenture pursuant
to Section 1302, or to consent to the execution of an amendment, change or
modification of the Agreement pursuant to Section 1402; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified principal amount of the Bonds under any
other provision hereof or under applicable law.
Section 1502. Place of Meetings of Bondholders. Meetings of bondholders
may be held at such place or places as the Trustee or, in case of its failure to
act, the bondholders calling the meeting shall from time to time determine.
Section 1503. Call and Notice of Bondholders' Meetings.
(a) The Trustee may at any time call a meeting of bondholders to be held
at such time and at such place as the Trustee shall determine. Notice of every
meeting of bondholders, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be by
first class mail postage prepaid, to the bondholders at the address shown on the
registration books.
(b) In case at any time the holders of at least ten percentum (10%) in
aggregate principal amount of the Bonds outstanding shall have requested the
Trustee to call a meeting of the bondholders by written request setting forth in
reasonable detail the action proposed to be taken at the
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meeting, and the Trustee shall not have given the notice of such meeting within
twenty (20) days after receipt of such request, then such bondholders may
determine the time and the place for such meeting and may call such meeting to
take any action authorized in Section 1501 by giving notice thereof as provided
in subsection (a) of this Section.
Section 1504. Persons Entitled to Vote at Bondholders' Meetings. To be
entitled to vote at any meeting of bondholders, a person shall be a holder of
one or more Bonds outstanding, or a person appointed by an instrument in writing
as proxy for a bondholder by such bondholder. The only persons who shall be
entitled to be present or to speak at any meeting of bondholders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel and any representatives of the Issuer and its counsel.
Section 1505. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions hereof the Trustee may make such
reasonable regulations as it may deem advisable for any meeting of bondholders
in regard to proof of the holding of Bonds and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it shall
deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Bonds shall be proved in the manner specified in
Section 1601 and the appointment of any proxy shall be proved in the manner
specified in Section 1601 or by having the signature of the person executing the
proxy witnessed or guaranteed by any bank, banker or trust company authorized by
Section 1601 to certify to the holding of Bonds. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 1601 or other
proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by
bondholders as provided in subsection (b) of Section 1503, in which case the
bondholders calling the meeting shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority of the Bonds represented at the
meeting and entitled to vote.
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(c) At any meeting each bondholder or proxy shall be entitled to one vote
for each $5,000 principal amount of Bonds outstanding held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Bond challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote, except as a bondholder or proxy.
(d) At any meeting of bondholders, the presence of persons holding or
representing Bonds in an aggregate principal amount sufficient under the
appropriate provision hereof to take action upon the business for the
transaction of which such meeting was called shall constitute a quorum. Any
meeting of bondholders called pursuant to Section 1503 may be adjourned from
time to time by vote of the holders (or proxies for the holders) of a majority
of the Bonds represented at the meeting and entitled to vote, whether or not a
quorum shall be present; and the meeting may be held as so adjourned without
further notice.
Section 1506. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of bondholders shall be by written
ballots on which shall be subscribed the signatures of the bondholders or of
their representatives by proxy and the number or numbers of the Bonds
outstanding held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in triplicate, of the proceedings
of each meeting of bondholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken there at and affidavits by one
or more persons having knowledge of the facts setting forth a copy of the notice
of the meeting and showing that said notice was published or mailed as provided
in Section 1503. Each copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Issuer, another to the Company and another to the Trustee to be
preserved by the Trustee, which copy shall have attached thereto the ballots
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
Section 1507. Revocation by Bondholders. At any time prior to (but not
after) the evidencing to the Trustee, in the manner provided in Section 1506, of
the taking of any action by the holders of the percentage in aggregate
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principal amount of the Bonds specified herein in connection with such action,
any holder of a Bond the number of which is included in the Bonds the holders of
which have consented to such action may, by filing written notice with the
Trustee at its Principal Office and upon proof of holding as provided in Section
1601, revoke such consent so far as concerns such Bond. Except as aforesaid any
such consent given by the holder of any Bond shall be conclusive and binding
upon such holder and upon all future holders of such Bond and of any Bond issued
in exchange therefor or in lieu thereof, irrespective of whether or not any
notation in regard thereto is made upon such Bond. Any action taken by the
holders of the percentage in principal amount of the Bonds specified herein in
connection with such action shall be conclusively binding upon the Issuer, the
Company, the Trustee, the Bank and the holders of all the Bonds.
ARTICLE XVI.
MISCELLANEOUS
Section 1601. Consents, etc., of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided to be given or taken by bondholders may be embodied in
and evidenced by one or more instrument of substantially similar tenor signed by
such bondholders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer and the Company. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose hereof and conclusive in favor of the Trustee, the
Company and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution by the certificate of any notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The ownership of Bonds shall be proved by the registration books kept
by the Trustee as Bond Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by any bondholder shall bind every future holder of the same
Bond in respect of anything done or suffered to be (done by the Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Bond.
Section 1602. Issuer's Obligations Limited. No recourse under or upon any
obligation or agreement contained in this Indenture or in any Bond or under any
judgment obtained against the Issuer, or by the enforcement of any assessment or
by any legal or equitable proceeding by virtue of any constitution or statute or
otherwise or under any circumstances, under or independent of this Indenture,
shall be had against the Issuer.
Anything in this Indenture to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that (a) the Issuer may
rely conclusively on the truth and accuracy of any certificate, opinion, notice
or other instrument furnished to the Issuer by the Trustee or the Company as to
the existence of any fact or state of affairs required hereunder to be noticed
by the Issuer; (b) the Issuer shall not be under any obligation hereunder to
perform any record-keeping or to provide any legal services, it being understood
that such services shall be performed either by the Trustee or the Company; and
(c) none of the provisions of this Indenture shall require the Issuer to expend
or risk its own funds or to otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers hereunder, unless it shall first have been adequately indemnified to its
satisfaction against the cost, expenses and liability which may he incurred
thereby.
Notwithstanding anything herein contained to the contrary, any obligation
which the Issuer may incur under this Indenture or under any instrument executed
in connection herewith which shall entail the expenditure of money shall not be
a general obligation of the Issuer but shall be a limited obligation payable
solely from the Revenues.
Section 1603. Immunity of Directors, Officers and Employees of Issuer. No
recourse shall be had for the enforcement of any obligation, promise or
agreement of the Issuer contained in the Agreement, this Indenture or in any
Bond issued hereunder for any claim based thereon or otherwise in respect
thereof, against any director officer or employee, as such, in his individual
capacity, past, present
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or future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assignment or penalty or otherwise; it being expressly agreed and understood
that the Bonds, the Agreement and this Indenture are solely corporate
obligations, and that no personal liability whatsoever shall attach to, or be
incurred by, any director, officer or employee as such, past, present or future,
of the Issuer or of any successor corporation, either directly or through the
Issuer or any successor corporation, under or by reason of any of the
obligations, promises or agreements entered into between the Issuer and the
Company whether contained in the Agreement or to be implied therefrom as being
supplemental hereto or thereto, and that all personal liability of that
character against every such director, officer and employee is, by the execution
of the Agreement and this Indenture, and as a condition of, and as part of the
consideration for, the execution of the Agreement and this Indenture, expressly
waived and released.
Section 1604. Limitation of Rights. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied herefrom
or from the Bonds is intended or shall be construed to give to any person other
than the parties hereto, the Company, the Bank and the holders of the Bonds, any
legal or equitable right, remedy or claim under or in respect hereto or any
agreements, conditions and provisions herein contained; this Indenture and all
of the agreements, conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto, the Company, the
Bank and the holders of the Bonds as herein provided.
Section 1605. Severability. If any provision hereof shall be held or
deemed to be or shall, in fact, be inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question invalid, inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever.
Section 1606. Notices. It shall be sufficient service of any notice,
approval, consent, request, complaint, demand or other communication if the same
shall be delivered or mailed by first class registered or certified mail, return
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receipt requested, postage prepaid, and addressed, as follows:
(a) If to the Issuer: Trinity River Industrial
Development Authority
5300 S. Collins
Arlington, Texas 76010
Attention: Secretary/Treasurer
(b) If to the Company: Radiation Sterilizers, Incorporated
Attention : President
3000 Sand Hill Road
Menlo Park, California 94025
(c) If to the Trustee: Bank One Trust Company, N.A.
Attention : Corporate Trust
Administration
100 East Broad Street
Columbus, Ohio 43271-0181
(d) If to the Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
Attention: George Huxtable,
Vice President
2055 Gateway Plaza, Suite 200
San Jose, California 95110
Upon the occurrence of any Event of Taxability or upon the occurrence of an
Event of Default hereunder, the Trustee shall further promptly provide notice to
the Commission at the following address:
Texas Economic Development Corporation
410 East Fifth Street
Austin, Texas 78711
A duplicate copy of each notice, approval, consent, request, complaint, demand
or other communication given hereunder by the Issuer, the Company, the Trustee
or the Bank to any one of the others shall also be given to all of the others,
The Issuer, the Company, the Trustee and the Bank may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, approvals, consents, requests, complaints, demands or other
communications shall be sent or persons to whose attention the same shall be
directed.
Section 1607. Trustee as Paying Agent and Bond Registrar. The Trustee is
hereby designated and agrees to act as
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Paying Agent and Bond Registrar for and in respect to the Bonds.
Section 1608. Payments Due on Days Other Than Business Days. After the
Conversion Date, in any case where the date of maturity of principal of and/or
interest on the Bonds or the date fixed for the redemption of any Bonds shall
not be a Business Day, then payment of principal, redemption premium (if any)
and/or interest need not be made on such date but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for the redemption, and if made on such next
succeeding Business Day no interest shall accrue for the period after such date.
Section 1609. Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
Section 1610. Priority Over Other Liens. It is intended that this
Indenture shall be superior to any other lien which may be placed upon the
Revenues, the Bond Fund, the Construction Fund or any other funds or accounts
created pursuant to this Indenture.
Section 1611. Binding Effect. This instrument shall inure to the benefit
of and shall be binding upon the Issuer and the Trustee and their respective
successors and assigns, subject, however, to the limitations contained in this
Indenture.
Section 1612. Captions. The captions or headings in this Indenture are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Indenture.
Section 1613. Notice to S&P. The Trustee hereby agrees to notify S&P in
writing, signed by an authorized officer of the Trustee, with respect to: (a)
any change in the office of Trustee under the Indenture; (b) any amendment of or
supplement to the Indenture or the Agreement; (c) redemption, in full, of the
Bonds; (d) conversion of the interest rate borne by the Bonds to a Fixed
Interest Rate; (e) the expiration of the Letter of Credit; or (f) any amendment
to the Letter of Credit.
Section 1614. References to Bank. After the Letter of Credit is no longer
in effect and all amounts owing to the Bank under the Letter of Credit Agreement
and related documents have been paid, any provision of this Indenture requiring
notification to be given to the Bank, or requiring
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that the Bank consent to any action, shall become ineffective.
Section 1615. Laws Governing Indenture. The effect and meaning hereof and
the rights of all parties hereunder shall be governed by, and construed
according to, the laws of the State of Texas except that the duties,
responsibilities, obligations and powers of the Trustee hereunder shall be
governed by and construed according to the laws of the State of Ohio, but it is
the intention of the Issuer that the situs of the trust created by this
Indenture be in the state in which is located the principal office of the
Trustee from time to time acting under this Indenture. The word "Trustee" as
used in the preceding sentence shall not be deemed to include any additional
individual or institution appointed as a separate or Co-Trustee pursuant to
Section 1211 of this Indenture. It is the further intention of the Issuer that
the Trustee administer said trust in the state in which is located, from time to
time, the situs of said trust.
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IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed in
its corporate name and its corporate seal to be affixed hereto and attested by
its authorized officers, and to evidence its acceptance of the trusts hereby
created the Trustee has caused these presents to be executed in its corporate
name and its corporate seal to be affixed hereto and attested by its authorized
officers, all as of the date first above written.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
(CORPORATE SEAL)
By: [SIG]
----------------------------
President
Attest:
/s/ RAMONA A. MANEI
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Secretary
BANK ONE TRUST COMPANY, N.A.
as Trustee
By: [SIG]
----------------------------
Title: Trust Administrator
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<PAGE> 112
ACKNOWLEDGMENT AND CONSENT OF COMPANY
The undersigned, on behalf of RADIATION STERILIZERS, INCORPORATED, a
California corporation, HEREBY ACKNOWLEDGES NOTICE OF, AND HEREBY CONSENTS TO
(a) the assignment provisions contained with the Granting Clauses of the
foregoing Trust indenture, and (b) all terms and conditions set forth in said
Trust Indenture, and intending to be legally bound, HEREBY AGREES with the
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY and BANK ONE TRUST COMPANY, N.A.,
as Trustee, to perform, accept or be bound by any applicable terms and
conditions set forth in said Trust Indenture,
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of November 1, 1985.
RADIATION STERILIZERS,
INCORPORATED
By: [SIG]
-----------------------------------
Assistant Secretary
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ACKNOWLEDGMENT BY DEPOSITORY
The undersigned, on behalf of First City Bank of Dallas, hereby accepts
the duties and obligations imposed upon it as Depository hereunder and agrees to
be bound by the terms and provisions of this Indenture.
First City Bank of Dallas,
as Depository
By: [SIG]
-----------------------------------
Assistant Secretary
ATTEST:
[SIG]
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<PAGE> 1
EXHIBIT 10.9
$4,600,000
TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY
VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS
(RADIATION STERILIZERS, INCORPORATED PROJECT)
SERIES 1985-A AND SERIES 1985-B
BOND PURCHASE AGREEMENT
November 13, 1985
On the basis of the representations, warranties and covenants contained in
this Bond Purchase Agreement and upon the terms and conditions contained in this
Bond Purchase Agreement, the undersigned, Prudential-Bache Securities, Inc. (the
"Underwriter"), hereby offers to purchase from Trinity River Industrial
Development Authority (the "Issuer") up to $4,600,000 aggregate principal amount
its Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985-A and Series 1985-B (the "Series
1985-A Bonds" and the "Series 1985-B Bonds," collectively, the "Bonds"), each
series to be issued under and pursuant to a trust indenture dated as of November
1, 1985 (the Series 1985-A Indenture and the Series 1985-B Indenture,
collectively, the "Indentures") between the Issuer and Bank One Trust Company,
N.A., as trustee (the "Trustee").
SECTION 1. ISSUER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
By the Issuer's execution, delivery and acceptance hereof the Issuer
hereby represents and warrants to, and agrees with, the Underwriter that:
(a) The Issuer is an industrial development corporation and constituted
authority and instrumentality (within the meaning of those terms in the
Regulations and the rulings of the Internal Revenue Service prescribed and
promulgated pursuant to Section 103 of the Internal Revenue Code of 1954,
as amended). By virtue of the authority of the Constitution and laws of
the State of Texas (the "State"), and particularly the Development
Corporation Act of 1979, Article 5190.6, Vernon's Texas Civil Statutes, as
amended (the "Act"), the Issuer is authorized to issue the Bonds to
finance the Facilities, as defined in the loan agreements dated as of
November 1, 1985 (the Series 1985-A Agreement and the Series 1985-B
Agreement, collectively, the "Agreements") between the Issuer and
Radiation
<PAGE> 2
Sterilizers, Incorporated, a California corporation (the "Company"), and
to pledge the payments to be received pursuant to the Agreements as
security for the payment of the principal of and premium, if any, and
interest on the Bonds.
(b) The Issuer has complied with all provisions of the Constitution and
laws of the State, including the Act, and has full power and authority to
consummate all transactions contemplated by this Bond Purchase Agreement,
the Indentures and the Agreements.
(c) The information describing the Issuer in the Offering Statement of
even date herewith (the "Offering Statement") to be used in connection
with the offering and sale of the Bonds by the Underwriter under the
caption "THE ISSUER" as of the Closing Date, as hereinafter defined, is
true and does not contain any untrue statement of a material fact.
(d) The Issuer has duly authorized all necessary action for: (1) the
issuance and sale of the Bonds upon the terms set forth herein; (2) the
execution and delivery of the Indentures providing for the issuance of and
security for the Bonds (including the pledge by the Issuer of the payments
to be received pursuant to the Agreements sufficient to pay the principal
of and premium, if any, and interest on the Bonds); (3) appointing the
Trustee as Trustee, Paying Agent and Bond Registrar under the Indentures;
(4) the financing of the Facilities; (5) the execution, delivery, receipt
and due performance of this Bond Purchase Agreement, the Bonds, the
Indentures, the Agreements and any and all such other agreements and
documents as may be required to be executed, delivered and received by the
Issuer in order to carry out, give effect to and consummate the
transactions contemplated hereby or by the Indentures or the Agreements;
and (6) the carrying out, giving effect to and consummation of the
transactions contemplated hereby or by the Indentures or the Agreements.
(e) There is no action, suit, proceeding, inquiry or investigation at law
or in equity or before or by any court, public board or body pending or,
to the knowledge of the Issuer, threatened against or affecting the
Issuer, or any basis therefor, wherein an unfavorable decision, ruling or
finding would materially adversely affect the transactions contemplated
hereby or by the Indentures or the Agreements or the validity of the
Bonds, the Indentures, the Agreements, this Bond
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Purchase Agreement or any agreement or instrument to which the Issuer is a
party and which is used or contemplated for use in the consummation of the
transactions contemplated hereby or by the Indentures or the Agreements.
(f) The Issuer's execution and delivery of this Bond Purchase Agreement,
the Bonds, the Indentures, the Agreements and the other agreements
contemplated hereby or by the Indentures or the Agreements will not
contravene any law governing the Issuer and will not conflict with any
provisions of the Act.
(g) The Issuer has not been notified of any listing or proposed listing by
the Internal Revenue Service to the effect that the Issuer is a bond
issuer whose arbitrage certifications may not be relied upon.
SECTION 2. COMPANY'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
To induce the Issuer and the Underwriter to enter into this Bond Purchase
Agreement, and in consideration of the foregoing and the execution and delivery
of this Bond Purchase Agreement, the Company represents, warrants and covenants
to and with the Issuer and the Underwriter as follows:
(a) The financial statements provided to the Underwriter in connection
with the offer and sale of the Bonds by the Underwriter present fairly its
financial position as of the dates indicated therein and the results of
operation for the periods specified therein, and such financial statements
have been prepared in conformity with generally accepted accounting
principles consistently applied in all material respects with respect to
the periods involved, except as may otherwise be disclosed to the
Underwriter or in the Offering Statement.
(b) The descriptions and information to be contained in the Offering
Statement at the Closing Date, as defined herein, are true and do not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made,, not misleading;
provided, however, that none of the representations and warranties in this
Bond Purchase Agreement shall apply to the information contained under the
caption "THE ISSUER" or in Appendix B thereto (relating to Wells Fargo
Bank, N.A. (the "Bank").
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(c) It will not take or omit to take any action which will in any way
result in the proceeds from the sale of the Bonds being applied in a
manner inconsistent with the provisions of the Agreements and the
Indentures, including the provisions with respect to "arbitrage" therein.
(d) There is no action, suit, proceeding, inquiry or investigation at law
or in equity or before or by any public board or body pending or
threatened against or affecting it or any basis therefor, wherein an
unfavorable decision, ruling or finding would have a material adverse
effect on the transactions contemplated by this Bond Purchase Agreement,
the Indentures or the Agreements or would adversely affect the validity or
enforceability of the Bonds, the Indentures, the Agreements or the Letter
of Credit Agreements dated as of November 1, 1985 (the "Credit
Agreements") between the Company and the Bank pursuant to which
irrevocable letters of credit (the "Letters of Credit") will be issued by
the Bank.
(e) The Agreements, this Bond Purchase Agreement and the Credit
Agreements, when executed and delivered by the Company, will constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally,
(f) The execution and delivery of the Agreements, the Credit Agreements
and this Bond Purchase Agreement, and the performance by the Company of
its obligations under the foregoing, (i) have been duly authorized by all
necessary corporate action of the Company and no approval or other action
by any governmental authority or agency is required in connection
therewith; (ii) do not and will not violate the Articles of Incorporation
or Bylaws of the Company, or any existing court order by which the Company
is bound, and such actions do not and will not constitute a default under
any existing agreement, indenture, mortgage, lease, note or other
obligation or instrument to which the Company is a party; and (iii) will
not be subject to the lien, pledge or encumbrance of any existing
agreement or document to which the Company is a party (excluding any lien,
pledge or encumbrance arising under the Agreements and the Credit
Agreements).
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SECTION 3. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless the Issuer and the
Underwriter, and any member, officer, official or employee of the Issuer or the
Underwriter, and each person, if any, who controls the Underwriter, within the
meaning of Section 15 of the Securities Act of 1933, as amended (collectively
the "Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses whatsoever caused by any untrue statement or misleading
statement or allegedly misleading statement of a material fact contained in the
Offering Statement (or caused by any omission or alleged omission from the
Offering Statement of any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any such untrue or misleading statement or
omission or allegedly untrue or misleading statement or omission in the
information contained under the caption "THE ISSUER" or in Appendix B thereto.
If any action shall be brought against one or more of the Indemnified
Parties based upon the Offering Statement and in respect of which indemnity may
be sought against it, the Indemnified Parties shall promptly notify the Company
in writing, and the Company shall promptly assume the defense thereof, including
the employment of counsel, the payment of all expenses and the right to
negotiate and consent to settlement. Any one or more of the Indemnified Parties
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Indemnified Parties unless
employment of such counsel has been specifically authorized by the Company. The
Company shall not be liable for any settlement of any such action effected
without its consent by any of the Indemnified Parties, but if settled with the
consent of the Company or if there be a final judgment for the plaintiff in any
such action against the Company or any of the Indemnified Parties, with or
without the consent of the Company, the Company agrees to indemnify and hold
harmless the Indemnified Parties to the extent provided in this Bond Purchase
Agreement.
SECTION 4. PURCHASE, SALE AND DELIVERY OF THE BONDS.
On the basis of the representations, warranties and covenants of the
Issuer and the Company contained herein, and subject to the terms and conditions
herein set forth, at the Closing Time, as defined herein, the Underwriter agrees
to purchase from the Issuer and the Issuer agrees to sell to the Underwriter the
Bonds at 98.50% of the aggregate principal amount thereof.
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The Series 1985-A Bonds shall be issued under and secured as provided in
the Series 1985-A Indenture. The Series 1985-A Bonds will be payable (except to
the extent payable from proceeds (of the sale of the Bonds and the earnings from
the temporary investment thereof) solely out of the payments received under the
Series 1985-A Agreement (including moneys paid under the Series 1985-A Letter of
Credit), The Series 1985-A Bonds shall be further secured by the Series 1985-A
Letter of Credit. The Series 1985-A Bonds shall mature on November 1, 2005,
shall bear interest at a variable interest rate (subject to conversion to a
fixed interest rate), provide a put option to the owners thereof and be subject
to redemption, all as set forth in the Series 1985-A Indenture.
The Series 1985-B Bonds shall be issued under and secured as provided in
the Series 1985-B Indenture. The Series 1985-B Bonds will be payable (except to
the extent payable from proceeds of the sale of the Bonds and the earnings from
the temporary investment thereof) solely out of the payments received under the
Series 1985-B Agreement (including moneys paid under the Series 1985-B Letter of
Credit). The Series 1985-B Bonds shall be further secured by the Series 1985-B
Letter of Credit. The Series 1985-B Bonds shall mature on November 1, 2005,
shall bear interest at a variable interest rate (subject to conversion to a
fixed interest rate), provide a put option to the owners thereof and be subject
to redemption, all as set forth in the Series 1985-B Indenture.
Payment for the Bonds shall be made in immediately available funds by
federal wire transfer at such place, time and date as shall be mutually agreed
upon by the Issuer and the Underwriter. The date of such delivery and payment is
herein called the "Closing Date," and the hour and date of such delivery and
payment is herein called the "Closing Time." The delivery of the Bonds shall be
made in definitive form and issued to and registered in the name of the
Underwriter, except to the extent that the Underwriter may request the delivery
of certain of the Bonds registered as to other persons, and in such
denominations as authorized by the Indenture as the Underwriter shall specify in
writing at least 24 hours prior to the Closing Time. The Bonds shall be
available for examination and packaging by the Underwriter at least 24 hours
prior to the Closing Time.
SECTION 5. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS.
The Underwriter's obligations under this Bond Purchase Agreement shall be
subject to the due performance by the Issuer and the Company of their respective
obligations and agreements to be performed hereunder at or prior to the Closing
Time and
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to the accuracy of and compliance with the Issuer's and the Company's
representations and warranties contained herein, as of the date hereof and as of
the Closing Time, and are also subject to the following conditions:
(a) The Bonds, the Indentures, the Agreements, the Credit Agreements and
the Letters of Credit shall each have been duly authorized, executed and
delivered in the form mutually agreed upon by the Issuer, the Underwriter,
the Bank and the Company.
(b) At the Closing Time, the Underwriter shall
receive:
(1) The opinions dated the Closing Date of (i) McCall, Parkhurst &
Horton, Bond Counsel, relating to the valid authorization and
issuance of the Bonds, the due authorization, execution and delivery
of the Indentures and the Agreements, the tax-exempt status of the
Bonds and certain other matters, in substantially the form of
Exhibit A hereto; (ii) Gerald A, Wright, Esq., counsel to the
Company, relating to the due organization and existence of the
Company, the due authorization, execution and delivery of the
Agreements, the Credit Agreements and this Bond Purchase Agreement
and certain other matters, in substantially the form of Exhibit B
hereto; (iii) Sheppard, Mullin,, Richter & Hampton, counsel to the
Bank, relating to the valid authorization and issuance of the
Letters of Credit and certain other matters, in substantially the
form of Exhibit C hereto; (iv) counsel to the Trustee, relating to
certain matters with regard to the Trustee, in substantially the
form of Exhibit D hereto; (v) counsel to the Issuer, relating to
certain matters with regard to the Issuer, in substantially the form
of Exhibit E hereto; and (vi) Dumas, Huguenin, Boothman & Morrow,
counsel to the Underwriter, relating to certain matters of federal
bankruptcy law and federal securities law, in substantially the form
of Exhibit F hereto;
(2) A certificate, satisfactory to the Underwriter, of the President
of the Board of Directors of the Issuer, dated as of the Closing
Date, to the effect that: (i) the Issuer has duly performed all
obligations to be performed by it at or prior to the Closing Time
and that each
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of the representations and warranties given by the Issuer and
contained herein is true as of the Closing Date; (ii) the Issuer has
authorized, by all necessary action, the execution, delivery,
receipt and due performance of the Bonds, the Indentures, the
Agreements and any and all such other agreements and documents as
may be required to be executed, delivered and received by the Issuer
to carry out, give effect to and consummate the transactions
contemplated hereby; (iii) no litigation is pending, or to such
President's knowledge threatened, to restrain or enjoin the issuance
or sale of the Bonds or in any way affecting any authority for or
the validity of the Bonds, the Indentures, the Agreements, this Bond
Purchase Agreement or the Issuer's existence or powers or the
Issuer's right to use the proceeds of the Bonds to finance the
Facilities; and (iv) the execution, delivery, receipt and due
performance of the Bonds, the Indentures, the Agreements and the
other agreements contemplated hereby under the circumstances
contemplated hereby or by the Indentures or the Agreements and the
Issuer's compliance with the provisions thereof comply with the Act;
(3) Certificates, satisfactory in form and substance to the
Underwriter, of the President and the Secretary of the Company, of
such other officers acceptable to the Underwriter, dated as of the
Closing Dates to the effect that (i) since the date as of which
information is given in Appendix A to the Offering Statement
(including the documents to be incorporated by reference therein),
if any, or any financial information described in Section 2(a) of
this Bond Purchase Agreement, there has not been any material
adverse change in the business, properties, financial position or
results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, and since such
date, except in respect of the Bonds and in the ordinary course of
business, the Company has not incurred any undisclosed material
liability; (ii) there is no action, suit, proceeding or any
investigation or inquiry at law or in equity or before or by any
public board or body pending or threatened against or affecting the
Company or its property or any basis therefor, wherein an
unfavorable decision, ruling or finding would
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<PAGE> 9
adversely affect the transactions contemplated hereby or by the
Indenture or the Agreement or the validity or enforceability of the
Bonds, the Indentures, the Agreements, the Credit Agreements, the
Pledge and Security Agreement or this Bond Purchase Agreement; (iii)
the information contained in the Offering Statement (excluding
information contained under the caption "THE ISSUER" and in Appendix
B thereto) is true in all material respects and does not contain any
untrue statement of a material fact and does not omit to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading; and (iv) the Company has duly authorized, by all
necessary corporate action, the execution, delivery and due
performance by the Company of the Agreements, the Credit Agreements
and this Bond Purchase Agreement;
(4) Such additional certificates, opinions and other documents as
the Underwriter or the Bank may reasonably request shall have been
delivered, including any certificates or opinions to evidence
performance of or compliance with the provisions hereof and the
transactions contemplated hereby, all such certificates and other
documents to be satisfactory in form and substance to the
Underwriter or the Bank; and
(5) A letter from Moody's Investors Service, Inc. indicating a
rating for the Bonds which is not lower than "Aaa" or a letter from
Standard & Poor's Corporation indicating a rating for the Bonds
which is not lower than "AAA."
(c) The Bank shall have delivered the Letters of credit to the Trustee for
the benefit of the Bondholders.
SECTION 6. CONDITIONS OF ISSUER'S OBLIGATIONS.
The Issuer's obligations under this Bond Purchase Agreement are subject to
the Underwriter's performance of its obligations hereunder and to the due
completion of all proceedings, and the due satisfaction of all conditions
required by the Act for the issuance of the Bonds.
No provision, covenant or agreement contained in this Bond Purchase
Agreement shall be deemed to be the covenant or agreement of any member,
officer, attorney, agent or employee
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of the Issuer in an individual capacity; and no such provision, covenant or
agreement, and no obligation herein imposed upon the Issuer, or the breach
thereof, shall constitute an indebtedness of the Issuer within the meaning of
any provision of the constitution or law of the State or constitute or give rise
to any pecuniary liability of the Issuer or a charge against its general credit.
No recourse shall be had for the payment of the principal of or premium, if any,
or interest on the Bonds, or for any claim based hereon or on any instruments
and documents executed and delivered by the Issuer in connection with the
Facilities, against any member, officer, agent, attorney or employee, past,
present or future, of the Issuer or of any successor body, or their respective
heirs, personal representatives, successors as such, either directly or through
the Issuer or any such successor body, whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or
penalty, or otherwise, all of such liability being hereby released as a
condition of and as a consideration for the execution and delivery of this Bond
Purchase Agreement.
SECTION 7. TERMINATION.
Notwithstanding any other provision of this Bond Purchase Agreement to the
contrary, the Underwriter may terminate this Bond Purchase Agreement by
notification to the Issuer and the Company if at any time prior to the Closing
Date (A) legislation shall be introduced or enacted by the United States
Congress or adopted by either house therefor or a decision by a court of the
United States shall be rendered or a ruling, regulation or official statement by
or on behalf of the Treasury Department of the United States, the Internal
Revenue Service or other government agency shall be made with respect to federal
taxation upon interest received on bonds of the general character of the Bonds,
which would have the effect of changing directly or indirectly the federal
income tax consequences of interest on bonds of the general character of the
Bonds in the hands of the owners thereof; or (B) legislation shall be enacted or
any action shall be taken by the Securities and Exchange Commission which, in
the reasonable judgment of the Underwriter has the effect of requiring the
contemplated distribution of the Bonds to be registered under the Securities Act
of 1933, as amended, or the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended; or (C) there shall exist any event which, in the
reasonable judgment of the Underwriter, either (1) makes untrue or incorrect in
any material respect any statement or information contained in the Offering
Statement or (2) is not reflected in the Offering Statement should be reflected
therein or in an attachment thereto in order to make any material statements or
information
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<PAGE> 11
contained therein not misleading in any material respect; or (D) there shall
have occurred any outbreak of hostilities engaging the United States in any
local, national or international calamity or crisis on the financial markets of
the United States being such as, in the reasonable judgment of the Underwriter,
would materially affect the marketability of the Bonds; or (E) there shall be in
force a general suspension of trading on the New York Stock Exchange or minimum
or maximum prices for trading shall have been fixed and be in force, or maximum
ranges for prices for securities shall have been required and be in force on the
New York Stock Exchange, whether by virtue of a determination by that Exchange
or by order of the Securities and Exchange Commission or any other governmental
authority having jurisdiction; or (F) a general banking moratorium shall have
been declared by either federal, Texas, California or New York authorities
having jurisdiction and be in force; or (G) there shall have occurred any
change, or any development involving a prospective change, in or affecting the
operations of the Issuer, the Company or the Bank, which, in the reasonable
judgment of the Underwriter, materially impairs the investment quality of the
Bonds; or (H) any legislation, ordinance, rule or regulation shall be introduced
in or be enacted by any governmental body, department or agency in the State or
a decision by any court of competent jurisdiction within the State shall be
rendered, which materially adversely affects the market price of the Bonds; or
(I) additional material restrictions not in force as of the date hereof shall
have been imposed upon trading in securities generally by any governmental
authority or by any national securities exchange.
If the Issuer or the Company does not, in the exercise of good faith,
satisfy the conditions to the obligations of the Underwriter contained in this
Bond Purchase Agreement, or if the obligations of the Underwriter shall be
terminated for any reason permitted by this Bond Purchase Agreement, this Bond
Purchase Agreement shall terminate and the Underwriter shall not have any
further obligations hereunder. The Underwriter, however, may in its sole
discretion waive one or more of the conditions imposed by this Bond Purchase
Agreement and proceed herewith.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All of the Issuer's and the Company's representations, warranties and
agreements shall remain operative and in full force and effect, regardless of
any investigations made by the Underwriter on its behalf, and shall survive
delivery of the Bonds to the Underwriter.
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SECTION 9. PAYMENT OF EXPENSES.
Whether or not the Bonds are sold by the Issuer to the Underwriter, the
Underwriter shall be under no obligation to pay any expenses incident to the
performance of the obligations of the Issuer hereunder. All expenses and costs
to effect the authorization, preparation, issuance, delivery and sale of the
Bonds (including, without limitation, the fees and disbursements of Bond
Counsel, counsel to the Bank, counsel to the Issuer, and the expenses and costs
for the preparation, printing, photocopying, execution and delivery of the
Bonds, (and the rating thereof by Standard & Poor's Corporation or Moody's
Investors Service, Inc.), the Indentures, the Agreements, the Credit Agreements,
this Bond Purchase Agreement and all other agreements and documents contemplated
hereby) shall be paid out of the proceeds of the sale of the Bonds, or by the
Company. The Company and the Underwriter have agreed that certain expenses in
connection with the offer and sale of the Bonds by the Underwriter will be paid
by the Underwriter, including the fees and disbursements of the Underwriter and
its counsel, expenses and costs for the preparation, printing and delivery of
the Preliminary Offering Statement and Offering Statement, advertising and
certain miscellaneous fees and expenses, and neither the Company nor the Issuer
shall be liable for the payment thereof.
SECTION 10. NOTICES.
Any notice or other communication to be given to the Issuer under this
Bond Purchase Agreement may be given by mailing (certified or registered) or
delivering the same in writing to Trinity River Industrial Development
Authority, 5300 South Collins, Arlington, Texas 76010, Attention: Chairman; and
any notice or other communication to be given to the Underwriter under this Bond
Purchase Agreement may be given by delivering the same in writing to
Prudential-Bache Securities, Inc., 100 Gold Street, New York, New York 10292,
Attention: Public Finance Department, IDB/Pollution Control Group; and any
notice or other communication to be given to the Company may be given by
delivering the same in writing to Radiation Sterilizers, Incorporated, 3000 Sand
Hill Road, Building 4, Suite 245, Menlo Park, California 94025,
SECTION 11. APPLICABLE LAW; NONASSIGNABILITY
This Bond Purchase Agreement shall be governed by the laws of the State.
This Bond Purchase Agreement shall not be assigned by the Issuer or the
Underwriter.
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SECTION 12. AMENDMENTS; EXECUTION OF COUNTERPARTS.
This Bond Purchase Agreement may be executed in several counterparts, each
of which shall be regarded as an original and all of which shall constitute one
and same document. This Bond Purchase Agreement may not be amended, except in
writing signed by all parties hereto.
TRINITY RIVER INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest
/s/ Romona A. Niner By /s/ Signature Unreadable
- --------------------- ----------------------------------------
(Assistant) Secretary President
PRUDENTIAL-BACHE SECURITIES INC.
By /s/ William B. Jamus
---------------------------------------
Authorized Officer
RADIATION STERILIZERS
INCORPORATED
By /s/ Allan Chin
----------------------------------------
President
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EXHIBIT A
TO
BOND PURCHASE AGREEMENT
I. Pursuant to Section 5(b)(i), the Underwriter shall have received an
opinion of Bond Counsel to the following effect:
(TO BE FURNISHED BY BOND COUNSEL)
II. Pursuant to Section 5(b)(i), the Underwriter and its counsel shall
also have received a supplemental opinion of Bond Counsel to the following
effect:
A. The information contained in the Official Statement under the
captions "The Series 1985-A Bonds," "The Series 1985-B Bonds," "Purchase of the
Series 1985-A Bonds," "Purchase of the Series 1985-B Bonds," "Fixed Interest
Rate," "The Series 1985-A Agreement," "The Series 1985-B Agreement," "The Series
1985-A Indenture," "The Series 1985-B Indenture,, and "Tax Exemption" are
accurate statements or summaries of the matters therein set forth and fairly
present the information purported to be shown and do not contain any untrue
statements of a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
B. The Bonds are exempted securities within the meaning of Section
3(a)(2) of the Securities Act of 1933, as amended, and it is not necessary in
connection with the offer and sale of the Bonds to the public to register the
Bonds under the Securities Act of 1933, as amended, or to qualify the Bonds, the
Order or any other instrument or document under the Trust Indenture Act of 1939,
as amended.
C. In addition to the foregoing, such opinion shall also state that,
in the performance of their duties as Bond Counsel, without having undertaken to
determine independently the accuracy and completeness of the statements
contained in the Official Statement, nothing has come to the attention of such
counsel which would lead them to believe that the Official Statement (excluding
the financial and statistical data and forecasts included therein, and excluding
therefrom the Appendixes thereto, all as to which no view need to
<PAGE> 15
expressed) contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Bond Counsel shall provide to the Underwriter a consent to the reference
to such counsel and their opinion in the Official Statement.
-2-
<PAGE> 16
EXHIBIT B
TO
BOND PURCHASE AGREEMENT
I. Pursuant to Section 5(b)(l)(ii) of the Bond Purchase Agreement the
Underwriter shall have received an opinion of counsel to the Company to the
following effect:
A. Company is a corporation (i) duly organized, validly existing and
in good standing under the laws of the State of California, and (ii) duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions that require such qualification, except where the failure to so
qualify would not have a material and adverse effect on the Company Company has
all requisite and necessary power and authority to own its properties, to
conduct its present business, to execute, deliver and perform all of its
obligations under the Loan Agreements, this Purchase Agreement, the
Reimbursement Agreements, and the Company Financing Statement (collectively, the
"Company Documents.")
B. Guarantor is a limited partnership (i) duly organized, validly
existing and in good standing under the laws of the State of California, and
(ii) duly qualified to do business as a foreign partnership in good standing in
all other jurisdictions that require such qualification, except where the
failure to so qualify would not have a material and adverse effect on Guarantor.
Guarantor has all requisite and necessary partnership power and authority to own
its properties, to conduct its present business and to execute and perform all
of its obligations under the Guarantees, the Deeds of Trust, the Security
Agreements and the Guaranty Financing Statement (collectively, the "Guaranty
Documents.")
C. The execution, delivery and performance by Company of the Company
Documents has been duly authorized by all necessary corporate action and does
not and will not (i) require any further consent or approval of any person or
entity having any interest in Company; (ii) require any governmental approvals,
exemptions, orders, licenses, filings, registrations or qualifications with any
governmental authority not obtained; (iii) violate any provision of any law,
rule, regulation, writ, judgment, injunction, decree, order, determination or
award presently in effect having any applicability to the Company or any of
Company's property; (iv) violate any provision of, or require any consent under,
the articles or bylaws of Company; or (v) result in the breach of or constitute
a default under, cause or permit the acceleration of any obligation owed under,
or result in or require the creation or imposition of any lien,
<PAGE> 17
security interest, claim, charge, right of others or other encumbrance of any
nature upon any property of Company (other than the liens created under the
Company Documents) under, any indenture loan or credit agreement or any other
agreement, lease or instrument to or by which Company or any property of Company
is or may be bound or affected.
D. The execution, delivery and performance by Guarantor under the
Guaranty Documents does Not: and will not: (i) require any further consent or
approval of Guarantor's general or limited partners; (ii) require any
governmental approvals, exemptions, orders, licenses or any filings,
registrations or qualifications with any governmental authority not obtained;
(iii) violate any provisions of any law, rule, regulation, writ, judgment,
injunction, decree, order, determination or award presently in effect having any
applicability to Guarantor or any of Guarantor's property; (iv) violate any
provision of, or require any consent under, Guarantor's partnership agreement or
other similar governing documents; or (v) result in the breach of or constitute
a default under, cause or permit the acceleration of any obligation owed under,
or result in or require the creation or imposition of any lien, security
interest, claim, charge, right of others or other encumbrance of any nature upon
any property of Guarantor under, any indenture, loan or credit agreement or
other agreement, lease or instrument to or by which Guarantor or any property of
Guarantor is or may be bound or affected.
E. The Company Documents have been duly and validly executed and
delivered by Company and constitute legal, valid and binding obligations of
Company, enforceable against Company in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally.
F. The Guaranty Documents have been duly and validly executed and
delivered by Guarantor and constitute legal, valid and binding obligations of
Guarantor, enforceable against Guarantor in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally.
G. There are no actions, suits or proceedings of any kind pending
or, to the best of such counsel's knowledge, threatened against or affecting
Company, Guarantor or any general partner of Guarantor, by or before any court
or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, except as previously disclosed in writing
to Issuer, Bank and the Underwriter.
-2-
<PAGE> 18
II. Pursuant to Section 5(b)(ii), the Underwriter and its counsel shall
have received a supplemental opinion of counsel to the Company to the following
effect:
A. The information contained in the Official Statement under the
captions "The Facilities," "Use of Proceeds," "The Series 1985-A Guaranty," "The
Series 1985-B Guaranty" and "Appendix A" are accurate statements or summaries of
the matters therein set forth and fairly present the information purported to be
shown and do not contain any untrue statements of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
B. In addition to the foregoing, such opinion shall also state that,
in the performance of their duties, without having undertaken to determine
independently the accuracy and completeness of the statements contained in the
Official Statement, nothing has come to the attention of such counsel which
would lead them to believe that the Official Statement contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
-3-
<PAGE> 19
EXHIBIT C
TO
BOND PURCHASE AGREEMENT
I. Pursuant to Section 5(b)(1)(iii) of the Bond Purchase Agreement the
Underwriter shall have received an opinion of counsel to the Bank to the
following effect:
A. The Bank is a national banking association, duly organized and
validly existing under the laws of the United States, and has full corporate
right, power and authority to perform all obligations on its part to be
performed, and to take all actions required or permitted on its part to be
taken, under the Letters of Credit.
B. The Letters of Credit have been duly authorized, executed and
delivered by the Bank, and constitute valid, legal and binding obligations of
the Bank, enforceable in accordance with their terms.
C. Payments made under the Letters of Credit to the Trustee, and in
turn to the Bond Holders, in respect of principal and interest owing in
connection with the Bonds, would not constitute a transfer of property by or of
the Company avoidable under Section 547 of the Federal Bankruptcy Code by a
trustee or debtor in possession if a petition under the Federal Bankruptcy Code
was subsequently filed by or against the Company, and would Not constitute a
transfer of property by or of the Issuer avoidable under Section 547 of the
Federal Bankruptcy Code by a trustee or debtor in possession if -a petition
under the Federal Bankruptcy Code was subsequently filed by or against the
Issuer.
II. Pursuant to Section 5(b)(iii), the Underwriter and its counsel shall
also have received a supplemental opinion of counsel to the Bank to the
following effect:
The information contained in the Official Statement under the captions
"The Series 1985-A Letter of Credit," "The Series 1985-B Letter of Credit," and
"Appendix B" are accurate statements or summaries of the matters therein set
forth and fairly present the information purported to be shown and do not
contain any untrue statements of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
<PAGE> 20
EXHIBIT D
TO
BOND PURCHASE AGREEMENT
Pursuant to Section 5(b) (1)(iv) of the Bond Purchase Agreement the
Underwriter shall have received an opinion of counsel to the Trustee to the
following effect:
(a) The Trustee is a duly created and lawfully existing banking
association under the laws of the United States of America;
(b) The Trustee has taken all corporate action necessary to assume the
duties and obligations of the Trustee under the Indentures and the Agreements
and has duly authenticated and delivered the Bonds;
(c) The Trustee has duly authorized the execution and delivery of the
Indentures and the Agreements, and the Indentures and the Agreements, when
executed on behalf of the Trustee (assuming the due execution and delivery
thereof by the other parties thereto, respectively), will be the legal, valid,
binding and enforceable obligations of the Trustee in its capacity as Trustee;
(d) The Trustee has all necessary powers required to carry out the trusts
intended under the Indentures;
(e) All approvals, consents and orders of any governmental authority or
agency having jurisdiction in the matter which would constitute a condition
precedent to the performance by the Trustee of its duties and obligations under
the Indenture as Trustee have been obtained and are in full force and effect;
and
(f) No litigation is pending or, to the best of such counsel's knowledge,
threatened in any way contesting or affecting the Trustee's existence or powers
(including trust powers) or the Trustee's ability to fulfill its duties and
obligations under the Indentures.
<PAGE> 21
EXHIBIT E
TO
BOND PURCHASE AGREEMENT
Pursuant to Section 5(b)(1)(v) of the Bond Purchase Agreement the
Underwriter shall have received an opinion of counsel to the Issuer to the
following effect:
(1) The Issuer is a public body corporate and politic duly created and
validly existing under the Constitution and laws of the State of Texas with the
corporate power to enter into and perform the Agreements and the Indentures and
issue the Bonds.
(2) The Agreements and the Indentures have been duly authorized, executed
and delivered by the Issuer and are valid and binding obligations of the Issuer
enforceable against the Issuer. The Indentures create a valid lien on the "Trust
Estate" (defined in the Indentures).
(3) The Bonds have been duly authorized, executed and delivered by the
Issuer and are valid and binding limited obligations of the Issuer enforceable
against the Issuer, payable solely from the sources specified in the Indentures.
<PAGE> 22
EXHIBIT F
TO
BOND PURCHASE AGREEMENT
Pursuant to Section 5(b)(l)(vi) of the Bond Purchase Contract the
Underwriter shall have received an opinion of counsel to the Underwriter to the
following effect:
1. The Bonds are exempt from registration under the Securities Act of
1933, as amended, and it is not necessary in connection with the offer and sale
of the Bonds to register any other security issued in connection with the
issuance of the Bonds under such act, and no indenture in respect to the Bonds
is required to be qualified pursuant to the Trust Indenture Act of 1939, as
amended;
2. The statements contained in the Offering Statement under the captions
"Introductory Statement," "The Series 1985-A Bonds," "The Series 1985-B Bonds,"
"Purchase of the Series 1985 A Bonds," "Purchase of the Series 1985-B Bonds,"
"Fixed Interest Rate," "The Series 1985-A Agreement," "The Series 1985-B
Agreement," "The Series 1985-A Indenture," and "The Series 1985-B Indenture,"
insofar as the statements contained under such captions purport to describe or
summarize certain provisions of the Bonds, the Agreements, and the Indentures,
present a fair description or summary of such provisions;
3. Nothing has come to such counsel's attention which would lead such
counsel to believe that the Offering Statement (excluding the Appendices thereto
and other financial and statistical data therein and in the Offering Statement)
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances in
which they were made, not materially misleading;
In addition, the Underwriter shall have received a reasoned opinion from
counsel to the Underwriter to the effect that:
1. If funds are held in trust for the 123 day period provided in Section
4.01A and 14.02 of the Indentures, and for the 130 day period provided in
Section 8.02 of the Indentures, and payments of principal or interest are made
from those funds to the holders of the Bonds, the payments will not constitute
<PAGE> 23
preferences voidable under Section 547 under the Bankruptcy Code in connection
with a bankruptcy court case commenced by or against the Issuer, the User as
long as payment occurs after the expiration of the stated time period;
2. Payments by the Bank to the Trustee or to the holders of the Bonds
under the Letter of Credit will not constitute preferences voidable under
Section 547 of the Bankruptcy Code in connection with a bankruptcy court case
commenced by or against the Issuer, the User or any general partner of the User;
and
3. If the Tender Agent and the Trustee carry out their respective
responsibilities as provided in Article Six of the Indenture and hold the Bonds
and the proceeds of the sale of the Bonds solely for the benefit of the selling
Bondholders and the persons purchasing the same, payment from the Purchase Fund
by the Tender Agent to the Holders of the Bonds other than the Liquidity Bank,
the Issuer, the User or any general partner of the User, will not constitute
preferences voidable under Section 547 of the Bankruptcy Code.
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<PAGE> 1
EXHIBIT 10.10
SERIES A REIMBURSEMENT AGREEMENT
--------------------------------
between
RADIATION STERILIZERS, INCORPORATED
and
WELLS FARGO BANK, N.A.
Dated as of November 1, 1985
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions and Accounting Terms....................... 1
1.1 Defined Terms................................. 1
1.2 Use of Defined Terms.......................... 6
1.3 Accounting Terms.............................. 6
1.4 Exhibits...................................... 6
2. Series A Bonds......................................... 6
3. Letters of Credit...................................... 7
4. Loan Documents......................................... 8
4.1 Guaranty...................................... 8
4.2 Security Documents............................ 8
4.3 Series A Pledge Agreement..................... 10
4.4 Other Documents and Actions................... 10
4.5 Additional Security........................... 10
5. Conditions to Issuance and Disbursements...... 11
5.1 Conditions to Issuance........................ 11
5.2 Conditions to Disbursements................... 13
6. Reimbursement and Other Payments; Extension............ 14
6.1 Reimbursement................................. 14
6.2 Fees.......................................... 14
6.3 Increased Costs Due to Change in Law.......... 15
6.4 Obligations Absolute.......................... 15
6.5 Extension of Series A Letter of Credit........ 16
6.6 Reserve Accounts.............................. 16
7. Representations and Warranties by Company.............. 15
7.1 Formation of Company.......................... 18
7.2 Execution, Delivery and Performance of
Loan Documents and Bond Documents........... 18
7.3 Financial Statements.......................... 20
7.4 No Material Adverse Change.................... 20
7.5 Tax Liability................................. 20
7.6 Compliance with Laws.......................... 21
7.7 Litigation.................................... 21
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Paqe
----
<S> <C>
7.8 Official Statement............................ 21
7.9 Conditions to Issuance........................ 21
8. Representations and Warranties by Bank................. 21
8.1 Formation of Bank............................. 21
8.2 Authorization................................. 22
8.3 No Conflict................................... 22
8.4 Actions and Proceedings....................... 22
9. Affirmative Covenants.................................. 22
9.1 Governmental Approvals........................ 22
9.2 Continued Existence........................... 22
9.3 Books and Records............................. 23
9.4 Annual Operating Statements................... 23
9.5 Notice of Certain Events...................... 23
9.6 Opinions...................................... 24
9.7 Defaults of Others............................ 24
9.8 Tax Appeals................................... 24
9.9 Surplus Construction Funds.................... 24
9.10 Notice Re Disbursement Conditions............. 24
9.11 Insurance..................................... 24
9.12 Payment of Taxes, Assessments and Charges..... 28
9.13 Compliance.................................... 28
9.14 Maintenance and Furnishing of Property........ 28
10. Negative Covenants..................................... 28
10.1 Transfers of Project or Obligations........... 28
10.2 Liens on Property............................. 29
10.3 Liens on Personal Property.................... 29
10.4 Leases........................................ 29
10.5 Easements..................................... 30
11. Events of Default and Remedies Upon Default............ 30
11.1 Events of Default................................... 30
11.2 Remedies Upon Default............................... 32
11.3 Cumulative Remedies; No Waiver...................... 33
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
12. Miscellaneous.......................................... 34
12.1 Actions....................................... 34
12.2 Nonliability of Bank.......................... 34
12.3 No Representations by Bank.................... 35
12.4 No Third Parties Benefited.................... 35
12.5 Indemnity by Company.......................... 36
12.6 Commissions................................... 36
12.7 Binding Effect................................ 37
12,8 Execution in Counterparts..................... 37
12.9 Prior Agreements; Amendments; Consents........ 37
12.10 Survival of Representations and
Warranties................................. 37
12.11 Notices....................................... 37
12.12 Further Assurances............................ 39
12.13 Governing Law................................. 39
12.14 Severability of Provisions.................... 39
12.15 Inconsistency With Security Documents......... 39
12.16 Headings...................................... 39
12.17 Time of the Essence........................... 39
12.18 No FDIC Insurance............................. 39
13. Interest and Payment Terms............................. 39
13.1 Manner of Payment................................. 39
13.2 Interest.......................................... 40
13.3 Waivers........................................... 40
14. Condemnation........................................... 41
</TABLE>
<TABLE>
<CAPTION>
Section
EXHIBITS Reference
---------
<S> <C>
"A" Series A Letter of Credit.................................. 3
"B" Conditions to Disbursement................................. 1.1(e), 5.2
"C" Legal Descriptions......................................... 1.1(w), 4.2
"D" Permitted Encumbrances..................................... 5.1,3
"E" Description of Facilities.................................. 1.1(u)
"F" Reserve Accounts Pledge Agreement.......................... 6.6.4
</TABLE>
-iii-
<PAGE> 5
SERIES A REIMBURSEMENT AGREEMENT
This Series A Reimbursement Agreement is entered into as of November 1,
1985, by and between RADIATION STERILIZERS, INCORPORATED, a California
corporation ("Company"), and WELLS FARGO BANK, N.A., a national banking
association ("Bank").
1. Definitions And Accounting Terms.
1.1 Defined Terms. As used in this Series A Reimbursement Agreement,
the following terms shall have the meanings set forth respectively after each:
(a) "Agreement" means this Series A Reimburse= ment Agreement,
either as originally executed or as it may from time to time be
supplemented, modified or amended.
(b) "Bond Documents" means all of the instruments, documents
and agreements which may be executed from time to time by Issuer, Trustee,
the Original Purchaser and/or Company in connection with the Series A
Bonds (other than the Loan Documents), including without limitation the
following, each of which were executed as of even date herewith unless
otherwise indicated and in each case either as originally executed or as
the same may from time to time be supplemented, modified or amended:
(1) Trust Indenture between Issuer and Trustee, relating
to the Series A Bonds (the "Trust Indenture");
(2) the Series A Loan Agreement (as defined below); and
(3) Bond Purchase Agreement among Company, Issuer and
the Original Purchaser, relating to the Series A Bonds (the
"Bond Purchase Agreement").
(c) "Business Day" means any day of the year, other than a
Saturday or a Sunday, (a) on which banks located (i) in the cities in
which the principal corporate trust office of Trustee and the principal
office of Bank are located, and (ii) in New York, New York, are not
required or authorized by law to remain closed, and (b) on which the New
York Stock Exchange, Inc. is not closed.
-1-
<PAGE> 6
(d) "Code" means the Internal Revenue Code of 1954, as
amended, and references to the Code and Sections of the Code shall include
relevant regulations and proposed regulations thereunder and any successor
provisions to such Sections, regulations or proposed regulations.
(e) "Conditions to Disbursement" means the conditions set
forth in Exhibit "B" attached hereto, either as now existing or as it may
from time to time be supplemented, modified or amended.
(f) "Deed of Trust" means the deed of trust covering the
Property required pursuant to Section 4.2(a) of this Agreement, either as
originally executed
-----
or as it may from time to time be supplemented, modified or amended.
(g) "Depository" means First City Bank of Dallas, a state
banking corporation.
(h) "Designated Representative" means either the "Authorized
Company Representative" under the Series A Loan Agreement or, if Bank so
requests, a different Person, authorized by Company, with the approval of
Bank, to deliver certificates, requests for disbursements and other
documents and material to Bank pursuant to this Agreement.
(i) "Disbursement" means each of the disbursements by
Depository of Series A Bond Proceeds pursuant to this Agreement and the
Bond Documents.
(j) "Documents" means, collectively, the Bond Documents and
the Loan Documents.
(k) "Event of Default" means each of those events so
designated in Article 11 of this Agreement.
(1) "Financing Statements" means the Company Financing
Statements and the Guaranty Financing Statements, each either as
originally executed or as they may from time to time be supplemented,
modified or amended.
(m) "Fiscal Year" means Company's fiscal year, ending on March
31 of each calendar year.
(n) "Guarantor" means Charles King & Associates, a California
limited partnership.
-2-
<PAGE> 7
(o) "Guaranty" means the guaranty required pursuant to Section
4.1 of --- this Agreement, either as originally executed or as it may from
time to time be supplemented, modified or amended.
(p) "Improvements" means the improvements located on the
Property and the Supplemental Properties, and any and all other
improvements now or hereafter comprising any portion of the Property and
the Supplemental Properties.
(q) "Issuer" means the Trinity River Industrial Development
Authority, a non-profit industrial development corporation.
(r) "Loan Documents" means, collectively, this Agreement and
the Security Documents, in each case either as originally executed or as
the same may from time to time be supplemented, modified or amended.
(s) "Original Purchaser" meats Prudential-Bache Securities
Inc., a Delaware corporation.
(t) "Person" means any person or entity, whether an
individual, trustee, corporation, partnership, trust, unincorporated
organization or otherwise.
(u) "Personal Property" means all of Company's right, title
and interest in and to all present or future accounts, instruments, notes,
drafts, contract rights, insurance and condemnation proceeds and other
intangible personal property of every kind and nature, now or hereafter
located at the Property, or used or to be used in connection with or
relating to or arising with respect to the Property.
(v) "Project" means the construction and operation of the
industrial facility described in Exhibit "E" attached hereto for the
sterilization of packaged products using ionizing radiation,
as provided herein and in the Series A Loan Agreement.
(w) "Project Costs" means all costs of any nature whatsoever
incurred by or on behalf of Company in connection with the Project.
(x) "Property" means the real property described in Exhibit
"C-l" attached hereto, together with all easements and other rights now or
hereafter
-3-
<PAGE> 8
made appurtenant thereto, all improvements and fixtures now or hereafter
located thereon, and all additions or accretions thereto.
(y) "Related Loan Documents" means the documents defined in
the Series B Reimbursement Agreement as the "Loan Documents."
(z) "Remarketing Agent" means the Remarketing Agent appointed
in accordance with Section 403 of the Trust Indenture.
(aa) "Secured Obligations" means, collectively, (i) the
payment and performance of all indebtedness and other obligations of
Company to Bank under the Loan Documents and (ii) the payment by Company
to Trustee of the principal of, and all accrued interest on, the Series A
Bonds.
(bb) "Security Agreements" means the Company Security
Agreement and the Guaranty Security Agreement, each either as originally
executed or as they may from time to time be supplemented, modified or
amended.
(cc) "Security Documents" means, collectively, the Deed of
Trust, the Supplemental Deeds of Trust, the Financing Statements, the
Security Agreements, the Guaranty, the Series A Pledge Agreement, and any
other mortgage, deed of trust, security agreement, financing statement,
assignment or guaranty now, heretofore or hereafter executed to secure the
obligations of Company or Guarantor under any Loan Document, in each case
either as originally executed or as the same may from time to time be
supplemented, modified or amended.
(dd) "Series A Bonds" means the Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue
Bonds (Radiation Sterilizers, Incorporated Project), Series 1985A, to be
issued pursuant to the Trust Indenture.
(ee) "Series A Bond Proceeds" means the proceeds of the Series
A Bonds, including without limitation any insurance or condemnation
proceeds or other assets held by Trustee in special funds established
pursuant to the Bond Documents or otherwise.
(ff) "Series A Company Bonds" means Series A Bonds (a)
purchased by Trustee or the Remarketing Agent
-4-
<PAGE> 9
(as defined in the Trust Indenture) with moneys furnished by Company
pursuant to Section 4.11 of the Series A Loan Agreement and (b) delivered
to Bank or its nominee pur. suant to Section 401(j) or 401(k) of the Trust
Indenture as a result of the occurrence of an Event of Default.
(gg) "Series A Drawing Bonds" means Series A Bonds delivered
or deemed delivered to Bank or its nominee pursuant to the Trust Indenture
as the result of a "C Drawing," or a "C Drawing" and a "D Drawing," under
the Series A Letter of Credit.
(hh) "Series A Letter of Credit" means the Series A Letter of
Credit to be issued by Bank pursuant to Section 3 of this Agreement,
either as originally executed or as it may from time to time be
supplemented, modified or amended.
(ii) "Series A Loan Agreement" means the Series 1985A Loan
Agreement between Issuer and Company of even date herewith relating to the
loan to Company of the the Series A Bond Proceeds.
(jj) "Series A Pledge Agreement" means the pledge and security
agreement required pursuant to Section 4.3 of this Agreement, either as
originally executed or as it may from time to time be supplemented,
modified or amended.
(kk) "Series B Bonds" means the bonds for which amounts are
available to be drawn under the Series B Letter of Credit.
(11) "Series B Letter of Credit" means the letter of credit to
be issued by Bank pursuant to the Series B Reimbursement Agreement.
(mm) "Series B Loan Agreement" means the Series 1985B Loan
Agreement between Issuer and Company of even date herewith relating to the
loan to Company of the Series B Bond Proceeds.
(nn) "Series B Reimbursement Agreement" means the Series B
Reimbursement Agreement of even date herewith between Bank and Company.
(oo) "Supplemental Deeds of Trust" means the deeds of trust
and mortgages required pursuant to subsections (b), (c), (d) and (e) of
Section 4.2 of this
-5-
<PAGE> 10
Agreement, either as originally executed or as they may from time to time
be supplemented, modified or amended.
(pp) Supplemental Personal Property" means, collectively, the
Ohio Personal Property, the Georgia Personal Property, the Hayward
Personal Property and the Illinois Personal Property (each of which is
defined in Section 4.2, below).
(qq) "Supplemental Properties" means, collectively, the Ohio
Property, the Georgia Property, the Hayward Property and the Illinois
Property (each of which is defined in Section 4.2, below).
(rr) "Supplemental Title Policies" means the policies of title
insurance required pursuant to Section 5.1.5 of this Agreement.
(ss) "Title Policy" means the policy of title insurance
covering the Property required pursuant to Section 5.1.3 of this Agreement
and Section 1.3 of Exhibit "B" to this Agreement.
(tt) "Trustee" means Bank One Trust Company, N.A., a national
banking association, or its successors as trustee under the Trust
Indenture.
1.2 Use of Defined Terms. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
generally accepted accounting principles applied on a consistent basis.
1.4 Exhibits. All Exhibits to this Agreement, either as now existing
or as the same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
2. Series A Bonds. Company contemplates entry into the Bond Documents in
order to cause the issuance of the Series A Bonds, so that the Series A Bond
Proceeds may be used to finance the Project.
-6-
<PAGE> 11
3. Letters of Credit. In order to enhance the marketability of the Series
A Bonds and the Series B Bonds, Company requested that Bank issue an irrevocable
standby letter of credit, with Company's reimbursement obligations secured by
various parcels of real property owned by Company and Guarantor. Company hereby
acknowledges that Bank's appraisers have determined that the value of such
parcels is substantially less than the value of the requested letter of credit,
but that Bank has agreed to back the Series B Bonds without taking real property
security for Company's reimbursement obligations in connection therewith.
Company has therefore requested that Bank issue two irrevocable standby letters
of credit. The first letter of credit (the "Series A Letter of Credit") shall be
substantially in the form attached hereto as Exhibit "A" and shall be issued in
the face amount of $2,198,596.00, of which an amount not exceeding $2,150,000.00
shall be available to pay the principal amount or purchase price of the Series A
Bonds, and an amount not exceeding $48,596.00 shall be available for interest
accrued on the Series A Bonds, all as more particularly provided in the Series A
Letter of Credit. Company's obligations in connection with the Series A Letter
of Credit shall be secured by the Security Documents and the cash collateral
held in Reserve Accounts (as defined below). The second letter of credit (the
"Series B Letter of Credit") shall be substantially in the form attached to the
Series B Reimbursement Agreement as Exhibit "A" and shall be issued in the face
amount of $2,505,377.00, of which an amount not exceeding $2,450,000.00 shall be
available to pay the principal amount or purchase price of the Series B Bonds,
and an amount not exceeding $55,377.00 shall be available for the accrued
interest on the Series B Bonds, all as more particularly provided in the Series
B Letter of Credit. Company's obligations in connection with the Series B Letter
of Credit shall be secured by the cash collateral held in Reserve Accounts.
Various rights and obligations of Bank and Company in connection with the Series
B Letter of Credit are set forth in the Series B Reimbursement Agreement and the
other Related Loan Documents. The Series A Letter of Credit, the Series B Letter
of Credit and any successor or substitute letters of credit issued pursuant to
this Agreement are sometimes collectively referred to herein as the "Letters of
Credit." Bank is willing to issue the Series A Letter of Credit on the terms and
conditions contained in this Agreement and the other Loan Documents.
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4. Loan Documents.
4.1 Guaranty. In consideration of Bank's entry into this Agreement
and the other Loan Documents, and in order to guarantee the prompt payment when
due of all sums of principal and interest advanced by Bank pursuant to the
Letters of Credit as well as the prompt payment when due of any other sums owing
pursuant to this Agreement or any of the other Loan Documents, Company shall, at
its sole expense, deliver or cause to be delivered to Bank a guaranty (the
"Guaranty") executed by Guarantor, in such form and content as Bank shall in its
sole discretion require.
4.2 Security Documents. In consideration of Bank's entry into this
Agreement and the other Loan Documents, and as security for (i) the Secured
Obligations and (ii) the payment and performance of all other indebtedness and
obligations of Company to Bank that are evidenced by a document, executed at
Bank's request, that states that it is so secured, Company shall, at its sole
expense, deliver or cause to be delivered by Guarantor to Bank, and record or
cause to be recorded, if appropriate, the following documents, each of which
shall be in such form and content, and executed by such persons and/or entities,
as Bank shall in its sole discretion require:
(a) A Deed of Trust with Assignment of Rents, executed by
Company for the benefit of Bank and Trustee, covering the Property (the
"Deed of Trust");
(b) An Open End Mortgage, executed by Company for the benefit
of Bank and Trustee, covering certain real property located in the
Township of Orange, County of Delaware, State of Ohio, as more
particularly in Exhibit "C-2" attached hereto, together with all easements
and other rights now or hereafter made appurtenant thereto, all
improvements and fixtures now or hereafter located thereon, and all
additions or accretions thereto (the "Ohio Property");
(c) A Deed to Secure Debt, executed by Company for the benefit
of Bank and Trustee, covering certain real property located in the City of
Atlanta, County of DeKalb, State of Georgia, as more particularly in
Exhibit "C-3" attached hereto, together with all easements and other
rights now or hereafter made appurtenant thereto, all improvements and
fixtures now or hereafter located thereon, and all additions or accretions
thereto (the "Georgia Property");
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(d) A Deed of Trust with Assignment of Rents and Fixture
Filing, executed by Guarantor for the benefit of Bank and Trustee,
covering certain real property located in the City of Hayward, County of
Alameda, State of California, as more particularly in Exhibit "C-4"
attached hereto, together with all easements and other rights now or
hereafter made appurtenant thereto, all improvements and fixtures now or
hereafter located thereon, and all additions or accretions thereto (the
"Hayward Property");
(e) A Mortgage, executed by Guarantor for the benefit of Bank
and Trustee, covering certain real property located in the Village of
Schaumburg, County of Cook, State of Illinois, as more particularly in
Exhibit "C-5" attached hereto, together with all easements and other
rights now or hereafter made appurtenant thereto, all improvements and
fixtures now or hereafter located thereon, and all additions or accretions
thereto (the "Illinois Property");
(f) A Company Security Agreement (the "Company Security
Agreement"), executed by Company in favor of Bank and Trustee, granting a
security interest in the Personal Property and certain personal property
(collectively, the "Company Personal Property") now or hereafter relating
to the Property, the Ohio Property and the Georgia Property (collectively,
the "Company Properties");
(g) Seven UCC-1 Financing Statements (the "Guaranty Financing
Statements"), each executed by Company in favor of Bank and Trustee, four
of which cover the Company Personal Property, and three of which cover the
fixtures located on each of the Company Properties;
(h) A Guaranty Security Agreement (the "Guaranty Security
Agreement"), executed by Guarantor in favor of Bank and Trustee, granting
a security interest in certain personal property (collectively, the
"Guaranty Personal Property") now or hereafter relating to the Hayward
Property and the Illinois Property (the "Guaranty Properties"); and
(i) Three UCC-1 Financing Statements (the "Guaranty Financing
Statements"), each executed by Guarantor in favor of Bank and Trustee, two
of which
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cover the Guaranty Personal Property, and one of which covers the fixtures
located on the Illinois Property.
The deeds of trust and mortgages described in subsections (b), (c), (d), and (e)
are collectively referred to herein as the "Supplemental Deeds of Trust." The
Ohio Property, the Georgia Property and the Guaranty Properties are collectively
referred to herein as the "Supplemental Properties." The Company Security
Agreement and the Guaranty Security Agreement are collectively referred to
herein as the "Security Agreements." The Company Financing Statements and the
Guaranty Financing Statements are collectively referred to herein as the
"Financing Statements."
4.3 Series A Pledge Agreement. In consideration of Bank's entry into
this Agreement and the other Loan Documents, and as security for the prompt
payment when due of all sums of principal and interest advanced by Bank pursuant
to the Series A Letter of Credit as well as for payment of all other sums owing
pursuant to this Agreement and the other Loan Documents, Company shall, at its
sole expense, deliver or cause to be delivered to Bank a pledge and security
agreement (the "Series A Pledge Agreement") executed by Company, in such form
and content as Bank shall in its sole discretion require, assigning to Bank
Company's right, title and interest in and to the Series A Drawing Bonds and
then Series A Company Bonds,
4.4 Other Documents and Actions. Company agrees to execute,
acknowledge and/or deliver or cause to be executed, acknowledged and/or
delivered to Bank such other instruments, agreements and other documents
(including without limitation such amendments to the Security Documents as may
be required by Bank in order to reflect amendments or supplements to this
Agreement), and to take such actions, upon request by Bank, as Bank may
reasonably request in order to carry out the purposes of this Agreement and the
other Loan Documents and the transactions contemplated thereby and to protect
and/or further the validity, priority and/or enforceability of the Security
Documents or subject to the Security Documents any property, together with any
renewals, additions, substitutions, replacements or betterments thereto,
intended by the terms of this Agreement or the other Loan Documents to be
covered by the Security Documents.
4.5 Additional Security. Bank shall not acquire any security for the
obligations of Company or Guarantor under this Agreement or the other Loan
Documents, other than the Series A Pledge Agreement and the Guaranty, unless
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<PAGE> 15
Company shall have afforded to Trustee, for the benefit of the holders of the
Series A Bonds, prior to or simultaneously with the taking by Bank of such
security, rights which shall, at the option of Bank, be either senior to the
rights of Bank or of equal priority with the rights of Bank in connection with
such security.
5. Conditions to Issuance and Disbursements.
5.1 Conditions to Issuance. The obligation of Bank to issue the
Series A Letter of Credit is subject to the following conditions precedent:
5.1.1 Bank shall have received all of the following documents,
each of which shall be in form and substance satisfactory to Bank:
(a) the original Deed of Trust;
(b) the original Supplemental Deeds of Trust;
(c) the original Security Agreements;
(d) the original Financing Statements;
(e) the original Guaranty;
(f) the original Series A Pledge Agreement;
(g) copies of each of the Bond Documents;
(h) copies of the articles and by-laws of Company and any and
all supplements and amendments thereto, all certified to be true and
correct by the Secretary of Company;
(i) an original of each of the opinions, certificates, letters
and other documents specified in, Section 5(b) of the Bond Purchase
Agreement, in each case addressed to Bank;
(j) a written opinion of Company's counsel, in form and
substance satisfactory to Bank, covering such matters relating to Company
and the Loan Documents as may be required by Bank;
(k) a copy of the partnership agreement of Guarantor, a copy
of the certificate of limited partnership of Guarantor as recorded in San
Mateo County,
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<PAGE> 16
California, a copy of the Form LP-1 filed for Company with the California
Secretary of State, and copies of any and all amendments to such
documents, all certified as true, complete and correct by Charles W. King,
Jr.;
(1) a written opinion of Guarantor's counsel, in form and
substance satisfactory to Bank, covering such matters relating to
Guarantor and the Loan Documents as may be required by Bank;
(m) the certificate required pursuant to Section 7.2.1, below;
(n) executed copies (or duplicates) of the Trust Indenture and
the Series A Loan Agreement;
(o) the financial statements of Company and Guarantor required
to be furnished hereunder and under the Guaranty, and the insurance
policies required to be furnished hereunder and under the Guaranty; and
(p) such other instruments, certificates, opinions, consents
and other documents as Bank may reasonably require.
5.1.2 The Deed of Trust and the Supplemental Deeds of Trust
shall have been duly recorded.
5.1.3 Company shall, at its sole expense, have delivered or
caused to be delivered to Bank a TLTA lender's policy of title insurance (the
"Title Policy"), with a commitment to reissue the Title Policy in the same form
upon the completion of the construction of the industrial facility described in
Exhibit "E" attached hereto, or evidence of commmitments therefor satisfactory
to Bank, in form and substance and issued by an insurer or insurers satisfactory
to Bank, together with such endorsements and binders thereto as may from time to
time be required by Bank, naming Bank and Trustee, as their interests appear, as
insured, in an aggregate policy amount (in conjunction with the Supplemental
Title Policies, as defined below) of not less than $2,199,000.00, insuring the
Deed of Trust to be a valid first lien upon the Property, subject only to the
Series A Intercreditor Agreement and the matters listed in Exhibit "D" attached
hereto (the "Permitted Encumbrances"), and showing the Property to
be owned by Company in fee simple.
5.1.4 The Financing Statements shall have been filed with the
applicable Secretaries of State or county
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<PAGE> 17
recorder's office, as applicable, and Bank shall have received certificates of
the applicable Secretaries of State (if applicable), in form and substance
satisfactory to Bank, showing the Financing Statements to be subject to no prior
filings other than filings perfecting rights of other lenders with respect to
security interests ("Permitted Liens") granted by Company in conjunction with,
and simultaneously with, any Permitted Encumbrance.
5.1.5 Company shall, at its sole expense, have delivered to
Bank lenders' policies of title insurance (the "Supplemental Title Policies"),
or evidence of commitments therefor satisfactory to Bank, in form and substance
and issued by insurers satisfactory to Bank, together with all endorsements and
binders reasonably required by Bank, naming Bank and Trustee, as their interests
appear, as insured, in an aggregate policy amount (in conjunction with the Title
Policy) of not less than $2,199,000.00 insuring the Supplemental Deeds of Trust
to be valid liens subject only to such title exceptions as Bank may approve in
its solediscretion.
5.1.6 The Series A Bonds shall have been simultaneously duly
executed and delivered, all of the Series A Bonds shall have been sold, and the
full authorized face amount of the Series A Bonds (less such fees to the
Original Purchaser as are paid therefrom at the time of sale, as provided in the
Bond Documents) shall have been received by Trustee, as required pursuant to the
Bond Documents.
5.1.7 All conditions to the issuance of the Series B Letter of
Credit shall have been satisfied.
5.2 Conditions to Disbursements. The conditions described in Exhibit
"B" attached hereto shall be conditions precedent to each Disbursement.
Following the initial purchase of the Series A Bonds by the Original Purchaser,
Bank shall provide Depository with a standing written approval of all
Disbursements thereafter requested by the Authorized Company Representative (as
defined in the Series A Loan Agreement); provided, however, that such standing
approval shall automatically be revoked as of the date on which any Event of
Default (or event which, with the giving of notice or the passage of time or
both, would constitute an Event of Default) occurs or on which any Condition to
Disbursement fails to be fulfilled. Following any such revocation, Bank's
approval shall be required at the time of each Disbursement unless and until
Bank, in its sole discretion, chooses to provide Trustee with another revocable
standing approval.
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6. Reimbursement and Other Payments; Extension.
6.1 Reimbursement. Company hereby agrees to pay to Bank at the times
indicated, in cash or by such other means as may be satisfactory to Bank in its
sole discretion, the following:
(a) on the date of any disbursement of funds by Bank under the
Series A Letter of Credit, the entire amount of any and all funds
disbursed by Bank under the Series A Letter of Credit;
(b) upon demand, all reasonable amounts expended, advanced or
incurred by Bank (i) in connection with the negotiation, preparation,
execution, delivery, issuance, administration and performance of the
Series A Letter of Credit, this Agreement or any other Loan Document, or
any matter related thereto; (ii) to satisfy any obligation of Company or
Guarantor under this Agreement or any of the Loan Documents; and (iii) to
enforce the rights of Bank under this Agreement or any other Loan Document
(including without limitation any costs incurred by Bank in connection
with any insolvency or bankruptcy proceeding affecting Company or
Guarantor or any other Person involved in the Project), which amounts will
include all court costs, appraisal fees, reasonable attorneys' fees, fees
of auditors and accountants and investigation expenses reasonably incurred
by Bank in connection with any such matters;
(c) upon demand, all other amounts owing to Bank by Company
under this Agreement or any of the other Loan Documents.
All sums owing pursuant to this Agreement and the other Loan Documents shall be
payable with interest as provided in Article 13.
6.2 Fees. Company hereby agrees to pay to Bank, in cash or by such
other means as may be satisfactory to Bank in its sole discretion (i) on or
before the date on which the Series A Bonds are sold to the Original Purchaser
pursuant to the Bond Purchase Agreement, as an administration fee for the first
year of the term of the Series A Letter of Credit, in advance, an amount equal
to one and one-quarter percent (1.25%) of the undrawn amount initially available
to be drawn under the Series A Letter of Credit; and (ii) for each subsequent
year that the Series A Letter of Credit remains in effect until the expiration
of its three (3) year term, Company
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<PAGE> 19
shall pay to Bank, in advance, on or before the anniversary of issuance of the
Series A Letter of Credit, a loan administration fee in an amount equal to one
and one quarter percent (1.25%) of the undrawn amount available to be drawn
under the Series A Letter of Credit as of the last day of the preceding year of
the term of the Series A Letter of Credit (which amount will take into account
principal reductions of the Series A Bonds). In no event shall Bank have any
obligation to make reimbursement or to otherwise account to Company in respect
of fees paid by Company as a result of any reduction in the undrawn amount under
the Series A Letter of Credit.
6.3 Increased Costs Due to Change in Law. If any change in any law
or regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by Bank, or (ii)
impose on Bank any other condition regarding this Agreement or the Series A
Letter of Credit (other than changes in the rates of income taxation generally
applicable to Bank), and the result of any such event shall be to increase the
cost to Bank of issuing or maintaining the Series A Letter of Credit (which
increase in cost shall be determined by Bank's reasonable allocation of the
aggregate of such cost increases resulting from such events), and such
requirement or cost shall remain in effect for more than one hundred eighty
(180) days after notice thereof from Bank to Company, then (a) Bank shall so
notify Company, and (b) upon receipt of such notice from Bank, Company shall
promptly pay to Bank, from time to time as specified by Bank, additional amounts
which shall be sufficient to compensate Bank for such increased costs as accrue
after the expiration of such one hundred eighty (180) day period, together with
interest on each such amount from the date of such notice until payment in full
thereof at the rate set forth in Article 13. A certificate as to such ---
increased cost incurred by Bank as a result of any such event, submitted by Bank
to Company, shall be conclusive as to the amount thereof.
6.4 Obligations Absolute. The obligations of Company under the Loan
Documents shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances:
(a) any lack of validity or enforceability of the Series A
Letter of Credit, or any of the Documents or any other agreement or
instrument related thereto;
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<PAGE> 20
(b) any amendment or waiver of or any consent to departure
from the terms of the Series A Letter of Credit or any of the Documents or
any other agreement or instrument related thereto;
(c) the existence of any claim, set-off, defense or other
right which the Company, Guarantor or Issuer may have at any time against
Trustee, any beneficiary or any transferee of the Series A Letter of
Credit (or any Person for whom Trustee, any such beneficiary or any such
transferee may be acting), Bank or any other Person, whether in connection
with this Agreement, the Series A Letter of Credit, any of the other Loan
Documents, the Series A Bonds or any other agreement or instrument related
thereto, or in connection with the Project or any unrelated transaction;
(d) any statement, draft or any other document presented under
the Series A Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any. respect, or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) the surrender or impairment of any securrity for the
performance or observance of the terms of this Agreement, any of the other
Loan Documents or any other agreement related thereto; or
(f) any other circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing.
6.5 Extension of Series A Letter of Credit. The term of the Series A
Letter of Credit may be extended if, following Company's request, Bank and
Company reach agreement on the terms of such extension. Bank shall not be
obligated to enter into any such extension or to otherwise extend, modify or
supplement the Series A Letter of Credit or any of the other Loan Documents.
6.6 Reserve Accounts. On or before December 15, 1986, Bank shall
establish and designate two interest-bearing accounts (the "Unrestricted Reserve
Account" and the "Restricted Reserve Account"). The Unrestricted Reserve Account
and the Restricted Reserve Account are collectively referred to herein (and in
the Series B Reimbursement Agreement) as the "Reserve Accounts." On December 15,
1986, Company shall deposit with Bank cash in the amount of $333,000.00, which
amount shall be apportioned between the Unrestricted Reserve Account and
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the Restricted Reserve Account pursuant to subsection 6.6.3, below, On December
15, 1987, Company shall deposit with Bank an additional $333,000.00, which
amount shall be apportioned between the Unrestricted Reserve Account and the
Restricted Reserve Account pursuant to subsection 6.6.3, below. In connection
with the Reserve Accounts, Bank and Company agree as follows:
6.6.1 All amounts held in the Reserve Accounts shall be
invested by Bank in accordance with instructions of Company that are wholly
acceptable to Bank, subject to all restrictions imposed by Bond Counsel from
time to time.
6.6.2 Bank and Company acknowledge that, as of the date of
this Agreement, Bond Counsel has advised them (a) that moneys to be deposited in
the Reserve Accounts and certain moneys deposited in other trust funds and
accounts (the "Trustee Accounts") held by Trustee (collectively, the "Arbitrage
Funds"), are subject to arbitrage restrictions, (b) that a portion of the
Arbitrage Funds (the "Unrestricted Funds") may be invested at an unrestricted
yield; which portion shall not exceed the smallest of (i) one and one-quarter
percent (1.25%) of the average annual debt service on, (ii) the maximum annual
debt service on, or (iii) fifteen percent (15%) of the aggregate outstanding
principal amount of, the Series A Bonds and the Series B Bonds, and (c) that if
the amount of the Unrestricted Funds is calculated pursuant to subsection (i),
"average annual debt service" shall mean the annual interest that the Series A
Bonds and the Series B Bonds would bear if initially issued at the Fixed
Interest Rate (as defined in the Trust Indenture and the Trust Indenture
relating to the Series B Bonds [collectively, the "Trust Indentures"]).
6.6.3 Those amounts to be deposited by Company pursuant to
this Section 6.6 that qualify as Unrestricted Funds shall be deposited in the
Unrestricted Reserve Account. Those amounts to be deposited by Company pursuant
to this Section 6.6 that are in excess of the Unrestricted Funds (the
"Restricted Funds") shall be deposited in the Restricted Reserve Account and
shall be subject to yield restrictions as required by Bond Counsel from time to
time. At such times as a portion of the Series A Bonds and/or the Series B Bonds
are redeemed or otherwise cancelled in accordance with the provisions of either
Trust Indenture, Bond Counsel shall consult with Bank and Bank shall, to the
extent required by Bond Counsel, transfer all or a portion of the Unrestricted
Funds from the Unrestricted Reserve Account to the Restricted Reserve Account,
thereby increasing the Restricted Funds and decreasing the Unrestricted Funds.
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6.6.4 Company hereby grants to Bank and Trustee a lien on and
a security interest in the Reserve Accounts, all amounts deposited in the
Reserve Accounts and all proceeds of the investment or disposition of the
amounts deposited therein, as security for (a) the payment and performance of
all indebtedness and other obligations of Company to Bank under the Loan
Documents (including the "Loan Documents" as defined in this Agreement and the
"Loan Documents" as defined in the Series B Reimbursement Agreement) and (b) the
payment by Company to Trustee of the principal of, and all accrued interest on,
the Series A Bonds and the Series B Bonds. Company shall, at its sole expense,
deliver or cause to be delivered to Bank a pledge and security agreement (the
"Reserve Accounts Pledge Agreement") executed by Company, in the form attached
hereto as Exhibit "F" and from time to time execute and deliver such other
instruments and documents as Bank may require in order to evidence or perfect
such pledge.
6.6.5 In the event that Company desires to provide substitute
collateral in lieu of payment of all or a portion of the moneys to be deposited
by Company pursuant to this Section 6.6, acceptance of such substitute
collateral shall be in Bank's sole and absolute discretion.
7. Representations and Warranties by Company. As a material inducement to
Bank's entry into this Agreement and the transactions contemplated hereby,
Company represents and warrants to Bank as follows:
7.1 Formation of Company. Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, (b) has all requisite power and authority to conduct its business
and to own and lease its properties, and (c) is duly qualified to do business
in, and is in good standing in, every jurisdiction in which the nature of
business conducted by it makes such qualification necessary or where failure to
so qualify would have a material adverse effect on its business or financial
condition or its performance of its obligations under the Documents.
7.2 Execution, Delivery and Performance of Loan Documents and Bond
Documents.
7.2.1 Company and Guarantor have all requisite power and
authority to execute and deliver, and to perform
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<PAGE> 23
all of their obligations under, the Documents, and shall execute and deliver to
Bank, prior to the issuance of the Series A Letter of Credit and as a condition
thereto, a certificate evidencing the due authorization and consent of the board
of directors of Company and the partners in Guarantor to the execution of the
Documents and the entry by Company and Guarantor into the transaction
contemplated thereby.
7.2.2 The execution and delivery by Company of, and the
performance by Company of all of its obligations under, each Document has been
duly authorized by all necessary action and do not and will not:
(a) require any consent or approval not heretofore obtained of
any Person having any interest in Company;
(b) violate any provision of, or require any consent under the
articles or bylaws of Company;
(c) result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge,
right of others, or other encumbrance of any nature (other than as
contemplated under the Documents) upon or with respect to any property now
owned or leased or hereafter acquired by Company;
(d) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to Company; or
(e) result in a breach of or constitute a default under, or
cause or permit the acceleration of any material obligation owed under,
any indenture or loan or credit agreement or any other agreement, lease,
or instrument to which Company is a party or by which Company or any of
its property is bound or affected.
7.2.3 At the time of execution of this Agreement, Company is
not in default in any respect that is materially adverse to the interests of the
holders of the Documents or that would have any material adverse effect on the
financial condition of Company or the conduct of its business under any law,
rule, regulation, order, writ, judgm ment, injunction, decree, determination,
award, indenture, agreement, lease or instrument described in Section 7.2.2(d)
or Section 7.2.2(e), above.
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7.2.4 No authorization, consent, approval, order, license,
exemption from, or filing or registration or qualification with, any court or
governmental department, public body, authority, commission, board, bureau,
agency, or instrumentality, is or will be required to authorize, or is otherwise
required (except for such authorizations, consents, approvals, orders, licenses,
exemptions or filings as may be required under the state securities or "Blue
Sky" laws in connection with the sale of the Series A Bonds by the original
Purchaser under the Bond Purchase Agreement, which shall be obtained to the
extent necessary by the Original Purchaser) in connection with the following:
(a) the execution and delivery by Company of, and the
performance by Company of all of its obligations under, the Documents, or
(b) the creation of the liens, security interests, or other
charges or encumbrances described in the Documents.
7.2.5 Each of the Documents, when executed and delivered, will
constitute the legal, valid, and binding obligations of Company (to the extent
it is a party thereto or obligated thereunder), enforceable against Company in
accordance with its terms.
7.3 Financial Statements. Company has furnished to Bank its
financial statements, and such statements and any other financial statements or
reports submitted by Company to Bank or to the Original Purchaser accurately
reflect the financial position of Company as of the date thereof.
7.4 No Material Adverse Change. There has been no material adverse
change in the condition, financial or otherwise, of Company since the dates of
the financial statements described in Section 7.3, above.
7.5 Tax Liability. Company has filed all tax returns (federal, state
and local) required to be filed and has paid all taxes shown thereon to be due
and all property taxes due, including interest and penalties, if any; provided,
however, that Company shall not be required to pay and discharge any such tax so
long as the legality thereof shall be promptly and actively contested in good
faith and by appropriate proceedings. Company has established and is maintaining
adequate reserves for tax liabilities, if any
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(including any tax liabilities contested pursuant to this Section 7.5).
7.6 Compliance with Laws. Company is and shall remain in compliance
in all material respects with all laws, regulations and requirements applicable
to its business and has obtained all authorizations, consents, approvals,
orders, licenses, exemptions from, and has accomplished all filings or
registrations or qualifications with, any court or governmental department,
public body, authority, commission, board, bureau, agency or instrumentality,
failure to obtain or comply with which would have a material and adverse effect
upon its business.
7.7 Litigation. There are no actions, suits or proceedings pending
or threatened against or affecting Company or the property of Company before any
court or governmental department, public body, authority, commission, board,
bureau, agency or instrumentality, except as expressly disclosed to Bank in
writing by Company prior to the execution of this Agreement.
7.8 Official Statement. To the best of Company's knowledge, neither
the Official Statement nor the Preliminary Official Statement provided in
connection with the Series A Bonds, nor any certificate or statement or any data
furnished by Company to Bank or to Trustee or any other person or entity in
connection with the negotiation of this Agreement or any of the other Documents
or the transactions contemplated thereby (other than statements contained in the
Preliminary Official Statement which were revised or corrected in the Official
Statement) contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in the light
of the circumstances under which they were made, not misleading.
7.9 Conditions to Issuance. All of the conditions to issuance of the
Series A Letter of Credit have been fulfilled, except as expressly disclosed to
Bank in writing by Company prior to the execution of this Agreement.
8. Representations and Warranties by Bank. As a material inducement
to Company's entry into this Agreement and the transactions contemplated hereby,
Bank represents and warrants to Company that:
8.1 Formation of Bank. Bank is a national banking association, duly
organized, validly existing and in good standing; Bank has all requisite
corporate power to carry on
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its business as now being conducted, and has all requisite corporate power and
authority to enter into this Agreement, issue the Series A Letter of Credit, and
perform its obligam tions hereunder and thereunder.
8.2 Authorization. The execution, delivery and performance of this
Agreement and the issuance of the Series A Letter of Credit by the Bank have
been duly authorized by all necessary corporate action on the part of Bank.
8.3 No Conflict. The execution, delivery and performance of this
Agreement and the issuance of the Series A Letter of Credit by Bank do not
conflict with or violate any provision of the articles of incorporation or
by-laws of Bank and do not, to the best of Bank's knowledge, conflict with,
violate, result in a breach of, or cause a default under (i) any provision of
federal, state or local law or regulation relating to the business or assets of
Bank, (ii) any provision of any consent, arbitration award, judgment or decree
by which Bank is bound, or (iii) any provision of any agreement or instrum ment
to which Bank is a party or by which Bank or its assets are bound or restricted.
8.4 Actions and Proceedings. There is no pending action or
proceeding before any court, governmental agency or arbitrator against Bank and,
to the best of Bank's knowledge, there is no threatened action or proceeding
against Bank before any court, governmental agency or arbitrator which would
materially and adversely affect the ability of the Bank to perform its
obligations under this Agreement or the Series A Letter of Credit, subject to
applicable laws, principles and judicial decisions.
9. Affirmative Covenants. For so long as any obligation of Company in
connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall, unless Bank otherwise consents in writing:
9.1 Governmental Approvals. Deliver to Bank, from time to time at
Bank's request, evidence in form and substance satisfactory to Bank that Company
has complied with all applicable laws, ordinances, regulations and other
requirements relating thereto.
9.2 Continued Existence. Maintain its existence, and continue to be
a corporation in good standing in the State of California. In connection with
the covenants given pursuant to this Section 9.2, Company agrees that it will
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not dissolve or otherwise dispose of all or substantially all of its assets.
9.3 Books and Records. Maintain full and complete books of account
and other records reflecting the results of its operations (in conjunction with
any other ventures as well as specifically with respect to the Project),
including without limitation all contributions of equity investment capital, and
provide to Bank, promptly after request by Bank therefor, such financial
statements and other information pertaining to Company, and the assets and
operations of Company, as Bank may from time to time request.
9.4 Annual Operating Statements. Deliver to Bank the following:
(a) Promptly and in any event within ninety (90) days after
the end of each Fiscal Year, balance sheets and statements of income for
Company's operations for such Fiscal Year, accompanied with all supporting
schedules and certificates of Company's chief financial officer that the
statements are true and correct.
(b) Upon request, copies of all such regular or periodic
financial statements or financial reports as Company shall send to its
shareholder(s).
(c) Upon request, copies of all such regular or periodic
reports which are available for public inspection which Company may be
required to file with any federal or state department, bureau, commission
or agency, including without limitation tax returns.
(d) Promptly and in any event within one hundred twenty (120)
days after the end of each Fiscal Year, a certification of a Designated
Representative that no Event of Default has occurred and Company is in
compliance with all covenants and agreements made by Company and contained
in this Agreement or any of the Loan Documents.
9.5 Notice of Certain Events. Promptly notify Bank if (a) Company
learns of the occurrence of any event which constitutes, or will constitute,
with the passage of time or the giving of notice or both, an Event of Default or
a default under this Agreement or any of the other Documents, together with a
detailed statement by a responsible officer of Company specifying the nature
thereof and what action Company is taking or proposes to take with respect
thereto,
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or (b) Company receives any notice from, or the taking of any other action by,
the holder of any promissory note, debenture or other evidence of indebtedness
of Company or of any security (as defined in the Securities Act of 1933, as
amended) of Company with respect to a claimed default, together with a detailed
statement by a responsible officer of Company specifying the notice given or
other action taken by such holder and the nature of the claimed default and what
action Company is taking or proposes to take with respect thereto, or (c)
Company learns of the existence of any legal, judicial or regulatory proceedings
affecting Company or any property of Company in which the amount involved is
material and is not covered by insurance or which, if adversely determined,
would cause a material adverse change in the financial condition of Company, or
(d) there shall occur or exist any other event or condition causing a material
adverse change in the financial condition of Company.
9.6 Opinions. Deliver to Bank, concurrently with the delivery
thereof to Trustee, a copy of each opinion of counsel required pursuant to the
Bond Documents, in each case addressed to Bank.
9.7 Defaults of Others. Use its best efforts to cure or cause to be
cured all defaults of Trustee or Issuer under the Bond Documents, if
economically practical and/or required in order to avoid an acceleration of the
Series A Bonds.
9.8 Tax Appeals. Bring, maintain and diligently prosecute any and
all actions, appeals and proceedings which are available to Company in order to
challenge, reverse or set aside a "Determination of Taxability," as that term is
defined in the Bond Documents.
9.9 Surplus Construction Funds. Subsections 3.3(h)(i) and (iv) of
the Series A Loan Agreement notwithstanding, use moneys in the Construction Fund
(as defined in the Series A Loan Agreement) remaining after the Project is
complete and fully paid for solely for the purposes described in subsecm tions
3.3(h)(ii) and (iii) of the Series A Loan Agreement.
9.10 Notice re Disbursement Conditions. Promptly notify Bank if
Company learns that any Condition to Disbursement was not on the date of this
Agreement, or has since ceased to be, fulfilled.
9.11 Insurance. Provide or cause to be provided the following
policies of insurance in connection with the
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Company Properties and the improvements located thereon (the "Company
Improvements"):
(a) workers' compensation insurance and any other insurance
required by law in connection with the Project;
(b) builder's risk-all risk insurance covering 100% of the
replacement cost of the Company Improvements during the course of
construction and following completion, and all related personal property,
in the event of fire, lightning, windstorm, vandalism, malicious mischief
and such other hazards, casualties and contingencies as are normally and
usually covered by extended coverage policies in effect in the localities
where the Company Properties are situated (including insurance against
loss by flood if any of the Company Properties are now or hereafter
located in an area designated as being subject to the danger of flood);
(c) public liability insurance in an amount deemed necessary
from time to time by Bank, but in no event less than $10,000,000 for a
"single occurrence";
(d) property damage insurance in an amount deemed necessary
from time to time by Bank, but in no event less than $1,000,000;
(e) such business interruption insurance with respect to
business uses of the Company Properties as Bank may require (including
insurance against rental or income loss during a period of repair or
restoration of damage for a period of at least one year); and
(f) such other policies of insurance as Bank may reasonably
require from time to time.
All such insurance coverages (i) shall be maintained as long as any obligation
of Company in connection with this Agreement, the Series A Letter of Credit or
any of the other Loan Documents remains outstanding at Company's sole cost and
expense, (ii) shall be with insurers of recognized responsibility which are
approved in writing by Bank, (iii) shall be in form and substance satisfactory
to Bank, (iv) shall include a "lender's loss payable endorsement" (form 438 BFU)
in form and substance satisfactory to Bank, assuring Bank that all proceeds are
to be payable to Bank and Trustee as their interests may appear, (v) shall
contain a provision to the effect that the insurer shall not cancel the policy
or modify
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it materially and adversely to the interests of Bank and Trustee, as their
interests appear, without first giving Bank at least thirty (30) days' prior
written notice thereof, and (vi) shall be in such deductible amounts as Bank and
Company shall agree upon (in the absence of which agreement such policies shall
not have deductible amounts). Certificates of insurance for all of the above
insurance policies, showing the same to be in full force and effect, shall be
delivered to Bank upon demand by Bank therefor at any time while any obligation
of Company in connection with the Series A Bonds, this Agreement, the Series A
Letter of Credit or any of the Loan Documents remains outstanding. All policies
insuring against damage to the Company Improvements shall contain an agreed
value clause sufficient to eliminate any risk of cominsurance.
9.11.1 Delivery of Proceeds to Bank. In the event that,
notwithstanding the "lender's loss payable endorsement" requirement of this
Section 9.11, the proceeds of any insurance policy described herein are paid to
Company, Company shall deliver such proceeds to Bank immediately upon receipt.
9.11.2 Application of Casualty insurance Proceeds. Any
proceeds collected (the "Proceeds"") under any fire or other physical damage
insurance policy described in this Section 9.11 shall be disbursed to Company as
provided in subsection 9.11.2.1, but only upon fulfillment of each of the
following conditions within 60 days following the occurrence of the damage for
which the Proceeds are collected:
(a) Company shall demonstrate to Bank's reasonable
satisfaction that the Proceeds (together with amounts deposited by Company
pursuant to subsection (b)) will be adequate to accomplish the repair and
reconstruction of the Company Improvements that have been damaged or
destroyed, and to restore the fair market value of the Company Property to
at least the value it had immediately prior to sustaining the damage. Such
demonstration shall include delivery to Bank of (i) plans and
specifications reasonably satisfactory to Bank and (ii) a construction
contract in form and content, and with a contractor, reasonably
satisfactory to Bank.
(b) To the extent that the Proceeds are insufficient to
accomplish the repairs and reconstruction required above, Company shall
deliver to Bank funds (the "Shortfall Funds") in the amount of such
shortfall, which funds shall be assigned to Bank and Trustee as security
for the Secured Obligations and
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shall be held and disbursed in the same manner as the Proceeds; provided,
however, that if such damage occurs to the Project prior to the completion
of the Project, Company shall deliver the Shortfall Funds to Depository
for deposit into the Construction Fund.
(c) Company shall execute such documents, in form and content
satisfactory to Bank, as Bank requires to evidence and secure Company's
obligation to use all amounts disbursed for the prompt repair and
reconstruction of the Company Property in accordance with the plans and
specifications approved by Bank.
(d) There shall have occurred no Event of Default which remains
uncured or event which, with the giving of notice or the passage of time
or both, would constitute an Event of Default, and Bank shall have
received a certificate to that effect signed by a Desigm nated
Representative.
9.11.2.1 Any Proceeds and Shortfall Funds to be disbursed to
Company shall be held by Bank (or Depository, as applicable) in a
noninterest-bearing account (or the Construction Fund, as applicable) and
disbursed in accordance with Bank's customary construction lending practices.
Any amounts remaining undisbursed following completion of (and full payment for)
such repairs and reconstruction shall be returned to Company up to the amount of
any Shortfall Funds deposited by Company, and any other amounts remaining shall,
as Bank chooses in its sole and absolute discretion, either (a) be paid to
Company or (b) applied by Bank and/or Depository against (and/or held by Bank as
security for) Company's obligations to Bank and Trustee, as their interests in
the Company Property then appear.
9.11.2.2 In the event Company fails to fulfill the conditions
set forth in subsections 9.11.2(a) through 9.11.2(d) within 60 days following
the date on which the damage occurs, the Proceeds shall be applied by Bank
and/or Depository against (and/or held by Bank as security for) Company's
obligations to Bank and Trustee, as their interests in the Company Property then
appear.
9.11.2.3 In the event Bank and/or Depository applies any
Proceeds against (and/or Bank holds any Proceeds as security for) any portion of
Company's obligations to Bank and Trustee and the fair market value of the
Company Property (together with all other collateral then held by Bank and
Trustee for such obligations) immediately thereafter is, in
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Bank's reasonable judgment, inadequate to secure all remaining obligations to
Bank and Trustee secured by the Deed of Trust and the mortgage and deed to
secure debt described in subsections 4.2(b) and (c), above (collectively, the
"Company Deeds of Trust"), as applicable, Bank may thereupon require that
Company, within 30 days of Bank's written demand, provide additional cash
collateral in the minimum amount necessary to reduce such remaining obligations
to an amount for which Bank's and Trustee's interest in the Company Property is
adequate security.
9.12 Payment of Taxes, Assessments and Charges. Pay all taxes,
assessments, charges and levies imposed by any public authority or utility
company which are or may become a lien affecting any Company Property or any
part thereof, including without limitation assessments on any appurtenant water
stock; provided, however that Company shall not be required to pay and discharge
any such tax, assessment, charge or levy so long as (a) the legality thereof
shall be promptly and actively contested in good faith and by appropriate
proceedings and (b) Company maintains reserves adequate to pay any liabilities
contested pursuant to this Section 9.12.
9.13 Compliance with Requirements. Comply with all conditions,
covenants, restrictions, easements, reservations, rights, rights of way and all
applicable laws, ordinances, regulations, use permits, occupancy permits,
building permits and other requirements, including without limitation those
affecting or relating to each Company Property, the construction of any
improvements thereon or Company's operations thereon.
9.14 Maintenance and Furnishing of Properties. Maintain the Company
Properties, and each portion thereof (including without limitation equipment,
machinery and fixed assets) fully furnished and in good condition and repair;
and not permit any waste or damage with respect thereto.
10. Negative Covenants. For so long as any obligation of Company in
connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall not, unless Bank otherwise consents in writing:
10.1 Transfers of Property or Obligations. Assign or delegate any
obligations in connection with the Series A Bonds, the Series A Letter of
Credit, this Agreement or any of the other Documents, or sell, assign, convey,
lease as a whole or otherwise transfer any Company Property or any interest
therein, without the express prior written consent of Bank, which consent may be
granted or withheld by Bank in
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its sole discretion. In connection with the restrictions contained in this
Section 10.1, Company acknowledges that Bank has entered into the transaction
contemplated by this Agreement in reliance upon the financial strength,
creditworthiness, reputation and management expertise of Company and would not
have entered into such transaction but for such reliance.
10.2 Liens on Property. Create or cause or suffer to become
effective any mortgage, deed of trust or like lien or encumbrance affecting the
Property or any portion of the same, except for the liens of the Deed of Trust,
the Series A Intercreditor Agreement and the Permitted Encumbrances. In
connection with the restrictions contained in this Section 10.2 and in Section
10.3, below, Company acknowledges that further liens on the Property are
prohibited pursuant to the Bond Documents and that, with any rehabilitation
project of the magnitude contemplated by this Agreement, numerous modifications
of the plan of development may be necessary from time to time during the course
of rehabilitation, including modification of matters relating to the financing
of rehabilitation. Under these circumstances, the existence of junior liens
against all or any portion of the Property, the holders of which would be
required to consent to such modifications in order to adequately protect the
position of the Bank as lien holder on the Property, would impair the
expeditious completion of the Improvements, to the detriment of all parties. In
connection with the covenant contained in this Section 10.2 and Section 10.3,
below, Company acknowledges further that further liens and encumbrances on the
Property or any Company Property will, in Bank's view, materially impair
Company's financial strength and creditworthiness.
10.3 Liens on Personal Property. Install in, or otherwise use in
connection with, the Company Improvements any personal property under any
security agreements or similar agreements however denominated whereby the right
is reserved or accrues to anyone to remove or repossess any such items or
whereby any Person other than Bank or Trustee reserves or acquires a lien upon
such items.
10.4 Leases. Enter into any leases, management agreements or other
agreements pursuant to which any Person is given any right to occupy, manage or
operate any Company Property or any portion thereof or space therein other than
(a) leases or agreements which are expressly terminable at will by Company and
its successors and assigns on not more than thirty (30) days' notice, and (b)
other leases and agreements, subject to the express prior written approval of
Bank (which approval shall not be unreasonably withheld).
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10.5 Easements. Grant, convey or cause to be effective any easement,
license, right of way, or title restriction or limitation affecting any Company
Property or any portion of the same without the express prior written consent of
Bank (which consent shall not be unreasonably withheld); provided, however, that
Company may grant routine easements which are reasonably necessary and required
by governmental or quasigovernmental entities or utility companies for the
furnishing of utilities or services without the requirement of such consent by
Bank, so long as such easements shall not materially weaken, diminish or impair
the security of any Company Deed of Trust or interfere with the intended use of
any Company Property.
11. Events of Default and Remedies Upon Default.
11.1 Events of Default. The occurrence of any one or more of the
following, whatever the reason therefor, shall constitute an Event of Default
hereunder:
(a) Company shall fail to pay any amount of principal or
interest owing under this Agreement or any of the other Loan Documents,
together with interest thereon from the due date until payment at the rate
provided in Article 13, within ten (10) days after the date on which
payment is due; or
(b) Either Company or Guarantor shall fail to perform or
observe any term, covenant or agreement contained in any of the Loan
Documents on its part to be performed or observed the breach of which can
be cured by the payment of money, within ten (10) days after notice; or
(c) Either Company or Guarantor shall fail to perform or
observe any term, covenant or agreement contained in any of the Loan
Documents on its part to be performed or observed, other than terms,
covenants or agreements the breach of which can be cured by the payment of
money, within thirty (30) days after notice (provided, however, that if
cure cannot reasonably be effected within such thirty (30) day period
there shall be no Event of Default under this Section 11.1(c) so long as
Company or Guarantor commences cure within such thirty (30) day period and
thereafter diligently prosecutes such cure to completion); or
(d) Trustee declares any default in connection with the Series
A Bonds or the Bond Documents or there
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is a Determination of Taxability (as defined in the Trust Indenture); or
(e) Company shall fail to perform or observe any term,
covenant or agreement contained in any of the Bond Documents on its part
to be performed or observed; or
(f) Any representation or warranty in any of the Documents or
in any certificate, agreement, instrument or other document made or
delivered pursuant to or in connection with any of the Documents proves to
have been incorrect in any material respect when made; or
(g) All or a substantial portion of the Property or any of the
Supplemental Properties is condemned, seized or appropriated by a
governmental authority; or
(h) The dissolution or liquidation of Company or Guarantor or
failure by Company or Guarantor promptly to lift any execution,
garnishment or attachment of such consequence as will materially impair
its ability to make any payments under the Loan Documents, or the entry of
an order for relief by a court of competent jurisdiction in any proceeding
for the liquidation or reorganization of Company or Guarantor, or the
filing of a petition by or against Company or Guarantor under the
provisions of any bankruptcy act or under any similar act which may be
hereafter enacted, or an assignment by Company or Guarantor for the
benefit of its creditors, or the entry by Company or Guarantor into an
agreement of composition with its creditors or the appointment of a
receiver, trustee, custodian, liquidator or similar officer for Company or
Guarantor; or
(i) Cessation of ownership or operation by Company or
Guarantor, as applicable, of the Property or any of the Supplemental
Properties (except as a result of damage, destruction or condemnation of
the Property or any of the Supplemental Properties, if Company or
Guarantor thereafter complies with the provisions of the Loan Documents
pertaining thereto), including such cessation without the prior approval
of Bank required under Section 11.2 of the Guaranty; or
(j) The occurrence of any Event of Default under the Series B
Reimbursement Agreement.
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11.2 Remedies Upon Default. Upon the occurrence of any Event of
Default, Bank may, at its option, do any or all of the following:
(a) Declare the principal of all amounts owing under this
Agreement and the other Loan Documents (including all obligations secured
by the Security Documents) and all other indebtedness of Company to Bank,
together with interest thereon, to be forthwith due and payable,
regardless of any other specified maturity or due date, without notice of
default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind or
character, and without the necessity of prior recourse to any security;
(b) Implement any remedies available to Bank under or in
connection with the Bond Documents;
(c) Terminate its consent to the disbursement or release of
the remaining Series A Bond Proceeds;
(d) If the Event of Default may be cured by Bank by taking
actions or making payments of money, Bank shall have the right (but not
the obligation) to take such actions (including without limitation the
retention of attorneys and the commencement or prosecution of actions on
its own behalf or on behalf of Company), or make such payments and pay for
the costs of such actions (including without limitation attorneys' fees
and court costs) from its own funds; provided, however, that the taking of
such actions at Bank's expense or the making of such payments by Bank out
of Bank's own funds shall not be deemed to cure such Event of Default, and
the same shall not be so cured unless and until Company shall have
reimbursed Bank for any costs incurred in taking such actions and for any
such payments, together with interest at the rate provided for in Article
13, from the date of incurring such costs or making such payments until
the date of reimbursement. If Bank advances its own funds for such
purposes, such funds shall be secured by the Security Documents,
notwithstanding that such advances may cause the total amount advanced
hereunder to exceed the amount committed to be advanced pursuant to this
Agreement, and Company shall immediately upon demand reimburse Bank
therefor with interest at the rate provided for in Article 13, from the
date of such advance until the date of reimbursement; and
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(e) Exercise any and all of its rights under the Documents or
as provided by law including, without limitation, making demand upon
Guarantor and collecting upon the Guaranty and foreclosing on any
security, and exercise any other rights with respect to any security for
Company's obligations hereunder, whether under the Security Documents or
any other agreement or as provided by law, all in such order and in such
manner as Bank in its sole discretion may determine,
11.3 Cumulative Remedies; No Waiver. All remedies of Bank provided
for herein are cumulative and shall be in addition to any and all other rights
and remedies provided in the Series A Letter of Credit, the Security Documents,
the Bond Documents or any of the other Loan Documents, or provided by law from
time to time; provided, however, that Bank hereby agrees to waive, during the
pendency of any proceeding by or against Company or Guarantor in bankruptcy or
reorganization, its right to set off any and all deposits (general or special)
at any time held and other indebtedness at any time owing by Bank to or for the
credit or the account of Company or Guarantor, as applicable, against any and
all of the obligations of Company or Guarantor, as applicable, now or hereafter
existing under this Agreement or in any of the other Loan Documents. The
exercise of any right or remedy by Bank hereunder shall not in any way
constitute a cure or waiver of default hereunder or under the Series A Letter of
Credit, the Security Documents, the Bond Documents or any of the other Loan
Documents, nor invalidate any notice of default or any act done pursuant to any
such notice, nor prejudice Bank in the exercise of any rights hereunder or under
the Series A Letter of Credit, the Security Documents, the Bond Documents or any
of the other Loan Documents, unless in the exercise of said rights, Bank and
Trustee realize all amounts owed to either under the Series A Letter of Credit,
this Agreement, the Security Documents, the Bond Documents and any of the other
Loan Documents and all Events of Default are cured. No waiver by Bank of any
default or breach by Company or Guarantor hereunder shall be implied from any
omission by Bank to take action on account of such default if such default
persists or is repeated, and no express waiver shall affect any default other
than the default expressly made the subject of the waiver. Any such express
waiver shall be operative only for the time and to the extent therein stated.
Any waiver of any covenant, term or condition contained herein shall not be
construed as a waiver of any subsequent breach of the same covenant, term or
condition. The consent or approval by Bank to or of any act by Company or
Guarantor requiring further consent or approval shall not be deemed to
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waive or render unnecessary consent or approval to or of any subsequent act.
12. Miscellaneous.
12.1 Actions. Bank shall have the right to commence, appear in, and
defend any action or proceeding purporting to affect the rights or duties of
Bank, Company or Guarantor hereunder or under the Guaranty or the payment of any
funds hereunder or under the Guaranty, and in connection therewith Bank may pay
necessary expenses, employ counsel and pay reasonable attorneys' fees. Company
agrees to pay to Bank, on demand, all costs and expenses incurred by Bank in
connection therewith, including without limitation reasonable attorneys' fees,
together with interest from the date of expenditure at the rate provided in
Article 13. In the event that either Bank or Company shall bring an action
against the other to interpret or enforce the terms or provisions of the Series
A Letter of Credit, this Agreement or any of the other Loan Documents, the
prevailing party-in such action shall be entitled to recover its attorneys' fees
and costs (whether or not taxable) as awarded by a court of competent
jurisdiction, whether or not such action is prosecuted to final judgment.
12.2 Nonliability of Bank, Company acknowledges and agrees that:
(a) the relationship between Company and Bank is, and shall at
all times remain, solely that of borrower and lender, and Bank neither
undertakes nor assumes any responsibility or duty to Company to select,
review, inspect, supervise, pass judgment upon or inform Company of any
matter in connection with the Project, including without limitation
matters relating to the adequacy or legal sufficiency of any of the
documents, agreements or arrangements pertaining to the Series A Bonds,
the Bond Documents or the rights or obligations of any Person in
connection therewith; and Company shall rely entirely upon its own
judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or information supplied to Company by
Bank in connection with such matters is for the protection of Bank only
and neither Company nor any other Person is entitled to rely thereon;
(b) Bank owes no duty of care to protect Company against
negligent, faulty, inadequate or defective building or construction;
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(c) Bank shall not be responsible or liable to Company for any
loss, damage, liability or claim of any kind relating to injury or death
to persons or damage to property in connection with the negligent, faulty,
inadequate or defective building or construction or use or operation of
any of the Properties, and Company hereby indemnities and holds Bank
harmless from any such loss, damage, liability or claim.
(d) Bank shall not be responsible or liable to Company for use
which may be made of the Series A Letter of Credit or for any acts or
omissions of Trustee and any beneficiary or transferee in connection
therewith;
(e) Bank shall not be responsible or liable to Company for the
validity, sufficiency or genuineness of documents (except as to Bank's
signatures thereon), or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged (except to the extent Bank
is grossly negligent in accepting or relying upon such documents);
(f) Bank shall not be responsible or liable to Company as a
result of any circumstances in any way related to the making or failure to
make payment under the Series A Letter of Credit, other than as a result
of the gross negligence or willful misconduct of Bank.
12.3 No Representations by Bank. By accepting or approving anything
required to be observed, performed or fulfilled, or to be given to Bank pursuant
to this Agreement or any of the other Documents, including any certificate,
statement of profit and loss or other financial statement, survey, appraisal or
insurance policy, Bank shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or representation to anyone with respect
thereto by Bank. Bank may accept documents in connection with the Series A
Letter of Credit or any of the other Documents which appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
12.4 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Company and Bank in connec" tion with the Series A Letter of Credit. It shall be
deemed a supplement to the Security Documents. It is made for the
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sole protection of Company, Bank, and Bank's successors and assigns. No other
Person shall have any rights of any nature hereunder or by reason hereof, except
to the extent that Trustee is expressly granted rights hereunder.
12.5 Indemnity by Company. Company hereby indemnifies and holds
harmless Bank and its directors, officers, agents and employees (collectively
the "indemnitees") from and against:
(a) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person if the claim,
demand, action or cause of action directly or indirectly relates to a
claim, demand, action or cause of action that the Person has or asserts
against Company in connection with the issuance of the Series A Letter of
Credit, the Series A Bonds, any of the Bond Documents, or the transaction
to which such documents pertain;
(b) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person and arise from or
in connection with (i) any statement or omission, actual or alleged, in
the Bond Documents, or (ii) any breach or default, actual or alleged, of
the representations, warranties, covenants, conditions or agreements
contained in this Agreement or any of the other Loan Documents or in any
of the Bond Documents; and
(c) any and all liabilities, losses, costs or expenses
(including court costs and attorneys' fees) that any indemnitee suffers or
incurs as a result of the assertion of any claim, demand, action or cause
of action specified in Section 12.5(a) or Section 12.5(b), above.
The indemnity contained in this Section 12.5 shall not extend to any claims,
demands, actions, causes of action, liabilities, losses, costs or expenses which
result solely from the gross negligence or willful misconduct of Bank.
12.6 Commissions. Company hereby indemnities and holds Bank harmless
from any responsibility, cost and/or liability, including any attorneys' fees
incurred, in connection with any claim by any Person for the payment of any
commission, charge or brokerage fee in connection with the Series A Bonds or any
of the other transactions contemplated in connection with this Agreement.
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<PAGE> 41
12.7 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of Company, Bank and their respective successors and assigns,
subject to the provisions of Section 10.1, above.
12.8 Execution in Counterparts. This Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, taken together will be deemed to
be but one and the same instrument. The execution of this Agreement or any other
Loan Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
12.9 Prior Agreements; Amendments; Consents. This Agreement,
together with the other Documents, contains the entire agreement between Bank
and Company with respect to the Series A Letter of Credit, and all prior
negotiations, understandings and agreements with respect to the Series A Letter
of Credit are superseded by this Agreement and the other Documents. No
amendment, modification, supplement, termination or waiver of any provision of
this Agreement or any of the other Loan Documents, and no consent to any deparm
ture by Company therefrom, may in any event be effective unless in writing
signed by Bank, and then only in the specific instance and for the specific
purpose given.
12.10 Survival of Representations and Warranties. All
representations and warranties of Company contained herein or in any other Loan
Document (qualified in each case by the facts and circumstances surrounding each
such document at the time such document was executed) will survive the delivery
of the Series A Letter of Credit and are material and have been and will be
relied upon by Bank, notwithstanding any investigation made by Bank or on behalf
of Bank. For the purpose of the foregoing, all statements contained in any
certificate, agreement or other writing delivered by or on behalf of Company or
Guarantor pursuant hereto or pursuant to any other Loan Document or in
connection with the transactions contemplated hereby or thereby shall be deemed
to be representations and warranties of Company contained herein or in the other
Loan Documents, as the case may be.
12.11 Notices. All notices, requests, demands, directions and other
communications provided for in this
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Agreement and under any of the other Loan Documents must be in writing and must
be mailed, telegraphed, delivered or sent by Telex or cable to the appropriate
party at its address as follows:
If to Company:
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
Attention: Charles W. King, Jr.
with a copy to:
Gerald Wright, Esq.
General Counsel
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
If to Bank:
Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: George Huxtable
Vice President
with a copy to:
Sheppard, Mullin, Richter & Hampton
333 South Hope Street
48th Floor
Los Angeles, California 90071
Attention: Robert E. Williams
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 12.11. Any
notice, request, demand, direction or other communication given by telegram,
Telex or cable must be confirmed within 48 hours by letter mailed or delivered
to the appropriate party at its respective address. If any notice, request,
demand, direction or other communication is given by mail it will be effective
upon the earlier of (a) 96 hours after deposit in the U.S. Mail, certified or
registered mail, return receipt requested postage prepaid or (b) actual receipt,
as indicated by the return receipt; if given by telegraph or cable, when
delivered to the telegraph
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<PAGE> 43
company with charges prepaid; if given by Telex, when sent; or if given by
personal delivery, when delivered.
12.12 Further Assurances. Company shall, at its expense and
without expense to Bank, do, execute and deliver such further acts and documents
as Bank from time to time requires for the purpose of assuring and confirming
unto Bank the rights hereby created or intended now or hereafter so to be, or
for carrying out the intention or facilitating the performance of the terms of
any Loan Document, or for assuring the validity of any security interest or lien
under any Security Document.
12.13 Governing Law. All of the Loan Documents shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Texas.
12.14 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid shall be
inoperative, unenforceable or invalid without affecting the remaining
provisions, and to this end the provisions of all Loan Documents are declared to
be severable.
12.15 Inconsistency With Security Documents. In the event that
any of the provisions of the Security Documents are inconsistent with the
provisions of this Agreement, the provisions of this Agreement shall prevail.
12.16 Headings. Article and section headings in this Agreement
are included for convenience of reference only and are not part of this
Agreement for any other purpose.
12.17 Time of the Essence. Time is of the essence.
12.18 No FDIC Insurance. Company and Bank hereby agree that
the transaction contemplated in this Agreement is not intended to and shall not
constitute a "deposit" within the meaning of 12 U.S.C. Section 1813(l)(1).
Neither Company nor Bank nor any successor or assign of either shall make any
claim against the Federal Deposit Insurance Corporation in the event of any
failure by Bank, in whole or in part, to fulfill its obligations with respect to
any draw or draws under the Series A Letter of Credit.
13. Interest and Payment Terms.
13.1 Manner of Payment. All amounts to be paid to Bank under
this Agreement and the other Loan Documents
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<PAGE> 44
shall be paid to Bank at its banking offices at 2055 Gateway Place, Suite 200,
San Jose, California 95110, in coin or currency of the United States of America
which at the time of payment is legal tender for the payment of public and
private debts. All such payments shall be in immediately available funds, and
shall be timely only if received by Bank before 1:00 p,m., San Francisco,
California, time, on the date that such payment is required to be made. Any
payment received by Bank after such time shall be considered for all purposes
(including the calculation of interest, to the extent permitted by law) as
having been made on Bank's next following business day. As used in this Article
13, the term "business day" shall mean a day other than a Saturday, Sunday or a
day upon which banking institutions in the State of California are authorized or
required by law to close. If the date for any payment to Bank falls on a day
that is not a business day, then for all purposes of such payment the same shall
be deemed to have fallen on the next following business day, and such extension
of time shall in such case be included in the computation of payments of
interest,
13.2 Interest. Interest shall accrue on all amounts owing to
Bank under this Agreement and the other Loan Documents and remaining from time
to time unpaid, from the date so paid by Bank or otherwise becoming owing under
the Loan Documents until payment thereof, at a varying rate per annum (based on
an actual day basis using a 360 day year) which is two percent (2%) above the
floating commercial loan rate announced by Bank from time to time as its prime
rate, provided that the interest rate shall not exceed the maximum lawful
non-usurious rate of interest under applicable law. Adjustments in the varying
interest rate shall be made on the same day as each change in the announced
prime rate.
13.3 Waivers. Company and any and each co-maker, guarantor,
accommodation party, endorser or other person liable for the payment or
collection of any and all amounts owed to Bank under the Loan Documents
expressly waive demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, bringing of suit and diligence
in taking any action to collect such amounts and in the handling of any
collateral at any time existing as security in connection therewith, and shall
be directly and primarily liable for the payment of all sums owing and to be
owing, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any such amount or in connection with any lien
or security interest at any time had or existing as security for any such
amount.
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<PAGE> 45
14. Condemnation.
Company hereby assigns to Bank and Trustee, for their equal and ratable benefit,
as security for all obligations secured by the Company Deeds of Trust from time
to time, all compensation, awards and other amounts payable to Company in
connection with any taking of any portion of the Company Properties for public
use, and any proceeds of any related settlement regardless of whether eminent
domain proceedings are instituted in connection therewith (collectively,
"Compensation"). Company shall deliver all Compensation to Bank immediately upon
receipt, In the event Bank chooses, in its sole and absolute discretion, to
waive the Event of Default described in Section 11.1(g), above, any Compensation
received by Bank shall be (i) disbursed to Company for repairs and
reconstruction and/or (ii) paid to Company and/or (iii) applied by Bank and/or
Trustee against Company's obligations (or held as security therefor), in
accordance with the rights, procedures and other provisions set forth in Section
9.11, above, for the application of casualty insurance proceeds; and the
requirements set forth in Sections 9.11.2(b), above and 9.11.2.3, above,
respectively, with regard to Company's deposit of Shortfall Funds and additional
collateral shall also apply.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
"Company":
RADIATION STERILIZERS, INCORPORATED,
a California corporation
By /s/ unreadable
-------------------------------
Its President
--------------------------
By /s/ unreadable
-------------------------------
Its Secretary
--------------------------
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<PAGE> 46
"Bank":
WELLS FARGO BANK, N.A.,
a national banking association
By /s/ Jerry ????
-------------------------------
Assistant Vice President
----------------------------------
Printed Name and Title
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<PAGE> 47
EXHIBIT "A"
SERIES A LETTER OF CREDIT
Irrevocable Letter of
Credit No.________________
Dated as of_________, 19_____
Bank One Trust Company, N.A,
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your favor for
the account of Radiation Sterilizers, Incorporated, a California corporation
("Company"), its Irrevocable Letter of Credit No.___________("Series A Letter of
Credit") in a maximum amount of up to $2,198,596.00 (as more fully described
below) effective immediately and expiring at Bank's counters by 4:00 P.M., San
Francisco time, on December 15, 1988, unless extended by Bank (the "Expiration
Date").
This Series A Letter of Credit is being issued in connection with
that certain Trust Indenture (the "Trust Indenture") dated as of November 1,
1985, between you, as Trustee, and the Trinity River Industrial Development
Authority, a nonprofit industrial development corporation (the "Issuer"),
pursuant to which the Issuer has agreed to authorize and issue and sell Trinity
River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985A (the "Series A Bonds"), in the aggregate principal amount of
$2,150,000.00, the payment of which Series A Bonds is secured by, among other
things, this Series A Letter of Credit,
As used in this Series A Letter of Credit, the term "business day"
shall mean a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon
which banking institutions in the State of California, the State of Texas or the
City of New York are authorized or required by law to close, or (iv) a day on
which the New York Stock Exchange, Inc. is closed.
You, as Trustee and Paying Agent, pursuant to the Trust Indenture,
are hereby irrevocably authorized to draw
-1-
<PAGE> 48
on Bank, for the account of Company, in accordance with the terms and conditions
hereof and subject to reductions in amounts as hereinafter set forth, an
aggregate amount not exceeding $2,198,596.00 (Two Million One Hundred
Ninety-Eight Thousand Five Hundred Ninety-Six Dollars) (the "Stated Amount"), of
which (A) an aggregate amount not exceeding $2,150,000.00 may be drawn upon with
respect to "A Drawings" and "C Drawings", as defined below, to cover principal
of the Series A Bonds, and (B) an aggregate amount not exceeding $48,596.00 may
be drawn upon with respect to "B Drawings," "D Drawings" and A Drawings", as
defined below, to cover 55 days of interest (calculated at an assumed interest
rate of 15% per annum) on the Series A Bonds.
Funds under this Series A Letter of Credit are only available to you
against your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face:
"Drawn under Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No.___________and upon your presenting to Wells Fargo Bank, N.A. one or more of
the following written certificates:
(A) Your written certificate signed by you in the form of Exhibit A
attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of Exhibit B
attached hereto appropriately completed (a "B Drawing");
(C) Your written certificate signed by you in the form of Exhibit C
attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of Exhibit D
attached hereto appropriately completed (a "D Drawing");
(E) Your written certificate signed by you in the form of Exhibit E
attached hereto appropriately completed (an "E Drawing").
All documents presented to Bank in connection with any demand for
payment hereunder, as well as all notices and other communications to Bank with
respect to this Series A Letter of Credit, shall be in writing and addressed and
presented to Bank at its offices at 475 Sansome Street, San Francisco,
California 94111, Attention: Letter of Credit Operations - AU 1175, or any other
place in the United States which may be designated by Bank by written notice
delivered
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<PAGE> 49
to you. Such documents, notices and other communications shall be personally
delivered to Bank, or may be sent to Bank by tested Telex in which case draft
requirements are waived.
If Bank receives any of your drafts drawn hereunder at such office,
all in strict conformity with the terms and conditions of this Series A Letter
of Credit, on or prior to the Expiration Date, Bank will honor the same and make
payment hereunder. Payments to you under this Series A Letter of Credit shall be
made by wire transfer of immediately available funds to Bank One, Columbus,
N.A., Columbus, Ohio, for your Account No. 04-0178-7, Attn: Corporate Trust
Administration, or into such other account as you designate to Bank in writing
from time to time. If a proper draft and certificate are presented by 11:30
A.M., New York time, payment will be made that same business day; otherwise
payment will be made the next business day.
Upon a Drawing hereunder, the total amount of this Series A Letter
of Credit shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount of this
Series A Letter of Credit shall be reduced by the amount of such Drawing;
(B) With respect to any C or D Drawing, the total amount of this
Series A Letter of Credit shall be reduced by the amount of such Drawing,
provided that Bank shall reinstate the amount of such drawing if such
amount is paid to Bank by Company prior to default under that certain
Series A Reimbursement Agreement dated as of November 1, 1985 (the "Series
A Reimbursement Agreement"), by and between Company and Bank. In addition,
in the event Bank transfers any Series A Drawing Bonds (as defined in the
Series A Reimbursement Agreement) in its possession following any C
Drawing to any person or entity (other than to you, as Trustee, for
cancellation), an amount equal to the amount of such C Drawing (and any
corresponding D Drawing) which was applied to pay principal and interest
on the Series A Bonds being so transferred shall automatically be
reinstated hereunder. Bank will send notice of any such reinstatement to
you, as Trustee, in the form attached hereto as Exhibit F; and
(C) With respect to any E Drawing, the total amount of this Series A
Letter of Credit shall be reduced by the amount of such Drawing and such
amount shall then be immediately and automatically reinstated, and Bank
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<PAGE> 50
will send notice of such reinstatement to you, as Trustee, in the form
attached hereto as Exhibit F.
Only you, as Trustee and Paying Agent, may make a drawing under this
Series A Letter of Credit. Upon the payment to you, as Trustee and Paying Agent,
of the amount specified in a draft drawn hereunder, Bank will be fully
discharged on its obligation under this Series A Letter of Credit with respect
to such draft and shall not thereafter be obligated to make any further payments
under this Series A Letter of Credit in respect to such draft to you or any
other person who may have made to you or makes to you a demand for payment of
principal of, purchase price of or interest on any Series A Bond. By paying to
you an amount demanded in such draft(s) we make no representation as to the
correctness of the amount demanded in such draft(s).
Upon the earliest of (i) 15 days after the making by you of an A
Drawing (and any associated B Drawing) hereunder (other than an A Drawing for
partial redemption); (ii) Bank's receipt of a certificate signed by your officer
and an officer of Company stating (a) that no Series A Bonds are Outstanding
within the meaning of the Trust Indenture and (b) that such officers are duly
authorized to sign such certificate on behalf of you and Company; (iii) Bank's
receipt of a certificate signed by your officer and an officer of Company
stating (a) that an Alternate Letter of Credit (as defined in the Trust
Indenture) has been accepted by you as Trustee under the Trust Indenture and (b)
that such officers are duly authorized to sign such certificate on behalf of you
and on behalf of Company; (iv) Bank's receipt of a certificate signed by your
officer and an officer of Company stating (a) that no less than 15 days prior to
the date of such certificate, the interest rate on the Series A Bonds was
converted to a Fixed Interest Rate (as defined in the Trust Indenture), (b) that
you have not received written notification from both Company and Bank stating
that this Series A Letter of Credit is not to be cancelled, and (c) that such
officers are duly authorized to sign such certificate on behalf of you and on
behalf of Company; or (v) the Expiration Date, this Series A Letter of Credit
shall automatically terminate and be delivered to Bank for cancellation.
This Series A Letter of Credit shall be governed by (i) the Uniform
Customs and Practice for Documentary Credit as fixed by the Congress of the
International Chamber of Commerce from time to time (the "Uniform Customs") and
(ii) the laws of the State of California, including the Uniform Commercial Code
as in effect in the State of California. In the
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<PAGE> 51
event of a conflict between the Uniform Customs and the laws of the State of
California, the Uniform Customs shall prevail. Communications with respect to
this Series A Letter of Credit shall be in writing and shall be addressed to
Bank at its offices at 475 Sansome Street, San Francisco, California 94111,
Attention: Letter of Credit Operations -AU 1175, specifically referring to the
number of this Series A Letter of Credit.
This Series A Letter of Credit is transferable in its entirety to
any transferee who has succeeded you as Trustee under the Trust Indenture. Each
letter of credit issued upon any such transfer may be successively transferred.
Transfer of the available balance under this Series A Letter of Credit to such
transferee shall be effected by the presentation to Bank of this Series A Letter
of Credit accompanied by a certificate substantially in the form of Exhibit G
attached hereto. Following such presentation, and as soon as this original
Series A Letter of Credit is returned to the Bank and the Bank has been paid its
customary transfer fee, Bank shall forthwith transfer the same to your
transferee or, if so requested by your transferee, issue an irrevocable letter
of credit to your transferee with provisions therein consistent with those of
this Series A Letter of Credit.
This Series A Letter of Credit sets forth in full Bank's
undertaking, and such undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or agreement
referred to herein (including, without limitation, the Series A Bonds and the
Trust Indenture), except only the certificates) and the draft(s) referred to
herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such certificate (s)
and such draft(s).
In the event of any failure by Bank, in whole or in part, to fulfill
its obligations with respect to any draw or draws under this Series A Letter of
Credit, no person or entity shall have the right to make any claim against the
Federal Deposit Insurance Corporation in connection with such failure. By its
signature below, Bank One Trust Company, N.A., a national banking association,
as Trustee and Paying Agent, acknowledges receipt of this Series A Letter of
Credit
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<PAGE> 52
and agrees that the terms of this paragraph shall bind itself and its successors
and assigns.
Very truly yours,
WELLS FARGO BANK, N.A.
By______________________________
Its__________________________
ACCEPTED AND AGREED TO
THIS ___ DAY OF NOVEMBER, 1985:
BANK ONE TRUST COMPANY, N.A.
By______________________________
Its _________________________
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<PAGE> 53
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
(PRINCIPAL UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No.___________ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) The undersigned is making a drawing under the Series A Letter of
Credit with respect to the payment of principal upon acceleration, partial
redemption, full redemption or maturity of the Series A Bonds.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior A Drawings and C Drawings under the Series A
Letter of Credit for the payment of the principal amount of purchase price of
the Series A Bonds (other than C Drawings for which Bank has delivered notices
of reinstatement), does not exceed $2,150,000,00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series A Letter of Credit
(other than Drawings for which the Series A Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series A Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of principal owing on account of the Series A Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied by the undersigned
for any other purpose, and (c) no portion of
A-1
<PAGE> 54
it shall be commingled with other funds held by the undersigned or the
Depository (as defined in the Series A Reimbursement Agreement). This drawing is
made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ________ day of ___________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association,
as Trustee and Paying Agent
By ______________________________
Title ________________________
A-2
<PAGE> 55
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
(ACCRUED INTEREST UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No._________(the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) The undersigned is making a drawing under the Series A Letter of
Credit with respect to the payment of accrued and unpaid interest upon
acceleration, partial redemption, full redemption, or maturity of the Series A
Bonds.
(3) Interest has accrued on the Series A Bonds and is due and
payable and the amount of the draft accompanying this certificate, together with
the aggregate of all prior B Drawings, D Drawings, and E Drawings under the
Series A Letter of Credit for payment of accrued interest on the Series A Bonds,
other than D Drawings and E Drawings for which the Series A Letter of Credit has
been reinstated, does not exceed $48,596.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series A Letter of Credit
(other than Drawings for which the Series A Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series A Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest owing on account of the Series A Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied by the under-
B-1
<PAGE> 56
signed for any other purpose, and (c) no portion of it shall be commingled with
other funds held by the undersigned or the Depository (as defined in the Series
A Reimbursement Agreement). This drawing is made in accordance with the
provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _______ day of ___________, 19 ___.
BANK ONE TRUST COMPANY, N.A.,
a national banking association,
as Trustee and Paying Agent
By ______________________________
Title ________________________
B-2
<PAGE> 57
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
(PRINCIPAL OF SERIES A BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee"), and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ______________ (the "Series A Letter of Credit," the capitalized terms
defined therein and not defined herein being used as therein defined) issued by
Bank in favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) Paying Agent is making a drawing under the Series A Letter of
Credit (a) at the written request (or oral request to be immediately followed in
writing) of the Remarketing Agent (as defined in the Series A Reimbursement
Agreement) to pay, pursuant to Section 401(g) of the Trust Indenture, the
principal amount of the purchase price of those repurchased Series A Bonds which
the Remarketing Agent has been unable to remarket, the principal amount of which
is equal to the amount of the draft accompanying this certificate, and which
Series A Bonds (i) are now held by either the Remarketing Agent pursuant to its
representation to Paying Agent, which representation Paying Agent has not
independently verified, or are held by Paying Agent and (ii) shall be
reregistered in the name of Bank, or its agent, as pledgee, and delivered to
Bank, or such agent, within 5 business days following receipt by Paying Agent of
the amount demanded hereby; or (b) to pay, pursuant to Section 401(h) of the
Trust Indenture, the portion of the purchase price of the Series A Bonds
delivered to Paying Agent for purchase equal to the principal amount of such
Series A Bonds, and Paying Agent shall deliver to Bank, or its agent, as
pledgee, within 5 business days following receipt by Paying Agent of the amount
demanded hereby, a principal amount of Series A Bonds equal to the amount of the
draft accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior payments
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<PAGE> 58
made pursuant to A Drawings and C Drawings under the Series A Letter of Credit
(other than reinstated amounts) does not exceed $2,150,000.00.
(4) Upon receipt of the amount demanded hereby, (a) Paying Agent
will either (i) deliver it to the Remarketing Agent or use the same only for the
purpose of purchase of the Series A Bonds referenced in Paragraph 2(a) hereof,
or (ii) use it for the purpose of purchase of the Series A Bonds referred to in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the _____ day of ________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By ______________________________
Title ________________________
C-2
<PAGE> 59
EXHIBIT D
CERTIFICATE FOR "D DRAWING"
(ACCRUED INTEREST ON SERIES A BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ______ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) Paying Agent is making a drawing under the Series A Letter of
Credit (a) at the written request (or oral request to be immediately followed in
writing) of the Remarketing Agent (as defined in the Series A Reimbursement
Agreement), to pay, pursuant to Section 401(g) of the Trust Indenture, the
amount of accrued interest on those Series A Bonds that the Remarketing Agent
has been unable to remarket, which amount of accrued interest is equal to the
amount of the draft accompanying this certificate; or (b) to pay, pursuant to
Section 401(h) of the Trust Indenture, the portion of the purchase price of the
Series A Bonds delivered to Paying Agent for purchase equal to the amount of
accrued and unpaid interest on such Series A Bonds to the date of purchase
thereof, which amount of accrued interest is equal to the amount of the draft
accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Series A Letter of
Credit (other than reinstated amounts), does not exceed $48,596.00.
(4) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Series A Bonds and
the Trust Indenture.
(5) Upon receipt by Paying Agent of the amount demanded hereby, (a)
Paying Agent will either (i) deliver it
D-1
<PAGE> 60
to the Remarketing Agent or use the same only for the purpose of reimbursement
or payment of accrued interest referenced in Paragraph 2(a) hereof, or (ii) use
it for the purpose of reimbursement or payment of accrued interest referenced in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
(6) To the extent that the payment demanded hereby is to be made in
accordance with the Series A Letter of Credit on a date between a Record Date
and the corresponding Interest Payment Date (as those terms are defined in the
Trust Indenture), Paying Agent now holds and shall, within 5 business days
following receipt by Paying Agent of the payment demanded hereby, deliver to
Bank, due-bill checks that, in the aggregate, are in the amount and in the form
required by the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the __________ day of _____________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By ______________________________
Title ________________________
D-2
<PAGE> 61
EXHIBIT E
CERTIFICATE FOR E DRAWING"
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ___________ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) The undersigned is making a drawing under the Series A Letter of
Credit with respect to the payment of accrued and unpaid interest upon an
Interest Payment Date (as defined in the Trust Indenture) during the continuance
of an Event of Default under the Series A Reimbursement Agreement for which Bank
has not yet exercised its right to demand that the undersigned accelerate the
Series A Bonds.
(3) Interest has accrued on the Series A Bonds and is due and
payable, and the amount of the draft accompanying this certificate, together
with the aggregate of all prior B Drawings, D Drawings and E Drawings under the
Series A Letter of Credit for the payment of accrued interest on the Series A
Bonds, other than D Drawings and E Drawings for which the Series A Letter of
Credit has been reinstated, does not exceed $48,596.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series A Letter of Credit
(other than Drawings for which the Series A Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series A Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest
E-l
<PAGE> 62
owing on account of the Series A Bonds pursuant to the Trust Indenture, (b) no
portion of it shall be applied by the undersigned for any other purpose, and (c)
no portion of it shall be commingled with other funds held by the undersigned.
This drawing is made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ___________ day of _____________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By ______________________________
Title ________________________
E-2
<PAGE> 63
EXHIBIT F
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO.__________
DATED AS OF _______________,19__.
The undersigned, a duly authorized officer of Wells Fargo Bank, N.A. ("Bank"),
hereby certifies to the Trustee under the Trust Indenture dated as of November
1, 1985, between the Trinity River Industrial Development Authority and Bank One
Trust Company, N.A., a national banking association ("Trustee"), with reference
to Irrevocable Letter of Credit No.___________ (the "Series A Letter of Credit")
issued by Bank in favor of Trustee, that the amount drawn by Trustee pursuant to
its _____________ Drawing dated as of ______, has been reinstated as of
_________ and is available for draw subject to the terms of the Series A Letter
of Credit.
In witness whereof, Bank has executed and delivered this Certificate
this ________ day of ______________,19__.
WELLS FARGO BANK, N.A.
By ______________________________
Title ________________________
F-1
<PAGE> 64
EXHIBIT G
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Letter of Credit Operations
AU 1175
Re: Wells Fargo Bank, N.A.
Irrevocable Letter of Credit No.
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit (the "Series A Letter of Credit") in its entirety.
By this transfer, all rights of the undersigned beneficiary in and
to the Series A Letter of Credit are transferred to the transferee and the
transferee shall have sole rights as beneficiary thereof, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned beneficiary.
The original Series A Letter of Credit is returned herewith, along
with your customary transfer fee, and we ask you to endorse the transfer on the
reverse thereof and forward
G-1
<PAGE> 65
it direct to the transferee with your customary notice of transfer.
Very truly yours,
--------------------------------
Signature of Beneficiary
SIGNATURE AUTHENTICATED
- -------------------------------
(Bank)
- --------------------------------
(Authorized Signature)
G-2
<PAGE> 66
EXHIBIT "B"
CONDITIONS TO DISBURSEMENT
1. Conditions to All Disbursements. Bank shall not be obligated to approve
any Disbursement of Series A Bond Proceeds under Section 3.3 of the Series A
Loan Agreement unless each of the following conditions are fulfilled:
1.1 Completion of Project. The acquisition and construction of the
Project shall have been completed in accordance with the plans and
specifications therefor.
1.2 Permits, Etc. All required governmental inspections, reports and
certifications shall have been made, and all occupancy, use and other permits
required by all applicable governmental regulatory authorities and public
utility companies shall have been issued, for the full operation of the Project.
1.3 Title Policy. Company shall, as soon as it is available and at
Company's sole expense, have delivered to Bank a Title Policy, revised as of the
date on which the Project shall have been completed, or evidence to a commitment
therefor satisfactory to Bank, in form and substance and issued by an insurer
satisfactory to Bank, together with such endorsements and binders thereto as may
be required by Bank, naming Bank as insured, in an aggregate policy amount of
not less than $2,200,000.00 insuring the Deed of Trust to be a valid first lien
upon the Property, subject only to the Series A Intercreditor Agreement and the
Permitted Encumbrances, and such other exceptions as shall have been approved in
writing by Bank pursuant to this Agreement.
EXHIBIT "B"
Page 1 of 1
<PAGE> 67
EXHIBIT "C-1"
LEGAL DESCRIPTION
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
City of Fort Worth, County of Tarrant, State of Texas, and described as follows:
Lot 10-R-1-A, Block 1, Wichita-20 Business Park, an Addition to the City
of Fort Worth, Tarrant County, Texas, according to plat recorded in Volume
388-183 Page 44, Deed Records of Tarrant Country, Texas.
EXHIBIT "C-1"
Page 1 of 1
<PAGE> 68
EXHIBIT "C-2"
LEGAL DESCRIPTION
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
Township of Orange, County of Delaware, State of Ohio, and described as follows:
Being Lot Number Six Hundred Ninety-Six (696), in GREEN MEADOWS CORPORATE
PARK, PHRASE I, as the same is numbered and delineated upon the recorded
plat thereof, of record in Plat Book 16, page 107, Recorder's Office,
Delaware County, Ohio.
EXHIBIT "C-2"
Page 1 of 1
<PAGE> 69
EXHIBIT "C-3"
LEGAL DESCRIPTION
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
City of Atlanta, County of DeKalb, State of Georgia, and described as follows:
BEGINNING at an iron pin found on the easterly right-of-way line of Mellon
Court (having a 60-foot right-of-way), which iron pin is located 1,460.80
feet northerly, as measured along the easterly right-of-way line of Mellon
Court, from the corner formed by the intersection of the easterly
right-of-way line of Mellon Court with the northerly right-of-way line of
Dividend Drive (having a 60-foot right-of-way); running thence north 00
degrees 01 minute 10 seconds west along the easterly right-of-way line of
Mellon Court, a distance of 95.04 feet to an iron pin set; running thence
northeasterly, northerly and northwesterly along the southeasterly,
easterly and northeasterly right-of-way line of the terminus of the
cul-de-sac of Mellon Court, an arc distance of 114.90 feet to an iron pin
set (said arc having a radius of 60.00 feet and being subtended by a chord
line having a bearing of north 05 degrees 09 minutes 38 seconds east and a
chord length of 98.13 feet); thence leaving the northeasterly right-of-way
line of the terminus of the cul-de-sac of Mellon Court and running north
57 degrees 04 minutes 55 seconds east, a distance of 41.09 feet to an iron
pin set; running thence north 89 degrees 49 minutes 55 seconds east, a
distance of 265.00 feet to an iron pin set; running thence south 00
degrees 43 minutes 00 seconds west, a distance of 215.00 feet to an iron
pin located on the northerly line of property now or formerly owned by
Activation, Inc.; running thence south 89 degrees 49 minutes 55 seconds
west along the northerly line of said Activation, Inc. Property, a
distance of 305.60 feet to the iron pin found on the easterly right-of-way
line of Mellon Court, which iron pin marks the point of beginning; and
being a tract of land containing 1.452 acres according to a plat of survey
prepared for Radiation Sterilizers, Inc. by Tri County Land Surveying and
Boggus & Associates Engineers, and certified to by A. A. Katterhenry,
Georgia Registered Land Surveyor No. 1692, dated October 7, 1983 and last
revised October 31, 1983.
EXHIBIT "C-3"
Page 1 of 1
<PAGE> 70
EXHIBIT "C-4"
LEGAL DESCRIPTION
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
City of Hayward, County of Alameda, State of California, and described as
follows:
PARCEL 1:
PARCEL 1, AS SHOWN ON PARCEL MAP NO. 582, FILED MARCH 27, 1970, IN BOOK 64 OF
PARCEL MAPS, PAGE 17, ALAMEDA COUNTY RECORDS.
RESERVING THEREFROM, AN EASEMENT FOR RAILWAY PURPOSES IN, ON, OVER, UNDER AND
LONG THAT PORTION THEREOF DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF SAID PARCEL 1, DISTANT THEREON NORTH
0 degrees 38' 41" WEST 40 FEET FROM THE SOUTHWEST CORNER THEREOF; THENCE FROM
SAID POINT OF BEGINNING EASTERLY ALONG A LINE PARALLEL WITH AND PERPENDICULARLY
DISTANT NORTHERLY 40 FEET FROM THE SOUTHERN LINE OF SAID PARCEL 1, NORTH 89
degrees 21' 19" EAST 90 FEET TO A POINT THEREON; THENCE LEAVING SAID PARALLEL
LINE NORTH 81 degrees 10' 57" WEST 91.241 FEET TO A POINT ON THE SAID WESTERN
LINE OF PARCEL 1; THENCE SOUTHERLY ALONG LAST SAID LINE SOUTH 0 degrees 38' 41"
EAST 15 FEET TO THE POINT OF BEGINNING.
PARCEL 2:
AN EASEMENT FOR RAILROAD PURPOSES, IN, ON, OVER, UNDER AND ALONG A PORTION OF
PARCEL 2, AS SHOWN ON PARCEL MAP NO, 582, FILED MARCH 27, 1970, IN BOOK 64 of
PARCEL MAPS, PAGE 17, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERLY LINE OF SAID PARCEL 2, DISTANT THEREON
NORTH 0 degrees 38' 41" WEST 40.00 FEET FROM THE SOUTHWEST CORNER OF SAID PARCEL
2; THENCE FROM SAID POINT OF BEGINNING NORTHERLY ALONG LAST SAID LINE NORTH 0
degrees 38' 41" WEST 15.00 FEET TO A POINT THEREON; THENCE LEAVING LAST SAID
LINE SOUTH 76 degrees 36' 31" EAST 61.847 FEET; THENCE WESTERLY ALONG A LINE
PARALLEL WITH AND PERPENDICULARLY DISTANT NORTHERLY 40.00 FEET FROM THE
SOUTHERLY LINE OF SAID PARCEL 2 SOUTH 89 degrees 21' 19" WEST 60.00 FEET TO THE
POINT OF BEGINNING.
EXHIBIT "C-4"
Page 1 of 1
<PAGE> 71
EXHIBIT "C-5"
LEGAL DESCRIPTION
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
Village of Schaumburg, County of Cook, State of Illinois, and described as
follows:
Lot 37 in Woodfield Business Center Unit 11, being a resubdivision of lots
27 and 28 in Woodfield Business Center Unit 7, a resubdivision in the
southwest 1/4 of Section 11, Township 41 north, Range 10 east of the third
principal meridian, in Cook County, Illinois.
EXHIBIT "C-5"
Page 1 of 1
<PAGE> 72
SCHEDULE B
Sechedule B of the policy or policies to be issued will also contain the
following exclusions and exceptions
The policy will be subject to the Conditions and Stipulations thereof, the terms
and conditions of the instrument creating the estate insured, if any, shown in
Schedule A and to the following matters which will be additional exceptions from
the coverage of the policy.
1. None of record.
2. "SHORTAGES IN AREA."
3. Taxes for the year is 36 and subsequent years, and subsequent
assessments for prior years due to change in land usage or
owndership. In the Final Mortgagee Policy to be issued, Item 3 will
be amended to read "Taxes for the year 1985 and subsequent years,
not yet due and payable, upon payment of the prescribed premium."
4. Usury or claims of usury Mortgagee Policy or Mortgagee Title Policy
Binder on Interim Construction Loan only.
5. Any right of recession contained in any CONSUMER CREDIT PROTECTION
or TRUTH-IN-LENDING laws (Mortgagee Policy or Mortagee Title Policy
Binder on Interim Construction Loan only.)
8. INSERT HERE ALL OTHER SPECIFIC EXCEPTIONS AS TO SUPERIOR LIENS,
EASEMENTS, OUTSTANDING MINERAL AND ROYALTY INTERESTS, ETC.)
a. A ten Foot (10') easement along the Northwest side of the
property for public utilities, as shown by plat recorded in
Volume 388-183, Page 44, Deed Records of Tarrant County,
Texas.
b. Easement for sewer granted to City of Fort Worth by The Mika
Company in instrument dated January 30, 1984, and recorded in
volume 7776, Page 643, Deed Records of Tarrant county, Texas.
<PAGE> 73
EXHIBIT "E"
DESCRIPTION OF FACILITIES
EXHIBIT "E"
Page 1 of 1
<PAGE> 74
EXHIBIT "F"
RESERVE ACCOUNTS PLEDGE AGREEMENT
This Reserve Accounts Pledge Agreement (the "Agreement"), dated as of
______________, 19__, is executed by RADIATION STERILIZERS, INCORPORATED, a
California corporation ("Debtor"), for the equal and ratable benefit of WELLS
FARGO BANK, N.A., a national banking association ("Bank"), and BANK ONE TRUST
COMPANY, N.A., a national banking association ("Trustee") (Bank and Trustee are
collectively referred to herein as "Secured Party"), pursuant to that certain
Series A Reimbursement Agreement Agreement (the "Series A Reimbursement
Agreement") and that certain Series B Reimbursement (the "Series B Reimbursement
Agreement") (collectively, the "Reimbursement Agreements"), each of which was
executed as of November 1, 1985 between Bank and Debtor. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth for them in
the Reimbursement Agreements.
1. Grant Of Security Interest. For valuable consideration, the receipt and
sufficiency of are hereby acknowledged, Debtor hereby assigns, transfers and
pledges to Secured Party all of Debtor's right, title and interest in those
certain Reserve Accounts established with and designated by Bank pursuant to
Section 6.6 of each of the Reimbursement Agreements, all amounts deposited in
the Reserve Accounts and all proceeds of the investment or disposition of the
amounts deposited therein, together with all other money or property heretofore
delivered or which shall hereafter be delivered to or come into the possession,
custody or control of Secured Party (whether described herein or not) in any
manner or for any purpose whatsoever during the existence of this Agreement
(collectively, the "Collateral"), and whether held in a general or special
account or deposit for safekeeping or otherwise, together with whatever is
receivable or received when the Collateral or proceeds are sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including without limitation all rights to payment, including
returned premiums, with respect to any insurance relating to the Collateral, and
all rights to payment with respect-to any cause of action affecting or relating
to the Collateral, and including any stock rights, rights to subscribe, stock
splits, liquidating dividends, cash dividends, dividends paid in stock, new
securities, or other property which Debtor is or may hereafter be entitled to
receive on account of such securities or other property, including without
limitation stock received by Debtor due to stock splits or dividends paid in
stock (the
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<PAGE> 75
"Proceeds"), and in the event that Debtor receives any such property, Debtor
will immediately deliver it to Secured Party to be held by Secured Party in the
same manner as the property originally pledged hereunder.
2. Obligations Secured. The obligations secured hereby are (a) the payment
and performance of all indebtedness and other obligations of Debtor to Bank
under the Loan Documents (including the "Loan Documents" as defined in the
Series A Reimbursement Agreement and the "Loan Documents" as defined in the
Series B Reimbursement Agreement), (b) the payment by Debtor to Trustee of the
principal of, and all accrued interest on, the Series A Bonds and the Series B
Bonds, (c) all obligations of Debtor and rights of Secured Party under this
Agreement, and (d) all present and future obligations of Debtor to Bank of other
kinds (collectively, the "Obligations"). The word "obligation" is used herein in
its most comprehensive sense and includes all present and future indebtedness,
liabilities, undertakings, covenants and conditions, whether voluntary or
involuntary, absolute or contingent, liquidated or unliquidated, determined or
undetermined, earned or unearned, and due or not due.
3. Termination. This Agreement will terminate upon the performance in full
of all Obligations of Debtor to Secured Party.
4. Warranties Of Debtor. Debtor represents and warrants: (1) with respect
to the Collateral and Proceeds generally: (a) that Debtor is the owner or has
control thereof; (b) that Debtor has the right to pledge the Collateral and
Proceeds; and (c) that the same is genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character; and (2) specifically with respect to Collateral and Proceeds
consisting of investment securities, instruments, chattel paper, documents,
contracts, insurance policies or any like property: (a) that all persons
appearing to be obligated thereon have authority and capacity to contract and
are bound as they appear to be; and (b) that the same comply with applicable
laws concerning the form, content and manner of preparation and execution.
5. Covenants Of Debtor.
A. Debtor Agrees in General: (a) to pay or perform all Obligations
secured hereby when due; (b) to pay all reasonable expenses, including
attorneys' fees, incurred by Secured Party in the perfection, preservation,
realization,
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<PAGE> 76
enforcement and exercise of its rights, powers and remedies hereunder; (c) to
permit Secured Party to exercise its powers; (d) to execute and deliver such
documents as Secured Party deems necessary to create, perfect and continue the
security interests contemplated hereby; (e) not to permit any lien on the
Collateral, except in favor to Secured Party; and (f) not to change its chief
place of business or the place where Debtor keeps its records concerning the
Collateral and Proceeds without first giving Secured Party written notice of the
address to which Debtor is moving same.
B. Debtor Agrees with Regard to Collateral and Proceeds: Unless
Secured Party elects to exercise its right and power to do so, Debtor agrees:
(a) not to commingle Proceeds with other property; (b) not to sell, hypothecate
or otherwise dispose of any Collateral or Proceeds subject hereto at any time,
except to Secured Party; and (c) to provide any service and do any other acts or
things necessary to keep Collateral and Proceeds free and clear of all defenses,
rights of offset and counterclaim.
6. Powers Of Lender. Debtor appoints Bank, Trustee, or either of them, its
true attorneys in fact to perform any of the following powers, which are coupled
with an interest, are irrevocable until termination of this Agreement and may be
exercised from time to time by Secured Party's officers and employees, or any of
them, at any time: (a) to perform any Obligation of Debtor hereunder in Debtor's
name or otherwise; (b) to liquidate the Reserve Accounts or any time deposit
pledged to Secured Party hereunder prior to its maturity date and to apply the
proceeds thereof to payment of any Obligations, notwithstanding the fact that
such liquidation may give rise to Federal penalties for early withdrawal of
funds from a time deposit; (c) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Secured Party's rights
hereunder; (d) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral; (e) to enter into any extension, reorganization, deposit, merger
or consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in-connection therewith to deposit or surrender control of the
Collateral, accept other property in exchange for the Collateral, and do and
perform such acts and things as Secured Party may deem proper, and any money or
property received in exchange for the Collateral may be applied to the
indebtedness or held by Secured Party under this Agreement; (f) to make any
compromise or settlement Secured Party deems desirable or
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<PAGE> 77
proper in respect of the Collateral; (g) to insure, process and preserve the
Collateral; and (h) to perform any obligation of Debtor under this Agreement. To
effect the purposes of this Agreement, or otherwise upon instructions of Debtor,
or any of them, Secured Party may cause the Collateral to be transferred to
Secured Party's name or the name of Secured Party's nominee. Only in the event
of a default hereunder may Secured Party, without obligation do so, exercise as
to the Collateral any other rights, powers and remedies of an owner thereof.
7. Cash Collateral Account. Any money received by Secured Party in respect
of the Collateral may, at Secured Party's option, be retained in a
non-interest-bearing cash collateral account and the same shall, for all
purposes, be deemed Collateral hereunder.
8. Lender's Care And Delivery Or Collateral. Secured Party's obligation
with respect to Collateral and Proceeds in its possession shall be strictly
limited to the duty to exercise reasonable care in the custody and preservation
of such Collateral and Proceeds. Secured Party shall have no duty to take any
steps necessary to preserve the rights of Debtor against prior parties, or to
initiate any action to protect against the possibility of decline in the market
value of the Collateral or Proceeds. Secured Party shall not be obligated to
take any action with respect to the Collateral or Proceeds requested by Debtor
unless such request is made in writing, and Secured Party determines that the
requested actions would not jeopardize the value of the Collateral and Proceeds
as security for the indebtedness. Secured Party may at any time deliver the
Collateral and Proceeds, or any part thereof, to Debtor and the receipt thereof
by Debtor shall be a complete and full acquittance for the Collateral and
Proceeds so delivered, and Secured Party shall thereafter be discharged from any
liability or responsibility therefore.
9. Payment Of Taxes, Charges, Liens And Assessments. Debtor agrees to pay
prior to delinquency all taxes, charges, liens and assessments against the
Collateral and Proceeds, and upon tie failure of Debtor to do so, Secured Party
at its option may pay any of them and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Any such
payments made by Secured Party shall be obligations of Debtor to Secured Party,
due and payable immediately without demand, together with interest at a rate
determined in accordance with the provisions of Section 13, below, and shall be
secured by the Collateral
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<PAGE> 78
and Proceeds, subject to all of the terms and conditions of this Agreement.
10. Events Of Default. The occurrence of any of the following shall be an
"Event of Default" under this Agreement: (a) the occurrence of any "Event of
Default" under either of the Reimbursement Agreements, (b) Debtor's failure to
pay any amount owing under the Series A Loan Agreement or the Series B Loan
Agreement which relates to the principal amount of, and accrued interest on, the
Series A Bonds and/or the Series B Bond, (c) failure by Debtor to timely and
fully perform any Obligation of Debtor contained herein; and (d) breach of any
warranty contained herein.
11. Remedies. Upon the occurrence of any event of default, Secured Party
shall have the right to declare immediately due and payable all or any
indebtedness secured hereby and to terminate any commitments to make loans or
otherwise extend credit to Debtor, without presentment, demand or notice of
dishonor, all of which are expressly waived by Debtor. Secured Party shall have
all other rights, privileges, powers and remedies granted to a secured party
upon default under the California Commercial Code or otherwise provided by law,
including without limitation the right to contact any persons obligated to
Debtor on Collateral and to instruct such persons to deliver all Proceeds
directly to Secured Party; the rights, privileges, powers and remedies of
Secured Party shall be cumulative; no single or partial exercise of any of them
shall preclude the further or other exercise thereof or any abandonment or
discontinuance of steps to enforce such right, power, privilege or remedy. Any
waiver, permit, consent or approval of any kind by Secured Party of any default
hereunder or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing. While
Debtor is in default: (1) Secured Party may, at any time and at Secured Party's
sole option, liquidate the Reserve Accounts and any time deposits pledged to
Secured Party hereunder, whether or not said time deposits have matured and
notwithstanding the fact that such liquidation may give rise to Federal
penalties for early withdrawal of funds from a time deposit; (2) Secured Party
may appropriate the Collateral and apply all Proceeds toward repayment of of the
indebted ness in such order of application as Secured Party may from time to
time elect or, at Secured Party's sole option, place any Proceeds in the cash
collateral account; and (3) Debtor will assemble and deliver all Collateral and
Proceeds, and books and records pertaining thereto, to Secured Party at a
reasonably convenient place designated by Secured Party. It is agreed that
public or private sales, for cash or on credit,
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<PAGE> 79
to a wholesaler or retailer or investor, or user of collateral of the types
subject to this Agreement, or public auction, are all commercially reasonable
since differences in the sales prices generally realized in the different kinds
of sales are ordinarily offset by the differences in the costs and credit risks
of such sales. Any proceeds of any disposition of the Collateral following the
occurrence of an Event of Default, or any part thereof, may be applied by
Secured Party to the payment of expenses incurred by Secured Party in connection
with the foregoing, including reasonable attorneys' fees, and the balance of
such proceeds may be applied by Secured Party toward the payment of the
indebtedness and in such order of application as Secured Party may from time to
time elect,
12. Disposition Of Collateral And Proceeds. Upon the transfer of all or
any part of the Obligations, Secured Party may transfer all or any part of the
Collateral or Proceeds and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all liability and
responsibility with respect to any of the foregoing so transferred; but with
respect to any Collateral or Proceeds not so transferred, Secured Party shall
retain all rights and powers hereby given.
13. Costs, Expenses And Attorneys' Fees. All payments, advances, charges,
costs and expenses, including reasonable attorneys' fees, made or incurred by
Secured Party in exercising any right, power or remedy conferred by this
Agreement or in the enforcement thereof shall be paid to Secured Party by Debtor
immediately and without demand, together with interest at the rate per annum
specified in the promissory note described in Section 2, above. --
14. Statute Of Limitations. Until all indebtedness shall have been paid in
full, the power of sale and all other rights, powers and remedies granted to
Secured Party hereunder shall continue to exist and may be exercised by Secured
Party at any time and from time to time irrespective of the fact that the
indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all indebtedness
secured hereunder.
15. Miscellaneous. Presentment, protest, notice of protest, notice of
dishonor and notice of nonpayment are waived with respect to any Proceeds to
which Secured Party
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is entitled hereunder; any right to direct the application of payments or
security for Obligations of Debtor hereunder and any right to require
proceedings against others or to require exhaustion of security are waived; and
consent to extensions, forbearances or alterations of the terms of
indebtednesses, the release or substitution of security, and the release of
guarantors is given with respect to Proceeds subject to this Agreement; provided
however, that in each instance Secured Party believes in good faith that the
action in question is commercially reasonable in that it does not unreasonably
increase the risk of nonpayment of the indebtedness to which the action applies.
Debtor hereby waives any benefit of or any right to participate in any
Collateral or other security whatsoever now or hereafter held by Secured Party,
16. Governing Law. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of Debtor and shall be
governed by and construed in accordance with the laws of the State of
California.
17. Severability Of Provisions. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without
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<PAGE> 81
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
18. Bank and Trustee. Until the first to occur of (a) the expiration of
the Series A Letter of Credit or (b) default by Bank in the performance of any
of its obligations under the Series A Letter of Credit, the following shall
apply:
(1) Trustee shall not have the right to exercise or implement any
right or remedy provided to Secured Party under this Agreement without first
obtaining the express prior written consent of Bank to the same; and
(2) In the event of any disagreement between Trustee and Bank as to
the exercise or implementation of any right or remedy provided to Secured Party
under this Agreement, the decision of Bank shall control as between Trustee and
Bank.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
"Debtor":
RADIATION STERILIZERS, INCORPORATED,
a California corporation
By ______________________________
Its __________________________
By ______________________________
Its __________________________
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<PAGE> 1
EXHIBIT 10.11
SERIES B REIMBURSEMENT AGREEMENT
--------------------------------
between
RADIATION STERILIZERS, INCORPORATED
and
WELLS FARGO BANK, N.A.
Dated as of November 1, 1985
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions and Accounting Terms 1
1.1 Defined Terms 1
1.2 Use of Defined Terms 5
1.3 Accounting Terms 5
1.4 Exhibits 5
2. Series B Bonds 5
3. Letters of Credit 5
4. Loan Documents 6
4.1 Guaranty 6
4.2 Series B 6
4.3 Other Documents and Actions 7
4.4 Additional Security 7
5. Conditions to Issuance and Disbursements 7
5.1 Conditions to Issuance 7
5.2 Conditions to Disbursements 8
6. Reimbursement and Other Payments; Extension 9
6.1 Reimbursement 9
6.2 Fees 10
6.3 Increased Costs Due to Change in Law 10
6.4 Obligations Absolute 11
6.5 Extension of Series B Letter of Credit 11
6.6 Reserve Accounts 12
7. Representations and Warranties by Company 13
7.1 Formation of Company 13
7.2 Execution, Delivery and Performance of
Loan Documents and Bond Documents 14
7.3 Financial Statements 15
7.4 No Material Adverse Change 15
7.5 Tax Liability 16
7.6 Compliance with Laws 16
7.7 Litigation 16
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.8 Official Statement 16
7.9 Conditions to Issuance 16
8. Representations and Warranties by Bank 17
8.1 Formation of Bank 17
8.2 Authorization 17
8.3 No Conflict 17
8.4 Actions and Proceedings 17
9. Affirmative Covenants 17
9.1 Governmental Approvals 18
9.2 Continued Existence 18
9.3 Books and Records 18
9.4 Annual Operating Statements 18
9.5 Notice of Certain Events 19
9.6 Opinions 19
9.7 Defaults 19
9.8 Tax Appeals 19
9.9 Surplus Construction Funds 19
9.10 Notice Re Disbursement Conditions 20
9.11 Compliance with Requirements 20
10. Negative Covenants 20
10.1 Transfers of Project or Obligations 20
11. Events of Default and Remedies Upon Default 20
11.1 Events of Default 20
11.2 Remedies Upon Default 22
11.3 Cumulative Remedies; No Waiver 23
12. Miscellaneous 24
12.l Actions 24
12.2 Nonliability of Bank 24
12.3 No Representations by Bank 24
12.4 No Third Parties Benefited 24
12.5 Indemnity by Company 26
12.6 Commissions 26
12.7 Binding Effect 27
12.8 Execution in Counterparts 27
12.9 Prior Agreements; Amendments; Consents 27
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
12.10 Survival of Representations and
Warranties 27
12.11 Notices 27
12.12 Further Assurances 29
12.13 Governing Law 29
12.14 Severability of Provisions 29
12.15 Inconsistency With Loan Documents 29
12.16 Headings 29
12.17 Time of the Essence 29
12.18 No FDIC Insurance 29
13. Interest and Payment Terms 29
13.1 Manner of Payment 29
13.2 Interest 30
13.3 Waivers 30
</TABLE>
<TABLE>
<CAPTION>
Section
EXHIBITS Reference
- -------- ---------
<S> <C> <C>
"A" Series B Letter of Credit 3
"B" Conditions to Disbursement 1.1(e), 5.2
"C" Legal Description 1.1(u)
"D" Permitted Encumbrances Exhibit "B"
"E" Description of Facilities 1.1(s)
"F" Reserve Accounts Pledge Agreement 6.6.4
</TABLE>
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<PAGE> 5
SERIES B REIMBURSEMENT AGREEMENT
--------------------------------
This Series B Reimbursement Agreement is entered into as of November
1, 1985, by and between RADIATION STERILIZERS, INCORPORATED, a California
corporation ("Company"), and WELLS FARGO BANK, N.A., a national banking
association ("Bank").
1. Definitions And Accounting Terms.
1.1 Defined Terms. As used in this Series B Reimbursement Agreement,
the following terms shall have the meanings set forth respectively after each:
(a) "Agreement" means this Series B Reimbursement Agreement,
either as originally executed or as it may from time to time be
supplemented, modified or amended.
(b) "Bond Documents" means all of the instruments, documents
and agreements which may be executed from time to time by Issuer, Trustee,
the Original Purchaser and/or Company in connection with the Series B
Bonds (other than the Loan Documents), including without limitation the
following, each of which were executed as of even date herewith unless
otherwise indicated and in each case either as originally executed or as
the same may from time to time be supplemented, modified or amended:
(1) Trust Indenture between Issuer and Trustee, relating
to the Series B Bonds (the "Trust Indenture");
(2) the Series B Loan Agreement (as defined below); and
(3) Bond Purchase Agreement among Company, Issuer and
the Original Purchaser, relating to the Series B Bonds (the "Bond
Purchase Agreement").
(c) "Business Day" means any day of the year, other than a
Saturday or a Sunday, (a) on which banks located (i) in the cities in
which the principal corporate trust office of Trustee and the principal
office of Bank are located, and (ii) in New York, New York, are not
required or authorized by law to remain closed, and (b) on which the New
York Stock Exchange, Inc. is not closed.
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<PAGE> 6
(d) "Code" means the Internal Revenue Code of 1954, as
amended, and references to the Code and Sections of the Code shall include
relevant regulations and proposed regulations thereunder and any successor
provisions to such Sections, regulations or proposed regulations.
(e) "Conditions to Disbursement" means the conditions set
forth in Exhibit "B" attached hereto, either as now existing or as it may
from time to time be supplemented, modified or amended.
(f) "Depository" means First City Bank of Dallas, a state
banking corporation.
(g) "Designated Representative" means either the "Authorized
Company Representative" under the Series B Loan Agreement or, if Bank so
requests, a different Person, authorized by Company, with the approval of
Bank, to deliver certificates, requests for disbursements and other
documents and material to Bank pursuant to this Agreement.
(h) "Disbursement" means each of the disbursements by
Depository of Series B Bond Proceeds pursuant to this Agreement and the
Bond Documents.
(i) "Documents" means, collectively, the Bond Documents and
the Loan Documents.
(j) "Event of Default" means each of those events so
designated in Article 11 of this Agreement.
(k) "Fiscal Year" means Company's fiscal year, ending on March
31 of each calendar year.
(l) "Guarantor" means Charles King & Associates, a California
limited partnership.
(m) "Guaranty" means the guaranty required pursuant to Section
4.1 of this Agreement, either as originally executed or as it may from
time to time be supplemented, modified or amended.
(n) "Improvements" means the improvements located on the
Property and any and all other improvements now or hereafter comprising
any portion of the Property.
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<PAGE> 7
(o) "Issuer" means the Trinity River Industrial Development
Authority, a non-profit industrial development corporation.
(p) "Loan Documents" means, collectively, this Agreement, the
Guaranty and the Series B Pledge Agreement, in each case either as
originally executed or as the same may from time to time be supplemented,
modified or amended.
(q) "Original Purchaser" means Prudential-Bache Securities
Inc., a Delaware corporation.
(r) "Person" means any person or entity, whether an
individual, trustee, corporation, partnership, trust, unincorporated
organization or otherwise.
(s) "Project" means the construction and operation of the
industrial facility described in Exhibit "E" attached hereto for the
sterilization of packaged products using ionizing radiation, as provided
herein and in the Series B Loan Agreement.
(t) "Project Costs" means all costs of any nature whatsoever
incurred by or on behalf of Company in connection with the Project.
(u) "Property" means the real property described in Exhibit
"C" attached hereto, together with all easements and other rights now or
hereafter made appurtenant thereto, all improvements and fixtures now or
hereafter located thereon, and all additions or accretions thereto.
(v) "Related Loan Documents" means the documents defined in
the Series A Reimbursement Agreement as the "Loan Documents."
(w) "Remarketing Agent" means the Remarketing Agent appointed
in accordance with Section 403 of the Trust Indenture.
(x) "Series A Bonds" means the bonds for which amounts are
available to be drawn under the Series A Letter of Credit.
(y) "Series A Letter of Credit" means the letter of credit to
be issued by Bank pursuant to the Series A Reimbursement Agreement.
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<PAGE> 8
(z) "Series A Loan Agreement" means the Series 1985A Loan
Agreement between Issuer and Company of even date herewith relating to the
loan to Company of the Series A Bond Proceeds.
(aa) "Series A Reimbursement Agreement" means the Series A
Reimbursement Agreement of even date herewith between Bank and Company.
(bb) "Series B Bond Proceeds" means the proceeds of the Series
B Bonds, including without limitation any insurance or condemnation
proceeds or other assets held by Trustee in special funds established
pursuant to the Series B Bond Documents or otherwise.
(cc) "Series B Bonds" means the Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue
Bonds (Radiation Sterilizers, Incorporated Project), Series 1985B, to be
issued pursuant to the Trust Indenture.
(dd) "Series B Company Bonds" means Series B Bonds (a)
purchased by Trustee or the Remarketing Agent (as defined in the Trust
Indenture) with moneys furnished by Company pursuant to Section 4.11 of
the Series B Loan Agreement and (b) delivered to Bank or its nominee
pursuant to Section 401(j) or 401(k) of the Trust Indenture as a result of
the occurrence of an Event of Default.
(ee) "Series B Drawing Bonds" means Series B Bonds delivered
or deemed delivered to Bank or its nominee pursuant to the Trust Indenture
as the result of a "C Drawing," or a "C Drawing" and a "D Drawing," under
the Series B Letter of Credit.
(ff) "Series B Letter of Credit" means the Series B Letter of
Credit to be issued by Bank pursuant to Section 3 of this Agreement,
either as originally executed or as it may from time to time be
supplemented, modified or amended.
(gg) "Series B Loan Agreement" means the Series 1985B Loan
Agreement between Issuer and Company of even date herewith relating to the
loan to Company of the Series B Bond Proceeds.
(hh) "Series B Pledge Agreement" means the pledge and security
agreement required pursuant to Section 4.2 of this Agreement, either as
originally exe-
-4-
<PAGE> 9
cuted or as it may from time to time be supplemented, modified or amended.
(ii) "Trustee" means Bank One Trust Company, N.A., a national
banking association, or its successors as trustee under the Trust
Indenture.
1.2 Use of Defined Terms. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
generally accepted accounting principles applied on a consistent basis.
1.4 Exhibits. All Exhibits to this Agreement, either as now existing
or as the same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
2. Series B Bonds. Company contemplates entry into the Bond Documents in
order to cause the issuance of the Series B Bonds, so that the Series B Bond
Proceeds may be used to finance the Project.
3. Letters of Credit. In order to enhance the marketability of the Series
A Bonds and the Series B Bonds, Company requested that Bank issue an irrevocable
standby letter of credit, with Company's reimbursement obligations secured by
various parcels of real property owned by Company and Guarantor. Company hereby
acknowledges that Bank's appraisers have determined that the value of such
parcels is substantially less than the value of the requested letter of credit,
but that Bank has agreed to back the Series B Bonds without taking real property
security for Company's reimbursement obligations in connection therewith,
Company has therefore requested that Bank issue two irrevocable standby letters
of credit. The first letter of credit (the "Series B Letter of Credit") shall be
substantially in the form attached hereto as Exhibit "A" and shall be issued in
the face amount of $2,505,377.00, of which an amount not exceeding $2,450,000.00
shall be available to pay the principal amount or purchase price of the Series B
Bonds, and an amount not exceeding $55,377.00 shall be available for the accrued
interest on the Series B Bonds, all as more particularly provided in the
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<PAGE> 10
particularly provided in the Series B Letter of Credit. Company's obligations in
connection with the Series B Letter of Credit shall be secured by the cash
collateral held in the Reserve Accounts (as defined below). The second letter of
credit (the "Series A Letter of Credit") shall be substantially in the form
attached to the Series A Reimbursement Agreement as Exhibit "A" and shall be
issued in the face amount of $2,198,596.00, of which an amount not exceeding
$2,150,000.00 shall be available to pay the principal amount or purchase price
of the Series A Bonds, and an amount not exceeding $48,596.00 shall be available
for interest accrued on the Series A Bonds, all as more particularly provided in
the Series A Letter of Credit. Company's obligations in connection with the
Series A Letter of Credit shall be secured by the Security Documents (as defined
in the Series A Reimbursement Agreement) and the cash collateral held in the
Reserve Accounts. Various rights and obligations of Bank and Company in
connection with the Series A Letter of Credit are set forth in the Series A
Reimbursement Agreement and the other Related Loan Documents. The Series A
Letter of Credit, the Series B Letter of Credit and any successor or substitute
letters of credit issued pursuant to this Agreement are sometimes collectively
referred to herein as the "Letters of Credit," Bank is willing to issue the
Series B Letter of Credit on the terms and conditions contained in this
Agreement and the other Loan Documents.
4. Loan Documents.
4.1 Guaranty. In consideration of Bank's entry into this Agreement
and the other Loan Documents, and in order to guarantee the prompt payment when
due of all sums of principal and interest advanced by Bank pursuant to the
Letters of Credit as well as the prompt payment when due of any other sums owing
pursuant to this Agreement or any of the other Loan Documents, Company shall, at
its sole expense, deliver or cause to be delivered to Bank a guaranty (the
"Guaranty") executed by Guarantor, in such form and content as Bank shall in its
sole discretion require.
4.2 Series B Pledge Agreement. In consideration of Bank's entry into
this Agreement and the other Loan Documents, and as security for the prompt
payment when due of all sums of principal and interest advanced by Bank pursuant
to the Series B Letter of Credit as well as for payment of all other sums owing
pursuant to this Agreement and the other Loan Documents, Company shall, at its
sole expense, deliver or cause to be delivered to Bank a pledge and security
agreement (the "Series B Pledge Agreement") executed by Company, in such form
and content as Bank shall in its sole discretion
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<PAGE> 11
require, assigning to Bank Company's right, title and interest in and to the
Series B Drawing Bonds and the Series B Company Bonds.
4.3 Other Documents and Actions. Company agrees to execute,
acknowledge and/or deliver or cause to be executed, acknowledged and/or
delivered to Bank such other instruments, agreements and other documents, and to
take such actions, upon request by Bank, as Bank may reasonably request in order
to carry out the purposes of this Agreement and the other Loan Documents and the
transactions contemplated thereby.
4.4 Additional Security. Bank shall not acquire any security for the
obligations of Company or Guarantor under this Agreement or the other Loan
Documents, other than the Series B Pledge Agreement and the Guaranty, unless
Company shall have afforded to Trustee, for the benefit of the holders of the
Series B Bonds, prior to or simultaneously with the taking by Bank of such
security, rights which shall, at the option of Bank, be either senior to the
rights of Bank or of equal priority with the rights of Bank in connection with
such security.
5. Conditions to Issuance and Disbursements.
5.1 Conditions to Issuance. The obligation of Bank to issue the
Series B Letter of Credit is subject to the following conditions precedent:
5.1.1 Bank shall have received all of the following documents,
each of which shall be in form and substance satisfactory to Bank:
(a) the original Guaranty;
(b) the original Series B Pledge Agreement;
(c) copies of each of the Bond Documents;
(d) copies of the articles and by-laws of Company and any
and all supplements and amendments thereto, all certified to be true and
correct by the Secretary of Company;
(e) an original of each of the opinions, certificates, letters
and other documents specified in, Section 5(b) of the Bond Purchase
Agreement, in each case addressed to Bank;
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<PAGE> 12
(f) a written opinion of Company's counsel, in form and
substance satisfactory to Bank, covering such matters relating to Company
and the Loan Documents as may be required by Bank;
(g) a copy of the partnership agreement of Guarantor, a
copy of the certificate of limited partnership of Guarantor as recorded in
San Mateo County, California, a copy of the Form LP-1 filed for Company
with the California Secretary of State, and copies of any and all
amendments to such documents, all certified as true, complete and correct
by Charles W. King, Jr.;
(h) a written opinion of Guarantor's counsel, in form and
substance satisfactory to Bank, covering such matters relating to
Guarantor and the Loan Documents as may be required by Bank;
(i) the certificate required pursuant to Section 7.2.1,
below;
(j) an executed copy (or duplicates) of the Trust Indenture
and the Series B Loan Agreement;
(k) the financial statements of Company and Guarantor required
to be furnished hereunder and under the Guaranty, and the insurance
policies required to be furnished hereunder and under the Guaranty; and
(l) such other instruments, certificates, opinions, consents
and other documents as Bank may reasonably require.
5.1.2 The Series B Bonds shall have been simultaneously duly
executed and delivered, all of the Series B Bonds shall have been sold, and the
full authorized face amount of the Series B Bonds (less such fees to the
Original Purchaser as are paid therefrom at the time of sale, as provided in the
Bond Documents) shall have been received by Trustee, as required pursuant to the
Bond Documents.
5.1.3 All conditions to the issuance of the Series A Letter of
Credit shall have been satisfied.
5.2 Conditions to Disbursements. The conditions described in Exhibit
"B" attached hereto shall be conditions precedent to each Disbursement.
Following the initial purchase of the Series B Bonds by the Original Purchaser,
Bank shall provide Depository with a standing written approval of all
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<PAGE> 13
Disbursements thereafter requested by the Authorized Company Representative (as
defined in the Series B Loan Agreement); provided, however, that such standing
approval shall automatically be revoked as of the date on which any Event of
Default (or event which, with the giving of notice or the passage of time or
both, would constitute an Event of Default) occurs or on which any Condition to
Disbursement fails to be fulfilled. Following any such revocation, Bank's
approval shall be required at the time of each Disbursement unless and until
Bank, in its sole discretion, chooses to provide Trustee with another revocable
standing approval.
6. Reimbursement and Other Payments; Extension.
6.1 Reimbursement. Company hereby agrees to pay to Bank at the times
indicated, in cash or by such other means as may be satisfactory to Bank in its
sole discretion, the following:
(a) on the date of any disbursement of funds by Bank under the
Series B Letter of Credit, the entire amount of any and all funds
disbursed by Bank under the Series B Letter of Credit;
(b) upon demand, all reasonable amounts expended, advanced or
incurred by Bank (i) in connection with the negotiation, preparation,
execution, delivery, issuance, administration and performance of the
Series B Letter of Credit, this Agreement or any other Loan Document, or
any matter related thereto; (ii) to satisfy any obligation of Company or
Guarantor under this Agreement or any of the Loan Documents; and (iii) to
enforce the rights of Bank under this Agreement or any other Loan Document
(including without limitation any costs incurred by Bank in connection
with any insolvency or bankruptcy proceeding affecting Company or
Guarantor or any other Person involved in the Project), which amounts will
include all court costs, appraisal fees, reasonable attorneys' fees, fees
of auditors and accountants and investigation expenses reasonably incurred
by Bank in connection with any such matters;
(c) upon demand, all other amounts owing to Bank by Company
under this Agreement or any of the other Loan Documents.
All sums owing pursuant to this Agreement and the other Loan Documents shall be
payable with interest as provided in Article 13.
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<PAGE> 14
6.2 Fees. Company hereby agrees to pay to Bank, in cash or by such
other means as may be satisfactory to Bank in its sole discretion (i) on or
before the date on which the Series B Bonds are sold to the Original Purchaser
pursuant to the Bond Purchase Agreement, as an administration fee for the first
year of the term of the Series B Letter of Credit, in advance, an amount equal
to one and one-quarter percent (1.25%) of the undrawn amount initially available
to be drawn under the Series B Letter of Credit; and (ii) for each subsequent
year that the Series B Letter of Credit remains in effect until the expiration
of its three (3) year term, Company shall pay to Bank, in advance, on or before
the anniversary of issuance of the Series B Letter of Credit, a loan
administration fee in an amount equal to one and one-quarter percent (1.25%) of
the undrawn amount available to be drawn under the Series B Letter of Credit as
of the last day of the preceding year of the term of the Series B Letter of
Credit (which amount will take into account principal reductions of the Series B
Bonds). In no event shall Bank have any obligation to make reimbursement or to
otherwise account to Company in respect of fees paid by Company as a result of
any reduction in the undrawn amount under the Series B Letter of Credit.
6.3 Increased Costs Due to Change in Law. If any change in any law
or regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by Bank, or (ii)
impose on Bank any other condition regarding this Agreement or the Series B
Letter of Credit (other than changes in the rates of income taxation generally
applicable to Bank), and the result of any such event shall be to increase the
cost to Bank of issuing or maintaining the Series B Letter of Credit (which
increase in cost shall be determined by Bank's reasonable allocation of the
aggregate of such cost increases resulting from such events), and such
requirement or cost shall remain in effect for more than one hundred eighty
(180) days after notice thereof from Bank to Company, then (a) Bank shall so
notify Company, and (b) upon receipt of such notice from Bank, Company shall
promptly pay to Bank, from time to time as specified by Bank, additional amounts
which shall be sufficient to compensate Bank for such increased costs as accrue
after the expiration of such one hundred eighty (180) day period, together with
interest on each such amount from the date of such notice until payment in full
thereof at the rate set forth in Article 13. A certificate as to such increased
cost incurred by Bank as a
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<PAGE> 15
result of any such event, submitted by Bank to Company, shall be conclusive as
to the amount thereof.
6.4 Obligations Absolute. The obligations of Company under the Loan
Documents shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances:
(a) any lack of validity or enforceability of the Series B
Letter of Credit, or any of the Documents or any other agreement or
instrument related thereto;
(b) any amendment or waiver of or any consent to departure
from the terms of the Series B Letter of Credit or any of the Documents or
any other agreement or instrument related thereto;
(c) the existence of any claim, set-off, defense or other
right which the Company, Guarantor or Issuer may have at any time against
Trustee, any beneficiary or any transferee of the Series B Letter of
Credit (or any Person for whom Trustee, any such beneficiary or any such
transferee may be acting), Bank or any other Person, whether in connection
with this Agreement, the Series B Letter of Credit, any of the other Loan
Documents, the Series B Bonds or any other agreement or instrument related
thereto, or in connection with the Project or any unrelated transaction;
(d) any statement, draft or any other document presented under
the Series B Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) the surrender or impairment of any security for the
performance or observance of the terms of this Agreement, any of the other
Loan Documents or any other agreement related thereto; or
(f) any other circumstance, happening or omission
whatsoever, whether or not similar to any of the foregoing.
6.5 Extension of Series B Letter of Credit. The term of the Series B
Letter of Credit may be extended if, following Company's request, Bank and
Company reach agreement on the terms of such extension, Bank shall not be
obligated
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<PAGE> 16
to enter into any such extension or to otherwise extend, modify or supplement
the Series B Letter of Credit or any of the other Loan Documents.
6.6 Reserve Accounts. On or before December 15, 1986, Bank shall
establish and designate two interest-bearing accounts (the "Unrestricted Reserve
Account" and the "Restricted Reserve Account"). The Unrestricted Reserve Account
and the Restricted Reserve Account are collectively referred to herein (and in
the Series A Reimbursement Agreement) as the "Reserve Accounts." On December 15,
1986, Company shall deposit with Bank cash in the amount of $333,000.00, which
amount shall be apportioned between the Unrestricted Reserve Account and the
Restricted Reserve Account pursuant to subsection 6.6.3, below. On December 15,
1987, Company shall deposit with Bank an additional $333,000.00, which amount
shall be apportioned between the Unrestricted Reserve Account and the Restricted
Reserve Account pursuant to subsection 6.6.3, below. In connection with the
Reserve Accounts, Bank and Company agree as follows:
6.6.1 All amounts held in the Reserve Accounts shall be
invested by Bank in accordance with instructions of Company that are wholly
acceptable to Bank, subject to all restrictions imposed by Bond Counsel from
time to time.
6.6.2 Bank and Company acknowledge that, as of the date of
this Agreement, Bond Counsel has advised them (a) that moneys to be deposited in
the Reserve Accounts and certain moneys deposited in other trust funds and
accounts (the "Trustee Accounts") held by Trustee (collectively, the "Arbitrage
Funds"), are subject to arbitrage restrictions, (b) that a portion of the
Arbitrage Funds (the "Unrestricted Funds") may be invested at an unrestricted
yield, which portion shall not exceed the smallest of (i) one and one-quarter
percent (1.25%) of the average annual debt service on, (ii) the maximum annual
debt service on, or (iii) fifteen percent (15%) of the aggregate outstanding
principal amount of, the Series A Bonds and the Series B Bonds, and (c) that if
the amount of the Unrestricted Funds is calculated pursuant to subsection (i),
"average annual debt service" shall mean the annual interest that the Series A
Bonds and the Series B Bonds would bear if initially issued at the Fixed
Interest Rate (as defined in the Trust Indenture and the Trust Indenture
relating to the Series B Bonds (collectively, the "Trust Indentures"]).
6.6.3 Those amounts to be deposited by Company pursuant to
this Section 6.6 that qualify as Unrestricted Funds shall be deposited in the
Unrestricted Reserve Account.
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<PAGE> 17
Those amounts to be deposited by Company pursuant to this Section 6.6 that are
in excess of the Unrestricted Funds (the "Restricted Funds") shall be deposited
in the Restricted Reserve Account and shall be subject to yield restrictions as
required by Bond Counsel from time to time. At such times as a portion of the
Series A Bonds and/or the Series B Bonds are redeemed or otherwise cancelled in
accordance with the provisions of either Trust Indenture, Bond Counsel shall
consult with Bank and Bank shall, to the extent required by Bond Counsel,
transfer all or a portion of the Unrestricted Funds from the Unrestricted
Reserve Account to the Restricted Reserve Account, thereby increasing the
Restricted Funds and decreasing the Unrestricted Funds.
6.6.4 Company hereby grants to Bank and Trustee a lien on and
a security interest in the Reserve Accounts, all amounts deposited in the
Reserve Accounts and all proceeds of the investment or disposition of the
amounts deposited therein, as security for (a) the payment and performance of
all indebtedness and other obligations of Company to Bank under the Loan
Documents (including the "Loan Documents" as defined in this Agreement and the
"Loan Documents" as defined in the Series A Reimbursement Agreement) and (b) the
payment by Company to Trustee of the principal of, and all accrued interest on,
the Series A Bonds and the Series B Bonds. Company shall, at its sole expense,
deliver or cause to be delivered to Bank a pledge and security agreement (the
"Reserve Accounts Pledge Agreement") executed by Company, in the form attached
hereto as Exhibit "F", and from time to time execute and deliver such other
instruments and documents as Bank may require in order to evidence or perfect
such pledge.
6.6.5 In the event that Company desires to provide substitute
collateral in lieu of payment of all or a portion of the moneys to be deposited
by Company pursuant to this Section 6.6, acceptance of such substitute
collateral shall be in Bank's sole and absolute discretion.
7. Representations and Warranties by Company. As a material inducement to
Bank's entry into this Agreement and the transactions contemplated hereby,
Company represents and warrants to Bank as follows:
7.1 Formation of Company. Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, (b) has all requisite power and authority to conduct its business
and to own and lease its properties, and (c) is duly qualified to do
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<PAGE> 18
business in, and is in good standing in, every jurisdiction in which the nature
of business conducted by it makes such qualification necessary or where failure
to so qualify would have a material adverse effect on its business or financial
condition or its performance of its obligations under the Documents.
7.2 Execution, Delivery and Performance of Loan Documents and Bond
Documents.
7.2.1 Company and Guarantor have all requisite power and
authority to execute and deliver, and to perform all of their obligations under,
the Documents, and shall execute and deliver to Bank, prior to the issuance of
the Series B Letter of Credit and as a condition thereto, a certificate
evidencing the due authorization and consent of the board of directors of
Company and the partners in Guarantor to the execution of the Documents and the
entry by Company and Guarantor into the transaction contemplated thereby.
7.2.2 The execution and delivery by Company of, and the
performance by Company of all of its obligations under, each Document has been
duly authorized by all necessary action and do not and will not:
(a) require any consent or approval not heretofore obtained of
any Person having any interest in Company;
(b) violate any provision of, or require any consent under the
articles or by-laws of Company;
(c) result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge,
right of others, or other encumbrance of any nature (other than as
contemplated under the Documents) upon or with respect to any property now
owned or leased or hereafter acquired by Company;
(d) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to Company; or
(e) result in a breach of or constitute a default under, or
cause or permit the acceleration of any material obligation owed under,
any indenture or loan or credit agreement or any other agreement, lease,
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<PAGE> 19
or instrument to which Company is a party or by which Company or any of
its property is bound or affected.
7.2.3 At the time of execution of this Agreement, Company is
not in default in any respect that is materially adverse to the interests of the
holders of the Documents or that would have any material adverse effect on the
financial condition of Company or the conduct of its business under any law,
rule, regulation, order, writ, judgment, injunction, decree, determination,
award, indenture, agreement, lease or instrument described in Section 7.2.2(d)
or Section 7.2.2(e), above.
7.2.4 No authorization, consent, approval, order, license,
exemption from, or filing or registration or qualification with, any court or
governmental department, public body, authority, commission, board, bureau,
agency, or instrumentality, is or will be required to authorize, or is otherwise
required (except for such authorizations, consents, approvals, orders, licenses,
exemptions or filings as may be required under the state securities or "Blue
Sky" laws in connection with the sale of the Series B Bonds by the Original
Purchaser under the Bond Purchase Agreement, which shall be obtained to the
extent necessary by the Original Purchaser) in connection with the following:
(a) the execution and delivery by Company of, and the
performance by Company of all of its obligations under, the Documents, or
(b) the creation of the liens, security interests, or other
charges or encumbrances described in the Documents.
7.2.5 Each of the Documents, when executed and delivered, will
constitute the legal, valid, and binding obligations of Company (to the extent
it is a party thereto or obligated thereunder), enforceable against Company in
accordance with its terms.
7.3 Financial Statements. Company has furnished to Bank its
financial statements, and such statements and any other financial statements or
reports submitted by Company to Bank or to the Original Purchaser accurately
reflect the financial position of Company as of the date thereof.
7.4 No Material Adverse Change. There has been no material adverse
change in the condition, financial or
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<PAGE> 20
otherwise, of Company since the dates of the financial statements described in
Section 7.3, above.
7.5 Tax Liability. Company has filed all tax returns (federal, state
and local) required to be filed and has paid all taxes shown thereon to be due
and all property taxes due, including interest and penalties, if any; provided,
however, that Company shall not be required to pay and discharge any such tax so
long as the legality thereof shall be promptly and actively contested in good
faith and by appropriate proceedings. Company has established and is maintaining
adequate reserves for tax liabilities, if any (including any tax liabilities
contested pursuant to this Section 7.5).
7.6 Compliance with Laws. Company is and shall remain in compliance
in all material respects with all laws, regulations and requirements applicable
to its business and has obtained all authorizations, consents, approvals,
orders, licenses, exemptions from, and has accomplished all filings or
registrations or qualifications with, any court or governmental department,
public body, authority, commission, board, bureau, agency or instrumentality,
failure to obtain or comply with which would have a material and adverse effect
upon its business.
7.7 Litigation. There are no actions, suits or proceedings pending
or threatened against or affecting Company or the property of Company before any
court or governmental department, public body, authority, commission, board,
bureau, agency or instrumentality, except as expressly disclosed to Bank in
writing by Company prior to the execution of this Agreement,
7.8 Official Statement. To the best of Company's knowledge, neither
the Official Statement nor the Preliminary Official Statement provided in
connection with the Series B Bonds, nor any certificate or statement or any data
furnished by Company to Bank or to Trustee or any other person or entity in
connection with the negotiation of this Agreement or any of the other Documents
or the transactions contemplated thereby (other than statements contained in the
Preliminary Official Statement which were revised or corrected in the Official
Statement) contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in the light
of the circumstances under which they were made, not misleading.
7.9 Conditions to Issuance. All of the conditions to issuance of the
Series B Letter of Credit have been ful-
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<PAGE> 21
filled, except as expressly disclosed to Bank in writing by Company prior to the
execution of this Agreement.
8. Representations and Warranties by Bank. As a material inducement to
Company's entry into this Agreement and the transactions contemplated hereby,
Bank represents and warrants to Company that:
8.1 Formation of Bank. Bank is a national banking association, duly
organized, validly existing and in good standing; Bank has all requisite
corporate power to carry on its business as now being conducted, and has all
requisite corporate power and authority to enter into this Agreement, issue the
Series B Letter of Credit, and perform its obligations hereunder and thereunder.
8.2 Authorization. The execution, delivery and performance of this
Agreement and the issuance of the Series B Letter of Credit by the Bank have
been duly authorized by all necessary corporate action on the part of Bank.
8.3 No Conflict. The execution, delivery and performance of this
Agreement and the issuance of the Series B Letter of Credit by Bank do not
conflict with or violate any provision of the articles of incorporation or
by-laws of Bank and do not, to the best of Bank's knowledge, conflict with,
violate, result in a breach of, or cause a default under (i) any provision of
federal, state or local law or regulation relating to the business or assets of
Bank, (ii) any provision of any consent, arbitration award, judgment or decree
by which Bank is bound, or (iii) any provision of any agreement or instrument to
which Bank is a party or by which Bank or its assets are bound or restricted.
8.4 Actions and Proceedings. There is no pending action or
proceeding before any court, governmental agency or arbitrator against Bank and,
to the best of Bank's knowledge, there in no threatened action or proceeding
against Bank before any court, governmental agency or arbitrator which would
materially and adversely affect the ability of the Bank to perform its
obligations under this Agreement or the Series B Letter of Credit, subject to
applicable laws, principles and judicial decisions.
9. Affirmative Covenants. For so long as any obligation of Company
in connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall, unless Bank otherwise consents in writing:
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<PAGE> 22
9.1 Governmental Approvals. Deliver to Bank, from time to time at
Bank's request, evidence in form and substance satisfactory to Bank that Company
has complied with all applicable laws, ordinances, regulations and other
requirements relating thereto.
9.2 Continued Existence. Maintain its existence, and continue to be
a corporation in good standing in the State of California. In connection with
the covenants given pursuant to this Section 9.2, Company agrees that it will
not dissolve or otherwise dispose of all or substantially all of its assets.
9.3 Books and Records. Maintain full and complete books of account
and other records reflecting the results of its operations (in conjunction with
any other ventures as well as specifically with respect to the Project),
including without limitation all contributions of equity investment capital, and
provide to Bank, promptly after request by Bank therefor, such financial
statements and other information pertaining to Company, and the assets and
operations of Company, as Bank may from time to time request.
9.4 Annual Operating Statements. Deliver to Bank the following:
(a) Promptly and in any event within ninety (90) days after
the end of each Fiscal Year, balance sheets and statements of income for
Company's operations for such Fiscal Year, accompanied with all supporting
schedules and certificates of Company's chief financial officer that the
statements are true and correct.
(b) Upon request, copies of all such regular or periodic
financial statements or financial reports as Company shall send to its
shareholder(s),
(c) Upon request, copies of all such regular or periodic
reports which are available for public inspection which Company may be
required to file with any federal or state department, bureau, commission
or agency, including without limitation tax returns.
(d) Promptly and in any event within one hundred twenty (120)
days after the end of each Fiscal Year, a certification of a Designated
Representative that no Event of Default has occurred and Company is in
compliance with all covenants and agreements made by
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<PAGE> 23
Company and contained in this Agreement or any of the Loan Documents.
9.5 Notice of Certain Events. Promptly notify Bank if (a) Company
learns of the occurrence of any event which constitutes, or will constitute,
with the passage of time or the giving of notice or both, an Event of Default or
a default under this Agreement or any of the other Documents, together with a
detailed statement by a responsible officer of Company specifying the nature
thereof and what action Company is taking or proposes to take with respect
thereto, or (b) Company receives any notice from, or the taking of any other
action by, the holder of any promissory note, debenture or other evidence of
indebtedness of Company or of any security (as defined in the Securities Act of
1933, as amended) of Company with respect to a claimed default, together with a
detailed statement by a responsible officer of Company specifying the notice
given or other action taken by such holder and the nature of the claimed default
and what action Company is taking or proposes to take with respect thereto, or
(c) Company learns of the existence of any legal, judicial or regulatory
proceedings affecting Company or any property of Company in which the amount
involved is material and is not covered by insurance or which, if adversely
determined, would cause a material adverse change in the financial condition of
Company, or (d) there shall occur or exist any other event or condition causing
a material adverse change in the financial condition of Company.
9.6 Opinions. Deliver to Bank, concurrently with the delivery
thereof to Trustee, a copy of each opinion of counsel required pursuant to the
Bond Documents, in each case addressed to Bank.
9.7 Defaults of Others. Use its best efforts to cure or cause to be
cured all defaults of Trustee or Issuer under the Bond Documents, if
economically practical and/or required in order to avoid an acceleration of the
Series B Bonds,
9.8 Tax Appeals. Bring, maintain and diligently prosecute any and
all actions, appeals and proceedings which are available to Company in order to
challenge, reverse or set aside a "Determination of Taxability," as that term is
defined in the Bond Documents.
9.9 Surplus Construction Funds. Subsections 3.3(h)(i) and (iv) of
the Series B Loan Agreement notwithstanding, use moneys in the Construction Fund
(as defined in the Series B
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<PAGE> 24
Loan Agreement) remaining after the Project is complete and fully paid for
solely for the purposes described in subsections 3.3(h)(ii) and (iii) of the
Series B Loan Agreement.
9.10 Notice re Disbursement Conditions. Promptly notify Bank if
Company learns that any Condition to Disbursement was not on the date of this
Agreement, or has since ceased to be, fulfilled.
9.11 Compliance with Requirements. Comply with all conditions,
covenants, restrictions, easements, reservations, rights, rights of way and all
applicable laws, ordinances, regulations, use permits, occupancy permits,
building permits and other requirements, including without limitation those
affecting or relating to the Property and the construction of any improvements
thereon.
10. Negative Covenants. For so long as any obligation of Company in
connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall not, unless Bank otherwise consents in writing:
10.1 Transfers of Property or Obligations. Assign or delegate any
obligations in connection with the Series B Bonds, the Series B Letter of
Credit, this Agreement or any of the other Documents, or sell, assign, convey,
lease as a whole or otherwise transfer the Property or any interest therein
without the express prior written consent of Bank, which consent may be granted
or withheld by Bank in its sole discretion. In connection with the restrictions
contained in this Section 10.1, Company acknowledges that Bank has entered into
the transaction contemplated by this Agreement in reliance upon the financial
strength, creditworthiness, reputation and management expertise of Company and
would not have entered into such transaction but for such reliance.
11. Events of Default and Remedies Upon Default.
11.1 Events of Default. The occurrence of any one or more of the
following, whatever the reason therefor, shall constitute an Event of Default
hereunder:
(a) Company shall fail to pay any amount of principal or
interest owing under this Agreement or any of the other Loan Documents,
together with interest thereon from the due date until payment at the rate
provided in Article 13, within ten (10) days after the date on which
payment is due; or
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<PAGE> 25
(b) Either Company or Guarantor shall fail to perform or
observe any term, covenant or agreement contained in any of the Loan
Documents on its part to be performed or observed the breach of which can
be cured by the payment of money, within ten (10) days after notice; or
(c) Either Company or Guarantor shall fail to perform or
observe any term, covenant or agreement contained in any of the Loan
Documents on its part to be performed or observed, other than terms,
covenants or agreements the breach of which can be cured by the payment of
money, within thirty (30) days after notice (provided, however, that if
cure cannot reasonably be effected within such thirty (30) day period
there shall be no Event of Default under this Section 11.1(c) so
long as Company or Guarantor commences cure within such thirty (30) day
period and thereafter diligently prosecutes such cure to completion); or
(d) Trustee declares any default in connection with the Series
B Bonds or the Bond Documents or there is a Determination of Taxability
(as defined in the Trust Indenture); or
(e) Company shall fail to perform or observe any term,
covenant or agreement contained in any of the Bond Documents on its part
to be performed or observed; or
(f) Any representation or warranty in any of the Documents or
in any certificate, agreement, instrument or other document made or
delivered pursuant to or in connection with any of the Documents proves to
have been incorrect in any material respect when made; or
(g) The dissolution or liquidation of Company or Guarantor or
failure by Company or Guarantor promptly to lift any execution,
garnishment or attachment of such consequence as will materially impair
its ability to make any payments under the Loan Documents, or the entry of
an order for relief by a court of competent jurisdiction in any proceeding
for the liquidation or reorganization of Company or Guarantor, or the
filing of a petition by or against Company or Guarantor under the
provisions of any bankruptcy act or under any similar act which may be
hereafter enacted, or an assignment by Company or Guarantor for the
benefit of its creditors, or the entry by Company or Guarantor into an
agreement of composition
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<PAGE> 26
with its creditors or the appointment of a receiver, trustee, custodian,
liquidator or similar officer for Company or Guarantor; or
(h) The occurrence of any Event of Default under the Series
A Reimbursement Agreement.
11.2 Remedies Upon Default. Upon the occurrence of any Event of
Default, Bank may, at its option, do any or all of the following:
(a) Declare the principal of all amounts owing under this
Agreement and the other Loan Documents (including all obligations secured
by the Security Documents) and all other indebtedness of Company to Bank,
together with interest thereon, to be forthwith due and payable,
regardless of any other specified maturity or due date, without notice of
default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind or
character, and without the necessity of prior recourse to any security;
(b) Implement any remedies available to Bank under or in
connection with the Bond Documents;
(c) Terminate its consent to the disbursement or release of
the remaining Series B Bond Proceeds;
(d) If the Event of Default may be cured by Bank by taking
actions or making payments of money, Bank shall have the right (but not
the obligation) to take such actions (including without limitation the
retention of attorneys and the commencement or prosecution of actions on
its own behalf or on behalf of Company), or make such payments and pay for
the costs of such actions (including without limitation attorneys' fees
and court costs) from its own funds; provided, however, that the taking of
such actions at Bank's expense or the making of such payments by Bank out
of Bank's own funds shall not be deemed to cure such Event of Default, and
the same shall not be so cured unless and until Company shall have
reimbursed Bank for any costs incurred in taking such actions and for any
such payments, together with interest at the rate provided for in Article
13, from the date of incurring such costs or making such payments until
the date of reimbursement. If Bank advances its own funds for such
purposes, such funds shall be secured by the Security Documents,
notwithstanding that such
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advances may cause the total amount advanced hereunder to exceed the
amount committed to be advanced pursuant to this Agreement, and Company
shall immediately upon demand reimburse Bank therefor with interest at the
rate provided for in Article 13, from the date of such advance until the
date of reimbursement; and
(e) Exercise any and all of its rights under the Documents or
as provided by law including, without limitation, making demand upon
Guarantor and collecting upon the Guaranty.
11.3 Cumulative Remedies; No Waiver. All remedies of Bank provided
for herein are cumulative and shall be in addition to any and all other rights
and remedies provided in the Series B Letter of Credit, the Bond Documents or
any of the other Loan Documents, or provided by law from time to time; provided,
however, that Bank hereby agrees to waive, during the tendency of any proceeding
by or against Company or Guarantor in bankruptcy or reorganization, its right to
set off any and all deposits (general or special) at any time held and other
indebtedness at any time owing by Bank to or for the credit or the account of
Company or Guarantor, as applicable, against any and all of the obligations of
Company or Guarantor, as applicable, now or hereafter existing under this
Agreement or in any of the other Loan Documents. The exercise of any right or
remedy by Bank hereunder shall not in any way constitute a cure or waiver of
default hereunder or under the Series B Letter of Credit, the Bond Documents or
any of the other Loan Documents, nor invalidate any notice of default or any act
done pursuant to any such notice, nor prejudice Bank in the exercise of any
rights hereunder or under the Series B Letter of Credit, the Bond Documents or
any of the other Loan Documents, unless in the exercise of said rights, Bank and
Trustee realize all amounts owed to either under the Series B Letter of Credit,
this Agreement, the Bond Documents and any of the other Loan Documents and all
Events of Default are cured. No waiver by Bank of any default or breach by
Company or Guarantor hereunder shall be implied from any omission by Bank to
take action on account of such default if such default persists or is repeated,
and no express waiver shall affect any default other than the default expressly
made the subject of the waiver. Any such express waiver shall be operative only
for the time and to the extent therein stated. Any waiver of any covenant, term
or condition contained herein shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition. The consent or
approval by Bank to or of any act by Company or Guarantor requiring further
consent or
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<PAGE> 28
approval shall not be deemed to waive or render unnecessary consent or approval
to or of any subsequent act.
12. Miscellaneous.
12.1 Actions. Bank shall have the right to commence, appear in, and
defend any action or proceeding purporting to affect the rights or duties of
Bank, Company or Guarantor hereunder or under the Guaranty or the payment of any
funds hereunder or under the Guaranty, and in connection therewith Bank may pay
necessary expenses, employ counsel and pay reasonable attorneys' fees. Company
agrees to pay to Bank, on demand, all costs and expenses incurred by Bank in
connection therewith, including without limitation reasonable attorneys' fees,
together with interest from the date of expenditure at the rate provided in
Article 13, In the event that either Bank or Company shall bring an action
against the other to interpret or enforce the terms or provisions of the Series
B Letter of Credit, this Agreement or any of the other Loan Documents, the
prevailing party in such action shall be entitled to recover its attorneys' fees
and costs (whether or not taxable) as awarded by a court of competent
jurisdiction, whether or not such action is prosecuted to final judgment.
12.2 Nonliability of Bank. Company acknowledges and agrees that:
(a) the relationship between Company and Bank is, and shall at
all times remain, solely that of borrower and lender, and Bank neither
undertakes nor assumes any responsibility or duty to Company to select,
review, inspect, supervise, pass judgment upon or inform Company of any
matter in connection with the Project, including without limitation
matters relating to the adequacy or legal sufficiency of any of the
documents, agreements or arrangements pertaining to the Series B Bonds,
the Bond Documents or the rights or obligations of any Person in
connection therewith; and Company shall rely entirely upon its own
judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or information supplied to Company by
Bank in connection with such matters is for the protection of Bank only
and neither Company nor any other Person is entitled to rely thereon;
(b) Bank owes no duty of care to protect Company against
negligent, faulty, inadequate or defective building or construction;
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<PAGE> 29
(c) Bank shall not be responsible or liable to Company for any
loss, damage, liability or claim of any kind relating to injury or death
to persons or damage to property in connection with the negligent, faulty,
inadequate or defective building or construction or use or operation of
any of the Properties, and Company hereby indemnifies and holds Bank
harmless from any such loss, damage, liability or claim.
(d) Bank shall not be responsible or liable to Company for use
which may be made of the Series B Letter of Credit or for any acts or
omissions of Trustee and any beneficiary or transferee in connection
therewith;
(e) Bank shall not be responsible or liable to Company for the
validity, sufficiency or genuineness of documents (except as to Bank's
signatures thereon), or of any indorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged (except to the extent Bank
is grossly negligent in accepting or relying upon such documents);
(f) Bank shall not be responsible or liable to Company as a
result of any circumstances in any way related to the making or failure to
make payment under the Series B Letter of Credit, other than as a result
of the gross negligence or willful misconduct of Bank.
12.3 No Representations by Bank. By accepting or approving anything
required to be observed, performed or fulfilled, or to be given to Bank pursuant
to this Agreement or any of the other Documents, including any certificate,
statement of profit and loss or other financial statement, survey, appraisal or
insurance policy, Bank shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or representation to anyone with respect
thereto by Bank. Bank may accept documents in connection with the Series B
Letter of Credit or any of the other Documents which appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
12.4 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Company and Bank in connection with the Series B Letter of Credit. It is made
for
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<PAGE> 30
the sole protection of Company, Bank, and Bank's successors and assigns. No
other Person shall have any rights of any nature hereunder or by reason hereof,
except to the extent that Trustee is expressly granted rights hereunder.
12.5 Indemnity by Company. Company hereby indemnifies and holds
harmless Bank and its directors, officers, agents and employees (collectively
the "indemnitees") from and against:
(a) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person if the claim,
demand, action or cause of action directly or indirectly relates to a
claim, demand, action or cause of action that the Person has or asserts
against Company in connection with the issuance of the Series B Letter of
Credit, the Series B Bonds, any of the Bond Documents, or the transaction
to which such documents pertain;
(b) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person and arise from or
in connection with (i) any statement or omission, actual or alleged, in
the Bond Documents, or (ii) any breach or default, actual or alleged, of
the representations, warranties, covenants, conditions or agreements
contained in this Agreement or any of the other Loan Documents or in any
of the Bond Documents; and
(c) any and all liabilities, losses, costs or expenses
(including court costs and attorneys' fees) that any indemnitee suffers or
incurs as a result of the assertion of any claim, demand, action or cause
of action specified in Section 12.5(a) or Section 12.5(b), above.
The indemnity contained in this Section 12.5 shall not extend to any claims,
demands, actions, causes of action, liabilities, losses, costs or expenses which
result solely from the gross negligence or willful misconduct of Bank.
12.6 Commissions. Company hereby indemnifies and holds Bank harmless
from any responsibility, cost and/or liability, including any attorneys' fees
incurred, in connection with any claim by any Person for the payment of any
commission, charge or brokerage fee in connection with the Series B Bonds or any
of the other transactions contemplated in connection with this Agreement.
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<PAGE> 31
12.7 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of Company, Bank and their respective successors and assigns,
subject to the provisions of Section 10.1, above.
12.8 Execution in Counterparts. This Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, taken together will be deemed to
be but one and the same instrument. The execution of this Agreement or any other
Loan Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
12.9 Prior Agreements; Amendments; Consents. This Agreement,
together with the other Documents, contains the entire agreement between Bank
and Company with respect to the Series B Letter of Credit, and all prior
negotiations, understandings and agreements with respect to the Series B Letter
of Credit are superseded by this Agreement and the other Documents. No
amendment, modification, supplement, termination or waiver of any provision of
this Agreement or any of the other Loan Documents, and no consent to any
departure by Company therefrom, may in any event be effective unless in writing
signed by Bank, and then only in the specific instance and for the specific
purpose given.
12.10 Survival of Representations and Warranties. All
representations and warranties of Company contained herein or in any other Loan
Document (qualified in each case by the facts and circumstances surrounding each
such document at the time such document was executed) will survive the delivery
of the Series B Letter of Credit and are material and have been and will be
relied upon by Bank, notwithstanding any investigation made by Bank or on behalf
of Bank. For the purpose of the foregoing, all statements contained in any
certificate, agreement or other writing delivered by or on behalf of Company or
Guarantor pursuant hereto or pursuant to any other Loan Document or in
connection with the transactions contemplated hereby or thereby shall be deemed
to be representations and warranties of Company contained herein or in the other
Loan Documents, as the case may be.
12.11 Notices. All notices, requests, demands, directions and other
communications provided for in this
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<PAGE> 32
Agreement and under any of the other Loan Documents must be in writing and must
be mailed, telegraphed, delivered or sent by Telex or cable to the appropriate
party at its address as follows:
If to Company:
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
Attention: Charles W. King, Jr.
with a copy to:
Gerald Wright, Esq.
General Counsel
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
If to Bank:
Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: George Huxtable
Vice President
with a copy to:
Sheppard, Mullin, Richter & Hampton
333 South Hope Street
48th Floor
Los Angeles, California 90071
Attention: Robert E. Williams
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 12.11. Any
notice, request, demand, direction given by telegram, Telex or cable must be
confirmed within 48 hours by letter mailed or delivered to the appropriate party
at its respective address. If any notice, request, demand, direction or other
communication is given by mail it will be effective upon the earlier of (a) 96
hours after deposit in the U.S. Mail, certified or registered mail, return
receipt requested postage prepaid or (b) actual receipt, as indicated by the
return receipt; if given by telegraph or cable, when delivered to the telegraph
company with
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<PAGE> 33
charges prepaid; if given by Telex, when sent; or if given by personal delivery,
when delivered.
12.12 Further Assurances. Company shall, at its expense and without
expense to Bank, do, execute and deliver such further acts and documents as Bank
from time to time requires for the purpose of assuring and confirming unto Bank
the rights hereby created or intended now or hereafter so to be, or for carrying
out the intention or facilitating the performance of the terms of any Loan
Document.
12.13 Governing Law. All of the Loan Documents shall be governed by,
and construed and enforced in accordance with, the laws of the State of Texas.
12.14 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid shall be inoperative,
unenforceable or invalid without affecting the remaining provisions, and to this
end the provisions of all Loan Documents are declared to be severable.
12.15 Inconsistency With Loan Documents. In the event that any of
the provisions of the Loan Documents are inconsistent with the provisions of
this Agreement, the provisions of this Agreement shall prevail.
12.16 Headings. Article and section headings in this Agreement are
included for convenience of reference only and are not part of this Agreement
for any other purpose.
12.17 Time of the Essence. Time is of the essence.
12.18 No FDIC Insurance. Company and Bank hereby agree that the
transaction contemplated in this Agreement is not intended to and shall not
constitute a "deposit" within the meaning of 12 U.S.C. Section 1813(l)(1).
Neither Company nor Bank nor any successor or assign of either shall make any
claim against the Federal Deposit Insurance Corporation in the event of any
failure by Bank, in whole or in part, to fulfill its obligations with respect to
any draw or draws under the Series B Letter of Credit.
13. Interest and Payment Terms.
13.1 Manner of Payment. All amounts to be paid to Bank under this
Agreement and the other Loan Documents shall be paid to Bank at its banking
offices at 2055 Gateway Place, Suite 200, San Jose, California 95110, in coin or
cur-
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<PAGE> 34
rency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts. All such payments shall be
in immediately available funds, and shall be timely only if received by Bank
before 1:00 p.m., San Francisco, California, time, on the date that such payment
is required to be made. Any payment received by Bank after such time shall be
considered for all purposes (including the calculation of interest, to the
extent permitted by law) as having been made on Bank's next following business
day. As used in this Article 13, the term "business day" shall mean a day other
than a Saturday, Sunday or a day upon which banking institutions in the State of
California are authorized or required by law to close. If the date for any
payment to Bank falls on a day that is not a business day, then for all purposes
of such payment the same shall be deemed to have fallen on the next following
business day, and such extension of time shall in such case be included in the
computation of payments of interest.
13.2 Interest. Interest shall accrue on all amounts owing to Bank
under this Agreement and the other Loan Documents and remaining from time to
time unpaid, from the date so paid by Bank or otherwise becoming owing under the
Loan Documents until payment thereof, at a varying rate per annum (based on an
actual day basis using a 360 day year) which is two percent (2%) above the
floating commercial loan rate announced by Bank from time to time as its prime
rate, provided that the interest rate shall not exceed the maximum lawful
non-usurious rate of interest under applicable law. Adjustments in the varying
interest rate shall be made on the same day as each change in the announced
prime rate.
13.3 Waivers. Company and any and each co-maker, guarantor,
accommodation party, endorser or other person liable for the payment or
collection of any and all amounts owed to Bank under the loan Documents
expressly waive demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, bringing of suit and diligence
in taking any action to collect such amounts and in the handling of any
collateral at any time existing as security in connection therewith, and shall
be directly and primarily liable for the payment of all sums owing and to be
owing, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any such
-30-
<PAGE> 35
amount or in connection with any lien or security interest at any time had or
existing as security for any such amount.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
"Company":
RADIATION STERILIZERS, INCORPORATED,
a California corporation
By /s/ ALLAN CHIN
-----------------------------------
Its President
By /s/ CHARLES W. KING JR.
-----------------------------------
Its Secretary
"Bank":
WELLS FARGO BANK, N.A.,
a national banking association
By /s/ [SIG]
-----------------------------------
Assistant Vice President
Printed Name and Title
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<PAGE> 36
EXHIBIT "A"
SERIES B LETTER OF CREDIT
Irrevocable Letter of
Credit No. ___________
Dated as of __________, 19__
Bank One Trust Company, N.A.
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your favor for the
account of Radiation Sterilizers, Incorporated, a California corporation
("Company"), its Irrevocable Letter of Credit No. ________ ("Series B Letter of
Credit") in a maximum amount of up to $2,505,377.00 (as more fully described
below) effective immediately and expiring at Bank's counters by 4:00 PM,
San Francisco time, on December 15, 1988, unless extended by Bank (the
"Expiration Date").
This Series B Letter of Credit is being issued in connection with that
certain Trust Indenture (the "Trust Indenture") dated as of November 1, 1985,
between you, as Trustee, and the Trinity River Industrial Development Authority,
a nonprofit industrial development corporation (the "Issuer"), pursuant to which
the Issuer has agreed to authorize and issue and sell Trinity River Industrial
Development Authority Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project), Series 1985B, (the "Series B
Bonds") in the aggregate principal amount of $2,450,000.00, the payment of which
Series B Bonds is secured by, among other things, this Series B Letter of
Credit.
As used in this Series B Letter of Credit, the term "business day" shall
mean a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon which
banking institutions in the State of California, the State of Texas or the City
of New York are authorized or required by law to close, or (iv) a day on which
the New York Stock Exchange, Inc. is closed.
You, as Trustee and Paying Agent, pursuant to the Trust Indenture, are
hereby irrevocably authorized to draw
-1-
<PAGE> 37
on Bank, for the account of Company, in accordance with the terms and conditions
hereof and subject to reductions in amounts as hereinafter set forth, an
aggregate amount not exceeding $2,505,377.00 (Two Million Five Hundred Five
Thousand Three Hundred Seventy-Seven Dollars) (the "Stated Amount"), of which
(A) an aggregate amount not exceeding $2,450,000.00 may be drawn upon with
respect to "A Drawings" and "C Drawings", as defined below, to cover principal
of the Series B Bonds, and (B) an aggregate amount not exceeding $55,377.00 may
be drawn upon with respect to "B Drawings," "D Drawings" and A Drawings", as
defined below, to cover 55 days of interest (calculated at an assumed interest
rate of 15% per annum) on the Series B Bonds.
Funds under this Series B Letter of Credit are only available to you
against your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face:
"Drawn under Wells Fargo Bank, N.A. Irrevocable Letter of Credit No. _________
and upon your presenting to Wells Fargo Bank, N.A., one or more of the following
written certificates:
(A) Your written certificate signed by you in the form of Exhibit A
attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of Exhibit B
attached hereto appropriately completed (a "B Drawing");
(C) Your written certificate signed by you in the form of Exhibit C
attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of Exhibit D
attached hereto appropriately completed (a "D Drawing");
(E) Your written certificate signed by you in the form of Exhibit E
attached hereto appropriately completed (an E Drawing").
All documents presented to Bank in connection with any demand for
payment hereunder, as well as all notices and other communications to Bank with
respect to this Series B Letter of Credit, shall be in writing and addressed and
presented to Bank at its offices at 475 Sansome Street, San Francisco,
California 94111, Attention: Letter of Credit Operations - AU 1175, or any other
place in the United States which may be designated by Bank by written notice
delivered
-2-
<PAGE> 38
to you. Such documents, notices and other communications shall be personally
delivered to Bank, or may be sent to Bank by tested Telex in which case draft
requirements are waived.
If Bank receives any of your drafts drawn hereunder at such office,
all in strict conformity with the terms and conditions of this Series B Letter
of Credit, on or prior to the Expiration Date, Bank will honor the same and make
payment hereunder. Payments to you under this Series B Letter of Credit shall be
made by wire transfer of immediately available funds to Bank One, Columbus,
N.A., Columbus, Ohio, for your Account No. 04-0178-7, Attn: Corporate Trust
Administration, or into such other account as you designate to Bank in writing
from time to time. If a proper draft and certificate are presented by 11:30
A.M., New York time, payment will be made that same business day; otherwise
payment will be made the next business day.
Upon a Drawing hereunder, the total amount of this Series B Letter
of Credit shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount of this
Series B Letter of Credit shall be reduced by the amount of such Drawing;
(B) With respect to any C or D Drawing, the total amount of this
Series B Letter of Credit shall be reduced by the amount of such Drawing,
provided that Bank shall reinstate the amount of such drawing if such
amount is paid to Bank by Company prior to default under that certain
Series B Reimbursement Agreement dated as of November 1, 1985 (the "Series
B Reimbursement Agreement"), by and between Company and Bank. In addition,
in the event Bank transfers any Series B Drawing Bonds (as defined in the
Series B Reimbursement Agreement) in its possession following any C
Drawing to any person or entity (other than to you, as Trustee, for
cancellation), an amount equal to the amount of such C Drawing (and any
corresponding D Drawing) which was applied to pay principal and interest
on the Series B Bonds being so transferred shall automatically be
reinstated hereunder. Bank will send notice of any such reinstatement to
you, as Trustee, in the form attached hereto as Exhibit F; and
(C) With respect to any E Drawing, the total amount of this Series B
Letter of Credit shall be reduced by the amount of such Drawing and such
amount shall then be immediately and automatically reinstated, and Bank
-3-
<PAGE> 39
will send notice of such reinstatement to you, as Trustee, in the form
attached hereto as Exhibit F.
Only you, as Trustee and Paying Agent, may make a drawing under this
Series B Letter of Credit. Upon the payment to you, as Trustee and Paying Agent,
of the amount specified in a draft drawn hereunder, Bank will be fully
discharged on its obligation under this Series B Letter of Credit with respect
to such draft and shall not thereafter be obligated to make any further payments
under this Series B Letter of Credit in respect to such draft to you or any
other person who may have made to you or makes to you a demand for payment of
principal of, purchase price of or interest on any Series B Bond. By paying to
you an amount demanded in such draft(s) we make no representation as to the
correctness of the amount demanded in such draft(s).
Upon the earliest of (i) 15 days after the making by you of an A
Drawing (and any associated B Drawing) hereunder (other than an A Drawing for
partial redemption); (ii) Bank's receipt of a certificate signed by your officer
and an officer of Company stating (a) that no Series B Bonds are Outstanding
within the meaning of the Trust Indenture and (b) that such officers are duly
authorized to sign such certificate on behalf of you and Company; (iii) Bank's
receipt of a certificate signed by your officer and an officer of Company
stating (a) that an Alternate Letter of Credit (as defined in the Trust
Indenture) has been accepted by you as Trustee under the Trust Indenture and (b)
that such officers are duly authorized to sign such certificate on behalf of you
and on behalf of Company; (iv) Bank's receipt of a certificate signed by your
officer and an officer of Company stating (a) that no less than 15 days prior to
the date of such certificate, the interest rate on the Series B Bonds was
converted to a Fixed Interest Rate (as defined in the Trust Indenture), (b) that
you have not received written notification from both Company and Bank stating
that this Series B Letter of Credit is not to be cancelled, and (c) that such
officers are duly authorized to sign such certificate on behalf of you and on
behalf of Company; or (v) the Expiration Date, this Series B Letter of Credit
shall automatically terminate and be delivered to Bank for cancellation.
This Series B Letter of Credit shall be governed by (i) the Uniform
Customs and Practice for Documentary Credit as fixed by the Congress of the
International Chamber of Commerce from time to time (the "Uniform Customs") and
(ii) the laws of the State of California, including the Uniform Commercial Code
as in effect in the State of California, In the
-4-
<PAGE> 40
event of a conflict between the Uniform Customs and the laws of the State of
California, the Uniform Customs shall prevail. Communications with respect to
this Series B Letter of Credit shall be in writing and shall be addressed to
Bank at its offices at 475 Sansome Street, San Francisco, California 94111,
Attention: Letter of Credit Operations - AU 1175, specifically referring to the
number of this Series B Letter of Credit.
This Series B Letter of Credit is transferable in its entirety to
any transferee who has succeeded you as Trustee under the Trust Indenture. Each
letter of credit issued upon any such transfer may be successively transferred.
Transfer of the available balance under this Series B Letter of Credit to such
transferee shall be effected by the presentation to Bank of this Series B Letter
of Credit accompanied by a certificate substantially in the form of Exhibit G
attached hereto. Following such presentation, and as soon as this original
Series B Letter of Credit is returned to the Bank and the Bank has been paid its
customary transfer fee, Bank shall forthwith transfer the same to your
transferee or, if so requested by your transferee, issue an irrevocable letter
of credit to your transferee with provisions therein consistent with those of
this Series B Letter of Credit.
This Series B Letter of Credit sets forth in full Bank's
undertaking, and such undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or agreement
referred to herein (including, without limitation, the Series B Bonds and the
Trust Indenture), except only the certificates) and the draft(s) referred to
herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such certificate(s)
and such draft(s).
In the event of any failure by Bank, in whole or in part, to fulfill
its obligations with respect to any draw or draws under this Series B Letter of
Credit, no person or entity shall have the right to make any claim against the
Federal Deposit Insurance Corporation in connection with such failure. By its
signature below, Bank One Trust Company, N.A., a national banking association,
as Trustee and Paying Agent, acknowledges receipt of this Series B Letter of
Credit
-5-
<PAGE> 41
and agrees that the terms of this paragraph shall bind itself and its successors
and assigns.
Very truly yours,
WELLS FARGO BANK, N.A.
By ____________________
Its ________________
ACCEPTED AND AGREED TO
THIS _______ DAY OF NOVEMBER, 1985:
BANK ONE TRUST COMPANY, N.A.
By _____________________
Its _________________
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<PAGE> 42
EXHIBIT A
---------
CERTIFICATE FOR "A DRAWING"
---------------------------
(PRINCIPAL UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ____________ (the "Series B Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series B Bonds.
(2) The undersigned is making a drawing under the Series B Letter of
Credit with respect to the payment of principal upon acceleration, partial
redemption, full redemption or maturity of the Series B Bonds.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior A Drawings and C Drawings under the Series B
Letter of Credit for the payment of the principal amount or purchase price of
the Series B Bonds (other than C Drawings for which Bank has delivered notices
of reinstatement), does not exceed $2,450,000.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series B Letter of Credit
(other than Drawings for which the Series B Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series B Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of principal owing on account of the Series B Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied
A-1
<PAGE> 43
by the undersigned for any other purpose, and (c) no portion of it shall be
commingled with other funds held by the undersigned or the Depository (as
defined in the Series B Reimbursement Agreement). This drawing is made in
accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ______________ day of ________, 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association,
as Trustee and Paying Agent
By.______________________
Title ________________
A-2
<PAGE> 44
EXHIBIT B
---------
CERTIFICATE FOR "B DRAWING"
---------------------------
(ACCRUED INTEREST UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.,
("Bank"), with reference to Wells Fargo Bank, N.A., Irrevocable Letter of Credit
No. ________ (the "Series B Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series B Bonds.
(2) The undersigned is making a drawing under the Series B Letter of
Credit with respect to the payment of accrued and unpaid interest upon
acceleration, partial redemption, full redemption, or maturity of the Series B
Bonds.
(3) Interest has accrued on the Series B Bonds and is due and
payable and the amount of the draft accompanying this certificate, together with
the aggregate of all prior B Drawings, D Drawings, and E Drawings under the
Series B Letter of Credit for payment of accrued interest on the Series B Bonds,
other than D Drawings for which the Series B Letter of Credit has been
reinstated, does not exceed $55,377.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series B Letter of Credit
(other than Drawings for which the Series B Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series B Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest owing on account of the Series B Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied by the undersigned
for any other purpose, and (c) no portion of
B-1
<PAGE> 45
it shall be commingled with other funds held by the undersigned or the
Depository (as defined in the Series B Reimbursement Agreement). This drawing is
made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ______ day of ____________________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By _________________________
Title ___________________
B-2
<PAGE> 46
EXHIBIT C
---------
CERTIFICATE FOR "C DRAWING"
---------------------------
(PRINCIPAL OF SERIES B BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee"), and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.,
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. _________ (the "Series B Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series B Bonds.
(2) Paying Agent is making a drawing under the Series B Letter of
Credit (a) at the written request (or oral request to be immediately followed in
writing) of the Remarketing Agent (as defined in the Series B Reimbursement
Agreement) to pay, pursuant to Section 401(g) of the Trust Indenture, the
principal amount of the purchase price of those repurchased Series B Bonds which
the Remarketing Agent has been unable to remarket, the principal amount of which
is equal to the amount of the draft accompanying this certificate, and which
Series B Bonds (i) are now held by either the Remarketing Agent pursuant to its
representation to Paying Agent, which representation Paying Agent has not
independently verified, or are held by Paying Agent and (ii) shall be
re-registered in the name of Bank, or its agent, as pledgee, and delivered to
Bank, or such agent, within 5 business days following receipt by Paying Agent of
the amount demanded hereby; or (b) to pay, pursuant to Section 401(h) of the
Trust Indenture, the portion of the purchase price of the Series B Bonds
delivered to Paying Agent for purchase equal to the principal amount of such
Series B Bonds, and Paying Agent shall deliver to Bank, or its agent, as
pledgee, within 5 business days following receipt by Paying Agent of the amount
demanded hereby, a principal amount of Series B Bonds equal to the amount of the
draft accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior pay-
C-1
<PAGE> 47
ments made pursuant to A Drawings and C Drawings under the Series B Letter of
Credit (other than reinstated amounts) does not exceed $2,450,000.00.
(4) Upon receipt of the amount demanded hereby, (a) Paying Agent
will either (i) deliver it to the Remarketing Agent or use the same only for the
purpose of purchase of the Series B Bonds referenced in Paragraph 2(a) hereof,
or (ii) use it for the purpose of purchase of the Series B Bonds referred to in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the ______________ day of __________, 19__,
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By _____________________
Title _______________
C-2
<PAGE> 48
EXHIBIT D
---------
CERTIFICATE FOR "D DRAWING"
---------------------------
(ACCRUED INTEREST ON SERIES B BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A., Irrevocable Letter of Credit
No. __________ (the "Series B Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series B Bonds.
(2) Paying Agent is making a drawing under the Series B Letter of
Credit (a) at the written request (or oral request to be immediately followed in
writing) of the Remarketing Agent (as defined in the Series B Reimbursement
Agreement), to pay, pursuant to Section 401(g) of the Trust Indenture, the
amount of accrued interest on those Series B Bonds that the Remarketing Agent
has been unable to remarket, which amount of accrued interest is equal to the
amount of the draft accompanying this certificate; or (b) to pay, pursuant to
Section 401(h) of the Trust Indenture, the portion of the purchase price of the
Series B Bonds delivered to Paying Agent for purchase equal to the amount of
accrued and unpaid interest on such Series B Bonds to the date of purchase
thereof, which amount of accrued interest is equal to the amount of the draft
accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Series B Letter of
Credit (other than reinstated amounts), does not exceed $55,377.00.
(4) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Series B Bonds and
the Trust Indenture.
(5) Upon receipt by Paying Agent of the amount demanded hereby, (a)
Paying Agent will either (i) deliver it
D-1
<PAGE> 49
to the Remarketing Agent or use the same only for the purpose of reimbursement
or payment of accrued interest referenced in Paragraph 2(a) hereof, or (ii) use
it for the purpose of reimbursement or payment of accrued interest referenced in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
(6) To the extent that the payment demanded hereby is to be made in
accordance with the Series B Letter of Credit on a date between a Record Date
and the corresponding Interest Payment Date (as those terms are defined in the
Trust Indenture), Paying Agent now holds and shall, within 5 business days
following receipt by Paying Agent of the payment demanded hereby, deliver to
Bank, due-bill checks that, in the aggregate, are in the amount and in the form
required by the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the ________ day of _________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By ________________________
Title __________________
D-2
<PAGE> 50
EXHIBIT E
---------
CERTIFICATE FOR A DRAWING"
--------------------------
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A., Irrevocable Letter of Credit
No. _____________ (the "Series B Letter of Credit," the capitalized terms
defined therein and not defined herein being used as therein defined) issued by
Bank in favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series B Bonds.
(2) The undersigned is making a drawing under the Series B Letter of
Credit with respect to the payment of accrued and unpaid interest upon an
Interest Payment Date (as defined in the Trust Indenture) during the continuance
of an Event of Default under the Series B Reimbursement Agreement for which Bank
has not yet exercised its right to demand that the undersigned accelerate the
Series B Bonds.
(3) Interest has accrued on the Series B Bonds and is due and
payable, and the amount of the draft accompanying this certificate, together
with the aggregate of all prior B Drawings, D Drawings and E Drawings under the
Series B Letter of Credit for the payment of accrued interest on the Series B
Bonds, other than D Drawings for which the Series B Letter of Credit has been
reinstated, does not exceed $55,377,00,
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series B Letter of Credit
(other than Drawings for which the Series B Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series B Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest
E-1
<PAGE> 51
owing on account of the Series B Bonds pursuant to the Trust Indenture, (b) no
portion of it shall be applied by the undersigned for any other purpose, and (c)
no portion of it shall be commingled with other funds held by the undersigned.
This drawing is made in accordance with the provisions of the Trust Indenture,
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _______ day of __________ 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By ______________________
Title ________________
E-2
<PAGE> 52
EXHIBIT F
---------
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. __________
DATED AS OF ______________, 19__
The undersigned, a duly authorized officer of Wells Fargo Bank, N.A.
("Bank"), hereby certifies to the Trustee under the Trust Indenture dated as of
November 1, 1985, between the Trinity River Industrial Development Authority and
Bank One Trust Company, N.A., a national banking association ("Trustee"), with
reference to Irrevocable Letter of Credit No. ______________ (the "Series B
Letter of Credit") issued by Bank in favor of Trustee, that the amount drawn by
Trustee pursuant to its _____________ Drawing dated as of ________________ has
been reinstated as of ____________ and is available for draw subject to the
terms of the Series B Letter of Credit.
In witness whereof, Bank has executed and delivered this Certificate
this ________ day of ________, 19__
WELLS FARGO BANK, N.A.
By: _____________________
Its _________________
F-1
<PAGE> 53
EXHIBIT G
---------
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Series B Letter of Credit Operations
AU 1175
Re: Wells Fargo Bank, N.A.,
Irrevocable Letter of Credit
----------------------------
No. ______________
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit (the "Series B Letter of Credit") in its entirety.
By this transfer, all rights of the undersigned beneficiary in and
to the Series B Letter of Credit are transferred to the transferee and the
transferee shall have sole rights as beneficiary thereof, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned beneficiary.
The original Series B Letter of Credit is returned herewith, along
with your customary transfer fee, and we ask
G-1
<PAGE> 54
you to endorse the transfer on the reverse thereof and forward it direct to the
transferee with your customary notice of transfer.
Very truly yours,
----------------------------------
Signature of Beneficiary
SIGNATURE AUTHENTICATED
- -----------------------
(Bank)
- -----------------------
(Authorized Signature)
G-2
<PAGE> 55
EXHIBIT "B"
CONDITIONS TO DISBURSEMENT
--------------------------
1. Conditions to All Disbursements. Bank shall not be obligated to approve
any Disbursement of Series B Bond Proceeds under Section 3.3 of the Series B
Loan Agreement unless each of the following conditions are fulfilled:
1.1 Completion of Project. The acquisition and construction of the
Project shall have been completed in accordance with the plans and
specifications therefor.
1.2 Permits, Etc. All required governmental inspections, reports and
certifications shall have been made, and all occupancy, use and other permits
required by all applicable governmental regulatory authorities and public
utility companies shall have been issued, for the full operation of the Project.
EXHIBIT "B"
Page 1 of 1
<PAGE> 56
EXHIBIT "C"
LEGAL DESCRIPTION
-----------------
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
City of Fort Worth, County of Tarrant, State of Texas, and described as follows:
Lot 10-R-l-A, Block 1, Wichita-20 Business Park, an Addition to the City
of Fort Worth, Tarrant County, Texas, according to plan recorded in Volume
388-183 Page 44, Deed Records of Tarrant County, Texas.
EXHIBIT "C"
Page 1 of 1
<PAGE> 57
EXHIBIT "E"
DESCRIPTION OF FACILITIES
-------------------------
EXHIBIT "E"
Page 1 of 1
<PAGE> 58
EXHIBIT "F"
RESERVE ACCOUNTS PLEDGE AGREEMENT
---------------------------------
This Reserve Accounts Pledge Agreement (the "Agreement"), dated as
of _____________,19__, is executed by RADIATION STERILIZERS, INCORPORATED, a
California corporation ("Debtor"), for the equal and ratable benefit of WELLS
FARGO BANK, N.A., a national banking association ("Bank"), and BANK ONE TRUST
COMPANY, N.A., a national banking association ("Trustee") (Bank and Trustee are
collectively referred to herein as "Secured Party"), pursuant to that certain
Series A Reimbursement Agreement Agreement (the "Series A Reimbursement
Agreement") and that certain Series B Reimbursement (the "Series B Reimbursement
Agreement") (collectively, the "Reimbursement Agreements"), each of which was
executed as of November 1, 1985 between Bank and Debtor. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth for them in
the Reimbursement Agreements.
1. Grant Of Security Interest. For valuable consideration, the receipt and
sufficiency of are hereby acknowledged, Debtor hereby assigns, transfers and
pledges to Secured Party all of Debtor's right, title and interest in those
certain Reserve Accounts established with and designated by Bank pursuant to
Section 6.6 of each of the Reimbursement Agreements, all amounts deposited in
the Reserve Accounts and all proceeds of the investment or disposition of the
amounts deposited therein, together with all other money or property heretofore
delivered or which shall hereafter be delivered to or come into the possession,
custody or control of Secured Party (whether described herein or not) in any
manner or for any purpose whatsoever during the existence of this Agreement
(collectively, the "Collateral"), and whether held in a general or special
account or deposit for safekeeping or otherwise, together with whatever is
receivable or received when the Collateral or proceeds are sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including without limitation all rights to payment, including
returned premiums, with respect to any insurance relating to the Collateral, and
all rights to payment with respect to any cause of action affecting or relating
to the Collateral, and including any stock rights, rights to subscribe, stock
splits, liquidating dividends, cash dividends, dividends paid in stock, new
securities, or other property which Debtor is or may hereafter be entitled to
receive on account of such securities or other property, including without
limitation stock received by Debtor due to stock splits or dividends paid in
stock (the
-1-
EXHIBIT "F
<PAGE> 59
"Proceeds"), and in the event that Debtor receives any such property, Debtor
will immediately deliver it to Secured Party to be held by Secured Party in the
same manner as the property originally pledged hereunder.
2. Obligations Secured. The obligations secured hereby are (a) the payment
and performance of all indebtedness and other obligations of Debtor to Bank
under the Loan Documents (including the "Loan Documents" as defined in the
Series A Reimbursement Agreement and the "Loan Documents" as defined in the
Series B Reimbursement Agreement), (b) the payment by Debtor to Trustee of the
principal of, and all accrued interest on, the Series A Bonds and the Series B
Bonds, (c) all obligations of Debtor and rights of Secured Party under this
Agreement, and (d) all present and future obligations of Debtor to Bank of other
kinds (collectively, the "Obligations"). The word "obligation" is used herein in
its most comprehensive sense and includes all present and future indebtedness,
liabilities, undertakings, covenants and conditions, whether voluntary or
involuntary, absolute or contingent, liquidated or unliquidated, determined or
undetermined, earned or unearned, and due or not due.
3. Termination. This Agreement will terminate upon the performance in full
of all Obligations of Debtor to Secured Party.
4. Warranties Of Debtor. Debtor represents and warrants: (1) with respect
to the Collateral and Proceeds generally: (a) that Debtor is the owner or has
control thereof; (b) that Debtor has the right to pledge the Collateral and
Proceeds; and (c) that the same is genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character; and (2) specifically with respect to Collateral and Proceeds
consisting of investment securities, instruments, chattel paper, documents,
contracts, insurance policies or any like property: (a) that all persons
appearing to be obligated thereon have authority and capacity to contract and
are bound as they appear to be; and (b) that the same comply with applicable
laws concerning the form, content and manner of preparation and execution.
5. Covenants Of Debtor.
A. Debtor Agrees in General: (a) to pay or perform all Obligations
secured hereby when due; (b) to pay all reasonable expenses, including
attorneys' fees, incurred by Secured Party in the perfection, preservation,
realization,
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<PAGE> 60
enforcement and exercise of its rights, powers and remedies hereunder; (c) to
permit Secured Party to exercise its powers; (d) to execute and deliver such
documents as Secured Party deems necessary to create, perfect and continue the
security interests contemplated hereby; (e) not to permit any lien on the
Collateral, except in favor to Secured Party; and (f) not to change its chief
place of business or the place where Debtor keeps its records concerning the
Collateral and Proceeds without first giving Secured Party written notice of the
address to which Debtor is moving same.
B. Debtor Agrees with Regard to Collateral and Proceeds: Unless
Secured Party elects to exercise its right and power to do so, Debtor agrees:
(a) not to commingle Proceeds with other property; (b) not to sell, hypothecate
or otherwise dispose of any Collateral or Proceeds subject hereto at any time,
except to Secured Party; and (c) to provide any service and do any other acts or
things necessary to keep Collateral and Proceeds free and clear of all defenses,
rights of offset and counterclaim.
6. Powers Of Lender. Debtor appoints Bank, Trustee, or either of them, its
true attorneys in fact to perform any of the following powers, which are coupled
with an interest, are irrevocable until termination of this Agreement and may be
exercised from time to time by Secured Party's officers and employees, or any of
them, at any time: (a) to perform any Obligation of Debtor hereunder in Debtor's
name or otherwise; (b) to liquidate the Reserve Accounts or any time deposit
pledged to Secured Party hereunder prior to its maturity date and to apply the
proceeds thereof to payment of any Obligations, notwithstanding the fact that
such liquidation may give rise to Federal penalties for early withdrawal of
funds from a time deposit; (c) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Secured Party's rights
hereunder; (d) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral; (e) to enter into any extension, reorganization, deposit, merger
or consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith to deposit or surrender control of the
Collateral, accept other property in exchange for the Collateral, and do and
perform such acts and things as Secured Party may deem proper, and any money or
property received in exchange for the Collateral may be applied to the
indebtedness or held by Secured Party under this Agreement; (f) to make any
compromise or settlement Secured Party deems desirable or
-3-
<PAGE> 61
proper in respect of the Collateral; (g) to insure, process and preserve the
Collateral; and (h) to perform any obligation of Debtor under this Agreement. To
effect the purposes of this Agreement, or otherwise upon instructions of Debtor,
or any of them, Secured Party may cause the Collateral to be transferred to
Secured Party's name or the name of Secured Party's nominee. Only in the event
of a default hereunder may Secured Party, without obligation do so, exercise as
to the Collateral any other rights, powers and remedies of an owner thereof.
7. Cash Collateral Account. Any money received by Secured Party in respect
of the Collateral may, at Secured Party's option, be retained in a
non-interest-bearing cash collateral account and the same shall, for all
purposes, be deemed Collateral hereunder,
8. Lender's Care And Delivery Or Collateral. Secured Party's obligation
with respect to Collateral and Proceeds in its possession shall be strictly
limited to the duty to exercise reasonable care in the custody and preservation
of such Collateral and Proceeds. Secured Party shall have no duty to take any
steps necessary to preserve the rights of Debtor against prior parties, or to
initiate any action to protect against the possibility of decline in the market
value of the Collateral or Proceeds. Secured Party shall not be obligated to
take any action with respect to the Collateral or Proceeds requested by Debtor
unless such request is made in writing, and Secured Party determines that the
requested actions would not jeopardize the value of the Collateral and Proceeds
as security for the indebtedness. Secured Party may at any time deliver the
Collateral and Proceeds, or any part thereof, to Debtor and the receipt thereof
by Debtor shall be a complete and full acquaintance for the Collateral and
Proceeds so delivered, and Secured Party shall thereafter be discharged from any
liability or responsibility therefore.
9. Payment Of Taxes, Charges, Liens And Assessments. Debtor agrees to pay
prior to delinquency all taxes, charges, liens and assessments against the
Collateral and Proceeds, and upon the failure of Debtor to do so, Secured Party
at its option may pay any of them and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Any such
payments made by Secured Party shall be obligations of Debtor to Secured Party,
due and payable immediately without demand, together with interest at a rate
determined in accordance with the provisions of Section 13, below, and shall be
secured by the Collateral
-4-
<PAGE> 62
and Proceeds, subject to all of the terms and conditions of this Agreement.
10. Events Of Default. The occurrence of any of the following shall be an
"Event of Default" under this Agreement: (a) the occurrence of any "Event of
Default" under either of the Reimbursement Agreements, (b) Debtor's failure to
pay any amount owing under the Series A Loan Agreement or the Series B Loan
Agreement which relates to the principal amount of, and accrued interest on, the
Series A Bonds and/or the Series B Bond, (c) failure by Debtor to timely and
fully perform any Obligation of Debtor contained herein; and (d) breach of any
warranty contained herein.
11. Remedies. Upon the occurrence of any event of default, Secured Party
shall have the right to declare immediately due and payable all or any
indebtedness secured hereby and to terminate any commitments to make loans or
otherwise extend credit to Debtor, without presentment, demand or notice of
dishonor, all of which are expressly waived by Debtor. Secured Party shall have
all other rights, privileges, powers and remedies granted to a secured party
upon default under the California Commercial Code or otherwise provided by law,
including without limitation the right to contact any persons obligated to
Debtor on Collateral and to instruct such persons to deliver all Proceeds
directly to Secured Party; the rights, privileges, powers and remedies of
Secured Party shall be cumulative; no single or partial exercise of any of them
shall preclude the further or other exercise thereof or any abandonment or
discontinuance of steps to enforce such right, power, privilege or remedy. Any
waiver, permit, consent or approval of any kind by Secured Party of any default
hereunder or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing. While
Debtor is in default: (1) Secured Party may, at any time and at Secured Party's
sole option, liquidate the Reserve Accounts and any time deposits pledged to
Secured Party hereunder, whether or not said time deposits have matured and
notwithstanding the fact that such liquidation may give rise to Federal
penalties for early withdrawal of funds from a time deposit; (2) Secured Party
may appropriate the Collateral and apply all Proceeds toward repayment of the
indebtedness in such order of application as Secured Party may from time to time
elect or, at Secured Party's sole option, place any Proceeds in the cash
collateral account; and (3) Debtor will assemble and deliver all Collateral and
Proceeds, and books and records pertaining thereto, to-Secured Party at a
reasonably convenient place designated by Secured Party. It is agreed that
public or private sales, for cash or on credit,
-5-
<PAGE> 63
to a wholesaler or retailer or investor, or user of collateral of the types
subject to this Agreement, or public auction, are all commercially reasonable
since differences in the sales prices generally realized in the different kinds
of sales are ordinarily offset by the differences in the costs and credit risks
of such sales. Any proceeds of any disposition of the Collateral following the
occurrence of an Event of Default, or any part thereof, may be applied by
Secured Party to the payment of expenses incurred by Secured Party in connection
with the foregoing, including reasonable attorneys' fees, and the balance of
such proceeds may be applied by Secured Party toward the payment of the
indebtedness and in such order of application as Secured Party may from time to
time elect.
12. Disposition Of Collateral And Proceeds. Upon the transfer of all or
any part of the Obligations, Secured Party may transfer all or any part of the
Collateral or Proceeds and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all liability and
responsibility with respect to any of the foregoing so transferred; but with
respect to any Collateral or Proceeds not so transferred, Secured Party shall
retain all rights and powers hereby given.
13. Costs, Expenses And Attorneys' Fees. All payments, advances, charges,
costs and expenses, including reasonable attorneys' fees, made or incurred by
Secured Party in exercising any right, power or remedy conferred by this
Agreement or in the enforcement thereof shall be paid to Secured Party by Debtor
immediately and without demand, together with interest at the rate per annum
specified in the promissory note described in Section 2, above.
14. Statute Of Limitations. Until all indebtedness shall have been paid in
full, the power of sale and all other rights, powers and remedies granted to
Secured Party hereunder shall continue to exist and may be exercised by Secured
Party at any time and from time to time irrespective of the fact that the
indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all indebtedness
secured hereunder.
15. Miscellaneous. Presentment, protest, notice of protest, notice of
dishonor and notice of nonpayment are waived with respect to any Proceeds to
which Secured Party
-6-
<PAGE> 64
is entitled hereunder; any right to direct the application of payments or
security for Obligations of Debtor hereunder and any right to require
proceedings against others or to require exhaustion of security are waived; and
consent to extensions, forbearances or alterations of the terms of
indebtednesses, the release or substitution of security, and the release of
guarantors is given with respect to Proceeds subject to this Agreement; provided
however, that in each instance Secured Party believes in good faith that the
action in question is commercially reasonable in that it does not unreasonably
increase the risk of nonpayment of the indebtedness to which the action applies.
Debtor hereby waives any benefit of or any right to participate in any
Collateral or other security whatsoever now or hereafter held by Secured Party.
16. Governing Law. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of Debtor and shall be
governed by and construed in accordance with the laws of the State of
California.
17. Severability Of Provision. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
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<PAGE> 65
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
18. Bank and Trustee. Until the first to occur of (a) the expiration of
the Series A Letter of Credit or (b) default by Bank in the performance of any
of its obligations under the Series A Letter of Credit, the following shall
apply:
(1) Trustee shall not have the right to exercise or
implement any right or remedy provided to Secured Party under this
Agreement without first obtaining the express prior written consent
of Bank to the same; and
(2) In the event of any disagreement between Trustee and
Bank as to the exercise or implementation of any right or remedy
provided to Secured Party under this Agreement, the decision of Bank
shall control as between Trustee and Bank.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
"Debtor":
RADIATION STERILIZERS, INCORPORATED,
a California corporation
By _________________________
Its _____________________
By _________________________
Its _____________________
-8-
<PAGE> 1
EXHIBIT 10.12
[WELLS FARGO BANK, N.A. LETTERHEAD]
SERIES A LETTER OF CREDIT
Irrevocable Letter of
Credit No. I-81231
Dated as of December 11, 1985
Bank One Trust Company, N.A.
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust
Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your favor for the
account of Radiation Sterilizers, Incorporated, a California corporation
("Company"), its Irrevocable Letter of Credit No. I-81231 ("Series A Letter of
Credit") in a maximum amount of up to $2,198,596.00 (as more fully described
below) effective immediately and expiring at Bank's counters by 4:00 P.M., San
Francisco time, on December 15, 1988, unless extended by Bank (the "Expiration
Date").
This Series A Letter of Credit is being issued in connection with that
certain Trust Indenture (the "Trust Indenture") dated as of November 1, 1985,
between you, as Trustee, and the Trinity River Industrial Development Authority,
a non-profit industrial development corporation (the "Issuer"), pursuant to
which the Issuer has agreed to authorize and issue and sell Trinity River
Industrial Development Authority Variable Rate Demand Industrial Development
Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series 1985A (the
"Series A Bonds"), in the aggregate principal amount of $2,150,000.00, the
payment of which Series A Bonds is secured by, among other things, this Series A
Letter of Credit.
As used in this Series A Letter of Credit, the term "business day" shall
mean a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon which
banking institutions in the State of California, the State of Texas or the City
of New York are authorized or required by Law to close, or (iv) a day on which
the New York Stock Exchange, Inc. is closed.
You, as Trustee and Paying Agent, pursuant to the Trust Indenture, are
hereby irrevocably authorized to draw
Page 1 of 6
<PAGE> 2
[WELLS FARGO BANK, N.A. LETTERHEAD]
on Bank, for the account of Company, in accordance with the terms and conditions
hereof and subject to reductions in amounts as hereinafter set forth, an
aggregate amount not exceeding $2,198,596.00 (Two Million one Hundred
Ninety-Eight Thousand Five Hundred Ninety-Six Dollars) (the "Stated Amount"), of
which (A) an aggregate amount not exceeding $2,150,000.00 may be drawn upon with
respect to "A Drawings" and "C Drawings", as defined below, to cover principal
of the Series A Bonds, and (B) an aggregate amount not exceeding $48,596.00 may
be drawn upon with respect to "B Drawings". "D Drawings" and "E Drawings", as
defined below, to cover 55 days of interest (calculated at an assumed interest
rate of 15% per annum) on the Series A Bonds,
Funds under this Series A Letter of Credit are only available to you
against your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face:
"Drawn under Wells Fargo Bank, N.A. Irrevocable Letter of Credit No. I-81231"
and upon your presenting to Wells Fargo Bank, N.A. one or more of the following
written certificates:
(A) Your written certificate signed by you in the form of Exhibit A
attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of Exhibit B
attached hereto appropriately completed (a "B Drawing");
(C) Your written certificate signed by you in the form of Exhibit C
attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of Exhibit D
attached hereto appropriately completed
a "D Drawing");
(E) Your written certificate signed by you in the form of Exhibit E
attached hereto appropriately completed (an "E Drawing").
ALL documents presented to Bank in connection with any demand for payment
hereunder, as well as all notices and other communications to Bank with respect
to this Series A Letter of Credit, shall be in writing and addressed and
presented to Bank at its offices at 475 Sansome Street, San Francisco,
California 94111, Attention: Letter of Credit operations - AU 1175, or any other
place in the United States which may be designated by Bank by written notice
delivered
Page 2 of 6
<PAGE> 3
[WELLS FARGO BANK, N.A. LETTERHEAD]
to you. Such documents, notices and other communications shall be personally
delivered to Bank, or may be sent to Bank by tested Telex in which case draft
requirements are waived.
If Bank receives any of your drafts drawn hereunder at such office, all in
strict conformity with the terms and conditions of this Series A Letter of
Credit, on or prior to the Expiration Date, Bank will honor the same and make
payment hereunder, Payments to you under this Series A Letter of Credit shall be
made by wire transfer of immediately available funds to Bank One, Columbus,
N.A., Columbus, Ohio, for your account No. 04-0178-7, Attn: Corporate Trust
Administration, or into such other account as you designate to Bank in writing
from time to time. If a proper draft and certificate are presented by 11:30
A.M., New York time, payment will be made that same business day; otherwise
payment will be made the next business day.
Upon a Drawing hereunder, the total amount of this Series A Letter of
Credit shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount of this Series A
Letter of Credit shall be reduced by the amount of such drawing;
(B) With respect to any C or D Drawing, the total amount of this Series A
Letter of Credit shall be reduced by the amount of such Drawing, provided
that Bank Shall reinstate the amount of such Drawing if such amount is paid
to Bank by Company prior to default under that certain Series A Reimbursement
Agreement dated as of November 1, 1985 (the "Series A Reimbursement
Agreement"), by and between Company and Bank. In addition, in the event Bank
transfers any Series A Drawing Bonds (as defined in the Series A
Reimbursement Agreement) in its possession following any C Drawing to any
person or entity (other than to you, as Trustee, for cancellation), an amount
equal to the amount of such C Drawing (and any corresponding D Drawing) which
was applied to pay principal and interest on the Series A Bonds being so
transferred shall automatically be reinstated hereunder Bank will send notice
of any such reinstatement to you, as Trustee, in the form attached hereto as
Exhibit F; and
(C) With respect to any E Drawing, the total amount of this Series A
Letter of Credit shall be reduced by the amount of such Drawing and such
amount shall then be immediately and automatically reinstated and Bank
Page 3 of 6
<PAGE> 4
[Wells Fargo Bank, N.A. LETTERHEAD]
will send notice of such reinstatement to you, as Trustee, in the form
attached hereto as Exhibit F.
Only you, as Trustee and Paying Agent, may make a drawing under this
Series A Letter of Credit. Upon the payment to you, as Trustee and Paying Agent,
of the amount specified in a draft drawn hereunder, Bank will be fully
discharged on its obligation under this Series A Letter of Credit with respect
to such draft and shall not thereafter be obligated to make any further payments
under this Series A Letter of Credit in respect to such draft to you or any
other person who may have made to you or makes to you a demand for payment of
principal of, purchase price of or interest on any Series A Bond. By paying to
you an amount demanded in such draft(s) we make no representation as to the
correctness of the amount demanded in such draft(s).
Upon the earliest of (i) 15 days after the making by you of an A
Drawing (and any associated B Drawing) hereunder (other than an A Drawing for
partial redemption); (ii) Bank's receipt of a certificate signed by your officer
and an officer of Company stating (a) that no Series A Bonds are outstanding
within the meaning of the Trust Indenture and (b) that such officers are duly
authorized to sign such certificate on behalf of you and Company; (iii) Bank's
receipt of a certificate signed by your officer and an officer of Company
stating (a) that an Alternate Letter of Credit (as defined in the Trust
Indenture) has been accepted by you as Trustee under the Trust Indenture and (b)
that such officers are Duly authorized to sign such certificate on Behalf of you
and on Behalf of Company; (iv) Bank's receipt of a certificate signed by your
officer and an officer of Company stating (a) that no Less than 15 days prior to
the date of such certificate, the interest rate on the Series A Bonds was
converted to a Fixed Interest Rate (as defined in the Trust Indenture), (b) that
you have not received written notification from both Company and Bank stating
that this Series A Letter of Credit is not to be canceled, and (c) that such
officers are duly authorized to sign such certificate on behalf of you and on
behalf of Company; or (v) the Expiration Date, this Series A Letter of Credit
shall automatically terminate and be delivered to Bank for cancellation.
This Series A Letter of Credit shall be governed by (i) the Uniform
Customs and Practice for Documentary Credit as fixed by the Congress of the
International Chamber of Commerce from time to time (the "Uniform Customs") and
(ii) the Laws of the State of California, including the Uniform Commercial Code
as in effect in the State of California. In the
Page 4 of 6
<PAGE> 5
[WELLS FARGO BANK, N.A. LETTERHEAD]
event of a conflict between the Uniform Customs and the Laws of the State of
California, the Uniform Customs shall prevail. Communications with respect to
this Series A Letter of Credit shall be in writing and shall be addressed to
Bank at its offices at 475 Sansome Street, San Francisco, California 94111,
Attention: Letter of Credit Operations - AU 1175, specifically referring to the
number of this Series A Letter of Credit.
This Series A Letter of Credit is transferable in its entirety to
any transferee who has succeeded you as Trustee under the Trust Indenture. Each
Letter of credit issued upon any such transfer may be successively transferred.
Transfer of the available balance under this Series A Letter of Credit to such
transferee shall be effected by the presentation to Bank of this Series A Letter
of Credit accompanied by a certificate substantially in the form of Exhibit G
attached hereto. Following such presentation, and as soon as this original
Series A Letter of Credit is returned to the Bank and the Bank has been paid its
customary transfer fee, Bank shall forthwith transfer the same to your
transferee or, if so requested by your transferee, issue an irrevocable Letter
of credit to your transferee with provisions therein consistent with those of
this Series A Letter of Credit,
This Series A Letter of Credit sets forth in full Bank's
undertaking, and such undertaking shall not in any way be modified, amended,
amplified or Limited by reference to any document, instrument or agreement
referred to herein (including, without Limitation, the Series A Bonds and the
Trust Indenture), except only the certificate(s) and the draft(s) referred to
herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such certificate(s)
and such draft(s).
In the event of any failure by Bank, in whole or in part, to fulfill
its obligations with respect to any draw or draws under this Series A Letter of
Credit, no person or entity shall have the right to make any claim against the
Federal Deposit Insurance Corporation in connection with such Failure. By its
signature below, Bank One Trust Company, N.A., a national banking association,
as Trustee and Paying Agent, acknowledges receipt of this Series A Letter of
Credit
Page 5 of 6
<PAGE> 6
[WELLS FARGO BANK, N.A. LETTERHEAD]
and agrees that the terms of this paragraph shall bind itself and its successors
and assigns.
Very truly yours,
WELLS FARGO BANK, N.A.
BY [SIG]
------------------------------
Assistant Vice President
ACCEPTED AND AGREED TO
THIS 18th DAY OF DECEMBER, 1985:
BANK ONE TRUST COMPANY, N.A.
By [SIG]
-------------------------------
Its
----------------------------
Page 6 of 6
<PAGE> 7
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
(PRINCIPAL UPON ACCELERATION, PARTIAL REDEMPTION, FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. _________ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) The undersigned is making a drawing under the Series A Letter of
Credit with respect to the payment of principal upon acceleration, partial
redemption, full redemption or maturity of the Series A Bonds.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior A Drawings and C Drawings under the Series A
Letter of Credit for the payment of the principal amount of purchase price of
the Series A Bonds (other than C Drawings for which Bank has delivered notices
of reinstatement), does not exceed $2,150,000.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series A Letter of Credit
(other than Drawings for which the Series A Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series A Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of principal owing on account of the Series A Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied by the undersigned
for any other purpose, and (c) no portion of
A-1
<PAGE> 8
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
it shall be commingled with other funds held by the undersigned or the
Depository (as defined in the Series A Reimbursement Agreement). This drawing is
made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and delivered
this certificate as of the _____________ day of______________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association,
as Trustee and Paying Agent
By [SIG]
------------------------------
Title
------------------------
A-2
<PAGE> 9
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
(ACCRUED INTEREST UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No ____________ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) The undersigned is making a drawing under the Series A Letter of
Credit with respect to the payment of accrued and unpaid interest upon
acceleration, partial redemption, full redemption, or maturity of the Series A
Bonds.
(3) Interest has accrued on the Series A Bonds and is due and
payable and the amount of the draft accompanying this certificate, together with
the aggregate of all prior B Drawings, D Drawings, and E Drawings under the
Series A Letter of Credit for payment of accrued interest on the Series A Bonds,
other than D Drawings and E Drawings for which the Series A Letter of Credit has
been reinstated, does not exceed $48,596.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series A Letter of Credit
(other than Drawings for which the Series A Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series A Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest owing on account of the Series A Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied by the under-
B-1
<PAGE> 10
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
signed for any other purpose, and (c) no portion of it shall be commingled with
other funds held by the undersigned or the Depository (as defined in the Series
A Reimbursement Agreement). This drawing is made in accordance with the
provisions of the Trust Indenture,
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and delivered
this certificate as of the ____________ day of ______________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By [SIG]
------------------------------
Title
------------------------
B-2
<PAGE> 11
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
(PRINCIPAL OF SERIES A BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee"), and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A., Irrevocable Letter of Credit
No. ___________ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) Paying Agent is making a drawing under the Series A Letter of
Credit (a) at the written request (or oral request to be immediately followed in
writing) of the Remarketing Agent (as defined in the Series A Reimbursement
Agreement) to pay, pursuant to Section 401(g) of the Trust Indenture, the
principal amount of the purchase price of those repurchased Series A Bonds which
the Remarketing Agent has been unable to remarket, the principal amount of which
is equal to the amount of the draft accompanying this certificate, and which
Series A Bonds (i) are now held by either the Remarketing Agent pursuant to its
representation to Paying Agent, which representation Paying Agent has not
independently verified, or are held by Paying Agent and (ii) shall be
reregistered in the name of Bank, or its agent, as pledgee, and delivered to
Bank, or such agent, within 5 business days following receipt by Paying Agent of
the amount demanded hereby; or (b) to pay, pursuant to Section 401(h) of the
Trust Indenture, the portion of the purchase price of the Series A Bonds
delivered to Paying Agent for purchase equal to the principal amount of such
Series A Bonds, and Paying Agent shall deliver to Bank, or its agent, as
pledgee, within 5 business days following receipt by Paying Agent of the amount
demanded hereby, a principal amount of Series A Bonds equal to the amount of the
draft accompanying this certificate,
(3) The amount of the draft accompanying this certificate,
together with the aggregate of all prior payments
C-1
<PAGE> 12
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
made pursuant to A Drawings and C Drawings under the Series A Letter of Credit
(other than reinstated amounts) does not exceed $2,150,000.00.
(4) Upon receipt of the amount demanded hereby, (a) Paying Agent
will either (i) deliver it to the Remarketing Agent or use the same only for the
purpose of purchase of the Series A Bonds referenced in Paragraph 2(a) hereof,
or (ii) use it for the purpose of purchase of the Series A Bonds referred to in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the _________ day of __________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By [SIG]
------------------------------
Title
------------------------
C-2
<PAGE> 13
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-11231
EXHIBIT D
CERTIFICATE FOR "D DRAWING"
(ACCRUED INTEREST ON SERIES A BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ___________ (the "Series A Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) Paying Agent is making a drawing under the Series A Letter of
Credit (a) at the written request (or oral request to be immediately followed in
writing) of the Remarketing Agent (as defined in the Series A Reimbursement
Agreement), to pay, pursuant to Section 401(g) of the Trust Indenture, the
amount of accrued interest on those Series A Bonds that the Remarketing Agent
has been unable to remarket, which amount of accrued interest is equal to the
amount of the draft accompanying this certificate; or (b) to pay, pursuant to
Section 401(h) of the Trust Indenture, the portion of the purchase price of the
Series A Bonds delivered to Paying Agent for purchase equal to the amount of
accrued and unpaid interest on such Series A Bonds to the date of purchase
thereof, which amount of accrued interest is equal to the amount of the draft
accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Series A Letter of
Credit (other than reinstated amounts), does not exceed $48,596.00.
(4) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Series A Bonds and
the Trust Indenture.
(5) Upon receipt by Paying Agent of the amount demanded hereby,
(a) Paying Agent will either (i) deliver it
D-1
<PAGE> 14
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. 1-81231
to the Remarketing Agent or use the same only for the purpose of reimbursement
or payment of accrued interest referenced in Paragraph 2(a) hereof, or (ii) use
it for the purpose of reimbursement or payment of accrued interest referenced in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
(6) To the extent that the payment demanded hereby is to be made in
accordance with the Series A Letter of Credit on a date between a Record Date
and the corresponding Interest Payment Date (as those terms are defined in the
Trust Indenture), Paying Agent now holds and shall, within 5 business days
following receipt by Paying Agent of the payment demanded hereby, deliver to
Bank, due-bill checks that, in the aggregate, are in the amount and in the form
required by the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the day _________ of _______, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By [SIG]
------------------------------
Title
D-2
<PAGE> 15
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
EXHIBIT E
---------
CERTIFICATE FOR A DRAWING"
--------------------------
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE
--------------------------------------------
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. _______________ (the "Series A Letter of Credit," the capitalized terms
defined therein and not defined herein being used as therein defined) issued by
Bank in favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series A Bonds.
(2) The undersigned is making a drawing under the Series A Letter of
Credit with respect to the payment of accrued and unpaid interest upon an
Interest Payment Date (as defined in the Trust Indenture) during the continuance
of an Event of Default under the Series A Reimbursement Agreement for which Bank
has not yet exercised its right to demand that the undersigned accelerate the
Series A Bonds.
(3) Interest has accrued on the Series A Bonds and is due and
payable, and the amount of the draft accompanying this certificate, together
with the aggregate of all prior B Drawings, D Drawings and E Drawings under the
Series A Letter of Credit for the payment of accrued interest on the Series A
Bonds, other than D Drawings and E Drawings for which the Series A Letter of
Credit has been reinstated, does not exceed $48,596.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series A Letter of Credit
(other than Drawings for which the Series A Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series A Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest
E-1
<PAGE> 16
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
owing on account of the Series A Bonds pursuant to the Trust Indenture, (b) no
portion of it shall be applied by the undersigned for any other purpose, and (c)
no portion of it shall be commingled with other funds held by the undersigned.
This drawing is made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _____________ day of ________, 19__.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By [SIG]
------------------------------
Title
------------------------
E-2
<PAGE> 17
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
EXHIBIT F
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. ________
DATED AS OF _________, 19__
The undersigned, a duly authorized officer of Wells Fargo Bank, N.A.
("Bank"), hereby certifies to the Trustee under the Trust Indenture dated as of
November 1, 1985, between the Trinity River Industrial Development Authority and
Bank One Trust Company, N.A., a national banking association ("Trustee"), with
reference to Irrevocable Letter of Credit No. (the "Series A Letter of Credit")
issued by Bank in favor of Trustee, that the amount drawn by Trustee pursuant to
its ______ Drawing dated as of ________, has been reinstated A of ____________
and is available for draw subject to the terms of the Series A Letter of Credit.
In witness whereof, Bank has executed and delivered this Certificate
this ___________ day of _________, 19__.
WELLS FARGO BANK, N.A.
By: [SIG]
-----------------------------
Its
-------------------------
F-1
<PAGE> 18
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO I-81231
EXHIBIT G
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Letter of Credit operations
AU 1175
Re: Wells Fargo Bank, N.A.,
Irrevocable Letter of Credit No.
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit (the "Series A Letter of Credit") in its entirety.
By this transfer, all rights of the undersigned beneficiary in and
to the Series A Letter of Credit are transferred to the transferee and the
transferee shall have sole rights as beneficiary thereof, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned beneficiary.
The original Series A Letter of Credit is returned herewith, along
with your customary transfer fee, and we ask you to endorse the transfer on the
reverse thereof and forward
G-1
<PAGE> 19
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81231
it direct to the transferee with your customary notice of transfer.
Very truly yours,
[SIG]
------------------------------
Signature of Beneficiary
SIGNATURE AUTHENTICATED
- -----------------------------
(Bank)
- -----------------------------
(Authorized Signature)
G-2
<PAGE> 1
EXHIBIT 10.13
SINCE 1852
WELLS FARGO BANK, N.A.
475 SANSOME STREET SAN FRANCISCO, CALIFORNIA 94163
INTERNATIONAL DIVISION COMMERCIAL L/C DEPARTMENT CABLE ADDRESS WELLS
SERIES B LETTER OF CREDIT
Irrevocable Letter of
Credit No. I-81232
Dated as of December 11, 1985
Bank One Trust Company, N.A.
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-018
Attention: Corporate Trust
Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your
favor for the account of Radiation Sterilizes, Incorporated, a California
corporation ("Company"), its Irrevocable Letter of Credit No. I-81232 ("Series B
Letter of Credit") in a maximum amount of up to $2,505,377.00 (as more fully
described below) effective immediately and expiring at Bank's counters by 4:00
P.M., San Francisco time, on December 15, 1988, unless extended by Bank (the
"Expiration Date").
This Series B Letter of Credit is being issued in connection
with that certain Trust Indenture (the "Trust Indenture") dated as of November
1, 1985, between you, as Trustee, and the Trinity River Industrial Development
Authority, a non-profit industrial development corporation (the "Issuer"),
pursuant to which the Issuer has agreed to authorize and issue and sell Trinity
River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizes, Incorporated Project), Series
1985B (the "Series B Bonds"), in the aggregate principal amount of
$2,450,000.00, the payment of which Series B Bonds is secured by, among other
things, this Series B Letter of Credit .
As used in this Series B Letter of Credit, the term "business
day" shall mean a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon
which banking institutions in the State of California, the State of Texas or the
City of New York are authorized or required by Law to close, or (iv) a day on
which the New York Stock Exchange, Inc. is closed.
You, as Trustee and Paying Agent, pursuant to the Trust
Indenture, are hereby irrevocably authorized to draw
Page 1 of 6
<PAGE> 2
[WELLS FARGO BANK, N.A. LOGO]
on Bank, for the account of Company, in accordance with the terms and conditions
hereof and subject to reductions in amounts as hereinafter set forth, an
aggregate amount not exceeding $2,505,377.00 (Two Million Five Hundred Five
Thousand Three Hundred Seventy-Seven Dollars) (the "Stated Amount"), of which
(A) an aggregate amount not exceeding $2,450,000.00 may be drawn upon with
respect to "A Drawings" and "C Drawings", as defined below, to cover principal
of the Series B Bonds, and (B) an aggregate amount not exceeding $55,377.00 may
be drawn upon with respect to "B Drawings", "D Drawings" and "E Drawings", as
defined below, to cover 55 days of interest (calculated at an assumed interest
rate of 15% per annum) on the Series B Bonds,
Funds under this Series B Letter of Credit are only available to you
gainst your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face:
"Drawn under Wells Fargo Bank, N.A. Irrevocable Letter of Credit No. I-81232"
and upon your presenting to Wells Fargo Bank, N.A. one or more of the following
written certificates:
(A) Your written certificate signed by you in the form of
Exhibit A attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of
Exhibit B attached hereto appropriately completed (a "B Drawing");
(C) Your written certificate signed by you in the form of
Exhibit C attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of
Exhibit D attached hereto appropriately completed (a "D Drawing");
(E) Your written certificate signed by you in the form of
Exhibit E attached hereto appropriately completed (an "E Drawing).
All documents presented to Bank in connection with any demand
for payment hereunder, as well as all notices and other communications to Bank
with respect to this Series B Letter of Credit, shall be in writing and
addressed and presented to Bank at its offices at 475 Sansome Street, San
Francisco, California 94111, Attention: Letter of Credit Operations - AU 1175,
or any other place in the United States which may be designated by Bank by
written notice delivered
Page 2 of 6
<PAGE> 3
[WELLS FARGO BANK, N. A. LOGO]
to you. Such documents, notices and other communications shall be personally
delivered to Bank, or may be sent to Bank by tested Telex in which case draft
requirements are waived.
If Bank receives any of your drafts drawn hereunder at such
office, all in strict conformity with the terms and conditions of this Series B
Letter of Credit, on or prior to the Expiration Date, Bank will honor the same
and make payment hereunder. Payments to you under this Series B Letter of Credit
shall be made by wire transfer of immediately available funds to Bank One,
Columbus, N.A., Columbus, Ohio, for your account No. 04-0178-7, Attn: Corporate
Trust Administration, or into such other account as you designate to Bank in
writing from time to time. If a proper draft and certificate are presented by
11:30 A.M., New York time, payment will be made that same business day;
otherwise payment will be made the next business day.
Upon a Drawing hereunder, the total amount of this Series B
Letter of Credit shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount of
this Series B Letter by the amount of such drawing;
(B) With respect to any C or D Drawing, the total amount of
this Series B Letter by the amount of such Drawing, or B Drawing, the
total of Credit shall be reduced or D Drawing, the total of Credit
shall be reduced provided that Bank shall reinstate the amount of such
Drawing if such amount is paid to Bank by Company prior to default
under that certain Series B Reimbursement Agreement dated as of
November 1, 1985 (the "Series B Reimbursement Agreement"), by and
between Company and Bank. In addition, in the event Bank transfers any
Series B Drawing Bonds (as defined in the Series B Reimbursement
Agreement) in its possession following any C Drawing to any person or
entity (other than to you, as Trustee, for cancellation), an amount
equal to the amount of such C Drawing (and any corresponding D Drawing)
which was applied to pay principal and interest on the Series B Bonds
being so transferred shall automatically be reinstated hereunder Bank
will send notice of any such reinstatement to you, as Trustee, in the
form attached hereto as Exhibit F; and
(C) With respect to any E Drawing, the total amount of this
Series B Letter of Credit shall be reduced by the amount of such
Drawing and such amount shall then be immediately and automatically
reinstated, and Bank
Page 3 of 6
<PAGE> 4
[WELLS FARGO BANK, N.A. LOGO]
will send notice of such reinstatement to you, as Trustee, in the form
attached hereto as Exhibit F.
Only you, as Trustee and Paying Agent, may make a drawing
under this Series B Letter of Credit. Upon the payment to you, as Trustee and
Paying Agent, of the amount specified in a draft drawn hereunder, Bank will be
fully discharged on its obligation under this Series B Letter of Credit with
respect to such draft and shall not thereafter be obligated to make any further
payments under this Series B Letter of Credit in respect to such draft to you or
any other person who may have made to you or makes to you a demand for payment
of principal of, purchase price of or interest on any Series B Bond. By paying
to you an amount demanded in such draft(s) we make no representation as to the
correctness of the amount demanded in such draft(s).
Upon the earliest of (i) 15 days after the making by you of an
A Drawing (and any associated B Drawing) hereunder (other than an A Drawing for
partial redemption); (ii) Bank's receipt of a certificate signed by your officer
and an officer of Company stating (a) that no Series B Bonds are outstanding
within the meaning of the Trust Indenture and (b) that such officers are duly
authorized to sign such certificate on behalf of you and Company; (iii) Bank's
receipt of a certificate signed by your officer and an officer of Company
stating (a) that an Alternate Letter of Credit (as defined in the Trust
Indenture) has been accepted by you as Trustee under the Trust Indenture and (b)
that such officers are Duly authorized to sign such certificate on behalf of you
and on behalf of Company; (iv) Bank's receipt of a certificate signed by your
officer and an officer of Company stating (a) that no Less than 15 days prior to
the date of such certificate, the interest rate on the Series B Bonds was
converted to a Fixed Interest Rate (as defined in the Trust Indenture), (b) that
you have not received written notification from both Company and Bank stating
that this Series B Letter of Credit is not to be cancelled, and (c) that such
officers are duly authorized to sign such certificate on behalf of you and on
behalf of Company; or (v) the Expiration Date, this Series B Letter of Credit
shall automatically terminate and be delivered to Bank for cancellation.
This Series B Letter of Credit shall be governed by (i) the
Uniform Customs and Practice for Documentary Credit as fixed by the Congress of
the International Chamber of Commerce from time to time (the "Uniform Customs")
and (ii) the Laws of the state of California, including the Uniform Commercial
Code as in effect in the State of California. In the
Page 4 of 6
<PAGE> 5
[WELLS FARGO BANK, N.A. LOGO]
event of a conflict between the Uniform Customs and the Laws of the State of
California, the Uniform Customs shall prevail. Communications with respect to
this Series B Letter of Credit shall be in writing and shall be addressed to
Bank at its offices at 475 Sansome Street, San Francisco, California 94111,
Attention: Letter of Credit Operations - AU 1175, specifically referring to the
number of this Series B Letter of Credit,
This Series B Letter of Credit is transferable in its entirety
to any transferee who has succeeded you as Trustee under the Trust Indenture.
Each Letter of credit issued upon any such transfer may be successively
transferred. Transfer of the available balance under this Series B Letter of
Credit to such transferee shall be effected by the presentation to Bank of this
Series B Letter of Credit accompanied by a certificate substantially in the form
of Exhibit G attached hereto. Following such presentation, and as soon as this
original Series B Letter of Credit is returned to the Bank and the Bank has been
paid its customary transfer fee, Bank shall forthwith transfer the same to your
transferee or, if so requested by your transferee, issued an irrevocable Letter
of credit to your transferee with provisions therein consistent with those of
this Series B Letter of Credit.
This Series B Letter of Credit sets forth in full Bank's
undertaking, and such undertaking shall not in any way be modified, amended,
amplified or Limited by reference to any document, instrument or agreement
referred to herein including without Limitation, the Series B Bonds and the
Trust Indenture), except only the certificates) and the draft(s) 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)
and such draft(s).
In the event of any failure by Bank, in whole or in part, to
fulfill its obligations with respect to any draw or draws under this Series B
Letter of Credit, no person or entity shall have the right to make any claim
against the Federal Deposit Insurance Corporation in connection with such
failure. By its signature below, Bank One Trust Company, N.A., a national
banking association, as Trustee and Paying Agent, acknowledges receipt of this
Series B Letter of Credit
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<PAGE> 6
[WELLS FARGO BANK, N.A. LOGO]
and agrees that the terms of this paragraph shall bind itself and its successors
and assigns.
Very truly yours,
WELLS FARGO BANK, N.A.
By /s/ signature not readable
--------------------------
Assistant Vice President
ACCEPTED AND AGREED TO
THIS 18th DAY OF DECEMBER, 1985:
BANK ONE TRUST COMPANY, N.A.
By /s/ signature not readable
---------------------------
Its
-------------------------
Page 6 of 6
<PAGE> 7
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
(PRINCIPAL UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust Company,
N.A., a national banking association, as Trustee ("Trustee") and as Paying Agent
("Paying Agent") hereby certifies to Wells Fargo Bank, N.A., ("Bank"), with
reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit No. (the
"Series B Letter of Credit," the capitalized terms defined therein and not
defined herein being used as therein defined) issued by Bank in favor of Trustee
and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Series B Bonds.
(2) The undersigned is making a drawing under the Series B Letter of
Credit with respect to the payment of principal upon acceleration, partial
redemption, full redemption or maturity of the Series B Bonds.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior A Drawings and C Drawings under the Series B
Letter of Credit for the payment of the principal amount or purchase price of
the Series B Bonds (other than C Drawings for which Bank has delivered notices
of reinstatement), does not exceed $2,450,000.00.
(4) The amount of the draft accompanying this certificate, together
with the aggregate of all prior Drawings under the Series B Letter of Credit
(other than Drawings for which the Series B Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series B Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded hereby, (a)
the undersigned will apply it directly to the payment when due of the
appropriate amount of principal owing on account of the Series B Bonds pursuant
to the Trust Indenture, (b) no portion of it shall be applied
A-1
<PAGE> 8
Wells Fargo Bank, N.A.
San Francisco, California
Letter Of Credit No. I-81232
by the undersigned for any other purpose, and (c) no portion of it shall be
commingled with other funds held by the undersigned or the Depository (as
defined in the Series B Reimbursement Agreement). This drawing is made in
accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and delivered
this certificate as of the ____ day ________________ of, 19___.
BANK ONE TRUST COMPANY, N.A.,
a national banking association,
as Trustee and Paying Agent
By /s/signature not readable
-------------------------
Title
--------------------
A-2
<PAGE> 9
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
(ACCRUED INTEREST UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. _________ (the "Series B Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Indenture for the holders of the Series B Bonds.
(2) The undersigned is making a drawing under the Series B
Letter of Credit with respect to the payment of accrued and unpaid interest upon
acceleration, partial redemption, full redemption, or maturity of the Series B
Bonds.
(3) Interest has accrued on the Series B Bonds and is due and
payable and the amount of the draft accompanying this certificate, together with
the aggregate of all prior B Drawings, D Drawings, and E Drawings under the
Series B Letter of Credit for payment of accrued interest on the Series B Bonds,
other than D Drawings for which the Series B Letter of Credit has been
reinstated, does not exceed $55,377,00.
(4) The amount of the draft accompanying this certificate,
together with the aggregate of all prior Drawings under the Series B Letter of
Credit (other than Drawings for which the Series B Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series B Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply it directly to the payment when due of
the appropriate amount of interest owing on account of the Series B Bonds
pursuant to the Trust Indenture, (b) no portion of it shall be applied by the
undersigned for any other purpose, and (c) no portion of
B-1
<PAGE> 10
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
it shall be commingled with other funds held by the undersigned or the
Depository (as defined in the Series B Reimbursement Agreement). This drawing is
made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _______ day of _____________, 19___.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By /s/ signature not readable
--------------------------
Title
----------------------
B-2
<PAGE> 11
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
(PRINCIPAL OF SERIES B BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee"), and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A., Irrevocable Letter of Credit
No. (the "Series B Letter of Credit," the capitalized terms defined therein and
not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Indenture for the holders of the Series B Bonds.
(2) Paying Agent is making a drawing under the Series B Letter
of Credit (a) at the written request (or oral request to be immediately followed
in writing) of the Remarketing Agent (as defined in the Series B Reimbursement
Agreement) to pay, pursuant to Section 401(g) of the Trust Indenture, the
principal amount of the purchase price of those repurchased Series B Bonds which
the Remarketing Agent has been unable to remarket, the principal amount of which
is equal to the amount of the draft accompanying this certificate, and which
Series B Bonds (i) are now held by either the Remarketing Agent pursuant to its
representation to Paying Agent, which representation Paying Agent has not
independently verified, or are held by Paying Agent and (ii) shall be
re-registered in the name of Bank, or its agent, as pledgee, and delivered to
Bank, or such agent, within 5 business days following receipt by Paying Agent of
the amount demanded hereby; or (b) to pay, pursuant to Section 401(h) of the
Trust Indenture, the portion of the purchase price of the Series B Bonds
delivered to Paying Agent for purchase equal to the principal amount of such
Series B Bonds, and Paying Agent shall deliver to Bank, or its agent, as
pledgee, within 5 business days following receipt by Paying Agent of the amount
demanded hereby, a principal amount of Series B Bonds equal to the amount of the
draft accompanying this certificate.
(3) The amount of the draft accompanying this certificate,
together with the aggregate of all prior pay-
C-1
<PAGE> 12
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
ments made pursuant to A Drawings and C Drawings under the Series B Letter of
Credit (other than reinstated amounts) does not exceed $2,450,000.00.
(4) Upon receipt of the amount demanded hereby, (a) Paying Agent will
either (i) deliver it to the Remarketing Agent or use the same only for the
purpose of purchase of the Series B Bonds referenced in Paragraph 2(a) hereof,
or (ii) use it for the purpose of purchase of the Series B Bonds referred to in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other
funds. held by Paying Agent. This drawing is made in accordance with the
provisions of the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered
this certificate as of the ______ day of ________________, 19___.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying Agent
By /s/ signature not readable
--------------------------
Title
----------------------
C-2
<PAGE> 13
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT D
CERTIFICATE FOR "D DRAWING"
(ACCRUED INTEREST ON SERIES B BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.,
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No, (the "Series B Letter of Credit," the capitalized terms defined therein and
not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Indenture for the holders of the Series B Bonds.
(2) Paying Agent is making a drawing under the Series B Letter
of Credit (a) at the written request (or oral request to be immediately followed
in writing) of the Remarketing Agent (as defined in the Series B Reimbursement
Agreement), to pay, pursuant to Section 401(g) of the Trust Indenture, the
amount of accrued interest on those Series B Bonds that the Remarketing Agent
has been unable to remarket, which amount of accrued interest is equal to the
amount of the draft accompanying this certificate; or (b) to pay, pursuant to
Section 401(h) of the Trust Indenture, the portion of the purchase price of the
Series B Bonds delivered to Paying Agent for purchase equal to the amount of
accrued and unpaid interest on such Series B Bonds to the date of purchase
thereof, which amount of accrued interest is equal to the amount of the draft
accompanying this certificate,
(3) The amount of the draft accompanying this certificate,
together with the aggregate of all prior B, D and E Drawings under the Series B
Letter of Credit (other than reinstated amounts), does not exceed $55,377.00.
(4) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Series B Bonds and
the Trust Indenture.
(5) Upon receipt by Paying Agent of the amount demanded
hereby, (a) Paying Agent will either (i) deliver it
D-1
<PAGE> 14
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
to the Remarketing Agent or use the same only for the purpose of reimbursement
or payment of accrued interest referenced in Paragraph 2(a) hereof, or (ii) use
it for the purpose of reimbursement or payment of accrued interest referenced in
Paragraph 2(b) hereof; (b) no portion of it shall be applied by Paying Agent for
any other purpose; and (c) no portion of it shall be commingled with other funds
held by Paying Agent. This drawing is made in accordance with the provisions of
the Trust Indenture.
(6) To the extent that the payment demanded hereby is to be made in
accordance with the Series B Letter of Credit on a date between a Record Date
and the corresponding Interest Payment Date (as those terms are defined in the
Trust Indenture), Paying Agent now holds and shall, within 5 business days
following receipt by Paying Agent of the payment demanded hereby, deliver to
Bank, due-bill checks that, in the aggregate, are in the amount and in the form
required by the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered
this certificate as of the ______ day of ______________, 19___.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Paying agent
By
--------------------------------
Title
--------------------------
D-2
<PAGE> 15
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT E
CERTIFICATE FOR "E DRAWING"
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ______ (the "Series B Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Indenture for the holders of the Series B Bonds,
(2) The undersigned is making a drawing under the Series B
Letter of Credit with respect to the payment of accrued and unpaid interest upon
an Interest Payment Date (as defined in the Trust Indenture) during the
continuance of an Event of Default under the Series B Reimbursement Agreement
for which Bank has not yet exercised its right to demand that the undersigned
accelerate the Series B Bonds.
(3) Interest has accrued on the Series B Bonds and is due and
payable, and the amount of the draft accompanying this certificate, together
with the aggregate of all prior B Drawings, D Drawings and E Drawings under the
Series B Letter of Credit for the payment of accrued interest on the Series B
Bonds, other than D Drawings for which the Series B Letter of Credit has been
reinstated, does not exceed $55,377.00.
(4) The amount of the draft accompanying this certificate,
together with the aggregate of all prior Drawings under the Series B Letter of
Credit (other than Drawings for which the Series B Letter of Credit has been
reinstated), does not exceed the Stated Amount, and was computed in accordance
with the terms and conditions of the Series B Bonds and the Trust Indenture.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply it directly to the payment when due of
the appropriate amount of interest
E-1
<PAGE> 16
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
owing on account of the Series B Bonds pursuant to the Trust Indenture, (b) no
portion of it shall be applied by the undersigned for any other purpose, and (c)
no portion of it shall be commingled with other funds held by the undersigned.
This drawing is made in accordance with the provisions of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ____ day of ____________, 19___.
BANK ONE TRUST COMPANY, N.A.,
a national banking association
as Trustee and Paying Agent
By /s/ signature not readable
----------------------------
Title
------------------------
E-2
<PAGE> 17
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT F
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO._____________
DATED AS OF ___________, 19___
The undersigned, a duly authorized officer of Wells Fargo
Bank, N.A., ("Bank"), hereby certifies to the Trustee under the Trust Indenture
dated as of November 1, 1985, between the Trinity River Industrial Development
Authority and Bank One Trust Company, N.A., a national banking association
("Trustee"), with reference to Irrevocable Letter of Credit No. _______ (the
"Series B Letter of Credit") issued by Bank in favor of Trustee, that the amount
drawn by Trustee pursuant to its ______ Drawing dated as of ______________, has
been reinstated as of _________ and is available for draw subject to the terms
of the Series B Letter of Credit.
In witness whereof, Bank has executed and delivered this
Certificate this ______ day of ______________, 19___.
WELLS FARGO BANK, N.A.
By:
----------------------------------
Its
------------------------------
F-1
<PAGE> 18
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
EXHIBIT G
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Series B Letter of Credit Operations AU 1175
Re: Wells Fargo Bank, N.A.,
Irrevocable Letter of Credit
No.__________________
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit (the "Series B Letter of Credit") in its entirety.
By this transfer, all rights of the undersigned beneficiary in and to
the Series B Letter of Credit are transferred to the transferee and the
transferee shall have sole rights as beneficiary thereof, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned beneficiary.
The original Series B Letter of Credit is returned herewith, along with
your customary transfer fee, and we ask
G-1
<PAGE> 19
WELLS FARGO BANK, N.A.
SAN FRANCISCO, CALIFORNIA
LETTER OF CREDIT NO. I-81232
you to endorse the transfer on the reverse thereof and forward it direct to the
transferee with your customary notice of transfer.
Very truly yours,
/s/ signature not readable
---------------------------
Signature of Beneficiary
SIGNATURE AUTHENTICATED
- --------------------------
(Bank)
- --------------------------
(Authorized Signature)
G-2
<PAGE> 1
EXHIBIT 10.14
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Steve Ross
SERIES A INTERCREDITOR AGREEMENT
This Series A Intercreditor Agreement ("Agreement") is executed as of
November 1, 1985, by and between WELLS FARGO BANK, N.A., a national banking
association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a national banking
association ("Trustee").
1. Recitals.
1.1 The Series A Bonds. The Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and Issuer (the "Trust Indenture"), has agreed to
issue its Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Series A Bonds"). The proceeds of the Series A
Bonds are to be loaned to Radiation Sterilizers, Incorporated, a California
corporation ("Company"), and will be secured by the Deeds of Trust (as defined
below). Trustee is the trustee for the Series A Bonds.
1.2 The Series A Reimbursement Agreement and the Series A
Letter of Credit. Pursuant to the terms of that certain Series A Reimbursement
Agreement executed between Company and Bank as of even date herewith (the
"Series A Reimbursement Agreement"), Bank has agreed to issue an irrevocable
standby letter of credit in the face amount of $2,198,596.00 (the "Series A
Letter of Credit"). Trustee is empowered to draw upon the Series A Letter of
Credit for the benefit of the purchasers of the Series A Bonds as provided in
the Series A Letter of Credit. The obligations of Company to Bank under the
Series A Reimbursement Agreement and other documents executed in connection
therewith have been guaranteed by Charles King & Associates, a California
limited part-
-1-
<PAGE> 2
nership ("Guarantor") pursuant to that certain General Continuing Guaranty,
executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Security Documents. The obligations of Company to
Trustee relating to the payment of the principal amount of, and accrued
interest on, the Series A Bonds, and the obligations of Company to Bank under
the Series A Reimbursement Agreement and the other Loan Documents are secured
by the following documents (collectively, the "Security Documents"):
(a) A Deed of Trust with Assignment of Rents (the
"Texas Deed of Trust") dated as of even date herewith,
executed by Company, as trustor, in favor of John Hollyfield,
as trustee, for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the City of
Fort Worth, County of Tarrant, State of Texas (the "Texas
Property");
(b) An Open End Mortgage dated as of even date
herewith, executed by Company, as borrower, for the benefit of
Bank and Trustee, as beneficiary, encumbering real property
located in the Township of Orange, County of Delaware, State
of Ohio (the "Ohio Property");
(c) A Deed to Secure Debt dated as of even date
herewith, executed by Company, as grantor, for the benefit of
Bank and Trustee, as grantee encumbering real property located
in the City of Atlanta, County of DeKalb, State of Georgia
(the "Georgia Property");
(d) A Deed of Trust with Assignment of Rents and
Fixture Filing dated as of even date herewith, executed by
Guarantor, as trustor, in favor of American Securities
Company, as security trustee, for the benefit of Bank and
Trustee, as beneficiary, encumbering real property located in
the City of Hayward, County of Alameda, State of California
(the "Hayward Property"); and
(e) A Mortgage dated as of even date herewith,
executed by Guarantor for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the Village
of Schaumburg, County of Cook, State of Illinois (the
"Illinois Property").
-2-
<PAGE> 3
(f) A Company Security Agreement dated as of even
date herewith, executed by Company, as debtor, in favor of
Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Ohio
Property, the Texas Property and the Georgia Property.
(g) A Guaranty Security Agreement dated as of
even date herewith, executed by Guarantor, as debtor, in favor
of Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Hayward
Property and the Illinois Property,
The deeds of trust referred to in subsections (a) through (e) are collectively
referred to herein as the "Deeds of Trust". The Texas Property, the Ohio
Property, the Georgia Property, the Hayward Property and the Illinois Property
are sometimes collectively referred to herein as the "Properties."
1.4 Agreement. In consideration of, and as a
condition to, the issuance of the Series A Letter of Credit, Bank and Trustee
hereby agrees as hereinafter provided.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement
to Company or to any other person or entity of all or any portion of the
proceeds of the Series A Bonds or any other funds held from time to time by
Trustee under the Trust Indenture in connection therewith without the approval
of Bank (subject to certain pre-approvals of disbursements by Bank).
3. Notice of Bond Document Default to Bank.
Trustee shall give to Bank a copy of any notice (and
subsequent communications relating thereto) given to Company of or with respect
to a default under Section 1101 of the Trust Indenture or with respect to an
event which, with notice and/or lapse of time, would constitute a default under
Section 1101 of the Trust Indenture. Such copy shall be given to Bank in the
same manner and at the same time as the corresponding notice or communication
is given to Company under the applicable Bond Document(s), and before Trustee
exercises any remedy granted to it or Issuer under any of the Bond Documents.
If such a default occurs of which Trustee has knowledge for which no notice is
required to be given to
-3-
<PAGE> 4
Company, Trustee shall deliver a notice of such default to Bank immediately
upon learning of its occurrence.
4. Bank Rights on Bank Document Default.
Trustee hereby acknowledges and agrees that Bank shall have the
following rights in the event of the occurrence of an Event of Default under
the Series A Reimbursement Agreement, the Guaranty or any of the other Loan
Documents:
(a) The right to implement any or all of its rights under
the Series A Reimbursement Agreement and the other Loan
Documents (other than a foreclosure under the Texas Deed of
Trust), including without limitation commencement of actions
against Company to recover sums owing under the Loan Documents
and/or to obtain injunctive relief and making demand upon
Guarantor for the performance of its obligations under the
Guaranty, without giving notice to Trustee of Bank's intention
to cause a default to be declared under the Trust Indenture;
in such event, there shall be no declaration by Trustee of a
default under the Trust Indenture notwithstanding any such
action by Bank unless there are grounds for such default other
than by reason of the occurrence of an Event of Default under
the Series A Reimbursement Agreement; or
(b) The right, with or without implementation of any or
all of its rights under the Reimbursement Agreement and the
other Loan Documents (including the right to foreclose under
the Texas Deed of Trust), to give notice to Trustee of Bank's
intention to cause a default to be declared under the Trust
Indenture; in such event, Trustee shall immediately declare
such a default and make an A Drawing under the Series A Letter
of Credit.
5. Events of Default.
Bank hereby acknowledges and agrees that nothing contained in
Section 4, above, shall limit the rights of Trustee in the event of the
occurrence of an event of default under the Bond Documents other than an event
of default which occurs by reason of the occurrence of an Event of Default under
the Series A Reimbursement Agreement. Trustee hereby acknowledges and agrees
that the occurrence of an Event of Default under the Series A Reimbursement
Agreement shall not constitute an Event of Default under the Bond Documents
unless Bank has given the notice described in Section 4(b), above.
-4-
<PAGE> 5
6. Bank Right to Cure Bond Document Defaults.
If Company fails to cure a default under any Bond Document
within the applicable cure period, Trustee shall notify Bank in writing of such
failure and shall refrain from exercising any remedy under the Bond Documents
or at law in the event that Bank either (a) cures such default within fifteen
(15) days following receipt of such notice, or (b) if such default is not
capable of being cured by the payment of money, commences cure within thirty
(30) days and thereafter diligently proceeds with such cure. Nothing in this
Section 6 shall be construed to either (1) obligate Bank to cure any default by
Company or (2) obligate Trustee to refrain from exercising any remedy in the
event that such non-exercise would, in the opinion of bond counsel (McCall,
Parkhurst & Horton), adversely affect the tax-exempt status of interest on the
Series A Bonds.
7. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by
Trustee of funds from all sources (including without limitation any payments
under the Series A Letter of Credit) which are sufficient to retire in full the
obligations of Bank under the Series A Letter of Credit, Trustee shall do the
following:
7.1 Subject to Section 1105 of the Trust Indenture, use all funds
in its possession pursuant to the Trust Indenture and all funds paid under the
Series A Letter of Credit as may be necessary to promptly redeem and retire all
outstanding Series A Bonds at their face amount plus any accrued interest.
7.2 At the option of Bank, either reconvey, release and
cancel, or assign to Bank, all of its right, title and interest under the
Security Documents and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such reconveyance, release, cancellation or assignment.
7.3 Assign to Bank all of its interest in the cash
collateral held in the Reserve Accounts and execute and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such assignment.
7.4 Deliver to Bank, in good funds and to such account as
Bank shall designate, the entire balance of undisbursed proceeds of the Series
A Bonds and any other funds then held by Trustee under the Trust Indenture,
together with
-5-
<PAGE> 6
any interest and other sums accrued on all such sums, as of the date of payment
by Bank on the Series A Letter of Credit, subject to (i) Section 1105 of the
Trust Indenture and (ii) prior payment of any unpaid fees and expenses (not to
include any fees or expenses of outside legal counsel) of Trustee described in
Section 1202 of the Trust Indenture.
7.5 Assign to Bank all of its right, title and interest
under or in connection with the Series A Loan Agreement and the Trust
Indenture, including without limitation all sums in which Trustee has an
interest pursuant to the provisions of the Trust Indenture and all causes of
action and other rights which have accrued or may accrue thereafter; provided,
however, that Bank shall not be subject to any of the trust obligations of
Trustee with regard to such sums, causes of action and other rights.
8. Limits on Disposition of Pledged Bonds.
Bank shall not release from the lien of the Series A Pledge
Agreement any Pledged Bonds (as defined in the Series A Pledge Agreement)
(other than by delivery to the Trustee for cancellation) unless, at the time of
or before such release, the aggregate amount available under the Series A
Letter of Credit shall be reinstated in an amount equal to the full principal
amount of the Pledged Bonds released together with the portion of any drawing
made under the Series A Letter of Credit with respect to the interest portion
of the purchase price of the Pledged Bonds so being released. Also,
notwithstanding rights and remedies given to Bank in the Series A Pledge
Agreement to dispose of Pledged Bonds, at any time the Series A Letter of
Credit remains in effect, Bank shall not dispose of any Pledged Bonds other
than by delivery to the Trustee for cancellation.
9. Reserve Accounts.
Trustee hereby agrees to release its interest in the cash
collateral to be deposited by Company in the Reserve Accounts (pursuant to
Section 6.6 of the Series A Reimbursement Agreement) in exchange for any
substitute collateral reasonably satisfactory to Bank.
10. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by
Trustee of written assurances (from bond counsel or otherwise) that Trustee is
not required, for purposes of maintenance of the rating of the Series A Bonds
or otherwise, to hold a
-6-
<PAGE> 7
shared interest in the Security Documents, Trustee shall, at the option of
Bank, either reconvey, release and cancel, or assign to Bank all of its right,
title and interest under the Security Documents and the Reserve Accounts, and
will execute, acknowledge and deliver to Bank such instruments and documents as
may be reasonably necessary in connection with such reconveyance, release,
cancellation or assignment.
11. Notices.
11.1 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the identity of
Trustee, whether pursuant to the Trust Indenture or otherwise, and (b) any
actual or planned amendment of the Trust Indenture or any supplement thereto,
or any request by any person or entity for the same.
11.2 Trustee shall deliver to Bank copies of any reports
to be delivered by Trustee pursuant to the Trust Indenture, as it may be
amended from time to time, such delivery to be reasonably concurrent with
Trustee's delivery of such reports pursuant to the Trust Indenture.
11.3 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be in writing
and must be mailed or personally delivered to the appropriate party at its
address as follows:
If to Trustee: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust
If to Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: Mr. George Huxtable,
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 11.3. If any notice, request, demand, direction
or other communication is given by mail it will be effective upon the earlier
of (a) 96 hours after deposit in the U.S. Mail, certified or registered mail,
return receipt requested postage prepaid or (b) actual receipt, as indicated by
the return receipt; if given by personal delivery, when delivered.
-7-
<PAGE> 8
12. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
13. Amendments; Governing Law
This Agreement may be amended only by a written agreement
signed by both Bank and Trustee. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas.
14. Miscellaneous.
All capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth for them in the Series A Reimbursement
Agreement. In the event of any conflict between the provisions of this
Agreement and the provisions of any Bond Document, this Agreement shall
control.
IN WITNESS WHEREOF, Bank and Trustee have caused this
Agreement to be duly executed as of the date first written above.
"Bank":
WELLS FARGO BANK, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ P.O.
---------------------------------
"Trustee":
BANK ONE TRUST COMPANY, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ Vice Pres
---------------------------------
-8-
<PAGE> 9
STATE OF CALIFORNIA )
) ss.
COUNTY OF Santa Clara )
On March 20, 1986 before me, the undersigned, personally
appeared George Huxtable personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person who executed this instrument as Vice
President of the association therein named and acknowledged to me that said
association executed it.
/s/ Carmel Forte
---------------------------------------
[SEAL OMITTED] Notary Public in and for said
County and State
My commission expires:
STATE OF CALIFORNIA )
) ss.
COUNTY OF Santa Clara )
On _________, 19__, before me, the undersigned, personally
appeared,__________ personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed this instrument as
_________________ of the association therein named and acknowledged to me that
said association executed it.
----------------------------------------
Notary Public in and for said
County and State
My commission expires:
-9-
<PAGE> 10
STATE OF OHIO )
) ss.
COUNTY OF Franklin )
On this 14th day of March, 1986, before me, the subscriber, a
notary Public in and for said state and county, personally appeared Jean
Kroviak who stated that she is the Vice President of Bank One Trust Company,
N.A., a national banking association, who acknowledged that he executed the
foregoing instrument on behalf of such national banking association and that
such execution was duly authorized by such national banking association and was
his voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
my official seal on this 14th day of March, 1986.
/s/ Signature Unreadable
----------------------------------------
Notary Public/
My commission expires:
This instrument prepared by: Steve Ross, Esq,
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
-10-
<PAGE> 11
THIS INSTRUMENT WAS PREPARED BY
AND SHOULD BE RETURNED TO:
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Steve Ross
SERIES A INTERCREDITOR AGREEMENT
This Series A Intercreditor Agreement ("Agreement") is
executed as of November 1, 1985, by and between WELLS FARGO BANK, N.A., a
national banking association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a
national banking association ("Trustee").
1. Recitals.
1.1 The Series A Bonds. The Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and Issuer (the "Trust Indenture"), has agreed to
issue its Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Series A Bonds"), The proceeds of the Series A
Bonds are to be loaned to Radiation Sterilizers, Incorporated, a California
corporation ("Company"), and will be secured by the Deeds of Trust (as defined
below). Trustee is the trustee for the Series A Bonds,
1.2 The Series A Reimbursement Agreement and the Series A
Letter of Credit. Pursuant to the terms of that certain Series A Reimbursement
Agreement executed between Company and Bank as of even date herewith (the
"Series A Reimbursement Agreement"), Bank has agreed to issue an irrevocable
standby letter of credit in the face amount of $2,198,596.00 (the "Series A
Letter of Credit"). Trustee is empowered to draw upon the Series A Letter of
Credit for the benefit of the purchasers of the Series A Bonds as provided in
the Series A Letter of Credit. The obligations of Company to Bank under the
Series A Reimbursement Agreement and other documents executed in connection
therewith have been guaranteed by Charles King & Associates, a California
limited part-
-1-
<PAGE> 12
nership ("Guarantor") pursuant to that certain General Continuing Guaranty,
executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Security Documents. The obligations of Company to
Trustee relating to the payment of the principal amount of, and accrued
interest on, the Series A Bonds, and the obligations of Company to Bank under
the Series A Reimbursement Agreement and the other Loan Documents are secured
by the following documents (collectively, the "Security Documents"):
(a) A Deed of Trust with Assignment of Rents (the
"Texas Deed of Trust") dated as of even date herewith,
executed by Company, as trustor, in favor of John Hollyfield,
as trustee, for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the City of
Fort Worth, County of Tarrant, State of Texas (the "Texas
Property");
(b) An Open End Mortgage dated as of even date
herewith, executed by Company, as borrower, for the benefit of
Bank and Trustee, as beneficiary, encumbering real property
located in the Township of Orange, County of Delaware, State
of Ohio (the "Ohio Property");
(c) A Deed to Secure Debt dated as of even date
herewith, executed by Company, as grantor, for the benefit of
Bank and Trustee, as grantee encumbering real property located
in the City of Atlanta, County of DeKalb, State of Georgia
(the "Georgia Property");
(d) A Deed of Trust with Assignment of Rents and
Fixture Filing dated as of even date herewith, executed by
Guarantor, as trustor, in favor of American Securities
Company, as security trustee, for the benefit of Bank and
Trustee, as beneficiary, encumbering real property located in
the City of Hayward, County of Alameda, State of California
(the "Hayward Property"); and
(e) A Mortgage dated as of even date herewith,
executed by Guarantor for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the Village
of Schaumburg, County of Cook, State of Illinois (the
"Illinois Property").
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<PAGE> 13
(f) A Company Security Agreement dated as of even
date herewith, executed by Company, as debtor, in favor of
Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Ohio
Property, the Texas Property and the Georgia Property.
(g) A Guaranty Security Agreement dated as of
even date herewith, executed by Guarantor, as debtor, in favor
of Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Hayward
Property and the Illinois Property.
The deeds of trust referred to in subsections (a) through (e) are collectively
referred to herein as the "Deeds of Trust". The Texas Property, the Ohio
Property, the Georgia Property, the Hayward Property and the Illinois Property
are sometimes collectively referred to herein as the "Properties."
1.4 Agreement. In consideration of, and as a condition
to, the issuance of the Series A Letter of Credit, Bank and Trustee hereby
agrees as hereinafter provided.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement
to Company or to any other person or entity of all or any portion of the
proceeds of the Series A Bonds or any other funds held from time to time by
Trustee under the Trust Indenture in connection therewith without the approval
of Bank (subject to certain preapprovals of disbursements by Bank).
3. Notice of Bond Document Default to Bank.
Trustee shall give to Bank a copy of any notice (and
subsequent communications relating thereto) given to Company of or with respect
to a default under Section 1101 of the Trust Indenture or with respect to an
event which, with notice and/or lapse of time, would constitute a default under
Section 1101 of the Trust Indenture. Such copy shall be given to Bank in the
same manner and at the same time as the corresponding notice or communication
is given to Company under the applicable Bond Document(s), and before Trustee
exercises any remedy granted to it or Issuer under any of the Bond Documents.
If such a default occurs of which Trustee has knowledge for which no notice is
required to be
-3-
<PAGE> 14
given to Company, Trustee shall deliver a notice of such default to Bank
immediately upon learning of its occurrence.
4. Bank Rights on Bank Document Default.
Trustee hereby acknowledges and agrees that Bank shall have
the following rights in the event of the occurrence of an Event of Default
under the Series A Reimburse-ment Agreement, the Guaranty or any of the other
Loan Documents:
(a) The right to implement any or all of its
rights under the Series A Reimbursement Agreement and the
other Loan Documents (other than a foreclosure under the Texas
Deed of Trust), including without limitation commencement of
actions against Company to recover sums owing under the Loan
Documents and/or to obtain injunctive relief and making demand
upon Guarantor for the perform-mance of its obligations under
the Guaranty, without giving notice to Trustee of Bank's
intention to cause a default to be declared under the Trust
Indenture; in such event, there shall be no declaration by
Trustee of a default under the Trust Indenture notwithstanding
any such action by Bank unless there are grounds for such
default other than by reason of the occurrence of an Event of
Default under the Series A Reimbursement Agreement; or
(b) The right, with or without implementation of
any or all of its rights under the Reimbursement Agreement and
the other Loan Documents (including the right to foreclose
under the Texas Deed of Trust), to give notice to Trustee of
Bank's intention to cause a default to be declared under the
Trust Indenture; in such event, Trustee shall immediately
declare such a default and make an A Drawing under the Series
A Letter of Credit.
5. Events of Default.
Bank hereby acknowledges and agrees that nothing contained in
Section 4, above, shall limit the rights of Trustee in the event of the
occurrence of an event of default under the Bond Documents other than an event
of default which occurs by reason of the occurrence of an Event of Default
under the Series A Reimbursement Agreement. Trustee hereby acknowledges and
agrees that the occurrence of an Event of Default under the Series A
Reimbursement Agreement shall not constitute an Event of Default under the Bond
Documents unless Bank has given the notice described in Section 4(b), above.
-4-
<PAGE> 15
6. Bank Right to Cure Bond Document Defaults.
If Company fails to cure a default under any Bond Document
within the applicable cure period, Trustee shall notify Bank in writing of such
failure and shall refrain from exercising any remedy under the Bond Documents
or at law in the event that Bank either (a) cures such default within fifteen
(15) days following receipt of such notice, or (b) if such default is not
capable of being cured by the payment of money, commences cure within thirty
(30) days and thereafter diligently proceeds with such cure. Nothing in this
Section 6 shall be construed to either (1) obligate Bank to cure any default by
Company or (2) obligate Trustee to refrain from exercising any remedy in the
event that such non-exercise would, in the opinion of bond counsel (McCall,
Parkhurst & Horton), adversely affect the tax-exempt status of interest on the
Series A Bonds.
7. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by
Trustee of funds from all sources (including without limitation any payments
under the Series A Letter of Credit) which are sufficient to retire in full the
obligations of Bank under the Series A Letter of Credit, Trustee shall do the
following:
7.1 Subject to Section 1105 of the Trust Indenture, use
all funds in its possession pursuant to the Trust Indenture and all funds paid
under the Series A Letter of Credit as may be necessary to promptly redeem and
retire all outstanding Series A Bonds at their face amount plus any accrued
interest.
7.2 At the option of Bank, either reconvey, release and
cancel, or assign to Bank, all of its right, title and interest under the
Security Documents and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such reconveyance, release, cancellation or assignment.
7.3 Assign to Bank all of its interest in the cash
collateral held in the Reserve Accounts and execute and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such assignment.
7.4 Deliver to Bank, in good funds and to such account as
Bank shall designate, the entire balance of undisbursed proceeds of the Series
A Bonds and any other funds then held by Trustee under the Trust Indenture,
together with any interest and other sums accrued on all such sums, as of
-5-
<PAGE> 16
the date of payment by Bank on the Series A Letter of Credit, subject to (i)
Section 1105 of the Trust Indenture and (ii) prior payment of any unpaid fees
and expenses (not to include any fees or expenses of outside legal counsel) of
Trustee described in Section 1202 of the Trust Indenture.
7.5 Assign to Bank all of its right, title and interest
under or in connection with the Series A Loan Agreement and the Trust
Indenture, including without limitation all sums in which Trustee has an
interest pursuant to the provisions of the Trust Indenture and all causes of
action and other rights which have accrued or may accrue thereafter; provided,
however, that Bank shall not be subject to any of the trust obligations of
Trustee with regard to such sums, causes of action and other rights.
8. Limits on Disposition of Pledged Bonds.
Bank shall not release from the lien of the Series A Pledge
Agreement any Pledged Bonds (as defined in the Series A Pledge Agreement)
(other than by delivery to the Trustee for cancellation) unless, at the time of
or before such release, the aggregate amount available under the Series A
Letter of Credit shall be reinstated in an amount equal to the full principal
amount of the Pledged Bonds released together with the portion of any drawing
made under the Series A Letter of Credit with respect to the interest portion
of the purchase price of the Pledged Bonds so being released. Also,
notwith-standing rights and remedies given to Bank in the Series A Pledge
Agreement to dispose of Pledged Bonds, at any time the Series A Letter of
Credit remains in effect, Bank shall not dispose of any Pledged Bonds other
than by delivery to the Trustee for cancellation.
9. Reserve Accounts.
Trustee hereby agrees to release its interest in the cash
collateral to be deposited by Company in the Reserve Accounts (pursuant to
Section 6.6 of the Series A Reimbursement Agreement) in exchange for any
substitute collateral reasonably satisfactory to Bank.
10. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by
Trustee of written assurances (from bond counsel or otherwise) that Trustee is
not required, for purposes of maintenance of the rating of the Series A Bonds
or otherwise, to hold a shared interest in the Security Documents, Trustee
shall, at
-6-
<PAGE> 17
the option of Bank, either reconvey, release and cancel, or assign to Bank all
of its right, title and interest under the Security Documents and the Reserve
Accounts, and will execute, acknowledge and deliver to Bank such instruments
and documents as may be reasonably necessary in connection with such
reconveyance, release, cancellation or assignment.
11. Notices.
11.1 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the identity of
Trustee, whether pursuant to the Trust Indenture or otherwise, and (b) any
actual or planned amendment of the Trust Indenture or any supplement thereto,
or any request by any person or entity for the same.
11.2 Trustee shall deliver to Bank copies of any reports to be
delivered by Trustee pursuant to the Trust Indenture, as it may be amended from
time to time, such delivery to be reasonably concurrent with Trustee's delivery
of such reports pursuant to the Trust Indenture,
11.3 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be in writing
and must be mailed or personally delivered to the appropriate party at its
address as follows:
If to Trustee: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust
If to Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: Mr. George Huxtable,
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 11.3. If any notice, request, demand, direction
or other communication is given by mail it will be effective upon the earlier
of (a) 96 hours after deposit in the U.S. Mail, certified or registered mail,
return receipt requested postage prepaid or (b) actual receipt, as indicated by
the return receipt; if given by personal delivery, when delivered.
-7-
<PAGE> 18
12. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
13. Amendments; Governing Law.
This Agreement may be amended only by a written agreement
signed by both Bank and Trustee, This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas.
14. Miscellaneous.
All capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth for them in the Series A Reimbursement
Agreement. In the event of any conflict between the provisions of this
Agreement and the provisions of any Bond Document, this Agreement shall
control.
IN WITNESS WHEREOF, Bank and Trustee have caused this Agreement to be duly
executed as of the date first written above.
"Bank":
WELLS FARGO BANK, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ Signature Unreadable
---------------------------------
"Trustee":
BANK ONE TRUST COMPANY, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ AUTHORIZED SIGNER
---------------------------------
-8-
<PAGE> 19
STATE OF CALIFORNIA )
) ss.
COUNTY OF __________ )
On ______________, 19 __, before me, the undersigned,
personally appeared ________________, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed this
instrument as ___________ of the association therein named and acknowledged to
me that said association executed it.
/s/ Signature Unreadable
----------------------------------------
[SEAL OMITTED] Notary Public in and for said
County and State
My commission expires:
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On _____________, 19__, before me, the undersigned, personally
appeared ________________, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person who executed this instrument as
___________ of the association therein named and acknowledged to me that said
association executed it.
----------------------------------------
Notary Public in and for said
County and State
My commission expires:
-9-
<PAGE> 20
STATE OF OHIO )
) ss.
COUNTY OF FRANKLIN )
On this 10th day of December, 1985, before me, the subscriber,
a notary public in and for said state and county, personally appeared Fredrick
Schaal, who stated that he is the Senior Trust Officer of Bank One Trust
Company, N.A., a national banking association, who acknowledged that he
executed the foregoing instrument on behalf of such national banking
association and that such execution was duly authorized by such national
banking association and was his voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
my official seal on this 10TH day of DECEMBER 1985.
/s/ Signature Unreadable
----------------------------------------
Notary Public
My commission expires: Never Expires.
This instrument prepared by: Steve Ross, Esq.
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
-10-
<PAGE> 21
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Steve Ross
SERIES A INTERCREDITOR, AGREEMENT
This Series A Intercreditor Agreement ("Agreement") is executed as of
November 1, 1985, by and between WELLS FARGO BANK, N.A., a national banking
association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a national banking
association ("Trustee").
1. Recitals.
1.1 The Series A Bonds.The Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and Issuer (the "Trust Indenture"), has agreed to
issue its Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Series A Bonds"). The proceeds of the Series A
Bonds are to be loaned to Radiation Sterilizers, Incorporated, a California
corporation ("Company"), and will be secured by the Deeds of Trust (as defined
below). Trustee is the trustee for the Series A Bonds.
1.2 The Series A Reimbursement Agreement and the Series A
Letter of Credit. Pursuant to the terms of that certain Series A Reimbursement
Agreement executed between Company and Bank as of even date herewith (the
"Series A Reimbursement Agreement"), Bank has agreed to issue an irrevocable
standby letter of credit in the face amount of $2,198,596.00 (the "Series A
Letter of Credit"). Trustee is empowered to draw upon the Series A Letter of
Credit for the benefit of the purchasers of the Series A Bonds as provided in
the Series A Letter of Credit. The obligations of Company to Bank under the
Series A Reimbursement Agreement and other documents executed in connection
therewith have been guaranteed by Charles King & Associates, a California
limited part-
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<PAGE> 22
nership ("Guarantor") pursuant to that certain General Continuing Guaranty,
executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty"),
1.3 Security Documents. The obligations of Company to
Trustee relating to the payment of the principal amount of, and accrued
interest on, the Series A Bonds, and the obligations of Company to Bank under
the Series A Reimbursement Agreement and the other Loan Documents are secured
by the following documents (collectively, the "Security Documents"):
(a) A Deed of Trust with Assignment of Rents (the
"Texas Deed of Trust") dated as of even date herewith,
executed by Company, as trustor, in favor of John Hollyfield,
as trustee, for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the City of
Fort Worth, County of Tarrant, State of Texas (the "Texas
Property");
(b) An Open End Mortgage dated as of even date
herewith, executed by Company, as borrower, for the benefit of
Bank and Trustee, as beneficiary, encumbering real property
located in the Township of Orange, County of Delaware, State
of Ohio (the "Ohio Property");
(c) A Deed to Secure Debt dated as of even date
herewith, executed by Company, as grantor, for the benefit of
Bank and Trustee, as grantee encumbering real property located
in the City of Atlanta, County of DeKalb, State of Georgia
(the "Georgia Property");
(d) A Deed of Trust with Assignment of Rents and
Fixture Filing dated as of even date herewith, executed by
Guarantor, as trustor, in favor of American Securities
Company, as security trustee, for the benefit of Bank and
Trustee, as beneficiary, encumbering real property located in
the City of Hayward, County of Alameda, State of California
(the "Hayward Property"); and
(e) A Mortgage dated as of even date herewith,
executed by Guarantor for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the Village
of Schaumburg, County of Cook, State of Illinois (the
"Illinois Property").
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<PAGE> 23
(f) A Company Security Agreement dated as of even
date herewith, executed by Company, as debtor, in favor of
Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Ohio
Property, the Texas Property and the Georgia Property.
(g) A Guaranty Security Agreement dated as of
even date herewith, executed by Guarantor, as debtor, in favor
of Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Hayward
Property and the Illinois Property.
The deeds of trust referred to in subsections (a) through (e) are collectively
referred to herein as the "Deeds of Trust". The Texas Property, the Ohio
Property, the Georgia Property, the Hayward Property and the Illinois Property
are sometimes collectively referred to herein as the "Properties."
1.4 Agreement. In consideration of, and as a
condition to, the issuance of the Series A Letter of Credit, Bank and Trustee
hereby agrees as hereinafter provided.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement
to Company or to any other person or entity of all or any portion of the
proceeds of the Series A Bonds or any other funds held from time to time by
Trustee under the Trust Indenture in connection therewith without the approval
of Bank (subject to certain pre-approvals of disbursements by Bank).
3. Notice of Bond Document Default to Bank.
Trustee shall give to Bank a copy of any notice (and
subsequent communications relating thereto) given to Company of or with respect
to a default under Section 1101 of the Trust Indenture or with respect to an
event which, with notice and/or lapse of time, would constitute a default under
Section 1101 of the Trust Indenture. Such copy shall be given to Bank in the
same manner and at the same time as the corresponding notice or communication
is given to Company under the applicable Bond Document(s), and before Trustee
exercises any remedy granted to it or Issuer under any of the Bond Documents.
If such a default occurs of which Trustee has knowledge for which no notice is
required to be given to
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<PAGE> 24
Company, Trustee shall deliver a notice of such default to Bank immediately
upon learning of its occurrence.
4. Bank Rights on Bank Document Default.
Trustee hereby acknowledges and agrees that Bank shall have
the following rights in the event of the occurrence of an Event of Default
under the Series A Reimbursement Agreement, the Guaranty or any of the other
Loan Documents:
(a) The right to implement any or all of its
rights under the Series A Reimbursement Agreement and the
other Loan Documents (other than a foreclosure under the Texas
Deed of Trust), including without limitation commencement of
actions against Company to recover sums owing under the Loan
Documents and/or to obtain injunctive relief and making demand
upon Guarantor for the performance of its obligations under
the Guaranty, without giving notice to Trustee of Bank's
intention to cause a default to be declared under the Trust
Indenture; in such event, there shall be no declaration by
Trustee of a default under the Trust Indenture notwithstanding
any such action by Bank unless there are grounds for such
default other than by reason of the occurrence of an Event of
Default under the Series A Reimbursement Agreement; or
(b) The right, with or without implementation of
any or all of its rights under the Reimbursement Agreement and
the other Loan Documents (including the right to foreclose
under the Texas Deed of Trust), to give notice to Trustee of
Bank's intention to cause a default to be declared under the
Trust Indenture; in such event, Trustee shall immediately
declare such a default and make an A Drawing under the Series
A Letter of Credit.
5. Events of Default.
Bank hereby acknowledges and agrees that nothing contained in
Section 4, above, shall limit the rights of Trustee in the event of the
occurrence of an event of default under the Bond Documents other than an event
of default which occurs by reason of the occurrence of an Event of Default
under the Series A Reimbursement Agreement. Trustee hereby acknowledges and
agrees that the occurrence of an Event of Default under the Series A
Reimbursement Agreement shall not constitute an Event of Default under the Bond
Documents unless Bank has given the notice described in Section 4(b), above.
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<PAGE> 25
6. Bank Right to Cure Bond Document Defaults.
If company fails to cure a default under any Bond Document
within the applicable cure period, Trustee shall notify Bank in writing of such
failure and shall refrain from exercising any remedy under the Bond Documents
or at law in the event that Bank either (a) cures such default within fifteen
(15) days following receipt of such notice, or (b) if such default is not
capable of being cured by the payment of money, commences cure within thirty
(30) days and thereafter diligently proceeds with such cure. Nothing in this
Section 6 shall be construed to either (1) obligate Bank to cure any default by
Company or (2) obligate Trustee to refrain from exercising any remedy in the
event that such non-exercise would, in the opinion of bond counsel (McCall,
Parkhurst & Horton), adversely affect the tax-exempt status of interest on the
Series A Bonds.
7. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by
Trustee of funds from all sources (including without limitation any payments
under the Series A Letter of Credit) which are sufficient to retire in full the
obligations of Bank under the Series A Letter of Credit, Trustee shall do the
following:
7.1 Subject to Section 1105 of the Trust Indenture, use
all funds in its possession pursuant to the Trust Indenture and all funds paid
under the Series A Letter of Credit as may be necessary to promptly redeem and
retire all outstanding Series A Bonds at their face amount plus any accrued
interest.
7.2 At the option of Bank, either reconvey, release and
cancel, or assign to Bank, all of its right, title and interest under the
Security Documents and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such reconveyance, release, cancellation or assignment,
7.3 Assign to Bank all of its interest in the cash
collateral held in the Reserve Accounts and execute and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such assignment.
7.4 Deliver to Bank, in good funds and to such account as
Bank shall designate, the entire balance of undisbursed proceeds of the Series
A Bonds and any other funds then held by Trustee under the Trust Indenture,
together with any interest and other sums accrued on all such sums, as of
-5-
<PAGE> 26
the date of payment by Bank on the Series A Letter of Credit, subject to (i)
Section 1105 of the Trust Indenture and (ii) prior payment of any unpaid fees
and expenses (not to include any fees or expenses of outside legal counsel) of
Trustee described in Section 1202 of the Trust Indenture.
7.5 Assign to Bank all of its right, title and interest
under or in connection with the Series A Loan Agreement and the Trust
Indenture, including without limitation all sums in which Trustee has an
interest pursuant to the provisions of the Trust Indenture and all causes of
action and other rights which have accrued or may accrue thereafter; provided,
however, that Bank shall not be subject to any of the trust obligations of
Trustee with regard to such sums, causes of action and other rights.
8. Limits on Disposition of Pledged Bonds.
Bank shall not release from the lien of the Series A Pledge
Agreement any Pledged Bonds (as defined in the Series A Pledge Agreement)
(other than by delivery to the Trustee for cancellation) unless, at the time of
or before such release, the aggregate amount available under the Series A
Letter of Credit shall be reinstated in an amount equal to the full principal
amount of the Pledged Bonds released together with the portion of any drawing
made under the Series A Letter of Credit with respect to the interest portion
of the purchase price of the Pledged Bonds so being released. Also,
notwithstanding rights and remedies given to Bank in the Series A Pledge
Agreement to dispose of Pledged Bonds, at any time the Series A Letter of
Credit remains in effect, Bank shall not dispose of any Pledged Bonds other
than by delivery to the Trustee for cancellation.
9. Reserve Accounts.
Trustee hereby agrees to release its interest in the cash
collateral to be deposited by Company in the Reserve Accounts (pursuant to
Section 6.6 of the Series A Reimbursement Agreement) in exchange for any
substitute collateral reasonably satisfactory to Bank.
10. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by
Trustee of written assurances (from bond counsel or otherwise) that Trustee is
not required, for purposes of maintenance of the rating of the Series A Bonds
or otherwise, to hold a shared interest in the Security Documents, Trustee
shall, at
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<PAGE> 27
the option of Bank, either reconvey, release and cancel, or assign to Bank all
of its right, title and interest under the Security Documents and the Reserve
Accounts, and will execute, acknowledge and deliver to Bank such instruments
and documents as may be reasonably necessary in connection with such
reconveyance, release, cancellation or assignment.
11. Notices.
11.1 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the identity of
Trustee, whether pursuant to the Trust Indenture or otherwise, and (b) any
actual or planned amendment of the Trust Indenture or any supplement thereto,
or any request by any person or entity for the same.
11.2 Trustee shall deliver to Bank copies of any reports
to be delivered by Trustee pursuant to the Trust Indenture, as it may be
amended from time to time, such delivery to be reasonably concurrent with
Trustee's delivery of such reports pursuant to the Trust Indenture.
11.3 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be in writing
and must be mailed or personally delivered to the appropriate party at its
address as follows:
If to Trustee: Bank One
Trust Company, N.A. 100 East
Broad Street Columbus, Ohio
43271-0181 Attention:
Corporate Trust
If to Bank: Wells Fargo
Bank, N.A. Real Estate
Industries Group 2055 Gateway
Place, Suite 200 San Jose,
California 95110 Attention:
Mr. George Huxtable, Vice
President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 11.3. If any notice, request, demand,
direction or other communication is given by mail it will be effective upon the
earlier of (a) 96 hours after deposit in the U.S. Mail, certified or registered
mail, return receipt requested postage prepaid or (b) actual receipt, as
indicated by the return receipt; if given by personal delivery, when delivered.
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<PAGE> 28
12. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
13. Amendments; Governing Law.
This Agreement may be amended only by a written agreement
signed by both Bank and Trustee. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas.
14. Miscellaneous.
All capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth for them in the Series A Reimbursement
Agreement. In the event of any conflict between the provisions of this
Agreement and the provisions of any Bond Document, this Agreement shall
control.
IN WITNESS WHEREOF, Bank and Trustee have caused this
Agreement to be duly executed as of the date first written above.
Signed and Acknowledged "Bank":
in the presence of:
WELLS FARGO BANK, N.A.
/S/ Signature Unreadable
- -----------------------------
Witness By /s/ Jerry Tare
-------------------------------------
Its Assistant Vice President
---------------------------------
/s/ Signature Unreadable
- -----------------------------
Witness
Signed and Acknowledged "Trustee":
in the presence of
BANK ONE TRUST COMPANY, N.A.
/s/ Signature Unreadable
- -----------------------------
Witness By /s/ Signature Unreadable
------------------------------------
Its /s/ Authorized Signer
---------------------------------
/s/ Signature Unreadable
- -----------------------------
Witness
-8-
<PAGE> 29
STATE OF CALIFORNIA )
) ss.
COUNTY OF _________ )
On December 13, 1985, before me, the undersigned, personally
appeared __________, personally known to me (or proved to me on the/basis of
satisfactory evidence) to be the person who executed this instrument as
Assistant Vice President of the association therein named and acknowledged to
me that said association executed it.
/s/ Linda S. Joy
----------------------------------------
[SEAL OMITTED] Notary Public in and for said
County and State
My commission expires:
STATE OF CALIFORNIA )
) ss.
COUNTY OF ________ )
On ___________, 19 __, before me, the undersigned, personally
appeared _____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed this instrument as
___________ of the association therein named and acknowledged to me that said
association executed it.
----------------------------------------
Notary Public in and for said
County and State
My commission expires:
-9-
<PAGE> 30
STATE OF OHIO )
) ss.
COUNTY OF FRANKLIN )
On this 10th day of December, 1985, before me, the subscriber,
a notary public in and for said state and county, personally appeared Frederick
Schaal, who stated that he is the Senior Trust Officer of Bank One Trust
Company, N.A., a national banking association, who acknowledged that he
executed the foregoing instrument on behalf of such national banking
association and that such execution was duly authorized by such national
banking association and was his voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
my official seal on this 10TH day of DECEMBER 1985.
/s/ Signature Unreadable
----------------------------------------
Notary Public
My commission expires: NEVER EXPIRES
This instrument prepared by: Steve Ross, Esq.
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
-10-
<PAGE> 31
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Jack Rubens
SERIES A INTERCREDITOR AGREEMENT
This Series A Intercreditor Agreement ("Agreement") is executed as of
November 1, 1985, by and between WELLS FARGO BANK, N.A., a national banking
association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a national banking
association ("Trustee").
1. Recitals.
1.1 The Series A Bonds. The Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and issuer (the "Trust Indenture"), has agreed to
issue its Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Series A Bonds"). The proceeds of the Series A
Bonds are to be loaned to Radiation Sterilizers, Incorporated, a California
corporation ("Company"), and will be secured by the Deeds of Trust (as defined
below). Trustee is the trustee for the Series A Bonds.
1.2 The Series A Reimbursement Agreement and the Series A
Letter of Credit. Pursuant to the terms of that certain Series A Reimbursement
Agreement executed between Company and Bank as of even date herewith (the
"Series A Reimbursement Agreement"), Bank has agreed to issue an irrevocable
standby letter of credit in the face amount of $2,198,596.00 (the "Series A
Letter of Credit"). Trustee is empowered to draw upon the Series A Letter of
Credit for the benefit of the purchasers of the Series A Bonds as provided in
the Series A Letter of Credit. The obligations of Company to Bank under the
Series A Reimbursement Agreement and other documents executed in connection
therewith have been guaranteed by Charles King & Associates, a California
limited part-
-1-
<PAGE> 32
nership ("Guarantor") pursuant to that certain General Continuing Guaranty,
executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Security Documents. The obligations of Company to
Trustee relating to the payment of the principal amount of, and accrued
interest on, the Series A Bonds, and the obligations of Company to Bank under
the Series A Reimbursement Agreement and the other loan Documents are secured
by the following documents (collectively, the "Security Documents"):
(a) A Deed of Trust with Assignment of Rents (the "Texas
Deed of Trust") dated as of even date herewith, executed by Company,
as trustor, in favor of John Hollyfield, as trustee, for the benefit
of Bank and Trustee, as beneficiary, encumbering real property located
in the City of Fort Worth, County of Tarrant, State of Texas (the
"Texas Property");
(b) An Open End Mortgage dated as of even date herewith,
executed by Company, as borrower, for the benefit of Bank and Trustee,
as beneficiary, encumbering real property located in the Township of
Orange, County of Delaware, State of Ohio (the "Ohio Property");
(c) A Deed to Secure Debt dated as of even date herewith,
executed by Company, as grantor, for the benefit of Bank and Trustee,
as grantee encumbering real property located in the City of Atlanta,
County of DeKalb, State of Georgia (the "Georgia Property");
(d) A Deed of Trust with Assignment of Rents and Fixture
Filing dated as of even date herewith, executed by Guarantor, as
trustor, in favor of American Securities Company, as security trustee,
for the benefit of Bank and Trustee, as beneficiary, encumbering real
property located in the City of Hayward, County of Alameda, State of
California (the "Hayward Property"); and
(e) A Mortgage dated as of even date herewith, executed
by Guarantor for the benefit of Bank and Trustee, as beneficiary,
encumbering real property located in the Village of Schaumburg, County
of Cook, State of Illinois (the "Illinois Property").
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<PAGE> 33
(f) A Company Security Agreement dated as of even date
herewith, executed by Company, as debtor, in favor of Bank and
Trustee, as secured party, granting a security interest in certain
personal property relating to the Ohio Property, the Texas Property
and the Georgia Property.
(g) A Guaranty Security Agreement dated as of even date
herewith, executed by Guarantor, as debtor, in favor of Bank and
Trustee, as secured party, granting a security interest in certain
personal property relating to the Hayward Property and the Illinois
Property.
The deeds of trust referred to in subsections (a) through (e) are collectively
referred to herein as the "Deeds of Trust". The Texas Property, the Ohio
Property, the Georgia Property, the Hayward Property and the Illinois Property
are sometimes collectively referred to herein as the "Properties."
1.4 Agreement. In consideration of, and as a
condition to, the issuance of the Series A Letter of Credit, Bank and Trustee
hereby agrees as hereinafter provided.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement
to Company or to any other person or entity of all or any portion of the
proceeds of the Series A Bonds or any other funds held from time to time by
Trustee under the Trust Indenture in connection therewith without the approval
of Bank (subject to certain pre-approvals of disbursements by Bank).
3. Notice of Bond Document Default to Bank.
Trustee shall give to Bank a copy of any notice (and subsequent
communications relating thereto) given to Company of or with respect to a
default under Section 1101 of the Trust Indenture or with respect to an event
which, with notice and/or lapse of time, would constitute a default under
Section 1101 of the Trust Indenture. Such copy shall be given to Bank in the
same manner and at the same time as the corresponding notice or communication
is given to Company under the applicable Bond Document(s), and before Trustee
exercises any remedy granted to it or Issuer under any of the Bond Documents.
If such a default occurs of which Trustee has knowledge for which no notice is
required to be given to
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<PAGE> 34
Company, Trustee shall deliver a notice of such default to Bank immediately
upon learning of its occurrence.
4. Bank Rights on Bank Document Default.
Trustee hereby acknowledges and agrees that Bank shall have
the following rights in the event of the occurrence of an Event of Default
under the Series A Reimbursement Agreement, the Guaranty or any of the other
Loan Documents:
(a) The right to implement any or all of its rights under
the Series A Reimbursement Agreement and the other Loan Documents
(other than a foreclosure under the Texas Deed of Trust), including
without limitation commencement of actions against Company to recover
sums owing under the Loan Documents and/or to obtain injunctive relief
and making demand upon Guarantor for the performance of its
obligations under the Guaranty, without giving notice to Trustee of
Bank's intention to cause a default to be declared under the Trust
Indenture; in such event, there shall be no declaration by Trustee of
a default under the Trust Indenture notwithstanding any such action by
Bank unless there are grounds for such default other than by reason of
the occurrence of an Event of Default under the Series A Reimbursement
Agreement; or
(b) The right, with or without implementation of any or
all of its rights under the Reimbursement Agreement and the other Loan
Documents (including the right to foreclose under the Texas Deed of
Trust), to give notice to Trustee of Bank's intention to cause a
default to be declared under the Trust Indenture; in such event,
Trustee shall immediately declare such a default and make an A Drawing
under the Series A Letter of Credit.
5. Events of Default.
Bank hereby acknowledges and agrees that nothing contained in
Section 4, above, shall limit the rights of Trustee in the event of the
occurrence of an event of default under the Bond Documents other than an event
of default which occurs by reason of the occurrence of an Event of Default
under the Series A Reimbursement Agreement. Trustee hereby acknowledges and
agrees that the occurrence of an Event of Default under the Series A
Reimbursement Agreement shall not constitute an Event of Default under the Bond
Documents unless Bank has given the notice described in Section 4(b), above.
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<PAGE> 35
6. Bank Right to Cure Bond Document Defaults.
If Company fails to cure a default under any Bond Document
within the applicable cure period, Trustee shall notify Bank in writing of such
failure and shall refrain from exercising any remedy under the Bond Documents
or at law in the event that Bank either (a) cures such default within fifteen
(15) days following receipt of such notice, or (b) if such default is not
capable of being cured by the payment of money, commences cure within thirty
(30) days and thereafter diligently proceeds with such cure. Nothing in this
Section 6 shall be construed to either (1) obligate Bank to cure any default by
Company or (2) obligate Trustee to refrain from exercising any remedy in the
event that such non-exercise would, in the opinion of bond counsel (McCall,
Parkhurst Horton), adversely affect the tax-exempt status of interest on the
Series A Bonds.
7. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by
Trustee of funds from all sources (including without limitation any payments
under the Series A Letter of Credit) which are sufficient to retire in full the
obligations of Bank under the Series A Letter of Credit, Trustee shall do the
following:
7.1 Subject to Section 1105 of the Trust Indenture, use
all funds in its possession pursuant to the Trust Indenture and all funds paid
under the Series A Letter of Credit as may be necessary to promptly redeem and
retire all outstanding Series A Bonds at their face amount plus any accrued
interest.
7.2 At the option of Bank, either reconvey, release and
cancel, or assign to Bank, all of its right, title and interest under the
Security Documents and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such reconveyance, release, cancellation or assignment.
7.3 Assign to Bank all of its interest in the cash
collateral held in the Reserve Accounts and execute and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such assignment.
7.4 Deliver to Bank, in good funds and to such account as
Bank shall designate, the entire balance of undisbursed proceeds of the Series
A Bonds and any other funds then held by Trustee under the Trust Indenture,
together with any interest and other sums accrued on all such sums, as of
-5-
<PAGE> 36
the date of payment by Bank on the Series A Letter of Credit, subject to (i)
Section 1105 of the Trust indenture and (ii) prior payment of any unpaid fees
and expenses (not to include any fees or expenses of outside legal counsel) of
Trustee described in Section 1202 of the Trust Indenture.
7.5 Assign to Bank all of its right, title and interest
under or in connection with the Series A Loan Agreement and the Trust
Indenture, including without limitation all sums in which Trustee has an
interest pursuant to the provisions of the Trust Indenture and all causes of
action and other rights which have accrued or may accrue thereafter; provided,
however, that Bank shall not be subject to any of the trust obligations of
Trustee with regard to such sums, causes of action and other rights.
8. Limits on Disposition of Pledged Bonds.
Bank shall not release from the lien of the Series A Pledge
Agreement any Pledged Bonds (as defined in the Series A Pledge Agreement)
(other than by delivery to the Trustee for cancellation) unless, at the time of
or before such release, the aggregate amount available under the Series A
Letter of Credit shall be reinstated in an amount equal to the full principal
amount of the Pledged Bonds released together with the portion of any drawing
made under the Series A Letter of Credit with respect to the interest portion
of the purchase price of the Pledged Bonds so being released. Also,
notwithstanding rights and remedies given to Bank in the Series A Pledge
Agreement to dispose of Pledged Bonds, at any time the Series A Letter of
Credit remains in effect, Bank shall not dispose of any Pledged Bonds other
than by delivery to the Trustee for cancellation.
9. Reserve Accounts.
Trustee hereby agrees to release its interest in the cash
collateral to be deposited by Company in the Reserve Accounts (pursuant to
Section 6.6 of the Series A Reimbursement Agreement) in exchange for any
substitute collateral reasonably satisfactory to Bank.
10. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by
Trustee of written assurances (from bond counsel or otherwise) that Trustee is
not required, for purposes of maintenance of the rating of the Series A Bonds
or otherwise, to hold a shared interest in the Security Documents, Trustee
shall, at
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<PAGE> 37
the option of Bank, either reconvey, release and cancel, or assign to Bank all
of its right, title and interest under the Security Documents and the Reserve
Accounts, and will execute, acknowledge and deliver to Bank such instruments
and documents as may be reasonably necessary in connection with such
reconveyance, release, cancellation or assignment.
11. Notices.
11.1 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the identity of
Trustee, whether pursuant to the Trust Indenture or otherwise, and (b) any
actual or planned amendment of the Trust Indenture or any supplement thereto,
or any request by any person or entity for the same.
11.2 Trustee shall deliver to Bank copies of any reports
to be delivered by Trustee pursuant to the Trust Indenture, as it may be
amended from time to time, such delivery to be reasonably concurrent with
Trustee's delivery of such reports pursuant to the Trust Indenture.
11.3 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be in writing
and must be mailed or personally delivered to the appropriate party at its
address as follows:
If to Trustee: Bank One
Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust
If to Bank: Wells Fargo
Bank, N.A. Real Estate
Industries Group 2055 Gateway
Place, Suite 200 San Jose,
California 95110 Attention:
Mr. George Huxtable,
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 11.3. If any notice, request, demand,
direction or other communication is given by mail it will be effective upon the
earlier of (a) 96 hours after deposit in the U.S. Mail, certified or registered
mail, return receipt requested postage prepaid or (b) actual receipt, as
indicated by the return receipt; if given by personal delivery, when delivered.
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<PAGE> 38
12. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
13. Amendments; Governing Law.
This Agreement may be amended only by a written agreement
signed by both Bank and Trustee. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas.
14. Miscellaneous.
All capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth for them in the Series A Reimbursement
Agreement. In the event of any
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<PAGE> 39
conflict between the provisions of this Agreement and the provisions of any
Bond Document, this Agreement shall control.
IN WITNESS WHEREOF, Bank and Trustee have caused this
Agreement to be duly executed as of the date first written above.
"Bank":
Wells Fargo Bank, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ V.P.
---------------------------------
Attest /s/ Signature Unreadable
--------------------------------------
Its /s/ A.V. P.
---------------------------------
Signed, sealed and delivered in presence of
- -----------------------------
/s/ Signature Unreadable
- -----------------------------
/s/ Carmel Forte
Notary Public, Santa Clara County, California
My commission expires:
[SEAL OMITTED]
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<PAGE> 40
"Trustee":
Bank One Trust Company, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ Vice Pres
---------------------------------
Attest /s/ Signature Unreadable
--------------------------------------
Its /s/ Asst Vice President
---------------------------------
Signed , sealed and delivered in presence of
- -----------------------------
/s/ Signature Unreadable
- -----------------------------
/s/ Signature Unreadable
Notary Public, Franklin County, Ohio
My commission expires:
-10-
<PAGE> 41
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Steve Ross
SERIES A INTERCREDITOR AGREEMENT
This Series A Intercreditor Agreement ("Agreement") is executed as of
November 1, 1985, by and between WELLS FARGO BANK, N.A., a national banking
association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a national banking
association ("Trustee").
1. Recitals.
1.1 The Series A Bonds. The Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and Issuer (the "Trust Indenture"), has agreed to
issue its Trinity River Industrial Development Authority Variable Rate Demand
Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985A (the "Series A Bonds"). The proceeds of the Series A
Bonds are to be loaned to Radiation Sterilizers, Incorporated, a California
corporation ("Company"), and will be secured by the Deeds of Trust (as defined
below). Trustee is the trustee for the Series A Bonds.
1.2 The Series A Reimbursement Agreement and the Series A
Letter of Credit. Pursuant to the terms of that certain Series A Reimbursement
Agreement executed between Company and Bank as of even date herewith (the
"Series A Reimbursement Agreement"), Bank has agreed to issue an irrevocable
standby letter of credit in the face amount of $2,198,596.00 (the "Series A
Letter of Credit"). Trustee is empowered to draw upon the Series A Letter of
Credit for the benefit of the purchasers of the Series A Bonds as provided in
the Series A Letter of Credit. The obligations of Company to Bank under the
Series A Reimbursement Agreement and other documents executed in connection
therewith have been guaranteed by Charles King & Associates, a California
limited part-
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<PAGE> 42
nership ("Guarantor") pursuant to that certain General Continuing Guaranty,
executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Security Documents. The obligations of Company
to Trustee relating to the payment of the principal amount of, and accrued
interest on, the Series A Bonds, and the obligations of Company to Bank under
the Series A Reimbursement Agreement and the other Loan Documents are secured
by the following documents (collectively, the "Security Documents"):
(a) A Deed of Trust with Assignment of Rents (the
"Texas Deed of Trust") dated as of even date herewith,
executed by Company, as trustor, in favor of John Hollyfield,
as trustee, for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the City of
Fort Worth, County of Tarrant, State of Texas (the "Texas
Property");
(b) An Open End Mortgage dated as of even date
herewith, executed by Company, as borrower, for the benefit of
Bank and Trustee, as beneficiary, encumbering real property
located in the Township of Orange, County of Delaware, State
of Ohio (the "Ohio Property");
(c) A Deed to Secure Debt dated as of even date
herewith, executed by Company, as grantor, for the benefit of
Bank and Trustee, as grantee encumbering real property located
in the City of Atlanta, County of DeKalb, State of Georgia
(the "Georgia Property");
(d) A Deed of Trust with Assignment of Rents and
Fixture Filing dated as of even date herewith, executed by
Guarantor, as trustor, in favor of American Securities
Company, as security trustee, for the benefit of Bank and
Trustee, as beneficiary, encumbering real property located in
the City of Hayward, County of Alameda, State of California
(The "Hayward Property"); and
(e) A Mortgage dated as of even date herewith,
executed by Guarantor for the benefit of Bank and Trustee, as
beneficiary, encumbering real property located in the Village
of Schaumburg, County of Cook, State of Illinois (the
"Illinois Property").
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<PAGE> 43
(f) A Company Security Agreement dated as of even
date herewith, executed by Company, as debtor, in favor of
Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Ohio
Property, the Texas Property and the Georgia Property.
(g) A Guaranty Security Agreement dated as of
even date herewith, executed by Guarantor, as debtor, in favor
of Bank and Trustee, as secured party, granting a security
interest in certain personal property relating to the Hayward
Property and the Illinois Property.
The deeds of trust referred to in subsections (a) through (e) are collectively
referred to herein as the "Deeds of Trust". The Texas Property, the Ohio
Property, the Georgia Property, the Hayward Property and the Illinois Property
are sometimes collectively referred to herein as the "Properties."
1.4 Agreement. In consideration of, and as a
condition to, the issuance of the Series A Letter of Credit, Bank and Trustee
hereby agrees as hereinafter provided.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement
to Company or to any other person or entity of all or any portion of the
proceeds of the Series A Bonds or any other funds held from time to time by
Trustee under the Trust Indenture in connection therewith without the approval
of Bank (subject to certain pre-approvals of disbursements by Bank).
3. Notice of Bond Document Default to Bank.
Trustee shall give to Bank a copy of any notice (and
subsequent communications relating thereto) given to Company of or with respect
to a default under Section 1101 of the Trust Indenture or with respect to an
event which, with notice and/or lapse of time, would constitute a default under
Section 1101 of the Trust Indenture. Such copy shall be given to Bank in the
same manner and at the same time as the corresponding notice or communication
is given to Company under the applicable Bond Document(s), and before Trustee
exercises any remedy granted to it or Issuer under any of the Bond Documents.
If such a default occurs of which Trustee has knowledge for which no notice is
required to be given to
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<PAGE> 44
Company, Trustee shall deliver a notice of such default to Bank immediately
upon learning of its occurrence.
4. Bank Rights on Bank Document Default.
Trustee hereby acknowledges and agrees that Bank shall have
the following rights in the event of the occurrence of an Event of Default
under the Series A Reimburse-ment Agreement, the Guaranty or any of the other
Loan Documents:
(a) The right to implement any or all of its
rights under the Series A Reimbursement Agreement and the
other Loan Documents (other than a foreclosure under the Texas
Deed of Trust), including without limitation commencement of
actions against Company to recover sums owing under the Loan
Documents and/or to obtain injunctive relief and making demand
upon Guarantor for the perfor-mance of its obligations under
the Guaranty, without giving notice to Trustee of Bank's
intention to cause a default to be declared under the Trust
Indenture; in Such event, there shall be no declaration by
Trustee of a default under the Trust Indenture notwithstanding
any such action by Bank unless there are grounds for such
default other than by reason of the occurrence of an Event of
Default under the Series A Reimbursement Agreement; or
(b) The right, with or without implementation of
any or all of its rights under the Reimbursement Agreement and
the other Loan Documents (including the right to foreclose
under the Texas Deed of Trust), to give notice to Trustee of
Bank's intention to cause a default to be declared under the
Trust Indenture; in such event, Trustee shall immediately
declare such a default and make an A Drawing under the Series
A Letter of Credit.
8. Events of Default.
Bank hereby acknowledges and agrees that nothing contained in
Section 4, above, shall limit the rights of Trustee in the event of the
occurrence of an event of default under the Bond Documents other than an event
of default which occurs by reason of the occurrence of an Event of Default
under the Series A Reimbursement Agreement. Trustee hereby acknowledges and
agrees that the occurrence of an Event of Default under the Series A
Reimbursement Agreement shall not constitute an Event of Default under the Bond
Documents unless Bank has given the notice described in Section 4(b), above.
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<PAGE> 45
6. Bank Right to Cure Bond Document Defaults.
If Company fails to cure a default under any Bond Document
within the applicable cure period, Trustee shall notify Bank in writing of such
failure and shall refrain from exercising any remedy under the Bond Documents
or at law in the event that Bank either (a) cures such default within fifteen
(15) days following receipt of such notice, or (b) if such default is not
capable of being cured by the payment of money, commences cure within thirty
(30) days and thereafter diligently proceeds with such cure. Nothing in this
Section 6 shall be construed to either (1) obligate Bank to cure any default by
Company or (2) obligate Trustee to refrain from exercising any remedy in the
event that such non-exercise would, in the opinion of bond counsel (McCall,
Parkhurst & Horton), adversely affect the tax-exempt status of interest on the
Series A Bonds.
7. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by
Trustee of funds from all sources (including without limitation any payments
under the Series A Letter of Credit) which are sufficient to retire in full the
obligations of Bank under the Series A Letter of Credit, Trustee shall do the
following:
7.1 Subject to Section 1105 of the Trust Indenture, use
all funds in its possession pursuant to the Trust Indenture and all funds paid
under the Series A Letter of Credit as may be necessary to promptly redeem and
retire all outstanding Series A Bonds at their face amount plus any accrued
interest.
7.2 At the option of Bank, either reconvey, release and
cancel, or assign to Bank, all of its right, title and interest under the
Security Documents and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such reconveyance, release, cancellation or assignment.
7.3 Assign to Bank all of its interest in the cash
collateral held in the Reserve Accounts and execute and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with
such assignment.
7.4 Deliver to Bank, in good funds and to such account as
Bank shall designate, the entire balance of undisbursed proceeds of the Series
A Bonds and any other funds then held by Trustee under the Trust Indenture,
together with any interest and other sums accrued on all such sums, as of
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<PAGE> 46
the date of payment by Bank on the Series A Letter of Credit, subject to (i)
Section 1105 of the Trust Indenture and (ii) prior payment of any unpaid fees
and expenses (not to include any fees or expenses of outside legal counsel) of
Trustee described in Section 1202 of the Trust Indenture.
7.5 Assign to Bank all of its right, title and interest
under or in connection with the Series A Loan Agreement and the Trust
Indenture, including without limitation all sums in which Trustee has an
interest pursuant to the provisions of the Trust Indenture and all causes of
action and other rights which have accrued or may accrue thereafter; provided,
however, that Bank shall not be subject to any of the trust obligations of
Trustee with regard to such sums, causes of action and other rights.
8. Limits on Disposition of Pledged Bonds.
Bank shall not release from the lien of the Series A Pledge
Agreement any Pledged Bonds (as defined in the Series A Pledge Agreement)
(other than by delivery to the Trustee for cancellation) unless, at the time of
or before such release, the aggregate amount available under the Series A
Letter of Credit shall be reinstated in an amount equal to the full principal
amount of the Pledged Bonds released together with the portion of any drawing
made under the Series A Letter of Credit with respect to the interest portion
of the purchase price of the Pledged Bonds so being released. Also,
notwithstanding rights and remedies given to Bank in the Series A Pledge
Agreement to dispose of Pledged Bonds, at any time the Series A Letter of
Credit remains in effect, Bank shall not dispose of any Pledged Bonds other
than by delivery to the Trustee for cancellation.
9. Reserve Accounts.
Trustee hereby agrees to release its interest in the cash
collateral to be deposited by Company in the Reserve Accounts (pursuant to
Section 6.6 of the Series A Reimbursement Agreement) in exchange for any
substitute collateral reasonably satisfactory to Bank.
10. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by
Trustee of written assurances (from bond counsel or otherwise) that Trustee is
not required, for purposes of maintenance of the rating of the Series A Bonds
or otherwise, to hold a shared interest in the Security Documents, Trustee
shall, at
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<PAGE> 47
the option of Bank, either reconvey, release and cancel, or assign to Bank all
of its right, title and interest under the Security Documents and the Reserve
Accounts, and will execute, acknowledge and deliver to Bank such instruments
and documents as may be reasonably necessary in connection with such
reconveyance, release, cancellation or assignment.
11. Notices.
11.1 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the
identity of Trustee, whether pursuant to the Trust Indenture or
otherwise, and (b) any actual or planned amendment of the Trust
Indenture or any supplement thereto, or any request by any person or
entity for the same.
11.2 Trustee shall deliver to Bank copies of any reports
to be delivered by Trustee pursuant to the Trust Indenture, as it may
be amended from time to time, such delivery to be reasonably
concurrent with Trustee's delivery of such reports pursuant to the
Trust Indenture.
11.3 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be
in writing and must be mailed or personally delivered to the
appropriate party at its address as follows:
If to Trustee: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust
If to Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: Mr. George Huxtable,
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 11.3. If any notice, request, demand, direction
or other communication is given by mail it will be effective upon the earlier
of (a) 96 hours after deposit in the U.S. Mail, certified or registered mail,
return receipt requested postage prepaid or (b) actual receipt, as indicated by
the return receipt; if given by personal delivery, when delivered.
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<PAGE> 48
12. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
13. Amendments; Governing Law.
This Agreement may be amended only by a written agreement
signed by both Bank and Trustee. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas.
14. Miscellaneous.
All capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth for them in the Series A Reimbursement
Agreement. In the event of any conflict between the provisions of this
Agreement and the provisions of any Bond Document, this Agreement shall
control.
IN WITNESS WHEREOF, Bank and Trustee have caused this
Agreement to be duly executed as of the date first written above.
"Bank":
WELLS FARGO BANK, N.A.
By /s/ Signature Unreadable
-------------------------------------
Its /s/ Assistant Vice President
---------------------------------
"Trustee":
BANK ONE TRUST COMPANY, N.A.,
By /s/ Signature Unreadable
-------------------------------------
Its /s/ AUTHORIZED SIGNER
---------------------------------
-8-
<PAGE> 49
STATE OF CALIFORNIA )
) ss.
COUNTY OF San Francisco )
On December 13, 1985, before me, the undersigned, personally appeared
appeared __________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed this instrument as Asst
Vice President of the association therein named and acknowledged to me that
said association executed it.
[SEAL OMITTED] /s/ Linda S. Joy
----------------------------------------
Notary Public in and for said
County and State
My commission expires:
STATE OF CALIFORNIA )
) ss.
COUNTY OF _______ )
On __________, 19 __, before me, the undersigned, personally
appeared ____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed this instrument as
________ of the association therein named and acknowledged to me that said
association executed it.
----------------------------------------
Notary Public in and for said
County and State
My commission expires:
-9-
<PAGE> 50
STATE OF OHIO )
) ss.
COUNTY OF FRANKLIN )
On this 10th day of DECEMBER 1985, before me, the subscriber,
a notary public in and for said state and county, personally appeared FREDERICK
SCHAAL , who stated that the is the SENIOR TRUST OFFICER of Bank One Trust
Company, N.A., a national banking association, who acknowledged that he
executed the foregoing instrument on behalf of such national banking
association and that such execution was duly authorized by such national
banking association and was his voluntary act and deed.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
my official seal on this 10TH day of DECEMBER, 1985.
/s/ Signature Unreadable
----------------------------------------
Notary Public
My commission expires: NEVER EXPIRES
This instrument prepared by: Steve Ross, Esq.
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
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<PAGE> 1
EXHIBIT 10.15
SERIES B INTERCREDITOR AGREEMENT
This Series B Intercreditor Agreement ("Agreement") is
executed as of November 1, 1985, by and between WELLS FARGO BANK, N.A., a
national banking association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a
national banking association ("Trustee").
1. Recitals.
1.1 The Series B Bonds. The Trinity River Industrial Development
Authority, a nonprofit industrial development corporation ("Issuer"), pursuant
to that certain Trust Indenture executed as of even date herewith between
Trustee and Issuer (the "Trust Indenture"), has agreed to issue its Trinity
River Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985B (the "Series B Bonds"). The proceeds of the Series B Bonds are to be
loaned to Radiation Sterilizers, Incorporated, a California corporation
("Company"). Trustee is the trustee for the Series B Bonds.
1.2 The Series B Reimbursement Agreement and the Series B Letter of
Credit. Pursuant to the terms of that certain Series B Reimbursement Agreement
executed between Company and Bank as of even date herewith (the "Series B
Reimbursement Agreement"), Bank has agreed to issue an irrevocable standby
letter of credit in the face amount of $2,505,377.00 (the "Series B Letter of
Credit"). Trustee is empowered to draw upon the Series B Letter of Credit for
the benefit of the purchasers of the Series B Bonds as provided in the Series B
Letter of Credit. The obligations of Company to Bank under the Series B
Reimbursement Agreement and other documents executed in connection therewith
have been guaranteed by Charles King & Associates, a California limited
partnership ("Guarantor") pursuant to that certain General Continuing Guaranty,
executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Agreement. In consideration of, and as a condition to, the issuance
of the Series B Letter of Credit, Bank and Trustee hereby agrees as hereinafter
provided.
-1-
<PAGE> 2
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement to Company
or to any other person or entity of all or any portion of the proceeds of the
Series B Bonds or any other funds held from time to time by Trustee under the
Trust Indenture in connection therewith without the approval of Bank (subject to
certain pre-approvals of disbursements by Bank).
3. Notice of Bond Document Default to Bank.
Trustee shall give to Bank a copy of any notice (and subsequent
communications relating thereto) given to Company of or with respect to a
default under Section 1101 of the Trust Indenture or with respect to an event
which, with notice and/or lapse of time, would constitute a default under
Section 1101 of the Trust Indenture. Such copy shall be given to Bank in the
same manner and at the same time as the corresponding notice or communication is
given to Company under the applicable Bond Document(s), and before Trustee
exercises any remedy granted to it or Issuer under any of the Bond Documents. If
such a default occurs of which Trustee has knowledge for which no notice is
required to be given to Company, Trustee shall deliver a notice of such default
to Bank immediately upon learning of its occurrence.
4. Bank Rights on Bank Document Default.
Trustee hereby acknowledges and agrees that Bank shall have the
following rights in the event of the occurrence of an Event of Default under the
Series B Reimbursement Agreement, the Guaranty or any of the other Loan
Documents:
(a) The right to implement any or all of its rights under the Series
B Reimbursement Agreement and the other Loan Documents, including without
limitation commencement of actions against Company to recover sums owing
under the Loan Documents and/or to obtain injunctive relief and making
demand upon Guarantor for the performance of its obligations under the
Guaranty, without giving notice to Trustee of Bank's intention to cause a
default to be declared under the Trust Indenture; in such event, there
shall be no declaration by Trustee of a default under the Trust Indenture
notwithstanding any such action by Bank unless there are grounds for such
default other than by reason of the
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<PAGE> 3
occurrence of an Event of Default under the Series B Reimbursement
Agreement; or
(b) The right, with or without implementation of any or all of its
rights under the Series B Reimbursement Agreement and the other Loan
Documents, to give notice to Trustee of Bank's intention to cause a
default to be declared under the Trust Indenture; in such event, Trustee
shall immediately declare such a default and make an A Drawing under the
Series B Letter of Credit.
5. Events of Default.
Bank hereby acknowledges and agrees that nothing contained in Section
4, above, shall limit the rights of Trustee in the event of the occurrence of an
event of default under the Bond Documents other than an event of default which
occurs by reason of the occurrence of an Event of Default under the Series B
Reimbursement Agreement. Trustee hereby acknowledges and agrees that the
occurrence of an Event of Default under the Series B Reimbursement Agreement
shall not constitute an Event of Default under the Bond Documents unless Bank
has given the notice described in Section 4(b), above.
6. Bank Right to Cure Bond Document Defaults.
If Company fails to cure a default under any Bond Document within the
applicable cure period, Trustee shall notify Bank in writing of such failure and
shall refrain from exercising any remedy under the Bond Documents or at law in
the event that Bank either (a) cures such default within fifteen (15) days
following receipt of such notice, or (b) if such default is not capable of being
cured by the payment of money, commences cure within thirty (30) days and
thereafter diligently proceeds with such cure. Nothing in this Section 6 shall
be construed to either (1) obligate Bank to cure any default by Company or (2)
obligate Trustee to refrain from exercising any remedy in the event that such
non-exercise would, in the opinion of bond counsel (McCall, Parkhurst & Horton),
adversely affect the tax-exempt status of interest on the Series B Bonds.
7. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by Trustee of
funds from all sources (including without limitation any payments under the
Series B Letter of
-3-
<PAGE> 4
Credit) which are sufficient to retire in full the obligations of Bank under the
Series B Letter of Credit, Trustee shall do the following:
7.1 Subject to Section 1105 of the Trust Indenture, use all funds in
its possession pursuant to the Trust Indenture and all funds paid under the
Series B Letter of Credit as may be necessary to promptly redeem and retire all
outstanding Series B Bonds at their face amount plus any accrued interest.
7.2 At the option of Bank, either reconvey, release and cancel, or
assign to Bank, all of its right, title and interest with respect to any
security ever held by Bank and Trustee to secure any or all of Company's
obligations to Bank and Trustee, and execute, acknowledge and deliver to Bank
such instruments and documents as may be reasonably necessary in connection with
such reconveyance, release, cancellation or assignment.
7.3 Assign to Bank all of the cash collateral to be deposited in the
Reserve Accounts and execute and deliver to Bank such instruments and documents
as may be reasonably necessary in connection with such assignment.
7.4 Deliver to Bank, in good funds and to such account as Bank shall
designate, the entire balance of undisbursed proceeds of the Series B Bonds and
any other funds then held by Trustee under the Trust Indenture, together with
any interest and other sums accrued on all such sums, as of the date of payment
by Bank on the Series B Letter of Credit, subject to (i) Section 1105 of the
Trust Indenture and (ii) prior payment of any unpaid fees and expenses (not to
include any fees or expenses of outside legal counsel) of Trustee described in
Section 1202 of the Trust Indenture.
7.5 Assign to Bank all of its right, title and interest under or in
connection with the Series B Loan Agreement and the Trust Indenture, including
without limitation all sums in which Trustee has an interest pursuant to the
provisions of the Trust Indenture and all causes of action and other rights
which have accrued or may accrue thereafter; provided, however, that Bank shall
not be subject to any of the trust obligations of Trustee with regard to such
sums, causes of action and other rights.
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<PAGE> 5
8. Limits on Disposition of Pledged Bonds.
Bank shall not release from the lien of the Series B Pledge Agreement
any Pledged Bonds (as defined in the Series B Pledge Agreement) (other than by
delivery to the Trustee for cancellation) unless, at the time of or before such
release, the aggregate amount available under the Series B Letter of Credit
shall be reinstated in an amount equal to the full principal amount of the
Pledged Bonds released together with the portion of any drawing made under the
Series B Letter of Credit with respect to the interest portion of the purchase
price of the Pledged Bonds so being released. Also, notwithstanding rights and
remedies given to Bank in the Series B Pledge Agreement to dispose of Pledged
Bonds, at any time the Series B Letter of Credit remains in effect, Bank shall
not dispose of any Pledged Bonds other than by delivery to the Trustee for
cancellation.
9. Reserve Accounts.
Trustee hereby agrees to release its interest in the cash collateral to
be deposited by Company in the Reserve Accounts (pursuant to Section 6.6 of
Series B Reimbursement Agreement) in exchange for any substitute collateral
reasonably satisfactory to Bank.
10. Notices.
10.1 Trustee shall immediately give Bank notice of (a) its resignation
or removal or any other actual or planned change in the identity of Trustee,
whether pursuant to the Trust Indenture or otherwise, and (b) any actual or
planned amendment of the Trust Indenture or any supplement thereto, or any
request by any person or entity for the same.
10.2 Trustee shall deliver to Bank copies of any reports to be
delivered by Trustee pursuant to the Trust Indenture, as it may be amended from
time to time, such delivery to be reasonably concurrent with Trustee's delivery
of such reports pursuant to the Trust Indenture.
10.3 All notices, requests, demands, directions or other communications
which may be given pursuant to this Agreement must be in writing and must be
mailed or personally delivered to the appropriate party at its address as
follows:
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<PAGE> 6
If to Trustee: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust
If to Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: Mr. George Huxtable
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 10.3. If any notice, request, demand, direction
or other communication is given by mail it will be effective upon the earlier of
(a) 96 hours after deposit in the U.S. Mail, certified or registered mail,
return receipt requested postage prepaid or (b) actual receipt, as indicated by
the return receipt; if given by personal delivery, when delivered.
11. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to interpret
or enforce their rights under this Agreement, the prevailing party in such
action shall be entitled to recover its costs and attorneys' fees as awarded by
the court in such action.
12. Amendments; Governing Law.
This Agreement may be amended only by a written agreement signed by
both Bank and Trustee. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas.
13. Miscellaneous.
All capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth for them in the Series B Reimbursement
Agreement. In the
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<PAGE> 7
event of any conflict between the provisions of this Agreement and the
provisions of any Bond Document, this Agreement shall control.
IN WITNESS WHEREOF, Bank and Trustee have caused this Agreement to be
duly executed as of the date first written above.
"Bank":
WELLS FARGO BANK, N.A.
By /s/ Jerry Tone
-----------------------------------
Its /s/ Assistant Vice President
----------------------------
"Trustee":
BANK ONE TRUST COMPANY, N.A.
By /s/ Signature Unreadable
--------------------------------
Its /s/ AUTHORIZED SIGNER
----------------------------
-7-
<PAGE> 1
EXHIBIT 10.16
SERIES A PLEDGE AND SECURITY AGREEMENT
This Series A Pledge and Security Agreement (the "Agreement"),
dated as of November 1, 1985, is made by RADIATION STERILIZERS, INCORPORATED, a
California corporation ("Pledgor"), to WELLS FARGO BANK, N.A., a national
banking association ("Bank") pursuant to that certain Series A Reimbursement
Agreement (the "Series A Reimbursement Agreement") executed as of even date
herewith between Pledgor and Bank.
WHEREAS, the Trinity River Industrial Development Authority, a
non-profit industrial development corporation ("Issuer") has agreed with
Pledgor to issue its Trinity River Industrial Development Authority Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985A (the "Series A Bonds") pursuant to that
certain Trust Indenture dated as of even date herewith (the "Trust Indenture"),
between Issuer and Bank One Trust Company, N.A., a national banking association
(the "Trustee"), which Series A Bonds will be backed by Bank on a secured
basis; and
WHEREAS, the Trust Indenture provides for the purchase of
certain Series A Bonds and for their delivery to Bank, or its nominee, in
accordance with Sections 401(j) and 401(k) of the Trust Indenture (defined in
the Series A Reimbursement Agreement, and herein, as the "Series A Drawing
Bonds" and the "Series A Company Bonds"); and
WHEREAS, in connection with the issuance of the Series A
Bonds, Pledgor has requested that Bank issue the Series A Letter of Credit
described in the Series A Reimbursement Agreement (the "Series A Letter of
Credit"), which may be used, inter alia, to purchase some or all of the
outstanding Series A Drawing Bonds from their owners with the proceeds of "C
Drawings" under the Series A Letter of Credit; and
WHEREAS, it is a condition precedent to the obligations of
Bank to issue the Series A Letter of Credit that Pledgor shall have executed
and delivered this Agreement to Bank;
NOW, THEREFORE, in consideration of the premises and in order
to induce Bank to issue the Series A Letter of Credit and for other good and
valuable consideration, receipt of which is hereby acknowledged, Pledgor hereby
agrees with Bank as follows:
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<PAGE> 2
1. Defined Terms. Capitalized terms used and not
otherwise defined herein shall have the same meanings as set forth in the
Series A Reimbursement Agreement.
2. Pledge. Pledgor hereby pledges, assigns,
hypothecates, transfers and delivers to Bank all its right, title and interest,
whether now existing or hereafter acquired, in and to the Series A Drawing
Bonds and the Series A Company Bonds (collectively, the "Pledged Bonds") as the
same may from time to time be delivered to the Remarketing Agent or the Paying
Agent by the owners thereof, and hereby grants to Bank a first lien on, and
security interest in, its right, title and interest in and to the Pledged
Bonds, including without limitation all interest thereon and other proceeds
thereof, and any related due-bills, as collateral security for the prompt and
complete payment and performance by Pledgor of all obligations and indebtedness
to Bank under the Series A Reimbursement Agreement and the other Loan
Documents, whether such obligations and indebtedness (i) are now existing or
owing or are hereafter incurred or (ii) are absolute or contingent
(collectively, the "Obligations").
3. Interest on Series A Bonds. If, while this Agreement
is in effect, Pledgor shall become entitled to receive or shall receive any
interest payment in respect of the Pledged Bonds, Pledgor agrees to accept the
same as Bank's agent and to hold the same in trust on behalf of Bank and to
deliver the same forthwith to Bank. All interest payments in respect of the
Series A Drawing Bonds which are received by Bank shall be credited against the
obligation of Pledgor to pay interest to Bank set forth in Article 13 of Series
A Reimbursement Agreement.
4. Collateral. All property at any time pledged with
Bank hereunder (whether described herein or not) and all income therefrom and
proceeds thereof, are herein collectively sometimes called the "Collateral."
Bank shall not acquire a security interest hereunder in any property other than
the Pledged Bonds unless Company shall have afforded to Trustee, for the
benefit of the holders of the Series A Bonds, prior to or simultaneously with
the taking by Bank of such security, rights which shall, at the option of Bank,
be either senior to the rights of Bank or of equal priority with the rights of
Bank in connection with such security.
5. Release of Series A Drawing Bonds. If Pledgor
fulfills its reimbursement obligations with respect to the principal and
interest paid by Bank under the Series A Letter of Credit (and interest thereon
under the Series A Reimburse-
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<PAGE> 3
ment Agreement) in connection with the repurchase of any Series A Bond pursuant
to Section 401(g) or 401(h) of the Trust Indenture, or if Bank transfers any
Series A Drawing Bond held by Bank to any Person other than Pledgor in
consideration for payment of the principal amount of the Series A Drawing Bond
so purchased, then in either case Bank agrees to release any such Series A
Drawing Bond from the lien of this Agreement. All Series A Bonds so released
shall be delivered, without recourse, representation or warranty, express or
implied, to Pledgor or the purchaser, as applicable.
6. Rights of Bank. Bank shall not be liable for failure
to collect or realize upon the Obligations or any collateral security
(including, but not limited to, the Pledged Bonds) or guaranty therefor, or any
part thereof, or for any delay in so doing, nor shall Bank be under any
obligation to take any action whatsoever with regard thereto. If an Event of
Default has occurred and is continuing, Bank may thereafter, without notice
(except the notice specified in Section 7, below, of time and place of public
or private sale), exercise all rights, privileges or options pertaining to any
Pledged Bonds as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but Bank shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
7. Remedies. In the event that any portion of the
Obligations has been declared due and payable, 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
Pledgor 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 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 or any credit risk, with the
right to 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 Pledgor, which right or equity is hereby expressly waived or
released. Bank shall pay over
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<PAGE> 4
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 Bank
hereunder, including reasonable attorney's fees and legal expenses, and the
payment in whole or in part of the Obligations in such order as Bank may elect,
Pledgor remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and after the
payment by Bank of any other amount required by any provision of the law,
including, without limitation, Section 9-504(l)(c) of the Uniform Commercial
Code, need Bank account for the surplus, if any, to Pledgor. Pledgor agrees
that Bank need not give more than 10 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. No notification need be given to Pledgor 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, Bank shall have all the
rights and remedies of a secured party under the Uniform Commercial Code of the
State of California. Pledgor further agrees to waive and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the
Uniform Commercial Code and Pledgor shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all amounts to which Bank is entitled, and the fees of any attorneys
employed by Bank to collect such deficiency.
8. Representations, Warranties and Covenants of Pledgor.
Pledgor represents and warrants that: (a) on the date of delivery to Bank (or
the Trustee on Bank's behalf) of any Pledged Bonds described herein, neither
Issuer, the Remarketing Agent nor the Paying Agent will have any right, title
or interest in or to the Pledged Bonds; (b) it has, and on the date of delivery
to Bank (or the Trustee on Bank's behalf) of any Pledged Bonds will have, full
power, authority and legal right to pledge all of its right, title and interest
in and to the Pledged Bonds pursuant to this Agreement; (c) this Agreement has
been duly authorized, executed and delivered by Pledgor and constitutes a
legal, valid and binding obligation of Pledgor enforceable in accordance with
its terms; (d) no consent of any other party (including, without limitation,
stockholders or creditors of Pledgor) and no
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<PAGE> 5
consent, license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by Pledgor in
connection with the execution, delivery and performance of this Agreement; (e)
the execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, or of the certificate of incorporation or bylaws of Pledgor or of any
securities issued by Pledgor or any company under common ownership with
Pledgor, or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which Pledgor or any company under common
ownership with Pledgor is a party or which purports to be binding upon Pledgor
or any company under common ownership with Pledgor or upon any of their
respective assets and will not result in the creation or imposition of any
lien, charge or encumbrance on or security interest in any of the assets of
Pledgor or any company under common ownership, with Pledgor except as
contemplated by this Agreement; and (f) the pledge, assignment and delivery of
such Pledged Bonds pursuant to this Agreement will create a valid first lien on
and a first perfected security interest in, all right, title or interest of
Pledgor in or to such Pledged Bonds, 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 Pledgor which would include the
Pledged Bonds. Pledgor covenants and agrees that it will defend Bank's right,
title and security interest in and to the Pledged Bonds and the proceeds
thereof against the claims and demands of all persons whomsoever; and covenants
and agrees that it will have like title to and right to pledge any other
property at any time hereafter pledged to Bank as Collateral hereunder and will
likewise defend Bank's right thereto and security interest therein.
9. No Dispositions, Etc. Without the prior written
consent of Bank, Pledgor agrees that it will not sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Collateral, nor will it create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Collateral, or any interest therein, or
any proceeds thereof, except for the lien and security interest provided for by
this Agreement.
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<PAGE> 6
10. Sale of Collateral. (a) Pledgor recognizes that Bank
may be unable to effect a public sale of any or all of the Pledged Bonds by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws, but may be compelled to resort
to one or more private sales thereof to a restricted group of purchasers who
may be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable to the seller than if such sale
were a public sale and, notwithstanding such circumstances, agrees that such
private sale shall be deemed to have been made in a commercially reasonable
manner. Bank shall be under no obligation to delay a sale of any of the
Pledged Bonds for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under applicable Federal
securities laws, or under applicable state securities laws, even if the issuer
would agree to do so.
(b) Pledgor further agrees to do or cause to be done all
such other acts and things as may be necessary to make such sale or sales of
any portion or all of the Pledged Bonds valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such sale
or sales, all at Pledgor's expense. Pledgor further agrees that a breach of
any of the covenants contained in this Section 10 will cause irreparable injury
to Bank, that Bank has no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this Section
shall be specifically enforceable against Pledgor and Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants except for a defense that no Event of Default has occurred under
the Series A Reimbursement Agreement. Pledgor further acknowledges the
impossibility of ascertaining the amount of damages which would be suffered by
Bank by reason of a breach of any of such covenants and, consequently, agrees
that, if Bank shall sue for damages for breach, it shall pay, as liquidated
damages and not as a penalty, an amount equal to the par value plus accrued
interest on the Pledged Bonds on the date Bank shall demand compliance with
this Section 10(b). Upon such payment, Bank will release its interest in such
Pledged Bonds.
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<PAGE> 7
11. Limitation on Disposition. Notwithstanding the
rights and remedies given to Bank in Section 7 and otherwise herein to dispose
of Pledged Bonds, Pledgor consents that upon an Event of Default under the
Series A Reimbursement Agreement, Bank may tender any Pledged Bonds to the
Trustee for cancellation, and Pledgor agrees that such tender shall not
constitute a disposition of collateral for purposes of UCC Section 9-504, but
shall constitute a simple reduction in the contingent obligations of Pledgor to
Bank.
12. Further Assurances. Pledgor agrees that at any time
and from time to time upon the written request of Bank, Pledgor will execute
and deliver such further documents and do such further acts and things as Bank
may reasonably request in order to effect the purposes of this Agreement.
13. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
14. No Waiver; Cumulative Remedies. Bank shall not, by
any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder and no waiver shall be valid unless in writing,
signed by Bank, and then only to the extent therein set forth. A waiver by
Bank of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Bank would otherwise have on
any future occasion. No failure to exercise nor any delay in exercising on the
part of Bank, any right, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and may be exercised singly or concurrently, and
are not exclusive of any rights or remedies provided by law.
15. Waivers; Amendments; Applicable Law. None of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Bank. This
Agreement and all obligations of Pledgor hereunder shall be binding upon the
successors and assigns of Pledgor, and shall, together with the rights and
remedies of Bank hereunder, inure to the benefit of Bank and its respec-
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<PAGE> 8
tive successors and assigns. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be
duly executed as of the date first written above.
RADIATION SERILIZERS, INCORPORATED,
a California corporation
By /s/ Signature Unreadable
------------------------------
Its /s/ President
---------------------------
By /s/ Signature Unreadable
------------------------------
Its /s/ Secretary
--------------------------
-8-
<PAGE> 1
EXHIBIT 10.17
SERIES B PLEDGE AND SECURITY AGREEMENT
This Series B Pledge and Security Agreement (the "Agreement"),
dated as of November 1, 1985, is made by RADIATION STERILIZERS, INCORPORATED, a
California corporation ("Pledgor"), to WELLS FARGO BANK, N.A., a national
banking association ("Bank") pursuant to that certain Series B Reimbursement
Agreement (the "Series B Reimbursement Agreement") executed as of even date
herewith between Pledgor and Bank.
WHEREAS, the Trinity River Industrial Development Authority, a
non-profit industrial development corporation ("Issuer") has agreed with
Pledgor to issue its Trinity River Industrial Development Authority Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985B (the "Series B Bonds") pursuant to that
certain Trust Indenture dated as of even date herewith (the "Trust Indenture"),
between Issuer and Bank One Trust Company, N.A., a national banking association
(the "Trustee"), which Series B Bonds will be backed by Bank on an unsecured
basis; and
WHEREAS, the Trust Indenture provides for the purchase of
certain Series B Bonds and for their delivery to Bank, or its nominee, in
accordance with Sections 401(j) and 401(k) of the Trust Indenture (defined in
the Series B Reimbursement Agreement, and herein, as the "Series B Drawing
Bonds" and the "Series B Company Bonds"); and
WHEREAS, in connection with the issuance of the Series B
Bonds, Pledgor has requested that Bank issue the Series B Letter of Credit
described in the Series B Reimbursement Agreement (the "Series B Letter of
Credit"), which may be used, inter alia, to purchase some or all of the
outstanding Series B Drawing Bonds from their owners with the proceeds of "C
Drawings" under the Series B Letter of Credit; and
WHEREAS, it is a condition precedent to the obligations of
Bank to issue the Series B Letter of Credit that Pledgor shall have executed
and delivered this Agreement to Bank;
NOW, THEREFORE, in consideration of the premises and in order
to induce Bank to issue the Series B Letter of Credit and for other good and
valuable consideration, receipt of which is hereby acknowledged, Pledgor hereby
agrees with Bank as follows:
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<PAGE> 2
1. Defined Terms. Capitalized terms used and not
otherwise defined herein shall have the same meanings as set forth in the
Series B Reimbursement Agreement.
2. Pledge. Pledgor hereby pledges, assigns,
hypothecates, transfers and delivers to Bank all its right, title and interest,
whether now existing or hereafter acquired, in and to the Series B Drawing
Bonds and the Series B Company Bonds (collectively, the "Pledged Bonds") as the
same may from time to time be delivered to the Remarketing Agent or the Paying
Agent by the owners thereof, and hereby grants to Bank a first lien on, and
security interest in, its right, title and interest in and to the Pledged
Bonds, including without limitation all interest thereon and other proceeds
thereof, and any related due bills, as collateral security for the prompt and
complete payment and performance by Pledgor of all obligations and indebtedness
to Bank under the Series B Reimbursement Agreement and the other Loan
Documents, whether such obligations and indebtedness (i) are now existing or
owing or are hereafter incurred or (ii) are absolute or contingent
(collectively, the "Obligations").
3. Interest on Series B Bonds. If, while this Agreement
is in effect, Pledgor shall become entitled to receive or shall receive any
interest payment in respect of the Pledged Bonds, Pledgor agrees to accept the
same as Bank's agent and to hold the same in trust on behalf of Bank and to
deliver the same forthwith to Bank. All interest payments in respect of the
Series B Drawing Bonds which are received by Bank shall be credited against the
obligation of Pledgor to pay interest to Bank set forth in Article 13 of Series
B Reimbursement Agreement.
4. Collateral. All property at any time pledged with
Bank hereunder (whether described herein or not) and all income therefrom and
proceeds thereof, are herein collectively sometimes called the "Collateral."
Bank shall not acquire a security interest hereunder in any property other than
the Pledged Bonds unless Company shall have afforded to Trustee, for the
benefit of the holders of the Series B Bonds, prior to or simultaneously with
the taking by Bank of such security, rights which shall, at the option of Bank,
be either senior to the rights of Bank or of equal priority with the rights of
Bank in connection with such security.
5. Release of Series B Drawing Bonds. If Pledgor
fulfills its reimbursement obligations with respect to the principal and
interest paid by Bank under the Series B Letter of Credit (and interest thereon
under the Series B
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<PAGE> 3
Reimbursement Agreement) in connection with the repurchase of any Series B Bond
pursuant to Section 401(g) or 401(h) of the Trust Indenture, or if Bank
transfers any Series B Drawing Bond held by Bank to any Person other than
Pledgor in consideration for payment of the principal amount of the Series B
Drawing Bond so purchased, then in either case Bank agrees to release any such
Series B Drawing Bond from the lien of this Agreement. All Series B Bonds so
released shall be delivered, without recourse, representation or warranty,
express or implied, to Pledgor or the purchaser, as applicable.
6. Rights of Bank. Bank shall not be liable for failure
to collect or realize upon the Obligations or any collateral security
(including, but not limited to, the Pledged Bonds) or guaranty therefor, or any
part thereof, or for any delay in so doing, nor shall Bank be under any
obligation to take any action whatsoever with regard thereto. If an Event of
Default has occurred and is continuing, Bank may thereafter, without notice
(except the notice specified in Section 7, below, of time and place of public
or private sale), exercise all rights, privileges or options pertaining to any
Pledged Bonds as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but Bank shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
7. Remedies. In the event that any portion of the
Obligations has been declared due and payable, 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
Pledgor 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 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 or any credit risk, with the
right to 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
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<PAGE> 4
right or equity of redemption in Pledgor, which right or equity is hereby
expressly waived or released. Bank shall pay over 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 Bank hereunder, including
reasonable attorney's fees and legal expenses, and the payment in whole or in
part of the Obligations in such order as Bank may elect, Pledgor remaining
liable for any deficiency remaining unpaid after such application, and only
after so paying over such net proceeds and after the payment by Bank of any
other amount required by any provision of the law, including, without
limitation, Section 9- 504(l)(c) of the Uniform Commercial Code, need Bank
account for the surplus, if any, to Pledgor. Pledgor agrees that Bank need not
give more than 10 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. No
notification need be given to Pledgor if it has signed after default a
statement renoun- cing 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, Bank shall have all the rights and remedies
of a secured party under the Uniform Commercial Code of the State of
California. Pledgor further agrees to waive and agrees not to assert any
rights or privileges which it may acquire under Section 9-112 of the Uniform
Commercial Code and Pledgor shall be liable for the deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay all
amounts to which Bank is entitled, and the fees of any attorneys employed by
Bank to collect such deficiency.
8. Representations, Warranties and Covenants of Pledgor.
Pledgor represents and warrants that: (a) on the date of delivery to Bank (or
the Trustee on Bank's behalf) of any Pledged Bonds described herein, neither
Issuer, the Remarketing Agent nor the Paying Agent will have any right, title
or interest in or to the Pledged Bonds; (b) it has, and on the date of delivery
to Bank (or the Trustee on Bank's behalf) of any Pledged Bonds will have, full
power, authority and legal right to pledge all of its right, title and interest
in and to the Pledged Bonds pursuant to this Agreement; (c) this Agreement has
been duly authorized, executed and delivered by Pledgor and constitutes a
legal,
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<PAGE> 5
valid and binding obligation of Pledgor enforceable in accordance with its
terms; (d) no consent of any other party (including, without limitation,
stockholders or creditors of Pledgor) and no consent, license, permit, approval
or authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority, domestic or foreign, is
required to be obtained by Pledgor in connection with the execution, delivery
and performance of this Agreement; (e) the execution, delivery and performance
of this Agreement will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of the
certificate of incorporation or bylaws of Pledgor or of any securities issued
by Pledgor or any company under common ownership with Pledgor, or of any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which Pledgor or any company under common ownership with Pledgor
is a party or which purports to be binding upon Pledgor or any company under
common ownership with Pledgor or upon any of their respective assets and will
not result in the creation or imposition of any lien, charge or encumbrance on
or security interest in any of the assets of Pledgor or any company under
common ownership with Pledgor except as contemplated by this Agreement; and (f)
the pledge, assignment and delivery of such Pledged Bonds pursuant to this
Agreement will create a valid first lien on and a first perfected security
interest in, all right, title or interest of Pledgor in or to such Pledged
Bonds, 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 Pledgor which would include the Pledged Bonds. Pledgor
covenants and agrees that it will defend Bank's right, title and security
interest in and to the Pledged Bonds and the proceeds thereof against the
claims and demands of all persons whomsoever; and covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to Bank as Collateral hereunder and will likewise defend
Bank's right thereto and security interest therein.
9. No Dispositions, Etc. Without the prior written
consent of Bank, Pledgor agrees that it will not sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Collateral, nor will it create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Collateral,
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<PAGE> 6
or any interest therein, or any proceeds thereof, except for the lien and
security interest provided for by this Agreement.
10. Sale of Collateral. (a) Pledgor recognizes that Bank
may be unable to effect a public sale of any or all of the Pledged Bonds by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws, but may be compelled to resort
to one or more private sales thereof to a restricted group of purchasers who
may be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable to the seller than if such sale
were a public sale and, notwithstanding such circumstances, agrees that such
private sale shall be deemed to have been made in a commercially reasonable
manner. Bank shall be under no obligation to delay a sale of any of the
Pledged Bonds for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under applicable Federal
securities laws, or under applicable state securities laws, even if the issuer
would agree to do so.
(b) Pledgor further agrees to do or cause to be
done all such other acts and things as may be necessary to make such sale or
sales of any portion or all of the Pledged Bonds valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at Pledgor's expense. Pledgor further agrees that
a breach of any of the covenants contained in this Section 10 will cause
irreparable injury to Bank, that Bank has no adequate remedy at law in respect
of such breach and, as a consequence, agrees that each and every covenant
contained in this Section shall be specifically enforceable against Pledgor and
Pledgor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event
of Default has occurred under the Series B Reimbursement Agreement. Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Bank by reason of a breach of any of such covenants
and, consequently, agrees that, if Bank shall sue for damages for breach, it
shall pay, as liquidated damages and not as a penalty, an amount equal to the
par value plus accrued interest on the Pledged Bonds on the date Bank shall
demand compliance with this Section 10(b). Upon
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<PAGE> 7
such payment, Bank will release its interest in such Pledged Bonds.
11. Limitation on Disposition. Notwithstanding the
rights and remedies given to Bank in Section 7 and otherwise herein to dispose
of Pledged Bonds, Pledgor consents that upon an Event of Default under the
Series B Reimbursement Agreement, Bank may tender any Pledged Bonds to the
Trustee for cancellation, and Pledgor agrees that such tender shall not
constitute a disposition of collateral for purposes of UCC Section 9-504, but
shall constitute a simple reduction in the contingent obligations of Pledgor to
Bank.
12. Further Assurances. Pledgor agrees that at any time
and from time to time upon the written request of Bank, Pledgor will execute
and deliver such further documents and do such further acts and things as Bank
may reasonably request in order to effect the purposes of this Agreement.
13. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
14. No Waiver; Cumulative Remedies. Bank shall not, by
any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder and no waiver shall be valid unless in writing,
signed by Bank, and then only to the extent therein set forth. A waiver by
Bank of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Bank would otherwise have on
any future occasion. No failure to exercise nor any delay in exercising on the
part of Bank, any right, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and may be exercised singly or concurrently, and
are not exclusive of any rights or remedies provided by law.
15. Waivers; Amendments; Applicable Law. None of the
terms or provisions of this Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Bank. This
Agreement and all
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<PAGE> 8
obligations of Pledgor hereunder shall be binding upon the successors and
assigns of Pledgor, and shall, together with the rights and remedies of Bank
hereunder, inure to the benefit of Bank and its respective successors and
assigns. This Agreement shall be governed by, and be construed and interpreted
in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be
duly executed as of the date first written above.
RADIATION STERILIZERS, INCORPORATED,
a California corporation
By /s/ Signature Unreadable
--------------------------------
Its /s/ President
-----------------------------
By /s/ Signature Unreadable
--------------------------------
Its /s/ Secretary
----------------------------
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<PAGE> 1
EXHIBIT 10.18
GENERAL CONTINUING GUARANTY
This General Continuing Guaranty ("Guaranty"), dated as of
November 1, 1985, is executed by CHARLES KING & ASSOCIATES, a California
limited partnership ("Guarantor"), in favor of WELLS FARGO BANK, N.A., a
national banking association ("Bank"), in order to induce Bank to issue two
irrevocable standby letters of credit in the aggregate amount of $4,600,000.00
(the "Letters of Credit") in favor of Bank One Trust Company, N.A., a national
banking association ("Trustee"), pursuant to that certain Series A
Reimbursement Agreement (the "Series A Reimbursement Agreement") and that
certain Series B Reimbursement Agreement (the "Series B Reimbursement
Agreement"), both between Bank and Radiation Sterilizers, Incorporated, a
California corporation ("Company"), and both dated as of even date herewith
(collectively, the "Reimbursement Agreements"). Capitalized terms used and not
otherwise defined in this Guaranty shall have the same meanings as set forth
for them in the Series A Reimbursement Agreement.
1. Guaranty of Indebtedness. For valuable
consideration, Guarantor irrevocably and jointly, severally and unconditionally
guarantees and promises to pay to Bank, or order, on demand in lawful money of
the United States of America, any and all Indebtedness of Company to Bank
arising from or in connection with the Reimbursement Agreements or the other
"Loan Documents" (which latter term, as used throughout this Guaranty, shall
include both Loan Documents as defined in the Series A Reimbursement Agreement
and Loan Documents as defined in the Series B Reimbursement Agreement) or the
issuance by Bank of the Letters of Credit or any payments by Bank thereon. The
word "Indebtedness" is used herein in its most comprehensive sense and includes
(a) any and all existing and future obligations of Company to Bank under the
Reimbursement Agreements or the other Loan Documents and including any and all
other present and future advances, debts, obligations and liabilities of
Company heretofore, now, or hereafter made, incurred or created, whether
voluntary or involuntary and however arising from the transaction in which the
Reimbursement Agreements or the other Loan Documents were created, whether due
or not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether Company may be liable individually or jointly with
others, or whether recovery upon such indebtedness may be or hereafter become
barred by any statute of limitations, or whether such indebtedness may be or
hereafter become invalid or other- wise unenforceable; and (b) any and all
amendments, modifications, renewals and/or extensions of any of the foregoing,
including but not limited to amendments, modifications, renewals
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<PAGE> 2
or extensions which are evidenced by a new or additional instrument, document
or agreement or which change the rate of interest on any Indebtedness.
2. Continuing Nature of Guaranty. This is a continuing
guaranty relating to any indebtedness, including that arising under successive
and future transactions which shall either increase or continue the
Indebtedness or from time to time renew it after it has been satisfied,
3. Loan Documents. Guarantor has read, is familiar with
and approves the Reimbursement Agreements and the other Loan Documents.
4. Rights Independent. The obligations hereunder are
independent of the obligations of Company or any other guarantor, and a
separate action or actions may be brought and prosecuted against Guarantor
whether or not action is brought and prosecuted against Company or any other
guarantor and whether or not Company or any other guarantor is joined in any
such action or actions; and Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. The
liability of Guarantor hereunder shall be reinstated and revived, and the
rights of Bank shall continue, with respect to any amount at any time paid on
account of the Indebtedness guaranteed hereby, which shall thereafter be
required to be restored or returned by Bank upon the bankruptcy, insolvency or
reorganization of Company, or otherwise, all as though such amount had not been
paid.
5. Authority to Modify Obligations. To the extent
permitted under Section 4.4 of the Series A Reimbursement Agreement and Section
4.3 of the Series B Reimbursement Agreement, Guarantor authorizes Bank, without
notice or demand and without affecting its liability hereunder, from time to
time to: (a) renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Indebtedness or any part thereof,
including increase or decrease of the rate of interest thereon; (b) accept
partial payments on the Indebtedness; (c) accept new or additional documents,
instruments or agreements relative to the Indebtedness; (d) take and hold
security or additional guarantees for the payment of this Guaranty or the
Indebtedness, and amend, alter, exchange, substitute, transfer, enforce, waive,
subordinate, terminate, modify and release in any manner any such security or
guarantees; (e) apply such security and direct the order or manner of sale
thereof as Bank in its discretion may determine; (f) release or substitute any
one or more of any other guarantors; and (g) settle, release on terms satis-
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<PAGE> 3
factory to Bank or by operation of law or otherwise, compound, compromise,
collect or otherwise liquidate any Indebtedness and/or security therefor in any
manner, consent to the transfer of security and bid and purchase at any sale,
without affecting or impairing the obligations of Guarantor hereunder. Bank
may without notice assign this Guaranty in whole or in part.
6. Waiver of Defenses. Guarantor waives any right to
require Bank to: (a) proceed against Company or any other guarantor; (b)
proceed against or exhaust any security for the Indebtedness; (c) give notice
of the terms, time and place of any public or private sale of any real or
personal property security for the Indebtedness; or (d) pursue any other remedy
in Bank's power whatsoever. Guarantor waives any defense arising by reason of
any disability or other defense of Company, or by reason of the cessation from
any cause whatsoever of the liability of Company, or by reason of any act or
omission of Bank or others which directly or indirectly results in or aids the
discharge or release of Company or any Indebtedness or any security or guaranty
therefor by operation of law or otherwise. Until all indebtedness of Company
to Bank shall have been paid in full, Guarantor shall have no right of
subrogation, and Guarantor waives any right to enforce any remedy which Bank
now has or may hereafter have against Company or any other guarantor, and
waives any benefit of, and any right to participate in, any security now or
hereafter held by Bank. Guarantor waives all setoffs and counterclaims and all
pre-sentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty and of the existence, creation, or incurring of new or additional
Indebtedness.
7. Reliance. Guarantor acknowledges that Bank is
relying on this Guaranty and on the financial strength, solvency and business
reputation of Guarantor in issuing the Letters of Credit and executing the
Reimbursement Agreements and the other Loan Documents, and that Bank would be
unwilling to issue the Letters of Credit in the absence of this Guaranty.
8. Attorney's Fees. Guarantor agrees to pay a
reasonable attorney's fee and all other costs and expenses which may be
incurred by Bank in the enforcement of this Guaranty and in the collection of
the indebtedness of Company to Bank.
9. Representations and Warranties. Guarantor represents
and warrants to Bank that:
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<PAGE> 4
(a) Formation of Guarantor. Guarantor (i) is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of California, (ii) has all requisite power and authority to
conduct its business and to own and lease its properties, and (iii) is in good
standing in every jurisdiction in which the nature of business conducted by it
makes such qualification necessary or where failure to so qualify would have a
material adverse effect on its business or financial condition or its
performance of its obligations hereunder.
(b) Execution, Delivery and Performance of Guaranty.
(i) Guarantor has all requisite power and
authority to execute and deliver, and to perform all of its
obligations under, this Guaranty.
(ii) The execution and delivery by Guarantor of,
and the performance by Guarantor of all of its obligations
under, this Guaranty have been duly authorized by all
necessary action and do not and will not:
(1) require any consent or approval not
heretofore obtained of any Person having any interest
in Guarantor;
(2) violate any provision of, or require
any consent under, the partnership agreement,
statement of partnership or any other governing
document applicable to Guarantor;
(3) result in or require the creation or
imposition of any mortgage, deed of trust, pledge,
lien, security interest, claim, charge, right of
others, or other encumbrance of any nature (other
than under the Reimbursement Agreements or the other
Loan Documents) upon or with respect to any property
now owned or leased or hereafter acquired by
Guarantor;
(4) violate any provision of any law,
rule, regulation (including without limitation
Regulations U or X of the Board of Governors of the
Federal Reserve System), order, writ, judgment,
injunction, decree, determina-
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<PAGE> 5
tion or award presently in effect having
applicability to Guarantor; or
(5) result in a breach of or constitute
a default under, or cause or permit the acceleration
of any obligation owed under, any indenture or loan
or credit agreement or any other agreement, lease, or
instrument to which Guarantor is a party or by which
Guarantor or any of its property is bound or
affected.
(iii) At the time of execution of this Guaranty,
Guarantor is not in default in any respect that is materially
adverse to the interests of the holder of this Guaranty or
that would have any material adverse effect on the financial
condition of Guarantor or the conduct of its business under
any law, rule, regulation, order, writ, judgment, injunction,
decree, determination, award, indenture, agreement, lease or
instrument described in subsections (b) (ii)(4) or (5), above.
(iv) No authorization, consent, approval, order,
license, exemption from, or filing or registration or
qualification with, any court or governmental department,
public body, authority, commission, board, bureau, agency, or
instrumentality, is or will be required to authorize, or is
otherwise required in connection with the following:
(1) the execution and delivery by
Guarantor of, and the performance by Guarantor of all
of its obligations under, this Guaranty, or
(2) the creation of the liens, security
interests, or other charges or encumbrances created
by the deeds of trust or mortgages described in
subsections 4.2(d) and (e) of the Series A
Reimbursement Agreement (the "Guaranty Deeds of
Trust"), encumbering two parcels of real property
(and the improvements thereon) located in the States
of California and Illinois (the "Guaranty
Properties") and the Guaranty Security Agreement
described in subsection 4.2(h) of the Series A
Reimbursement Agreement (the "Guaranty Security
Agreement"), granting a security interest in certain
personal pro-
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<PAGE> 6
perty relating to the Guaranty Properties (the "Guaranty
Personal Property").
(v) This Guaranty, when executed and delivered,
will constitute the legal, valid and binding obligation of
Guarantor, enforceable against it in accordance with its
terms.
(c) Financial Statements. Guarantor has furnished to
Bank the balance sheet and statement of profit and loss for Guarantor
for the year ending December 31, 1984, and for the period ending
September 30, 1985, and such statements fairly present the financial
position of Guarantor as of the date thereof, in conformity with
generally accepted accounting principles.
(d) No Material Adverse Change. There has been no
material adverse change in the condition, financial or otherwise, of
Guarantor since the date of the financial statements described in
subsection (c), above; since that date, Guarantor has not entered into
any material transaction not disclosed in such financial statements or
otherwise disclosed in writing to Bank; Guarantor has no material
liability or contingent liability not reflected or disclosed in such
financial statements or writings; and there are no material mortgages,
deeds of trust, pledges, liens, security interests, claims, charges,
rights of others or encumbrances for borrowed money (including liens
or retained security titles of conditional vendors) of any nature
whatsoever on any property of Guarantor, and no material indebtedness
of Guarantor, not disclosed in such financial statements or otherwise
disclosed to Bank in writing.
(e) Tax Liability. Guarantor has filed all tax returns
(federal, state and local) required to be filed and has paid all taxes shown
thereon to be due and all property taxes due, including interest and penalties,
if any; provided, however, that Guarantor shall not be required to pay and
discharge any such tax so long as the legality thereof shall be promptly and
actively contested in good faith and by appropriate proceedings. Guarantor has
established and is maintaining adequate reserves for tax liabilities, if any,
in accordance with generally accepted accounting principles (including any tax
liabilities contested pursuant to this subsection (e)).
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<PAGE> 7
(f) Compliance with Laws. Guarantor is and shall remain
in compliance in all material respects with all laws, regulations and
requirements applicable to it and has obtained all authorizations,
consents, approvals, orders, licenses, exemptions from, and has
accomplished all filings or registrations or qualifications with, any
court or governmental department, public body, authority, commission,
board, bureau, agency or instrumentality, that is necessary for the
transaction of its business.
(g) Litigation. There are no material actions, suits or
proceedings pending or threatened against or affecting Guarantor or
any property of Guarantor before any court or governmental department,
public body, authority, commission, board, bureau, agency or
instrumentality, except as expressly disclosed to Bank in writing by
Guarantor prior to the execution of this Guaranty.
10. Affirmative Covenants. For so long as any obligation
of Company or Guarantor in connection with the Reimbursement Agreements or any
other Loan Document remains outstanding, Guarantor shall, unless Bank otherwise
consents in writing:
10.1 Protection of Liens on Properties. Maintain the liens
created by the Guaranty Deeds of Trust upon the Guaranty Properties and take
such actions and execute and deliver to Bank such instruments and documents as
Bank may reasonably require from time to time in connection therewith.
10.2 Protection of Security Interest in Personal Property.
Maintain the lien created by the Guaranty Security Agreement upon the Guaranty
Personal Property, and take such actions and execute and deliver to Bank such
instruments and document as Bank may reasonably require from time to time in
connection therewith, including without limitation any supplemental security
agreements, form UCC-1 or UCC-2 financing statements or other instruments and
documents extending or perfecting the security interests of Bank and Trustee in
and to the Guaranty Personal Property as it may exist from time to time.
10.3 Payment of Taxes, Assessments and Charges. Pay all
taxes, assessments, charges and levies imposed by any public authority or
utility company which are or may become a lien affecting either Guaranty
Property or any part thereof, including without limitation assessments on any
appurtenant water stock; provided, however, that Guarantor shall not be required
to pay and discharge any such tax,
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<PAGE> 8
assessment, charge or levy so long as (a) the legality thereof shall be
promptly and actively contested in good faith and by appropriate proceedings
and (b) Guarantor maintains reserves adequate to pay any liabilities contested
pursuant to this Section 10.3.
10.4 Insurance. Provide or cause to be provided the
following policies of insurance in connection with the Guaranty Properties:
(a) builder's risk-all risk insurance covering
100% of the replacement cost of all improvements on each Guaranty
Property in the event of fire, lightning, windstorm, vandalism,
malicious mischief and such other hazards, casualties and contingencies
as are normally and usually covered by extended coverage policies in
effect in the localities where each Guaranty Property is situated
(including insurance against loss by flood if either Guaranty Property
is now or hereafter located in an area designated as being subject to
the danger of flood);
(b) public liability insurance in an amount
deemed necessary from time to time by Bank, but in no event less than
$3,000,000 for a "single occurrence";
(c) property damage insurance in an amount deemed
necessary from time to time by Bank, but in no event less than
$1,000,000;
(d) such business interruption insurance with
respect to business uses of each Guaranty Property as Bank may require
(including insurance against rental or income loss during a period of
repair or restoration of damage for a period of at least one year);
and
(e) such other policies of insurance as Bank may
reasonably require from time to time.
All such insurance coverages (i) shall be maintained as long as any obligation
of Company or Guarantor in connection with this Agreement, the Reimbursement
Agreements, the Letters of Credit or any of the other Loan Documents remains
outstanding at Company's and/or Guarantor's sole cost and expense, (ii) shall
be with insurers of recognized responsibility which are approved in writing by
Bank, (iii) shall be in form and substance satisfactory to Bank, (iv) shall
include a "lender's loss payable endorsement" (form 438 BFU) in form and
substance satisfactory to Bank, assuring Bank that all
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<PAGE> 9
Certificates of insurance for all of the above insurance policies, showing the
same to be in full force and effect, shall be delivered to Bank upon demand by
Bank therefor at any time while any obligation of Company or Guarantor in
connection with the Series A Bonds or the Series B Bonds (as defined in the
Series B Reimbursement Agreement), this Agreement, the Reimbursement
Agreements, the Letters of Credit or any of the other Loan Documents remains
outstanding. All policies insuring against damage to the improvements on
either Guarantor Property shall contain an agreed value clause sufficient to
eliminate any risk of co-insurance.
10.4.1 Delivery of Proceeds to Bank. In the event that,
notwithstanding the "lender's loss payable endorsement" requirement of this
Section 10.4, the proceeds of any insurance policy described herein are paid to
Guarantor, Guarantor shall deliver such proceeds to Bank immediately upon
receipt.
10.4.2 Application of Casualty Insurance Proceeds. Any
proceeds collected (the "Proceeds") under any fire or other physical damage
insurance policy described in this Section 10.4 shall be disbursed to Guarantor
as provided in subsection 10.4.2.1, but only upon fulfillment of each of the
following conditions within 60 days following the occurrence of the damage for
which the Proceeds are collected:
(a) Guarantor shall demonstrate to Bank's reasonable
satisfaction that the Proceeds (together with amounts deposited by
Guarantor pursuant to subsection (b)) will be adequate to accomplish
the repair and reconstruction of the improvements of the Guaranty
Property that has been damaged or destroyed, and to restore the fair
market value of the Guaranty Property to at least the value it had
immediately prior to sustaining the damage, Such demonstration shall
include delivery to Bank of (i) plans and specifications reasonably
satisfactory to Bank and (ii) a construction contract in form and
content, and with a contractor, reasonably satisfactory to Bank.
(b) To the extent that the Proceeds are insufficient to
accomplish the repairs and reconstruction required above, Guarantor
shall deliver to Bank funds (the "Shortfall Funds") in the amount of
such shortfall, which funds shall be assigned to Bank and Trustee as
security for the Secured Obligations and shall be held and disbursed
in the same manner as the Proceeds.
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<PAGE> 10
(c) Guarantor shall execute such documents, in form and
content satisfactory to Bank, as Bank requires to evidence and secure
Guarantor's obligation to use all amounts disbursed for the prompt
repair and reconstruction of the Guaranty Property in accordance with
the plans and specifications approved by Bank.
(d) There shall have occurred no Event of Default which
remains uncured or event which, with the giving of notice or the
passage of time or both, would constitute an Event of Default, and
Bank shall have received a certificate to that effect signed by
Guarantor and a Designated Representative.
10.4.2.1 Any Proceeds and Shortfall Funds to
be disbursed to Guarantor shall be held by Bank in a noninterest- bearing
account and disbursed in accordance with Bank's customary construction lending
practices. Any amounts remaining undisbursed following completion of (and full
payment for) such repairs and reconstruction shall be returned to Guarantor up
to the amount of any Shortfall Funds deposited by Guarantor, and any other
amounts remaining shall, as Bank chooses in its sole and absolute discretion,
either (a) be paid to Guarantor or (b) applied by Bank against (and/or held by
bank as security for) the Secured Obligations, as Bank and Trustee's interests
in the Guaranty Property then appear.
10.4.2.2 In the event Guarantor fails to
fulfill the conditions set forth in subsections 10.4.2(a) through 10.4.2(d)
within 60 days following the date on which the damage occurs, the Proceeds
shall be applied by Bank against (and/or held by Bank as security for) the
Secured Obligations, as Bank and Trustee's interests in the Guaranty Property
then appear.
10.4.2.3 In the event Bank applies any
Proceeds against (and/or Bank holds any Proceeds as security for) any portion
of the Secured Obligations and the fair market value of the Guaranty Property
(together with all other collateral then held by Bank and Trustee for such
obligations) immediately thereafter is, in Bank's reasonable judgment,
inadequate to secure all remaining obligations to Bank and Trustee secured by
the applicable Guaranty Deed of Trust, Bank may thereupon require that
Guarantor, within 30 days of Bank's written demand, provide additional cash
collateral in the minimum amount necessary to adequately secure the shortfall.
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<PAGE> 11
10.5 Governmental Approvals. Deliver to Bank, from time
to time at Bank's request, evidence in form and substance satisfactory to Bank
that Guarantor has complied with all applicable laws, ordinances, regulations
and other requirements relating thereto.
10.6 Compliance with Requirements. Comply with all
conditions, covenants, restrictions, easements, reservations, rights, rights of
way and all applicable laws, ordinances, regulations, use permits, occupancy
permits, building permits and other requirements, including without limitation
those affecting or relating to either Guaranty Property, the construction of
any improvements thereon or Guarantor's operations thereon.
10.7 Continued Existence. Maintain its existence, and
continue to be a limited partnership in good standing in the State of
California. In connection with the covenants given pursuant to this Section
10.7, Guarantor agrees that it will not dissolve or otherwise dispose of all or
substantially all of its assets.
10.8 Books and Records. Maintain full and complete books
of account and other records reflecting the results of its operations (in
conjunction with any other ventures as well as specifically with respect to the
Guaranty Properties), including without limitation all contributions of equity
investment capital, and provide to Bank, promptly after request by Bank
therefor, such financial statements and other information pertaining to
Guarantor, and the assets and operations of Guarantor, as Bank may from time to
time request.
10.9 Maintenance and Furnishing of Properties. Maintain
the Guaranty Properties, and each portion thereof (including without limitation
equipment, machinery and fixed assets) fully furnished and in good condition
and repair; and not permit any waste or damage with respect thereto.
10.10 Annual Operating Statements. Deliver to Bank the
following;
(a) Promptly and in any event within ninety (90)
days after the end of each fiscal year of Guarantor, balance sheets
and statements of income for Guarantor's operations for such fiscal
year, accompanied with all supporting schedules and certificates of
Guarantor's managing general partner that the statements are true and
correct.
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(b) Upon request, copies of all such regular or
periodic financial statements or financial reports as Guarantor shall
send to its partners,
(c) Upon request, copies of all such regular or
periodic reports which are available for public inspection which
Guarantor may be required to file with any federal or state
department, bureau, commission or agency, including without limitation
tax returns.
10.11 Quarterly Operating Statements. Deliver to Bank,
upon Bank's request, within thirty (30) days after the end of each calendar
quarter, an income statement reflecting the operation of the Guaranty
Properties during such quarter. Such quarterly statement shall contain such
information as Bank may reasonably require.
10.12 List of Guaranty Personal Property. Deliver to Bank,
from time to time, within thirty days of Bank's request therefor, a list of all
of the Guaranty Personal Property then in existence,
10.13 Notice of Litigation. Give notice to Bank, within
twenty (20) days of Guarantor's learning thereof, of any of the following:
(a) any litigation materially affecting
or relating to either Guaranty Property;
(b) any dispute between Guarantor and
any municipal or other governmental authority relating to either
Guaranty Property, the adverse determination of which might materially
affect that Guaranty Property;
(c) any threat or commencement of proceedings
in condemnation or eminent domain relating to either Guaranty
Property,
10.14 Security of Properties. Take such measures to
protect the physical security of each Guaranty Property and the Guaranty
Personal Property as Bank may reasonably deem advisable.
10.15 Copies of Leases. Upon request by Bank, give written
notice to Bank of the entry by Guarantor into any lease or other agreement
pursuant to which any Person is given any right to occupy or use any portion of
either Guaranty Property, together with true and correct copies of each such
lease or other agreement.
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11. Negative Covenants. For so long as any obligation of
Company or Guarantor in connection with the Reimbursement Agreements or any of
the other Loan Documents remains outstanding, Guarantor shall not, unless Bank
otherwise consents in writing:
11.1 Liens on Guaranty Property. Create or cause or
suffer to become effective any mortgage, deed of trust or like lien or
encumbrance affecting either Guaranty Property or any portion of the same,
except for the lien of non-delinquent real property taxes and those matters
listed in Exhibit "D" to the Series A Reimbursement Agreement.
11.2 Liens on Guaranty Personal Property. Install in, or
otherwise use in connection with, any Guaranty Property any Guaranty Personal
Property under any security agreements or similar agreements however
denominated, other than the Permitted Liens (as defined in the Guaranty
Security Agreement), whereby the right is reserved or accrues to anyone to
remove or repossess any such times or whereby any Person other than Bank or
Trustee reserves or acquires a lien upon such items. In no event shall any
financing of personal property be permitted pursuant to this Section 11.2 if
such financing will result in a "determination of taxability" (as that term is
defined in the Bond Documents) as to interest on the Series A Bonds and the
Series B Bonds.
11.3 Transfers of Guaranty Property or Obligations.
Assign or delegate any obligations under this Guaranty or any other Loan
Document or sell, assign, convey, lease as a whole or otherwise transfer any
Guaranty Property, any of the Guaranty Personal Property, or any interest
therein (except for dispositions of personal property permitted pursuant to
Section 11.4, below, occupancy agreements permitted pursuant to Section 11.5,
below, and junior encumbrances permitted pursuant to Sections 11.1 and 11.2,
above), without (a) obtaining the express prior written consent of Bank, which
consent may be granted or withheld in its sole discretion; or (b) providing
Bank and Trustee with substitute collateral acceptable to Bank. In connection
with the restrictions contained in this Section 11.3, Guarantor acknowledges
that Bank has entered into the transactions contemplated by the Reimbursement
Agreements in reliance upon the financial strength, creditworthiness,
reputation and management expertise of Guarantor and would not have entered
into such transaction but for such reliance.
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11.4 Removal of Personal Property. Remove or permit the
removal from any Guaranty Property of any items of Guaranty Personal Property.
Guarantor shall keep detailed records of each such removal, substitution, sale
or other disposition and make such records available to Bank upon its request
from instruments and documents as Bank may require in connection with the
attachment and perfection of the security interests of Bank and Trustee in and
to any new or replacement items of Guaranty Property on or about any Guaranty
Property.
11.5 Leases. Enter into any leases, management agreements
or other agreements pursuant to which any Person is given any right to occupy,
manage or operate either Guaranty Property or any portion thereof or space
therein other than (a) leases or agreements which are expressly terminable at
will by Guarantor and its successors and assigns on not more than thirty (30)
days' notice, and (b) other leases and agreements, subject to the express prior
written approval of Bank (which approval shall not be unreasonably withheld).
11.6 Easements. Grant, convey or cause to be effective
any easement, license, right of way, or title restriction or limitation
affecting either Guaranty Property or any portion of the same without the
express prior written consent of Bank (which consent shall not be unreasonably
withheld); provided, however, that Guarantor may grant routine easements which
are reasonably necessary and required by governmental or quasigovernmental
entities or utility companies for the furnishing of utilities or services
without the requirement of such consent by Bank, so long as such easements
shall not materially weaken, diminish or impair the security of either Guaranty
Deed of Trust or interfere with the intended use of either Guaranty Property.
12. Continuing Financial Reports. Guarantor shall
deliver to Bank, promptly and in any event within thirty (30) days of filing
the same with the Internal Revenue Service, a copy of each federal income tax
return filed while this Guaranty remains in effect. In addition, Guarantor
shall deliver to Bank, on or before July 1 during each year in which this
Guaranty remains in effect, a balance sheet and statement of profit and loss
for Guarantor prepared by a certified public accountant which fairly presents
the financial position of Guarantor as of the end of its most recent fiscal
year.
13. Condition of Company. Guarantor represents and
warrants to Bank that: (a) this Guaranty is executed at Company's request; (b)
Guarantor has established adequate
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means of obtaining from Company on a continuing basis financial and other
information pertaining to Company's business; and (c) Guarantor is now and will
be completely familiar with the business, operation and condition of Company
and its assets. Guarantor hereby waives and relinquishes any duty on the part
of Bank to disclose to Guarantor any matter, fact or thing relating to the
business, operation or condition of Company and its assets now known or
hereafter known by Bank during the life of this Guaranty. With respect to any
indebtedness of Company to Bank, Bank need not inquire into the powers of
Company or the officers or agents acting or purporting to act on its behalf,
and any indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed hereunder.
14. Deeds of Trust on Real Property. In the event that
all or a portion of the Indebtedness of Company to Bank is or may be secured by
deeds of trust covering certain interests in real property, Guarantor
authorizes Bank, at its sole option, without notice or demand and without
affecting the liability of Guarantor under this Guaranty, to foreclose any and
all of the deeds of trust by nonjudicial sale. Guarantor expressly waives any
defense to the recovery by Bank against Guarantor of any deficiency after a
nonjudicial sale, even though such a sale may preclude Guarantor from obtaining
reimbursement from Company. Guarantor waives all suretyship defenses it would
otherwise have under Texas law or under the laws of any other state. Guarantor
waives any right to receive notice of any judicial or nonjudicial sale or
foreclosure of any real property subject to any of the deeds of trust securing
the Indebtedness, and Guarantor's failure to receive any such notice shall not
impair or affect Guarantor's liability hereunder.
15. Effect of Waivers. Guarantor warrants and agrees
that each of the waivers set forth in this Guaranty is made with Guarantor's
full knowledge of their significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law.
16. Notices. All notices, requests, demands, directions
and other communications provided for in this Guaranty must be in writing and
must be mailed, telegraphed, delivered or sent by Telex or cable to the
appropriate party at its address as follows:
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If to Guarantor:
Charles King & Associates
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
Attention: Charles W. King, Jr.
with a copy to:
Gerald Wright, Esq.
General Counsel
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
If to Bank:
Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: George Huxtable
Vice President
with a copy to:
Sheppard, Mullin, Richter & Hampton
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Robert E. Williams
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 16. Any
notice, request, demand, direction or other communication given by telegram,
Telex or cable must be confirmed within 48 hours by letter mailed or delivered
to the appropriate party at its respective address. If any notice, request,
demand, direction or other communication is given by mail it will be effective
upon the earlier of (a) 96 hours after deposit in the U.S. Mail, certified or
registered mail, return receipt requested postage prepaid or (b) actual receipt,
as indicated by the return receipt; if given by telegraph or cable, when
delivered to the telegraph company with charges prepaid; if given by Telex, when
sent; or if given by personal delivery, when delivered.
17. Successors and Assigns. This Guaranty shall bind the
successors and assigns of Guarantor, and shall inure to Bank's successors and
assigns.
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18. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the State of Texas.
19. Amendments. Neither this Guaranty nor any provision
hereof may be amended, modified, waived, discharged or terminated except by an
instrument in writing duly signed by or on behalf of Bank and Guarantor.
20. Severability. In case any right of Bank herein shall
be held to be invalid, illegal or unenforceable, such invalidity, illegality
and/or unenforceability shall not affect any other right granted hereby.
21. Miscellaneous. All words used herein in the singular
shall be deemed to have been used in the plural, and all words used herein in
the plural shall be deemed to have been used in the singular, where the context
and construction so require. The section headings in this Guaranty are for
convenience of reference only and shall not limit or otherwise affect the
provisions of this Guaranty. This Guaranty may be executed in any number of
counterparts.
22. Rights Cumulative. All of Bank's rights hereunder
are cumulative and not exclusive.
23. Accounting Terms. All accounting terms not
specifically defined in this Guaranty shall be construed in conformity with,
and all financial data required to be submitted by this Guaranty shall be
prepared in conformity with, generally accepted accounting principles applied
on a consistent basis.
24. Actions. In the event that either Bank or Guarantor
shall bring an action against the other to interpret or enforce the terms or
provisions of this Guaranty, the Reimbursement Agreements or any of the other
Loan Documents, the prevailing party in such action shall be entitled to
recover its attorneys' fees and costs as awarded by a court of competent
jurisdiction, whether or not such action is prosecuted to final judgment.
25. Condemnation.
Guarantor hereby assigns to Bank and Trustee, for their equal
and ratable benefit, as security for all obligations secured by the Guaranty
Deeds of Trust from time to time, all compensation, awards and other amounts
payable to Guarantor in connection with any taking of any portion of
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any of the Guaranty Properties for public use, and any proceeds of any related
settlement regardless of whether eminent domain proceedings are instituted in
connection therewith (collectively, "Compensation"). Guarantor shall deliver
all Compensation to Bank immediately upon receipt. In the event Bank chooses,
in its sole and absolute discretion, to waive the Event of Default described in
Section 11.1(g) of the Series A Reimbursement Agreement, any Compensation
received by Bank shall be (i) disbursed to Guarantor for repairs and
reconstruction and/or (ii) paid to Guarantor and/or (iii) applied by Bank
and/or Trustee against Guarantor's obligations (or held as security therefor),
in accordance with the rights, procedures and other provisions set forth in
Section 10.3, above, for the application of casualty insurance proceeds; and
the requirements set forth in Sections 10.3.2(b), and 10.3.2.3, respectively,
with regard to Guarantor's deposit of Shortfall Funds and additional collateral
shall also apply.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
"Guarantor":
CHARLES KING & ASSOCIATES, a
California limited partnership
By /s/ CHARLES W. KING JR
------------------------------
CHARLES W. KING JR
------------------------------
Printed Name and Title
GENERAL PARTNER
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<PAGE> 1
EXHIBIT 10.19
COMPANY SECURITY AGREEMENT
This Company Security Agreement ("Security Agreement"), dated
as of November 1, 1985, is executed by RADIATION STERILIZERS, INCORPORATED, a
California corporation ("Debtor"), in favor of and for the equal and ratable
benefit of WELLS FARGO BANK, N.A., a national banking association ("Bank") and
BANK ONE TRUST COMPANY, N.A., a national banking association ("Bond Trustee"),
as assignee of all right, title and interest of the Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), in and to that certain Series 1985A Loan Agreement (the "Series A
Loan Agreement"), dated as of the date hereof between Debtor and Issuer, for the
benefit of the holders of the Trinity River Industrial Development Authority
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985A (the "Series A Bonds") issued
pursuant to that certain Trust Indenture (the "Trust Indenture") dated as of the
date hereof, between Issuer and Bond Trustee. Bank and Bond Trustee are
collectively referred to herein as "Secured Party." This Security Agreement is
executed in conjunction with that certain Series A Reimbursement Agreement of
even date herewith between Debtor and Bank (the "Series A Reimbursement
Agreement") and the Series A Loan Agreement, both of which agreements relate to
the Properties (as defined below). Capitalized terms used and not defined herein
shall have the meanings set forth for them in the Series A Reimbursement
Agreement.
1. Assignment. For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor hereby grants and assigns
to Secured Party, as security for the Obligations (as defined below), all of
Debtor's right, title and interest, whether now existing or hereafter arising,
in and to the personal property described in Schedule "l," attached hereto and
incorporated herein by this reference (collectively, the "Collateral").
2. Obligations Secured. This Security Agreement secures the
prompt payment and performance of each of the following obligations
(collectively, the "Obligations"):
2.1 All obligations of Debtor to Bank under the Loan
Documents, including without limitation (a) Debtor's reimbursement obligations
in connection with that certain Series A Letter of Credit (the "Series A Letter
of Credit") in the amount of $2,198,596.00, being issued by Bank
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pursuant to the Series A Reimbursement Agreement, (b) all of the interest
accruing from time to time as set forth in the Series A Reimbursement Agreement,
and (c) all obligations contained in this Security Agreement.
2.2 The payment by RSI to Bond Trustee of the principal of,
and accrued interest on, the Series A Bonds.
2.3 All other obligations of RSI to Bank or Bond Trustee
that are evidenced by a document, executed at Bank's request, which states that
it is secured by this Security Agreement.
2.4 All renewals, extensions, supplements and other
modifications of any of the foregoing, including without limitation
modifications that are evidenced by new or additional documents or that change
the rate of interest on any Obligation.
The word "obligation" is used herein in its most comprehensive sense and
includes all present and future indebtedness, liabilities, undertakings,
covenants and conditions, whether voluntary or involuntary, absolute or
contingent, liquidated or unliquidated, determined or undetermined, earned or
unearned, and due or not due.
3. Representations and Warranties. Debtor represents and
warrants that:
(a) Debtor has, or upon acquisition will have, and at all
times will maintain, good and marketable title to all of the Collateral, free
and clear of any security interest, mortgage, adverse claim, pledge, lien,
charge, default, defense, condition precedent or encumbrance, except as created
in favor of Secured Party or as permitted by Secured Party in writing; and
(b) Debtor has not previously assigned or encumbered
Debtor's interest in, or rights to, any of the Collateral, and no financing
statement (or other notice of any lien, security interest or encumbrance)
covering any of the Collateral is on file with any governmental official or
authority or has been delivered to any other person or entity except as
permitted by Secured Party in writing; and
(c) all information given to Secured Party by Debtor, or at
Debtor's request or instruction, with respect
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to the Collateral is accurate and contains no material misrepresentation or
omission; and
(d) that portion of the Collateral consisting of
instruments, contracts, chattel paper, documents or governmental licenses,
permits or approvals, is genuine and complies with all applicable laws
concerning form, content and manner of preparation and execution; and
(e) all parties to any of the Collateral consisting of
instruments, contracts, chattel paper, documents or governmental licenses,
permits or approvals, are bound as they appear to be under such Collateral; and
(f) Debtor's principal place of business is located at 3000
Sand Hill Road, Building 4, Suite 245, Menlo Park, California 94025.
4. Use. None of the Collateral shall be used for any unlawful
purpose, for hire or in any way which would limit or void any insurance required
to be maintained under this Security Agreement.
5. Collateral Protection. Debtor, at its expense, shall
warrant and defend title to the Collateral against the claims of all third
parties, and shall from time to time execute and deliver all further instruments
and contracts, and take all further action, that is necessary or appropriate (or
that Secured Party from time to time reason-ably deems necessary or appropriate)
to: (i) create, perfect, protect and maintain the security interests
contemplated by this Security Agreement; (ii) facilitate the performance of this
Security Agreement; (iii) secure or facilitate Secured Party's exercise of its
rights and remedies; (iv) evaluate the worth, condition and amount or extent of
the Collateral; (v) evaluate Debtor's performance of this Security Agreement;
(vi) determine the nature and source of prior or subsequent security interests,
mortgages, adverse claims, pledges, liens, charges or encumbrances on or
affecting any of the Collateral; and, (vii) maintain, preserve and protect the
Collateral and keep the Collateral in good and salable condition in accordance
with standards and practices generally adhered to by users or owners of personal
property similar in nature to the Collateral.
6. Perfection of Security Interest. Debtor covenants and
agrees that Debtor shall do and perform all acts and things necessary or
appropriate (or which Secured Party reasonably deems necessary or appropriate)
to perfect, or to give
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any necessary or desirable notice of, Secured Party's security interest in the
Collateral. Debtor further covenants and agrees to obtain appropriate consents
from all persons and entities whose consents may be necessary or desirable to
vest Secured Party with a valid and enforceable security interest in the
Collateral. Prior to delivering any Collateral to any bailee under any
circumstance whatsoever, Debtor shall notify Secured Party of such intention.
7. Notice of Action. Debtor covenants and agrees to notify
Secured Party immediately of any legal process levied against any of the
Collateral or any other event which affects the value, use or possession of the
Collateral or any of the rights of Debtor or Secured Party in relation to any of
the Collateral.
8. Miscellaneous Rights of Secured Party. At any time without
notice and at the expense of Debtor, Secured Party may, but shall not be
obligated to, do any or all of the following:
(a) notify any person obligated on any of the Collateral of
Secured Party's rights under this Security Agreement and enforce any or all such
rights;
(b) insure, protect, defend and preserve the Collateral or
any rights or interests of Secured Party with regard to any of the Collateral,
including without limitation the filing and prosecution of any third party claim
or other legal action or proceeding which Secured Party deems necessary to
protect any of Secured Party's rights, interests or priorities with respect to
any of the Collateral;
(c) inspect the Collateral during normal business hours;
and
(d) endorse, collect and receive any right to payment of
money owing to Debtor under any account, chattel paper, contract, deposit
account, document, general intangible, instrument or proceeds thereof which is
part of the Collateral.
Secured Party shall have no duty or obligation whatsoever to make or give any
presentments, demands for performance, notices of nonperformance, notices of
protest or notices of dishonor in connection with any of the Collateral or to
take any other action to preserve, protect or defend any right, title or
interest of Debtor or Secured Party with respect to any of the Collateral or to
preserve any value or utility of any of the Collateral.
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9. Collateral Designation Statement. Secured Party may at any
time, and from time to time, require Debtor to deliver to Secured Party
statements certified by Debtor describing with particularity all Collateral then
subject to this Security Agreement; the precise location of such Collateral and
any other security interests, mortgages, claims, pledges, liens, charges or
encumbrances to which any of such Collateral may be subject.
10. Power of Attorney. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact (such agency being coupled with an
interest) and as such attorney in-fact Secured Party may, without the obligation
to do so, in Secured Party's name or in the name of Debtor, prepare, execute and
file or record financing statements, continuation statements, applications for
registration and like papers necessary or desirable to create, perfect or
preserve any of Secured Party's security interests and rights in or to any of
the Collateral, and take after the occurrence of an "Event of Default" (as
hereinafter defined), any other action specified in Subsections 14(b)(i) -----
through (viii) inclusive hereof; provided that Secured Party as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Secured Party.
11. Handling of Collateral. Except as otherwise provided in
this Security Agreement or any document evidencing obligations secured hereby,
as amended from time to time, so long as no default exists under this Security
Agreement and no default or event of default exists under any document
evidencing obligations secured hereby, Debtor may, subject to Secured Party's
rights under Section 8 hereof, possess, use, move, transfer or - dispose of any
of the Collateral in the ordinary course of Debtor's business and in accordance
with the Series A Reimbursement Agreement.
12. Miscellaneous Undertakings. Debtor, at its sole cost and
expense, agrees to:
(a) pay, discharge and perform all obligations secured by
this Security Agreement when due; and
(b) pay all expenses, including without limitation
attorneys' fees and court costs, incurred by Secured Party in connection with
the creation, perfection, preservation, or enforcement of any of the security
interests granted under this Security Agreement, the defense of the Collateral
or the exercise by Secured Party of the rights, powers or
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remedies granted to Secured Party under this Security Agreement, by law or
otherwise.
13. Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Security Agreement:
(a) the occurrence of any "Event of Default" described in
the Series A Reimbursement Agreement; or
(b) any default of any Obligation; or
(c) Debtor's failure to promptly pay any amount owing to
Bond Trustee which relates to the principal amount of, or the accrued interest
on, any Series A Bond; or
(d) any default of any other obligation now or hereafter
secured by this Security Agreement.
14. Secured Party's Rights on Default. Upon the occurrence of
an Event of Default under this Security Agreement and so long as such Event of
Default continues, all amounts and obligations secured by this Security
Agreement shall be immediately due and payable and, in addition to exercising
any other rights and remedies granted to Secured Party under the Loan Documents,
the applicable Uniform Commercial Code, as amended or recodified from time to
time (the UCC), or otherwise by law:
(a) Secured Party may do any or all of the following:
(i) enter upon any of the Properties (or other place
where any of the Collateral may be located) without prior notice
to Debtor and take possession of, assemble, sell, dispose,
collect and move any or all of the Collateral, or render such
Collateral unusable, and store any of the Collateral at locations
acceptable to Secured Party, at Debtor's expense;
(ii) upon written notice, require Debtor to assemble
any or all of the Collateral and make it available at a mutually
convenient place designated by Secured Party so as to permit
Secured Party to take possession of, move, store, sell or dispose
of such Collateral;
(iii) sell, assign and deliver (at Debtor's place of
business or any other place permitted by law)
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all or any part of the Collateral at public or private sales, for
cash or on credit, to a wholesaler, retailer or user of each type
of Collateral or at public auction, each of which Debtor agrees
constitute commercially reasonable methods of disposing of the
Collateral since differences in the sales prices generally
realized in the different kinds of sales are ordinarily offset by
the difference in the speed, costs and credit risks of such
sales;
(iv) bid and become purchaser at any public sale or
auction of the Collateral; and
(v) apply any Collateral or other security available
for satisfaction of obligations secured by this Security
Agreement to the payment of: expenses incurred by Secured Party
in connection with any use, sale, transfer or delivery of such
Collateral; any other costs, charges, reasonable attorneys' fees,
or other expenses incurred by Secured Party in connection with
the Loan Documents or the Bond Documents, and any other
obligations of Debtor to Secured Party that are secured by this
Security Agreement, in such order, priority and manner as Secured
Party in its sole discretion may determine; and
(b) Secured Party may, either in Secured Party's name or as
Debtor's attorney-in-fact, for the account of Debtor and at Debtor's expense, do
any or all of the following:
(i) operate, consume, sell or dispose of the Collateral
as Secured Party deems appropriate for the purpose of performing
any or all of the obligations secured by this Security Agreement;
(ii) enter into any extension, reorganization, deposit,
merger or consolidation, settlement or compromise or any other
agreement relating to or affecting any of the Collateral, and in
connection therewith Secured Party may (A) sell, transfer or
dispose of, release, discharge or deposit or surrender control of
any of the Collateral; (B) accept other property in exchange for
any of the Collateral; (C) take such action as Secured Party may
deem proper; and (D) apply any money or property received in
exchange for any of the Collateral to any of the obligations
secured by this Security Agreement;
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(iii) make any compromise or settlement which Secured
Party may deem desirable or proper with respect to any of the
Collateral or any controversies or disputes relating to the
Collateral, and release any of the Collateral and any persons
liable on any of the Collateral;
(iv) endorse, deliver evidences of title, receive,
enforce and collect by legal action or otherwise all indebtedness
and obligations now or hereafter owing in connection with or on
account of any or all of the Collateral;
(v) perform any of the obligations secured by this
Security Agreement;
(vi) enforce, adjust and receive payment or performance
in connection with any insurance claims, claims for breach of
warranty, claims under any letters of credit, instruments,
documents, chattel paper or contracts and similar matters
concerning any of the Collateral;
(vii) exercise any and all other rights, powers and
remedies which Debtor would have, but for this Security
Agreement, in connection with the Collateral; and
(viii) sell or dispose of all or part of the Collateral
consisting of instruments that are "securities" under applicable
law at one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to
acquire any such securities for their own account, for investment
and not with a view to distribution or resale thereof. Debtor
acknowledges that any such private sales may be at prices and on
terms less favorable to Secured Party than those of public sales,
and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner and that Secured Party
has no obligation to delay sale of any such securities to permit
the issuer thereof to register such securities for public sale
under applicable law.
15. No Responsibility. Debtor acknowledges that Secured Party
has no responsibility for, and does not assume any of, Debtor's obligations or
duties under any agreement, instrument, general intangible or other contract or
obligation which is part of the Collateral or any obligation relating to the
acquisition, preparation or holding of the Collateral.
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16. Notices. All notices which any party hereto may desire or
may be required to give to any other party hereto shall be given in accordance
with Section 12.11 of the Series A Reimbursement Agreement.
17. Attorneys' Fees. Debtor shall be liable for and agrees to
pay the expenses incurred by Secured Party in enforcing this Security Agreement
against Debtor, including without limitation attorneys' fees. If Debtor shall
become subject to any case or proceeding under the Bankruptcy Reform Act, as
amended or recodified from time to time, Debtor shall pay to Secured Party on
demand all attorneys' fees, costs and expenses which Secured Party may incur to
obtain relief from any provision of the Act which delays or otherwise impairs
Secured Party's exercise of any right or remedy under this Security Agreement or
any of the Loan Documents or to obtain adequate protection or assurance for any
of Secured Party's rights in connection with the Collateral.
18. Heirs, Successors and Assigns. Subject to the limitations
contained elsewhere in this Security Agreement and the Loan Documents, the terms
of this Security Agreement shall be binding upon and inure to the benefit of the
heirs, successors and assigns of Debtor and Secured Party. There shall be no
third party beneficiaries of this Security Agreement.
19. Time. Time is of the essence of each term of this Security
Agreement.
20. Headings. All headings appearing in this Security
Agreement are for convenience only and shall be disregarded in construing this
Security Agreement.
21. Choice of Law. This Security Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, except
that the laws of the state in which certain is located shall govern the
creation, perfection, and enforcement of the liens created hereby in connection
with such personal property.
22. Miscellaneous. The rights and remedies of Secured Party
under this Security Agreement are cumulative and no exercise of any right or
remedy shall preclude the exercise of any other right or remedy or the later
exercise of the same right or remedy. Waivers and approvals under this Security
Agreement shall be in writing and, unless otherwise expressly stated, waivers
and approvals shall apply only to the specific circumstance addressed.
Notwithstanding any
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<PAGE> 10
other provision of this Security Agreement, Secured Party shall not be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Debtor to Secured Party unless Secured Party shall make an express written
election of said remedy under UCC Section 9505, as amended or recodified from
time to time, or other applicable law. Secured Party may designate an agent or
independent contractor to exercise any of Secured Party's rights hereunder. Any
married person who executes this Security Agreement as Debtor hereby expressly
agrees that recourse may be had against his or her separate property for all his
or her indebtedness to Secured Party that is secured by this Security Agreement.
23. Integration. This Security Agreement contains or expressly
incorporates by reference the entire and exclusive agreement of the parties with
respect to the matters contemplated herein and supersedes all prior negotiations
related thereto, and this Security Agreement shall not be amended or modified in
any way except by a written instrument which is executed by all parties hereto.
24. Exercise of Rights and Remedies. Until the first to occur
of (a) the expiration of the Series A Letter of Credit or (b) a material default
by Bank of its obligations under the Series A Letter of Credit, the following
shall apply:
24.1 Bond Trustee shall not have the right to exercise or
implement any right or remedy provided to Secured Party hereunder without first
obtaining Bank's written consent thereto.
24.2 In the event of a disagreement between Bond Trustee
and Bank as to the exercise or implementation
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<PAGE> 11
of any such right or remedy, the decision of Bank shall control.
In witness whereof, Debtor has caused this Security Agreement
to be duly executed as of the date first written above.
"Debtor":
RADIATION STERILIZERS, INCORPORATED
a California corporation
By /s/ Alan Chin, President
---------------------------
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<PAGE> 12
SCHEDULE 1
(a) All present and future accounts, general intangibles,
chattel paper, contract rights, deposit accounts, instruments and documents, now
or hereafter relating or arising with respect to the real properties described
in Exhibits "A-1" through "A-3" attached hereto and incorporated herein by this
reference (the "Properties") and/or the use thereof or any improvements thereto,
including without limitation: (i) all rights to the payment of money, including
escrow proceeds arising out of the sale or other disposition of all or any
portion of any of the Properties; (ii) all plans, specifications and drawings
relating to the development of any of the Properties and/or any construction
thereon; (iii) all use permits, occupancy permits, construction and building
permits, and all other permits and approvals required by any governmental or
quasi-governmental authority in connection with the development, construction,
use, occupancy or operation of any of the Properties, (iv) any and all
agreements relating to the development, construction, use, occupancy and/or
operation of any of the Properties between Debtor and any contractor,
subcontractor, project manager or supervisor, architect, engineer, laborer or
supplier of materials; (v) all lease or rental agreements; (vi) all names under
which any of the Properties are now or hereafter known and all rights to carry
on business under any such names or any variant thereof; (vii) all trademarks
relating to any of the Properties and/or the development, construction, use,
occupancy or operation thereof; (viii) all goodwill relating to any of the
Properties and/or the development, construction, use, occupancy or operation
thereof; (ix) all insurance proceeds and condemnation awards arising out of or
incidental to the ownership, development, construction, use, occupancy or
operation of any of the Properties; (x) all reserves, deferred payments,
deposits, refunds, cost savings, bonds, insurance policies and payments of any
kind relating to any of the Properties; (xi) all loan commitments issued to
Debtor in connection with any sale or financing of any of the Properties; (xii)
all shares of stock or other evidence of ownership of any part of or interest in
any of the Properties that are owned by Debtor in common with others; and (xiii)
all supplements, modifications and amendments to the foregoing,
(b) All accounts receivable arising out of income-producing
operations on any of the Properties.
(c) All fixtures located upon or within any of the Properties
or now or hereafter attached to, installed in, or used or intended for use in
connection with any of
Schedule "l"
Page 1 of 2
<PAGE> 13
the Properties, including without limitation any and all partitions, generators,
screens, awnings, boilers, furnaces, pipes, plumbing, elevators, cleaning, call
and sprinkler systems, fire extinguishing apparatus and equipment, water tanks,
heating, ventilating, air conditioning and air cooling equipment, and gas and
electric machinery and equipment.
(d) All present and future accessories, additions,
attachments, replacements and substitutions of or to any or all of the
foregoing.
(e) All proceeds and products of any or all of the foregoing,
including without limitation all monies, deposit accounts, insurance proceeds
and other tangible or intangible property received upon a sale or other
disposition of any of the foregoing.
Schedule "1"
Page 2 of 2
<PAGE> 14
EXHIBIT "A-l"
LEGAL DESCRIPTION
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Atlanta, County of DeKalb, State of Georgia, and described as follows:
BEGINNING at an iron pin found on the easterly right-of-way line of
Mellon Court (having a 60-foot right-of-way), which iron pin is located
1,460.80 feet northerly, as measured along the easterly right-of-way
line of Mellon Court, from the corner formed by the intersection of the
easterly right-of-way line of Mellon Court with the northerly
right-of-way line of Dividend Drive (having a 60-foot right-of-way);
running thence north 00 degrees 01 minute 10 seconds west along the
easterly right-of-way line of Mellon Court, a distance of 95.04 feet to
an iron pin set; running thence northeasterly, northerly and
northwesterly along the southeasterly, easterly and northeasterly
right-of-way line of the terminus of the cul-de-sac of Mellon Court, an
arc distance of 114.90 feet to an iron pin set (said arc having a
radius of 60.00 feet and being subtended by a chord line having a
bearing of north 05 degrees 09 minutes 38 seconds east and a chord
length of 98.13 feet); thence leaving the northeasterly right-of-way
line of the terminus of the cul-de-sac of Mellon Court and running
north 57 degrees 04 minutes 55 seconds east, a distance of 41.09 feet
to an iron pin set; running thence north 89 degrees 49 minutes 55
seconds east, `a distance of 265.00 feet to an iron pin set; running
thence south 00 degrees 43 minutes 00 seconds west, a distance of
215.00 feet to an iron pin located on the northerly line of property
now or formerly owned by Activation, Inc.; running thence south 89
degrees 49 minutes 55 seconds west along the northerly line of said
Activation, Inc. Property, a distance of 305.60 feet to the iron pin
found on the easterly right-of-way line of Mellon Court, which iron pin
marks the point of beginning; and being a tract of land containing
1.452 acres according to a plat of survey prepared for Radiation
Sterilizers, Inc. by Tri County Land Surveying and Boggus & Associates
Engineers, and certified to by A. A. Katterhenry, Georgia Registered
Land Surveyor No. 1692, dated October 7, 1983 and last revised October
31, 1983.
EXHIBIT "A-1"
Page 1 of 1
<PAGE> 15
EXHIBIT "A-2"
LEGAL DESCRIPTION
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the City of Fort Worth, County of Tarrant, State of Texas, and
described as follows:
Lot 10-R-1-A, Block 1, Wichita-20 Business Park, an Addition to the
City of Fort Worth, Tarrant County, Texas, according to plat recorded
in Volume 388-183 Page 44, Deed Records of Tarrant County, Texas.
Exhibit "A-2"
Page 1 of 1
<PAGE> 16
EXHIBIT "A-3"
LEGAL DESCRIPTION
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the Township of Orange, County of Delaware, State of Ohio, and
described as follows:
Being Lot Number Six Hundred Ninety-Six (696), in GREEN MEADOWS
CORPORATE PARK, PHASE I, as the same is numbered and delineated upon
the recorded plat thereof, of record in Plat Book 16, page 107,
Recorder's Office, Delaware County, Ohio.
EXHIBIT "A-3"
Page 1 of 1
<PAGE> 1
EXHIBIT 10.20
GUARANTY SECURITY AGREEMENT
This Guaranty Security Agreement ("Security Agreement"), dated
as of November 1, 1985, is executed by CHARLES KING & ASSOCIATES, a California
limited partnership ("Debtor"), in favor of and for the equal and ratable
benefit of WELLS FARGO BANK, N.A., a national banking association ("Bank") and
BANK ONE TRUST COMPANY, N.A., a national banking association ("Bond Trustee"),
as assignee of all right, title and interest of the Trinity River Industrial
Development Authority, a non-profit industrial development corporation
("Issuer"), in and to that certain Series 1985A Loan Agreement (the "Series A
Loan Agreement") dated as of the date hereof between Radiation Sterilizers,
Incorporated, a California corporation ("RSI") and Issuer, for the benefit of
the holders of the Trinity River Industrial Development Authority Variable Rate
Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985A (the "Series A Bonds") issued pursuant to
that certain Trust Indenture (the "Trust Indenture") dated as of the date
hereof, between Issuer and Bond Trustee. Bank and Bond Trustee are
collectively referred to herein as "Secured Party." This Security Agreement is
executed in conjunction with that certain Series A Reimbursement Agreement of
even date herewith between RSI and Bank (the "Series A Reimbursement
Agreement") and the Series A Loan Agreement, both of which agreements relate to
the Properties (as defined below). Debtor, as guarantor, has executed a
General Continuing Guaranty in favor of Bank dated as of even date herewith,
pursuant to which Debtor has guaranteed all of the obligations of RSI arising
from or in connection with the Series A Letter of Credit (as defined below) or
the Series A Reimbursement Agreement. Capitalized terms used and not defined
herein shall have the meanings set forth for them in the Series A Reimbursement
Agreement,
1. Assignment. For valuable consideration, the receipt
anf sufficiency of which are hereby acknowledged, Debtor hereby grants and
assigns to Secured Party, as security for the Obligations (as defined below),
all of Debtor's right, title and interest, whether now existing or hereafter
arising, in and to the personal property described in Schedule "1," attached
hereto and incorporated herein by this reference (collectively, the
"Collateral").
2. Obligations Secured. This Security Agreement secures
the prompt payment and performance of each of the following obligations
(collectively, the "Obligations"):
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<PAGE> 2
2.1 All obligations of RSI to Bank under the Loan
Documents, including without limitation (a) RSI's reimbursement obligations in
connection with that certain Series A Letter of Credit (the "Series A Letter of
Credit") in the amount of $2,198,596.00, being issued by Bank pursuant to the
Series A Reimbursement Agreement, (b) all of the interest accruing from time to
time as set forth in the Series A Reimbursement Agreement, and (c) all
obligations contained in this Security Agreement.
2.2 The payment by RSI to Bond Trustee of the
principal of, and accrued interest on, the Series A Bonds.
2.3 All other obligations of RSI to Bank or Bond
Trustee that are evidenced by a document, executed at Bank's request, which
states that it is secured by this Security Agreement.
2.4 All renewals, extensions, supplements and
other modifications of any of the foregoing, including without limitation
modifications that are evidenced by new or additional documents or that change
the rate of interest on any Obligation.
The word "obligation" is used herein in its most comprehensive sense and
includes all present and future indebtedness, liabilities, undertakings,
covenants and conditions, whether voluntary or involuntary, absolute or
contingent, liquidated or unliquidated, determined or undetermined, earned or
unearned, and due or not due.
3. Representations and Warranties. Debtor represents
and warrants that:
(a) Debtor has, or upon acquisition will have, and at
all times will maintain, good and marketable title to all of the Collateral,
free and clear of any security interest, mortgage, adverse claim, pledge, lien,
charge, default, defense, condition precedent or encumbrance, except as created
in favor of Secured Party or as permitted by Secured Party in writing; and
(b) Debtor has not previously assigned or
encumbered Debtor's interest in, or rights to, any of the Collateral, and no
financing statement (or other notice of any lien, security interest or
encumbrance) covering any of the Collateral is on file with any governmental
official or
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<PAGE> 3
authority or has been delivered to any other person or entity except as
permitted by Secured Party in writing; and
(c) all information given to Secured Party by
Debtor, or at Debtor's request or instruction, with respect to the Collateral
is accurate and contains no material misrepresentation or omission; and
(d) that portion of the Collateral consisting of
instruments, contracts, chattel paper, documents or governmental licenses,
permits or approvals, is genuine and complies with all applicable laws
concerning form, content and manner of preparation and execution; and
(e) all parties to any of the Collateral
consisting of instruments, contracts, chattel paper, documents or governmental
licenses, permits or approvals, are bound as they appear to be under such
Collateral; and
(f) Debtor's principal place of business is
located at 3000 Sand Hill Road, Building 4, Suite 245, Menlo Park, California
94025.
4. Use. None of the Collateral shall be used for any
unlawful purpose, for hire or in any way which would limit or void any
insurance required to be maintained under this Security Agreement.
5. Collateral Protection. Debtor, at its expense, shall
warrant and defend title to the Collateral against the claims of all third
parties, and shall from time to time execute and deliver all further
instruments and contracts, and take all further action, that is necessary or
appropriate (or that Secured Party from time to time reasonably deems necessary
or appropriate) to: (i) create, perfect, protect and maintain the security
interests contemplated by this Security Agreement; (ii) facilitate the
performance of this Security Agreement; (iii) secure or facilitate Secured
Party's exercise of its rights and remedies; (iv) evaluate the worth, condition
and amount or extent of the Collateral; (v) evaluate Debtor's performance of
this Security Agreement; (vi) determine the nature and source of prior or
subsequent security interests, mortgages, adverse claims, pledges, liens,
charges or encumbrances on or affecting any of the Collateral; and, (vii)
maintain, preserve and protect the Collateral and keep the Collateral in good
and salable condition in accordance with standards and practices generally
adhered to by users or owners of personal property similar in nature to the
Collateral.
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<PAGE> 4
6. Perfection of Security Interest. Debtor covenants
and agrees that Debtor shall do and perform all acts and things necessary or
appropriate (or which Secured Party reasonably deems necessary or appropriate)
to perfect, or to give any necessary or desirable notice of, Secured Party's
security interest in the Collateral. Debtor further covenants and agrees to
obtain appropriate consents from all persons and entities whose consents may be
necessary or desirable to vest Secured Party with a valid and enforceable
security interest in the Collateral. Prior to delivering any Collateral to any
bailee under any circumstance whatsoever, Debtor shall notify Secured Party of
such intention.
7. Notice of Action. Debtor covenants and agrees to
notify Secured Party immediately of any legal process levied against any of the
Collateral or any other event which affects the value, use or possession of the
Collateral or any of the rights of Debtor or Secured Party in relation to any
of the Collateral.
8. Miscellaneous Rights of Secured Party. At any time
without notice and at the expense of Debtor, Secured Party may, but shall not
be obligated to, do any or all of the following:
(a) notify any person obligated on any of the
Collateral of Secured Party's rights under this Security Agreement and enforce
any or all such rights;
(b) insure, protect, defend and preserve the
Collateral or any rights or interests of Secured Party with regard to any of
the Collateral, including without limitation the filing and prosecution of any
third party claim or other legal action or proceeding which Secured Party deems
necessary to protect any of Secured Party's rights, interests or priorities
with respect to any of the Collateral;
(c) inspect the Collateral during normal business
hours; and
(d) endorse, collect and receive any right to
payment of money owing to Debtor under any account, chattel paper, contract,
deposit account, document, general intangible, instrument or proceeds thereof
which is part of the Collateral.
Secured Party shall have no duty or obligation whatsoever to make or give any
presentments, demands for performance, notices of nonperformance, notices of
protest or notices of dishonor in connection with any of the Collateral or to
take
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<PAGE> 5
any other action to preserve, protect or defend any right, title or interest of
Debtor or Secured Party with respect to any of the Collateral or to preserve
any value or utility of any of the Collateral.
9. Collateral Designation Statement. Secured Party may
at any time, and from time to time, require Debtor to deliver to Secured Party
statements certified by Debtor describing with particularity all Collateral
then subject to this Security Agreement; the precise location of such
Collateral and any other security interests, mortgages, claims, pledges, liens,
charges or encumbrances to which any of such Collateral may be subject.
10. Power of Attorney. Debtor hereby irrevocably
appoints Secured Party as Debtor's attorney-in-fact (such agency being coupled
with an interest) and as such attorney in-fact Secured Party may, without the
obligation to do so, in Secured Party's name or in the name of Debtor, prepare,
execute and file or record financing statements, continuation statements,
applications for registration and like papers necessary or desirable to create,
perfect or preserve any of Secured Party's security interests and rights in or
to any of the Collateral, and take after the occurrence of an "Event of
Default" (as hereinafter defined), any other action specified in Subsections
14(b) (i) through (viii) inclusive hereof; provided that Secured Party as such
attorney-in-fact shall only be accountable for such funds as are actually
received by Secured Party.
11. Handling of Collateral. Except as otherwise provided
in this Security Agreement or any document evidencing obligations secured
hereby, as amended from time to time, so long as no default exists under this
Security Agreement and no default or event of default exists under any document
evidencing obligations secured hereby, Debtor may, subject to Secured Party's
rights under Section 8 hereof, possess, use, move, transfer or dispose of any
of the Collateral in the ordinary course of Debtor's business and in accordance
with the Series A Reimbursement Agreement.
12. Miscellaneous Undertakings. Debtor, at its sole cost
and expense, agrees to:
(a) pay, discharge and perform all obligations
secured by this Security Agreement when due; and
(b) pay all expenses, including without
limitation attorneys' fees and court costs, incurred by Secured
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<PAGE> 6
Party in connection with the creation, perfection, preservation, or enforcement
of any of the security interests granted under this Security Agreement, the
defense of the Collateral or the exercise by Secured Party of the rights,
powers or remedies granted to Secured Party under this Security Agreement, by
law or otherwise.
13. Default. The occurrence of any of the following
events shall constitute an "Event of Default" under this Security Agreement:
(a) the occurrence of any "Event of Default"
described in the Series A Reimbursement Agreement; or
(b) any default of any Obligation; or
(c) Debtor's failure to promptly pay any amount
owing to Bond Trustee which relates to the principal amount of, or the accrued
interest on, any Series A Bond; or
(d) any default of any other obligation now or
hereafter secured by this Security Agreement.
14. Secured Party's Rights on Default. Upon the
occurrence of an Event of Default under this Security Agreement and so long as
such Event of Default continues, all amounts and obligations secured by this
Security Agreement shall be immediately due and payable and, in addition to
exercising any other rights and remedies granted to Secured Party under the
Loan Documents, the applicable Uniform Commercial Code, as amended or
recodified from time to time (the "UCC"), or otherwise by law:
(a) Secured Party may do any or all of the
following:
(i) enter upon any of the Properties (or
other place where any of the Collateral may be
located) without prior notice to Debtor and take
possession of, assemble, sell, dispose, collect and
move any or all of the Collateral, or render such
Collateral unusable, and store any of the Collateral
at locations acceptable to Secured Party, at Debtor's
expense;
(ii) upon written notice, require Debtor
to assemble any or all of the Collateral and make it
available at a mutually convenient place designated
by
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[WELLS FARGO - RSI TEXAS:
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<PAGE> 7
Secured Party so as to permit Secured Party to take
possession of, move, store, sell or dispose of such
Collateral;
(iii) sell, assign and deliver (at
Debtor's place of business or any other place
permitted by law) all or any part of the Collateral
at public or private sales, for cash or on credit, to
a wholesaler, retailer or user of each type of
Collateral or at public auction, each of which Debtor
agrees constitute commercially reasonable methods of
disposing of the Collateral since differences in the
sales prices generally realized in the different
kinds of sales are ordinarily offset by the
difference in the speed, costs and credit risks of
such sales;
(iv) bid and become purchaser at any
public sale or auction of the Collateral; and
(v) apply any Collateral or other
security available for satisfaction of obligations
secured by this Security Agreement to the payment of:
expenses incurred by Secured Party in connection with
any use, sale, transfer or delivery of such
Collateral; any other costs, charges, reasonable
attorneys' fees, or other expenses incurred by
Secured Party in connection with the Loan Documents
or the Bond Documents, and any other obligations of
Debtor to Secured Party that are secured by this
Security Agreement, in such order, priority and
manner as Secured Party in its sole discretion may
determine; and
(b) Secured Party may, either in Secured Party's name or
as Debtor's attorney-in-fact, for the account of Debtor and at
Debtor's expense, do any or all of the following:
(i) operate, consume, sell or dispose of
the Collateral as Secured Party deems appropriate for
the purpose of performing any or all of the
obligations secured by this Security Agreement;
(ii) enter into any extension,
reorganization, deposit, merger or consolidation,
settlement or compromise or any other agreement
relating to or affecting any of the Collateral, and
in connection therewith Secured Party may (A) sell,
transfer or dispose of, release, discharge or deposit
or surrender control of any of the Collateral; (B)
accept other property in exchange for any of the
Collateral; (C) take such action
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<PAGE> 8
as Secured Party may deem proper; and (D) apply any
money or property received in exchange for any of the
Collateral to any of the obligations secured by this
Security Agreement;
(iii) make any compromise or settlement
which Secured Party may deem desirable or proper with
respect to any of the Collateral or any controversies
or disputes relating to the Collateral, and release
any of the Collateral and any persons liable on any
of the Collateral;
(iv) endorse, deliver evidences of title,
receive, enforce and collect by legal action or
otherwise all indebtedness and obligations now or
hereafter owing in connection with or on account of
any or all of the Collateral;
(v) perform any of the obligations
secured by this Security Agreement;
(vi) enforce, adjust and receive payment
or performance in connection with any insurance
claims, claims for breach of warranty, claims under
any letters of credit, instruments, documents,
chattel paper or contracts and similar matters
concerning any of the Collateral;
(vii) exercise any and all other rights,
powers and remedies which Debtor would have, but for
this Security Agreement, in connection with the
Collateral; and
(viii) sell or dispose of all or part of the
Collateral consisting of instruments that are
"securities" under applicable law at one or more
private sales to a restricted group of purchasers who
will be obligated to agree, among other things, to
acquire any such securities for their own account,
for investment and not with a view to distribution or
resale thereof. Debtor acknowledges that any such
private sales may be at prices and on terms less
favorable to Secured Party than those of public
sales, and agrees that such private sales shall be
deemed to have been made in a commercially reasonable
manner and that Secured Party has no obligation to
delay sale of any such securities to permit the
issuer thereof to register such securities for public
sale under applicable law.
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<PAGE> 9
15. No Responsibility. Debtor acknowledges that Secured
Party has no responsibility for, and does not assume any of, Debtor's
obligations or duties under any agreement, instrument, general intangible or
other contract or obligation which is part of the Collateral or any obligation
relating to the acquisition, preparation or holding of the Collateral.
16. Notices. All notices which any party hereto may
desire or may be required to give to any other party hereto shall be given in
accordance with Section 12.11 of the Series A Reimbursement Agreement.
17. Attorneys' Fees. Debtor shall be liable for and
agrees to pay the expenses incurred by Secured Party in enforcing this Security
Agreement against Debtor, including without limitation attorneys' fees. If
Debtor shall become subject to any case or proceeding under the Bankruptcy
Reform Act, as amended or recodified from time to time, Debtor shall pay to
Secured Party on demand all attorneys' fees, costs and expenses which Secured
Party may incur to obtain relief from any provision of the Act which delays or
otherwise impairs Secured Party's exercise of any right or remedy under this
Security Agreement or any of the Loan Documents or to obtain adequate
protection or assurance for any of Secured Party's rights in connection with
the Collateral.
18. Heirs, Successors and Assigns. Subject to the
limitations contained elsewhere in this Security Agreement and the Loan
Documents, the terms of this Security Agreement shall be binding upon and inure
to the benefit of the heirs, successors and assigns of Debtor and Secured
Party. There shall be no third party beneficiaries of this Security Agreement.
19. Time. Time is of the essence of each term of this
Security Agreement.
20. Headings. All headings appearing in this Security
Agreement are for convenience only and shall be disregarded in construing this
Security Agreement.
21. Choice of Law. This Security Agreement shall be
governed by, and construed in accordance with, the laws of the State of Texas,
except that the laws of the state in which certain personal property is located
shall govern the creation, perfection, and enforcement of the liens created
hereby in connection with such personal property.
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[WELLS FARGO - RSI TEXAS:
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<PAGE> 10
22. Miscellaneous. The rights and remedies of Secured
Party under this Security Agreement are cumulative and no exercise of any right
or remedy shall preclude the exercise of any other right or remedy or the later
exercise of the same right or remedy. Waivers and approvals under this
Security Agreement shall be in writing and, unless otherwise expressly stated,
waivers and approvals shall apply only to the specific circumstance addressed.
Notwithstanding any other provision of this Security Agreement, Secured Party
shall not be deemed to have accepted any property other than cash in
satisfaction of any obligation of Debtor to Secured Party unless Secured Party
shall make an express written election of said remedy under UCC Section 9505,
as amended or recodified from time to time, or other applicable law. Secured
Party may designate an agent or independent contractor to exercise any of
Secured Party's rights hereunder. Any married person who executes this
Security Agreement as Debtor hereby expressly agrees that recourse may be had
against his or her separate property for all his or her indebtedness to Secured
Party that is secured by this Security Agreement.
23. Integration. This Security Agreement contains or
expressly incorporates by reference the entire and exclusive agreement of the
parties with respect to the matters contemplated herein and supersedes all
prior negotiations related thereto, and this Security Agreement shall not be
amended or modified in any way except by a written instrument which is executed
by all parties hereto.
24. Exercise of Rights and Remedies. Until the first to
occur of (a) the expiration of the Series A Letter of Credit or (b) a material
default by Bank of its obligations under the Series A Letter of Credit, the
following shall apply:
24.1 Bond Trustee shall not have the right to
exercise or implement any right or remedy provided to Secured Party hereunder
without first obtaining Bank's written consent thereto.
24.2 In the event of a disagreement between Bond
Trustee and Bank as to the exercise or implementation
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[WELLS FARGO - RSI TEXAS:
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<PAGE> 11
of any such right or remedy, the decision of Bank shall control.
25. Suretyship Waivers. Debtor hereby expressly waives
diligence, demand, presentment, protest and notice of every kind and nature
whatsoever, consents to the taking by Secured Party of any type of additional
security for the obligations secured hereby, or the alteration or release in
any manner of any security now or hereafter held in connection with any
obligation now or hereafter held in connection with any obligation now or
hereafter secured by this Security Agreement, and consents that Secured Party
and RSI may deal with each other in connection with said obligations, or
otherwise, or alter any contracts now or hereafter existing between them, in
any manner whatsoever, all without in any way altering the liability of Debtor
hereunder, or affecting the security of this Security Agreement. If any
default should be made in the payment of any obligation secured hereby, or in
the terms and conditions of any security held therefor, Secured Party is
expressly granted the right, subject to the terms and conditions of Paragraph
24, above, to proceed in the enforcement of this Security Agreement,
independently of any other remedy or security that Secured Party may at any
time hold in connection with the obligation secured hereby.
In witness whereof, Debtor has caused this Security Agreement
to be duly executed as of the date first written above.
"Debtor":
CHARLES KING & ASSOCIATES,
a California limited partnership
By /S/ Charles W. King Jr.
--------------------------------
Charles W. King Jr.
its sole general partner
-11-
[WELLS FARGO - RSI TEXAS:
Guaranty Security Agreement]
<PAGE> 12
SCHEDULE "1"
(a) All present and future accounts, general intangibles,
chattel paper, contract rights, deposit accounts, instruments and documents,
now or hereafter relating or arising with respect to the real properties
described in Exhibits "A-l" and "A-2" attached hereto and incorporated herein
by this reference (the "Properties") and/or the use thereof or any improvements
thereto, including without limitation: (i) all rights to the payment of money,
including escrow proceeds arising out of the sale or other disposition of all
or any portion of any of the Properties; (ii) all plans, specifications and
drawings relating to the development of any of the Properties and/or any
construction thereon; (iii) all use permits, occupancy permits, construction
and building permits, and all other permits and approvals required by any
governmental or quasi-governmental authority in connection with the
development, construction, use, occupancy or operation of any of the
Properties, (iv) any and all agreements relating to the development,
construction, use, occupancy and/or operation of any of the Properties between
Debtor and any contractor, subcontractor, project manager or supervisor,
architect, engineer, laborer or supplier of materials; (v) all lease or rental
agreements; (vi) all names under which any of the Properties are now or
hereafter known and all rights to carry on business under any such names or any
variant thereof; (vii) all trademarks relating to any of the Properties and/or
the development, construction, use, occupancy or operation thereof; (viii) all
goodwill relating to any of the Properties and/or the development,
construction, use, occupancy or operation thereof; (ix) all insurance proceeds
and condemnation awards arising out of or incidental to the ownership,
development, construction, use, occupancy or operation of any of the
Properties; (x) all reserves, deferred payments, deposits, refunds, cost
savings, bonds, insurance policies and payments of any kind relating to any of
the Properties; (xi) all loan commitments issued to Debtor in connection with
any sale or financing of any of the Properties; (xii) all shares of stock or
other evidence of ownership of any part of or interest in any of the Properties
that are owned by Debtor in common with others; and (xiii) all supplements,
modifications and amendments to the foregoing.
(b) All accounts receivable arising out of
income-producing operations on any of the Properties.
(c) All fixtures located upon or within any of
the Properties or now or hereafter attached to, installed in, or used or
intended for use in connection with any of
Schedule "1"
Page 1 of 2
<PAGE> 13
the Properties, including without limitation any and all partitions,
generators, screens, awnings, boilers, furnaces, pipes, plumbing, elevators,
cleaning, call and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, heating, ventilating, air conditioning and air cooling
equipment, and gas and electric machinery and equipment.
(d) All present and future accessories,
additions, attachments, replacements and substitutions of or to any or all of
the foregoing.
(e) All proceeds and products of any or all of
the foregoing, including without limitation all monies, deposit accounts,
insurance proceeds and other tangible or intangible property received upon a
sale or other disposition of any of the foregoing.
Schedule "1"
Page 2 of 2
<PAGE> 14
EXHIBIT "A-1"
LEGAL DESCRIPTION
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the City of Hayward, County of Alameda, State of California, and
described as follows:
PARCEL 1:
PARCEL 1, AS SHOWN ON PARCEL MAP NO. 582, FILED MARCH 27, 1970, IN BOOK 64 OF
PARCEL MAPS, PAGE 17, ALAMEDA COUNTY RECORDS.
RESERVING THEREFROM, AN EASEMENT FOR RAILWAY PURPOSES IN, ON, OVER, UNDER AND
LONG THAT PORTION THEREOF DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF SAID PARCEL 1, DISTANT THEREON
NORTH 0degree 38' 41" WEST 40 FEET FROM THE SOUTHWEST CORNER THEREOF; THENCE
FROM SAID POINT OF BEGINNING EASTERLY ALONG A LINE PARALLEL WITH AND
PERPENDICULARLY DISTANT NORTHERLY 40 FEET FROM THE SOUTHERN LINE OF SAID PARCEL
1, NORTH 89degree 21' 19" EAST 90 FEET TO A POINT THEREON; THENCE LEAVING SAID
PARALLEL LINE NORTH 81degree 10' 57" WEST 91.241 FEET TO A POINT ON THE SAID
WESTERN LINE OF PARCEL 1; THENCE SOUTHERLY ALONG LAST SAID LINE SOUTH 0degree
38' 41" EAST 15 FEET TO THE POINT OF BEGINNING.
PARCEL 2:
AN EASEMENT FOR RAILROAD PURPOSES, IN, ON, OVER, UNDER AND ALONG A PORTION OF
PARCEL 2, AS SHOWN ON PARCEL MAP NO. 582, FILED MARCH 27, 1970, IN BOOK 64 of
PARCEL MAPS, PAGE 17, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERLY LINE OF SAID PARCEL 2, DISTANT THEREON
NORTH 0degree 38' 41" WEST 40.00 FEET FROM THE SOUTHWEST CORNER OF SAID PARCEL
2; THENCE FROM SAID POINT OF BEGINNING NORTHERLY ALONG LAST SAID LINE NORTH
0degree 38' 41" WEST 15.00 FEET TO A POINT THEREON; THENCE LEAVING LAST SAID
LINE SOUTH 760 36' 31" EAST 61.847 FEET; THENCE WESTERLY ALONG A LINE PARALLEL
WITH AND PERPENDICULARLY DISTANT NORTHERLY 40.00 FEET FROM THE SOUTHERLY LINE
OF SAID PARCEL 2 SOUTH 89degree 21' 19" WEST 60.00 FEET TO THE POINT OF
BEGINNING.
EXHIBIT "A-1"
Page 1 of 1
<PAGE> 15
EXHIBIT "A-2"
LEGAL DESCRIPTION
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the Village of Schaumburg, County of Cook, State of Illinois, and
described as follows:
Lot 37 in Woodfield Business Center Unit 11, being a resubdivision of
lots 27 and 28 in Woodfield Business Center Unit 7, a resubdivision in
the southwest 1/4 of Section 11, Township 41 north, Range 10 east of
the third principal meridian, in Cook County, Illinois.
EXHIBIT "A-2"
Page 1 of 1
<PAGE> 1
EXHIBIT 10.21
LOAN AGREEMENT
Between
COUNTY OF DELAWARE, OHIO
And
RADIATION STERILIZERS, INCORPORATED
Dated as of
December 1, 1984
---------------------------------
Relating To
$4,9OO,OOO
County of Delaware, Ohio
Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project)
---------------------------------
<PAGE> 2
INDEX
(This Index is not a part of the Loan Agreement but
for convenience of reference only.)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Preambles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
Representations
Section 2.1 Representations by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2 No Warranty by Issuer of Condition
or Suitability of the Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3 Representations by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
Acquisition, Construction and Equipping of the Facilities by the Company;
Issuance of the Bonds
Section 3.1 Agreement to Acquire, Construct and
Equip the Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Agreement to Issue Bonds; Application
of Bond Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3 Disbursements from the Construction Fund . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.4 Obligation of the Parties To Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . .
in Furnishing Documents to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.5 Establishment of Completion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.6 Company Required To Pay Acquisition, Construction and
Equipping Costs in Event Construction Fund
Insufficient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.7 Investment of Funds Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
Loan by the Issuer to the Company
Repayment of Loan
Section 4.1 Loan by the Issuer to the Company;
Repayment of Loan; Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . 19
Section 4.2 Company's Approval of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.3 Prepayments of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.4 Delivery of Letter of Credit to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.5 Satisfaction of Company's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.6 Alternate Letter of Credit; Alternate Credit Facility . . . . . . . . . . . . . . . . . . . 23
Section 4.7 Extension of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.8 Notice of Prepayments; Issuer To
Effect Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.9 Relative Position of this Article and
the Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.10 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.11 Payments to the Remarketing Agent and the Trustee . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
Particular Covenants of the Company
Section 5.1 Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.2 Qualification in the State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3 Indemnification of the Issuer and the Trustee by the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.4 Payment of Trustee fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.5 Maintenance and Operation of the Facilities . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.6 Tax-Exempt Status of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.7 Insurance Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.8 Taxes, Other Governmental Charges and
Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.9 Damage; Destruction and Eminent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.10 Company's Obligation To Pay Certain
Expenses of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.11 Application of Certain Proceeds Prior to the
Expiration Date of the Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
Events of Default and Remedies
Section 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.2 Remedies on Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.3 No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.4 Agreement To Pay Attorneys' Fees and Expenses.. . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.5 No Additional Waiver Implied by One Waiver . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VII
Miscellaneous
Section 7.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3 Cancellation of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.4 Amounts Remaining in Bond Fund, Construction
Fund and Other Funds and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.6 Binding Effect; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.7 Extent of Covenants of the Issuer; No personal
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.8 Amendments, Changes and Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.9 Execution Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.12 Governing Law, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit A Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
County Auditor's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
<PAGE> 5
LOAN AGREEMENT
Between
COUNTY OF DELAWARE, OHIO
and
RADIATION STERILIZERS, INCORPORATED
LOAN AGREEMENT made as of the 1st day of December, 1984, between the
COUNTY OF DELAWARE, OHIO, hereinafter referred to as the "Issuer", a county and
political subdivision organized under the laws of the State of Ohio (the
"State"), operating pursuant to the provisions of Chapter 165 of the Ohio
Revised Code, and particularly Section 165.02(D) thereof, to carry out the
public purposes of the Issuer and of the State, and RADIATION STERILIZERS,
INCORPORATED, hereinafter referred to as the "Company", a corporation organized
and existing under the laws of the State of California.
W I T N E S S E T H :
WHEREAS, Section 13 of Article VIII of the Ohio Constitution provides,
among other things, for the passage of laws authorizing the State, its
political subdivisions and their agencies or instrumentalities, and others, to
make loans to provide moneys for the acquisition, construction, enlargement,
improvement and equipment of facilities for industry, commerce, distribution or
research and to borrow money and issue bonds for such purposes in order to
create or preserve jobs and employment opportunities and improve the economic
welfare of the people of the State; and
WHEREAS, Chapter 165 of the Ohio Revised Code provides, among other
things, for the issuance of revenue bonds of a county and the loan of the
proceeds thereof to assist the borrower to purchase, construct, reconstruct,
enlarge, improve, furnish and equip real or personal property or both, or
interests therein, for industry, commerce, distribution or research and to
increase opportunities for employment and strengthen the economic welfare of
such county and the State; and
WHEREAS, pursuant to Section 1724.10 of the Ohio Revised Code, the
Community Improvement Corporation of Delaware, Ohio, hereinafter referred to as
"Agency," a community improvement corporation organized and operating pursuant
to the provisions of Chapter 1724 of the Ohio Revised Code, was designated by
the Issuer as Agent for the Issuer's industrial, commercial, distribution and
research development, and a plan has been prepared and submitted by the Agency
to the Issuer for the Issuer's industrial, commercial, distribution and
research development (being hereinafter referred to as "Plan"), in order to
create or preserve jobs and employment opportunities and
<PAGE> 6
improve the economic welfare of the State of Ohio and Issuer; and the Plan has
been confirmed by the Legislative Authority of the Issuer; and the Agency has
certified to the Issuer that the acquisitions construction and equipping of the
Facilities which are the subject matter of this Loan Agreement are and will be
in accordance with and in furtherance of such Plan, and the participation of
the Issuer and the Agency in such Plan; and
WHEREAS, the Legislative Authority has found and determined that the
industrial, commercial and economic welfare of the Issuer will be benefited by
assisting the Company in the financing of the acquisitions construction and
equipping of the Facilities; such acquisition, construction and equipping
should be financed for the purpose and upon the terms and conditions herein
provided; the financing of the acquisition, construction and equipping of the
Facilities as herein provided will assist in the development of industrial,
commercial, research and distribution activities to the benefit of the people
of the State and the Issuer and provide additional opportunities for their
gainful employment; and that such financing is authorized by, and will be
consistent with and in furtherance of, the provisions of Article VIII, Section
13 of the Ohio Constitution and of the laws of the State, particularly Chapter
165 of the Ohio Revised Code, and the Plan aforesaid; and
WHEREAS, the Issuer has caused a written notice to have been mailed by
certified mail to the Director of the Department of Development of the State in
accordance with Section 165.03(D) of the Ohio Revised Code;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto covenant, agree and bind
themselves as follows (provided, that any obligation of the Issuer created by
or arising out of this Loan Agreement shall not be a general debt on its part
but shall be payable solely out of the loan payments and other income, charges
and moneys realized from this Loan Agreement, and the proceeds from the sale of
the bonds referred to in Section 3.2 hereof):
-2-
<PAGE> 7
ARTICLE I
DEFINITIONS
In addition to the words and terms elsewhere defined in this
Agreement, the following words and terms as used in this Agreement shall have
the following meanings unless the context or use indicates another or different
meaning or intent and such definitions shall be equally applicable to both the
singular and plural forms of any of the words and terms herein defined:
"Additional Bonds" means the industrial development revenue bonds of
the Issuer which may be issued under Section 14 of the Bond Legislation for the
Project Bonds.
"Adjustment Date" means, after the Conversion Date, the Interest
Payment Date next preceding the Expiration Date of the Alternate Credit
Facility or the Expiration Date of the Letter of Credit, as the case may be.
"Agreement" means this agreement as from time to time supplemented or
amended in accordance with the provisions hereof.
"Alternate Credit Facility" means a credit facility other than the
Letter of Credit, including without limitations an irrevocable letter of credit
or bond insurance policy, which provides for payment of the principal of and
interest on the Project Bonds, when due.
"Alternate Letter of Credit" means an irrevocable letter of credit
issued in accordance with Section 4.6 of this Loan Agreement.
"Authorized Company Representative" means the person at the time
designated to act on behalf of the Company by written certificate furnished to
the Issuer, the Bank and the Trustee, containing the specimen signature of such
person and signed on behalf of the Company by its President or any Vice
President. Such certificate may designate an alternate or alternates.
"Available Moneys" means moneys on deposit in trust with the Trustee
for a period of at least one hundred twenty-three (123) days during which no
petition in bankruptcy or similar insolvency proceeding has been filed by or
against the Company.
"Bank" means the issuer of the Letter of Credit, initially Wells Fargo
Bank, N.A., San Jose, California.
"Bond Fund" means the fund created in Section 13 of the Bond
Legislation for the Project Bonds.
-3-
<PAGE> 8
"Bond Legislation" means, for the Project Bonds, the resolution
adopted by the Legislative Authority authorizing the issuance thereof, and when
used in connection with Additional Bonds or in relation to Bonds when
Additional Bonds are outstanding shall mean or include, as the case may be, the
resolution providing for the issuance of such Additional Bonds but only to the
extent consistent with the Bond Legislation for the Project Bonds, all as the
same may be amended, modified or supplemented by any amendments or
modifications thereof and supplements thereto entered into in accordance with
the provisions of the Indenture.
"Bond Payment Date" means any date upon which the principal of and
premium, if any, or interest on the Bonds shall be payable pursuant to the
Indenture, whether at stated maturity, by redemption, by acceleration or
otherwise.
"Bonds" means the Project Bonds and any Additional Bonds.
"Business Day" means any day, other than a Saturday or Sunday, on
which banks located in the cities in which the principal corporate trust office
of the Trustee and the principal office of the Bank are located, and in New
York, New York are not required or authorized by law to remain closed and on
which The New York Stock Exchange is not closed.
"Code" means the Internal Revenue Code of 1954, as amended, and
references to the Code and Sections of the Code shall include relevant
regulations and proposed regulations thereunder and any successor provisions to
such Sections, regulations or proposed regulations.
"Commitment Date" means July 18, 1983, the date of the commitment
instrument by which the Issuer undertakes to issue the Project Bonds.
"Company" means Radiation Sterilizers, Incorporated, a corporation
organized under the laws of the State of California and qualified to do
business in the State, and its lawful successors and assigns including any
surviving, resulting, or transferee entity as provided in Section 5.l hereof.
"Completion Date" means the date of completion of the acquisition,
construction and equipping of the Facilities as that date shall be certified as
provided in Section 3.5 hereof.
"Construction Fund" means the construction fund created in Section 12
of the Bond Legislation for the Project Bonds.
"Construction Period" means the period between the beginning of
acquisition, construction or equipping of the Facilities or the date on which
Bonds are first delivered to the Original Purchasers as defined in the
Indenture, whichever is earlier, and the Completion Date.
"Conversion Date" means the date upon which the Project Bonds begin to
bear interest at the Fixed Interest Rate, which date shall be established in
accordance with Section 8 of the Bond Legislation.
-4-
<PAGE> 9
"Eligible Investments" means (i) obligations issued or guaranteed by
the United States of America or by any person controlled or supervised by and
acting as an instrumentality of the United States of America pursuant to
authority granted by Congress, (ii) certificates of deposit issued by or other
time deposits at banks, savings banks, savings and loan associations or trust
companies, including the Trustee or its affiliates, organized under the laws of
the United States of America or any state thereof, which have an aggregate of
capital, paid in surplus and retained earnings of at least $25,000,000, or
issued by or drawn on any branch of such a bank, savings bank, savings and loan
association or trust company whether within or without the United States of
America, (iii) commercial paper or finance company paper, including that of the
Trustee or its affiliates but excluding that of the Company or its affiliates,
rated "P-1" or "A-1" or their equivalents by either Moody's Investors Service,
Inc. or Standard & Poor's Corporation or any successor of either, (iv)
obligations of any state of the United States of America or any political
subdivision or other instrumentality of any such state which are rated "A" or
its equivalent or better by either Moody's Investors Service, Inc. or Standard
& Poor's Corporation or any successor of either, (v) repurchase agreements or
variable amount master demand notes, including those of the Trustee or its
affiliates, secured by obligations described in (i) through (iv) of this
paragraph, and NO shares of Investment Company, as defined in the Indenture,
whose assets are invested exclusively in obligations described in (i) through
(iv) of this paragraph; provided, however, that "Eligible Investments" with
respect to any proceeds resulting from a draw under the Letter of Credit shall
mean only Government Obligations, as defined in the Indenture, maturing not
more than thirty days after purchase.
"Event of Default" shall have the meaning assigned in Section 6.1 of
this Loan Agreement.
"Expiration Date of the Alternate Credit Facility" means the date
established in the Alternate Credit Facility for the expiration thereof, and in
the event such date is extended, such date as extended.
"Expiration Date of the Letter of Credit" means the date established
in the Letter of Credit for the expiration thereof in accordance with its
terms, initially January 15, 1988, and in the event such date is extended, such
date as extended.
"Facilities" means the real, personal and mixed property identified in
Exhibit A hereto, together with any additions and improvements thereto,
modifications thereof and substitutions therefor.
"Fixed Interest Rate" means a fixed nonfloating interest rate on the
Project Bonds established in accordance with Section 8 of the Bond Legislation.
"Force Majeure" means acts of God; strikes, lockouts or other
industrial disturbances; acts of public enemies; orders of any kind of the
government of the United States of America, or of a state of the United States
of America or any of their departments, agencies, political subdivisions or
officials, or any civil or military authority; insurrections; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes, tornadoes or storms;
floods; washouts; droughts; arrests; restraints of governments and
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people; civil disturbances; explosions; breakage or accident to machinery,
transmission pipes or canals; partial or entire failure of utilities; or any
cause or event not reasonably within the control of the Company.
"Indenture" means the Trust Agreement between the Issuer and the
Trustee, of even date herewith, including as part thereof the Bond Legislation
for the Project Bonds, as the same may be amended, modified or supplemented by
any amendments or modifications thereof and any supplements thereto entered
into in accordance with the provisions thereof.
"Independent Counsel" means any attorney duly admitted to practice law
before the highest court of any state and not an officer or a full time
employee of the Issuer or the Company.
"Independent Engineer" means an engineer or engineering firm or an
architect or architectural firm qualified to practice the profession of
engineering or architecture under the laws of the State and who or which is not
an officer or a full time employee of the Issuer or the Company.
"Independent Tax Counsel" means Independent Counsel selected by the
Company and satisfactory to the Trustee, experienced in matters relating to the
exemption from federal income tax of interest on obligations issued by states
or their political subdivisions.
"Interest Payment Date" means with respect to the Project Bonds prior
to and including the Conversion Date the first Business Day of each calendar
month commencing February 1, 1985, and after the Conversion Date the first day
of each June and December. "Interest Payment Date" with respect to Additional
Bonds shall mean the dates identified as such in the Bond Legislation for the
Additional Bonds.
"Interest Rate for Advances" means a rate per annum which is equal to
the sum of 2% and the Prime Rate.
"Interest Reserve Requirement" means $262,000.
"Issuer" means the County of Delaware, Ohio, a county and political
subdivision in and of the State, and its lawful successors and assigns.
"Legislative Authority" means the Board of County Commissioners of the
Issuer and any officer, board, commission or other body which hereafter
succeeds, by operation of law, to the powers and duties of such board.
"Letter of Credit" means the irrevocable letter of credit issued by
the Bank contemporaneously with the original issuance of the Project Bonds,
except that upon the issuance and delivery of an Alternate Letter of Credit,
"Letter of Credit" shall mean such Alternate Letter of Credit, and upon the
delivery of an Alternate Credit Facility, "Letter of Credit" shall, unless the
context otherwise requires, include reference to the Alternate Credit Facility.
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"Letter of Credit Agreement" means the Letter of Credit Agreement,
dated as of December 1, 1984, between the Company and the Bank pursuant to
which the Letter of Credit is issued by the Bank and delivered to the Trustee,
and any and all modifications, alterations, amendments and supplements thereto,
and includes any agreement between the Company, the Guarantor and the Bank
pursuant to which any Alternate Letter of Credit is issued.
"Liquidity Facility" means an instrument such as an irrevocable letter
of credit (other than the Letter of Credit), a committed line of credit or a
standby bond purchase agreement, issued by a financial institution, which
provides for payment of the purchase price of Project Bonds delivered to the
Remarketing Agent or the Trustee pursuant to the Indenture. In the event of
delivery of a Liquidity Facility pursuant to Section 4.6 of this Loan
Agreement, references to the Letter of Credit in connection with the payment of
the purchase price of Project Bonds shall include reference to the Liquidity
Facility, and references to the Bank in such context shall include reference to
the issuer of the Liquidity Facility.
"Loan Term" means the period commencing on the date of this Agreement
and ending on the date on which the Bonds have been fully paid (or provision
for their payment has been made) in accordance with the provisions of the
Indenture.
"Net Proceeds", when used with respect to any insurance proceeds or
any condemnation award, means the gross proceeds thereof less the payment of
all expenses (including attorneys' fees and any extraordinary fees and expenses
of the Trustee) incurred in the collection of such gross proceeds.
"Notice Address" means
(a) As to the Company: Radiation Sterilizers, Incorporated
3000 Sand Hill Road
Menlo Park, California 94025
Attention: President
(b) As to the Issuer: County of Delaware, Ohio
County Courthouse
Delaware, Ohio 43015
Attention: Clerk
(c) As to the Bank: Wells Fargo Bank, N.A.
Real Estate Investors Group
2055 Gateway Plaza, Suite 200
San Jose, California 95110
Attention: George Huxtable,
Vice President
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(d) As to the Trustee: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43215-0181
Attention: Corporate Trust
Administration
or such address as may hereafter be provided pursuant to Section 7.5 hereof.
"Prime Rate" means the rate of interest as announced from time to time
by Wells Fargo Bank, N.A., San Francisco, California, as its prime rate of
interest, such rate changing automatically and immediately from time to time
effective as of the effective date of each such announced change.
"Project Bonds" means the industrial development revenue bonds of the
Issuer designated "County of Delaware, Ohio Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project)"
identified in Section 1 of the Bond Legislation for the Project Bonds.
"State" means the State of Ohio.
"Trustee" means the Trustee at the time serving as such under the
Indenture.
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ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer makes the following
representations as the basis for the undertakings on its part herein contained:
(a) The Issuer is a county and political subdivision duly
organized and existing under the laws of the State and It will do or cause
to be done all things required of it in order to maintain its existence.
The Issuer has the power to enter into this Agreement and the Indenture and
to carry out the transactions contemplated hereby and thereby. The Issuer
is not in violation under any of the provisions contained in the laws of
the State.
(b) The Issuer has duly accomplished all conditions necessary to
be accomplished by it prior to issuance and delivery of the Project Bonds
and execution and delivery of this Agreement. This Agreement and the
Indenture have been duly authorized executed and delivered by and, assuming
due authorization, execution and delivery by the other parties thereto, are
valid and binding agreements of the Issuer. The authorization, execution,
delivery and performance by the Issuer of this Agreement and the Indenture
will not cause the Issuer to be in violation of any provision of any law or
regulation applicable to the Issuer, or, to its knowledge, any writ or
decree of any court or governmental instrumentality binding upon the
Issuer, or of any mortgage, indenture, contract, agreement or other
undertaking to which the Issuer is a party or which is binding upon the
Issuer.
(c) The Bonds are secured by the Indenture, pursuant to which the
Revenues, as defined in the Indenture, and to the extent set forth in the
Indenture, the title and interest of the Issuer in and to this Agreement,
are pledged and assigned by the Issuer to the Trustee as security for
payment of the principal of and premium, if any, and interest on the Bonds.
Section 2.2. No Warranty by Issuer of Condition or Suitability of
the Facilities. The Issuer makes no warranty, either express or implied, as to
the condition of the Facilities or as to the suitability of the Facilities for
the Company's purposes.
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<PAGE> 14
Section 2.3. Representations by the Company. The Company makes
the following representations as the basis for the undertakings on its part
herein contained:
(a) The Company is a corporation duly organized under the
laws of the State of California, is qualified to do business and in good
standing as a foreign corporation in the State and has the requisite power
and authority to conduct its business, to own its properties and to execute
and deliver, and to perform all of its obligations under, this Agreement
and by proper corporate action this Agreement has been duly authorized,
executed and delivered by, and, assuming due authorization, execution and
delivery by the Issuer, is a valid and binding obligation of, the Company;
(b) Neither the authorization, execution or delivery of
this Agreement, the consummation of the transactions contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement will result in a breach of or constitute a default under any of
the terms, conditions or provisions of any agreement or instrument to which
the Company is now a party or by which it is bound, or constitute a default
under any of the foregoing, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of the Company prohibited under the terms of any
instrument or agreement, or violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to the Company, or of the
articles of incorporation or bylaws of the Company; and the Company is not
in default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture,
agreement, lease or instrument the effect of which default could be
materially adverse to the Company or the Company's ability to perform its
obligations under this Agreement;
(c) The financing of the acquisition, construction and
equipping of the Facilities as provided under this Loan Agreement, and
commitments therefor made by Issuer (i) have induced the Company to
determine to locate the Facilities in the State, and particularly, within
the boundaries of Issuer and (ii) will preserve or create jobs and
employment opportunities within the boundaries of the Issuer and the State
and improve the economic welfare of the people of the Issuer and the State;
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<PAGE> 15
(d) The Facilities will be acquired, constructed and
equipped in such manner as to conform with all applicable zoning, planning,
building, environmental and other regulations of the governmental
authorities having jurisdiction of the Facilities;
(e) The acquisition construction and equipping of the
Facilities was not commenced prior to the Commitment Date;
(f) With the exception of the Project Bonds, there are no
other issues of industrial development bonds, as defined in Section 103(b)
of the Code, the proceeds of which have been or will be used with respect
to facilities located within the incorporated limits of the County of
Delaware, Ohio, the "principal user" of which is the Company or a "related
person" thereto ("principal user" and "related person") being used in this
Agreement as those terms are used in Section 103(b) of the Code);
(g) The Facilities are located entirely within the
unincorporated limits of the County of Delaware, Ohio;
(h) Within the meaning of Section 103(b) of the Code,
substantially all of the proceeds the Project Bonds will be used for the
acquisition, construction, reconstruction or improvement of land or
property of a character subject to the allowance for depreciation
(hereinafter sometimes referred to as "financeable facilities");
(i) The Company is the sole owner of the Facilities and
is entitled to sole and exclusive possession of the Facilities;
(j) The Facilities consist of an industrial facility for
the sterilization of packaged products using ionizing radiation and are
consistent with the purposes of Section 13 of Article VIII of the Ohio
Constitution, and of Chapter 165 of the Ohio Revised Code;
(k) No authorizations, consents or approvals of
governmental bodies or agencies (other than the Issuer) are required in
connection with the execution and delivery by the Company of this
Agreement;
(l) There are no actions or proceedings pending or, to
the knowledge of the Company, threatened before any court or administrative
agency which will, in the reasonable judgment of the Company, materially
adversely affect the ability of the Company to meet its obligations under
this Agreement;
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<PAGE> 16
(m) The Facilities were first placed in service, within
the meaning of the Code, on March 12, 1984;
(n) During the period commencing on December 1, 1981 and
ending on the date of the issuance of the Project Bonds, there will have
been paid or incurred (and financed otherwise than out of the proceeds of
the issuance of the Project Bonds) no capital expenditures with respect to
facilities located within the incorporated limits of the County of
Delaware, Ohio, the "principal user" of which is, or was at the time such
capital expenditure was paid or incurred, the Company or any other
"principal user" of the Facilities or a "related person" to either the
Company or any other "principal user" of the Facilities; and
(o) The average weighted estimated economic life of the
components comprising the Facilities, determined pursuant to Section
103(b)(14) of the Code, exceeds seventeen (17) years.
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ARTICLE III
ACQUISITION, CONSTRUCTION AND EQUIPPING OF THE FACILITIES BY THE COMPANY;
ISSUANCE OF THE BONDS
Section 3.1. Agreement to Acquire. Construct and Equip the
Facilities. The Company will acquire, construct and equip, the Facilities to
effectuate the purposes of Chapter 165 of the Ohio Revised Code and shall
proceed with due diligence to completion of such acquisition, construction and
equipping.
The Company agrees that all wages paid to laborers and mechanics
employed on the Facilities by the Company or its contractors or subcontractors
shall be paid at the prevailing rates of wages of laborers and mechanics for
the class of work called for by the Facilities, which wages shall be determined
in accordance with the requirements of Chapter 4115 of the Ohio Revised Code
for determination of prevailing wage rates; provided that such requirements
shall not apply where the federal government or any of its agencies furnished
by loan or grant all or any part of the funds used in connection with the
Facilities and prescribes predetermined minimum wages to be paid to such
laborers and mechanics; and provided, further, that should the Company or other
non public user beneficiary undertake construction of the Facilities to be
performed by its regular bargaining unit employees who are covered under a
collective bargaining agreement which was in existence prior to the Commitment
Date, then the rate of pay provided under such collective bargaining agreement
may be paid to such employees. To the extent required by Section 4115.032 of
the Ohio Revised Code, the Company shall comply, and shall require compliance
by all contractors and subcontractors working on the Facilities with Sections
4115.03 through 4115.16, inclusive, of the Ohio Revised Code.
Section 3.2. Agreement to Issue Bonds; Application of Bond
Proceeds. In order to provide funds for the loan made hereunder to pay the
costs described in Section 3.3 hereof, the Issuer has, concurrently with the
execution of this Agreement, issued and delivered to the Original Purchaser, as
defined in the Indenture, the Project Bonds, and the Issuer has caused the
proceeds of the sale of the Project Bonds to be deposited into the Construction
Fund.
The Issuer agrees that Additional Bonds may be issued subject to and
in accordance with Section 14 of the Bond Legislation for the Project Bonds,
but only upon and pursuant to the request of the Company.
Section 3.3. Disbursements from the Construction Fund. The Issuer
has, in the Indenture, authorized and directed the Trustee to use the moneys in
the Construction Fund for the following purposes; provided, that any payments
from the Construction Fund prior to the Completion Date not used to
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provide financeable facilities within the meaning of Section 103(b) of the Code
(which permits an insubstantial portion of the proceeds of the Bonds to be used
other than to provide financeable facilities), shall not exceed 1/9th of the
aggregate amounts expended for financeable facilities; except, that payments in
excess of such 1/9th may be made for purposes other than to provide financeable
facilities if, in the opinion of Independent Tax Counsel, such payments will
not, under applicable statutes and regulations, jeopardize the exemption from
federal income tax of the interest on the Bonds:
(a) Payment to, or reimbursement of the Company for, the
fees for any title insurance or title curative documents that either the
Company or Independent Counsel selected by the Company and acceptable to
the Trustee may deem desirable to file or record in order to perfect or
protect the title of the Company to the Facilities, or interest of the
Issuer in the Revenues (as defined in the Indenture), and the fees and
expenses in connection with any actions or proceedings that either the
Company or such Independent Counsel may deem desirable to bring in order to
perfect or protect the title of the Company to the Facilities, or interest
of the Issuer in the Revenues.
(b) Payment of all financial, legal and accounting fees
and expenses, all costs of printing and engraving, appraisal fees, and all
other fees, charges and expenses incurred in connection with the
authorization, sale, issuance and delivery of the Bonds, this Agreement,
the Indenture and other related documents.
(c) Payment to the Company of such amounts, if any, as
shall be necessary to reimburse it in full for all advances, payments and
expenditures made by it after the Commitment Date but prior to the delivery
of the Bonds for or in connection with any preliminary study or planning of
the Facilities or any aspect thereof, the acquisition, construction and
equipping, of the Facilities and all real and personal property or mixed
real and personal property deemed by the Company reasonably necessary in
connection with the Facilities, or any one or more of said expenditures.
(d) Payment to, or reimbursement of, the Company for
labor, services and materials used or furnished in site improvement and in
any acquisition, construction and equipping of the Facilities, for the cost
of the construction, acquisition and equipping of facilities to connect the
Facilities with utilities and for the miscellaneous expenses incidental to
any thereof.
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(e) Payment to, or reimbursement of, the Company for the
fees, if any, for architectural, legal, engineering and supervisory
services with respect to the Facilities.
(f) Payment, as such payment becomes due, of the initial
or acceptance fee and other fees and expenses of the Trustee and of any
paying agent properly incurred under the Indenture, and payment of the
commitment fees of the Bank and the fees of the Remarketing Agent, as
defined in the Indenture, that may become due during the Construction
Period or reimbursement thereof if paid by the Company.
(g) To such extent as they shall not be paid by a
contractor for acquisition, construction or equipping with respect to any
part of the Facilities, payment of the premiums on all insurance taken out
and maintained during the Construction Period with respect to the
Facilities or reimbursement therefor if paid by the Company.
(h) Payment of expenses incurred by the Company in
seeking to enforce any remedy against any contractor or subcontractor.
(i) To the extent permitted by Chapter 165 of the Ohio
Revised Code, payment or reimbursement of any other costs and expenses
relating to the Facilities that may be approved by the Authorized Company
Representative.
(j) Payment of, or reimbursement of the Company for,
interest on the Project Bonds accruing prior to the Completion Date.
(k) All moneys in the Construction Fund (including moneys
earned pursuant to the provisions of Section 3.7 hereof) remaining after
the Completion Date and payment in full of the costs of acquisition,
construction and equipping of the Facilities and of all other items
provided for in the preceding subsections (a) to (j), inclusive, of this
Section 3.3, then due and payable, shall at the direction of the Authorized
Company Representative, be used for such of the following purposes as in
the opinion of Independent Tax Counsel, will not under applicable statutes
and regulations jeopardize the exemption from federal income tax of the
interest on the Bonds: (i) the purchase of Bonds in the open market for the
purpose of cancellation, at prices not exceeding the then open market price
of the Bonds, or (ii) payment into the Bond Fund, or (iii) acquisition,
construction and equipping of such additional industrial facilities as are
designated by the Authorized Company Representative, or (iv) a combination
of
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(i), (ii) and (iii), as is provided in such direction; provided, however,
that in the event the Authorized Company Representative fails or is
otherwise unable to direct the application of the moneys in accordance with
clauses (i) through (iii) of this Section 3.3(k), the Trustee shall apply
such moneys, to the maximum extent possible, to redemption of the Project
Bonds in accordance with Section 3 of the Bond Legislation for the Project
Bonds and shall retain any balance remaining thereafter in such special
account until all or a portion of such balance can again be applied for
such redemption. While so retained, such balance may be invested in the
manner provided in the Indenture for the investment of moneys held in the
Bond Fund, except that the yield on any such investments shall not exceed
the yield on the Bonds. For purposes of this Section 3.3(k), "yield" shall
be determined in a manner consistent with the regulations promulgated or
proposed under Section 103(c) of the Code and applicable to the investment
of such moneys. Notwithstanding the foregoing, amounts approved by the
Authorized Company Representative shall be retained by the Trustee in the
Construction Fund for payment of costs of Facilities not due and payable or
the liability for which is being contested by the Company in good faith or
such costs of the Facilities then due and payable but which in the
aggregate do not exceed 1% of the aggregate principal amount of the Project
Bonds originally issued pursuant to the Indenture, and any balance
remaining of such retained funds after full payment of all such costs of
Facilities shall be applied in the manner specified in this Section 3.3(k).
(1) In the event that the Company exercises its option to
prepay the loan made hereunder pursuant to the provisions of Sections
4.3(c) or 4.3(d) hereof, for payment into the Bond Fund.
Each of the payments referred to in this Section 3.3, except for the
payment described in subsection (1), shall be made only upon the written order
of the Authorized Company Representative, approved by the Bank, which order
shall describe generally the purpose for which such payment is being made.
Before any of the payments referred to in the preceding subsections (a) through
(i) of this Section 3.3 may be made, the Authorized Company Representative
shall certify with respect to each such payment: (i) that none of the items for
which the payment is proposed to be made has formed the basis for any payment
therefore made from the Construction Fund, (ii) that each item for which the
payment is proposed to be made is a proper item under this Section 3.3 and
(iii) that (A) not less than 90% of the aggregate of all prior payments from
the Construction Fund have been applied to provide financeable facilities
within the meaning of Section 103(b) of the Code; and (B) after application of
the payment which is the subject matter of the certificate, not less than 90%
of the aggregate of
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all payments from the Construction Fund will have been applied to provide
financeable facilities as so defined. In the case of any contract providing
for the retention of a portion of the contract price, there shall be paid from
the Construction Fund only the net amount remaining after deduction of any such
portion, and when the amount of any such retention is due and payable, then
such amount may be paid from the Construction Fund.
The foregoing provisions of this Section 3.3 notwithstanding, in the
event that all unpaid amounts payable under Sections 4.1 or 4.3 hereof are
declared due and payable pursuant to Section 6.2(a) hereof, all amounts
remaining in the Construction Fund shall immediately be deposited by the
Trustee, without any further direction, into the Bond Fund, provided, however,
that in the event such declaration is rescinded pursuant to the provisions of
the second paragraph of Section 8.02 of the Indenture the amounts so deposited
and remaining in the Bond Fund shall be redeposited, without any further
direction, in the Construction Fund by the Trustee.
Section 3.4. Obligation of the Parties To Cooperate in Furnishing
Documents to Trustee. The Issuer and the Company agree to cooperate in
furnishing to the Trustee the documents referred to in Section 3.3 hereof that
are required to effect payments out of the Construction Fund. Such obligation
is subject to any provisions of this Agreement or the Indenture requiring
additional documentation with respect to payments and shall not extend beyond
the moneys in the Construction Fund available for payment under the terms of
the Indenture.
Section 3.5. Establishment of Completion Date. The Completion
Date shall be evidenced to the Trustee by a certificate signed by the
Authorized Company Representative stating that, except for amounts retained by
the Trustee for costs of Facilities not then due and payable as provided in
subsection (k) of Section 3.3, (i) acquisition, construction and equipping of
the Facilities have been completed to the satisfaction of the Company in
accordance with the plans and specifications therefor and all labor, services,
materials and supplies used in connection therewith have been paid or
adequately provided for, (ii) all other facilities necessary in connection with
the Facilities have been acquired constructed and equipped and all costs and
expenses incurred in connection therewith have been paid or adequately provided
for and (iii) the Facilities as so acquired, constructed or equipped, as the
case may be, are suitable and sufficient for efficient operation and conform to
all applicable zoning, planning, building, environmental and other regulations
of the governmental authorities having jurisdiction of the Facilities. Such
certificate shall also set forth the total construction costs of the portions
of the Facilities in sufficient detail to enable the required determination to
be made of the principal amount of the Bonds allocable to each portion of the
Facilities pursuant to Section 4.3(d) hereof. Notwithstanding the foregoing,
such certificate shall state that it is given without prejudice to any rights
against third parties which exist at the date of such certificate or which may
subsequently come into being. The Issuer and the Company agree to cooperate
one with the other in causing such certificate to be furnished to the Trustee.
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Section 3.6. Company Required To Pay Acquisitions Construction and
Equipping Costs in Event Construction Fund Insufficient. In the event the
moneys in the Construction Fund available for payment of the costs of the
Facilities (including moneys from the proceeds of any Additional Bonds sold
pursuant to Section 14 of the Bond Legislation for the Project Bonds to finance
completion of the Facilities) should not be sufficient to pay the cost thereof
in full, the Company agrees, in order to fulfill the public purposes for which
the Facilities are to be used, to complete the Facilities and, unless the same
shall be paid out of the proceeds of the sale of Additional Bonds, to pay
directly all of the costs of the Facilities as may be in excess of the moneys
available therefor in the Construction Fund. The Issuer does not make any
warranty, either express or implied, that the moneys, which may be paid into
the Construction Fund and which under the provisions of this Agreement will be
available for payment of the costs of the Facilities, will be sufficient to pay
all the costs which will be incurred in that connection. The Company agrees
that if after exhaustion of the moneys in the Construction Fund the Company
should pay any portion of the said costs of the Facilities pursuant to the
provisions of this Section, it shall not be entitled, other than from proceeds
of Additional Bonds, to any reimbursement therefor from the Issuer, the
Trustee, or the holders of any of the Bonds,
Section 3.7. Investment of Funds Permitted. Any moneys
held as a part of the Construction Fund, the Bond Fund or any other fund or
account held by the Trustee (exclusive of moneys held by the Trustee pursuant
to Section 7.02 of the Indenture) may be invested in Eligible Investments in
accordance with the provisions of the Indenture.
The Issuer and the Company each hereby covenants that it will restrict
such investment and reinvestment and the use of the proceeds of the Project
Bonds in such manner and to such extent, if any, as may be necessary, after
taking into account reasonable expectations at the time of delivery of and
payment for the Project Bonds, to insure that the Project Bonds will not
constitute arbitrage bonds under Section 103(c) of the Code. Any member of the
Legislative Authority or the County Auditor is authorized and directed, alone
or in conjunction with any other officer, employee or consultant or agent of
the Issuer, or with the Company or any employee or consultant or agent of the
Company, to give an appropriate certificate of the Issuer, for inclusion in the
transcript of proceedings for the Project Bonds, setting forth the reasonable
expectations of the Issuer regarding the amount and use of the proceeds of the
Project Bonds and the facts, estimates and circumstances on which they are
based, all as of the date of delivery and payment for the Project Bonds
pursuant to Section 103(c) of the Code. The Company shall provide the Issuer
with, and the Issuer's certificate may be based on, a certificate of an
appropriate officer of the Company setting forth the reasonable expectations of
the Company, on the date of delivery of and payment for the Project Bonds
regarding the amount and use of proceeds of the Project Bonds and facts,
estimates and circumstances on which they are based.
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ARTICLE IV
LOAN BY THE ISSUER TO THE COMPANY
REPAYMENT OF LOAN
Section 4.1. Loan By the Issuer to the Company; Repayment of Loan;
Obligations Unconditional. The Issuer shall lend from time to time, pursuant
to Section 3.3 hereof, to the Company the proceeds of the sale of the Bonds for
the purposes provided in this Agreement. The Company will repay said loan as
follows: On each Bond Payment Date until the principal of and premium, if any,
and interest on all Bonds shall have been fully paid (or provision for the
payment thereof shall have been made in accordance with the provisions of the
Indenture) a sum in immediately available funds which, when added to the
balance which is then in the Bond Fund and available for such purpose, shall be
equal to the amount payable as principal of and premium, if any, and interest
on the Bonds then outstanding under the Indenture on such Bond Payment Date.
In addition to the amounts set forth in the next preceding paragraph, not
later than the fifth (5th) Business Day next succeeding each Interest Payment
Date prior to the Interest Payment Date next preceding the Expiration Date of
the Letter of Credit, the Company shall pay an amount equal to the difference
between the Interest Reserve Requirement and the aggregate amount of Available
Moneys on deposit in or credited to the Bond Fund on the Business Day next
succeeding such Interest Payment Date,
In any event, the amount payable under this Section 4.1 on any Bond
Payment Date shall be sufficient to pay the total amount due with respect to
the principal of and premium, if any, and interest on the Bonds on such Bond
Payment Date. If, after making any transfer from the Construction Fund to the
Bond Fund required by the Indenture, on any Bond Payment Date the balance in
the Bond Fund is insufficient to make required payments of principal of and
premium, if any, and interest on the Bonds on such date, the Company shall
forthwith pay to the Trustee, on behalf of the Issuer for deposit into the Bond
Fund, any such deficiency, provided, however, that if at any time all the
outstanding Bonds are paid and discharged as provided in Article VII of the
Indenture no further such payments shall be required. In the Indenture, the
Issuer has directed the Trustee to apply such payments in accordance with the
provisions of the Indenture and this Agreement.
The obligations of the Company to make the payments required in this
Section 4.1 and in Section 4.3 hereof in the amounts and at the times specified
and to perform and observe the other agreements on its part contained herein
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, any set-off, counterclaim,
recoupment, defense (other than payment itself) or other right which the
Company may have against the Issuer, the Trustee, or anyone else for any reason
whatsoever. The Company hereby waives, to the extent permitted by applicable
law, any and all rights which it may now have or which at any time
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hereafter may be conferred upon it, by statute or otherwise, to terminate or
cancel this Agreement except in accordance with the express terms hereof.
Nothing contained in this Section 4.1 shall be construed to release the Issuer
from the performance of any of the agreements on its part herein contained; and
in the event the Issuer should fail to perform any such agreement on its part,
the Company may institute such action against the Issuer as the Company may
deem necessary to compel performance or recover its damages for nonperformance
so long as such action will not be inconsistent with the agreements on the part
of the Company contained in the first sentence of this paragraph.
In the event the Company should fail to make any of the payments
required in this Section 4.1, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid. The Company agrees to pay interest on all overdue amounts
which represent repayments of principal of or premium on the Bonds at the rate
borne by such Bonds.
Section 4.2. Company's Approval of Indenture. The Indenture has
been submitted to the Company for its examination and review. By its execution
of this Agreement, the Company acknowledges that it has approved the Indenture.
Section 4.3. Prepayments of Loan
(a) Mandatory Prepayment of the Loan. The Company shall be
obligated to prepay unpaid amounts of the loan made by the Issuer to the
Company pursuant to Section 4.1 hereof prior to the stated I maturity of
the Project Bonds in the event that the Project Bonds are required to be
redeemed pursuant to Section 6 of the Bond Legislation for the Project
Bonds,
(b) Optional Prepayments Pursuant to the Indenture. The Company
shall have the right, at its option, to direct the Issuer to effect the
redemption of Project Bonds pursuant to Section 5 of the Bond Legislation
for the Project Bonds.
(c) Optional Prepayments upon Condemnation of Project. After the
Conversion Date, in the event that title to or the temporary use of the
Facilities, or any part thereof, shall be taken under the exercise of the
power of eminent domain by any governmental body or by any person, firm or
corporation acting under governmental authority, any Net Proceeds received
from any award made in any such eminent domain proceedings may, at the
option of the Company (which option must be exercised within ninety (90)
days of the date of entry of a final order in any eminent domain
proceedings granting condemnation), be paid to the Trustee in prepayment of
unpaid amounts of the loan made by the Issuer pursuant to Section 4.1
hereof in respect of the Project Bonds and shall be applied by the Trustee
as shall be directed in writing by the Authorized Company Representative
(i)
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to the redemption of all the Project Bonds pursuant to the Indenture
upon exercise of the prepayment option set forth in Section 4.3(d)
below or (ii) to the redemption of less than all the Project Bonds
pursuant to the Indenture or payment into the Bond Fund; provided
that, in the case of (ii), the Company shall furnish the Issuer and
the Trustee (x) a certificate of an Independent Engineer selected by
the Company stating (A) that the property forming a part of the
Facilities that was taken by such condemnation was not essential to
the character of the Facilities as industrial facilities, or (B) that
the Facilities have been restored to a condition substantially
equivalent to their condition as industrial facilities prior to the
taking by such condemnation proceedings, with such changes,
alterations and modifications (including the substitution and addition
of other property) as may be desired by the Company and as will not
materially impair the character of the Facilities as industrial
facilities, or (c) that improvements have been acquired which are
suitable for the operation of the Facilities as industrial facilities,
and (y) an opinion of Independent Tax Counsel or a ruling of the
Internal Revenue Service to the effect that such application of the
Net Proceeds will not jeopardize the exemption of interest on the
Bonds from federal income taxation.
(d) Optional Prepayments in Certain Events. After the
Conversion Date, the Company shall have the right, at its option,
within ninety (90) days following the event under clause (i) or (ii)
below authorizing the exercise of such option, or at any time during
the continuation of an event under clause (iii) or (iv) below
authorizing the exercise of such option, to give written notice to the
Issuer and the Trustee of its exercise of such option and to prepay,
or cause to be prepaid, all the amounts payable pursuant to Section
4.1 hereof in respect of the Project Bonds and such other amounts as
specified in this Section 4.3(d) within ninety (90) days following the
giving of notice of such exercise, if any of the following shall have
occurred:
(i) all or a substantial part of the Facilities
shall have been damaged or destroyed (A) to such extent that
the Company deems it not practicable or desirable to restore
such damaged or destroyed property within a period of three
(3) consecutive months to the condition thereof immediately
preceding such damage or destruction, or (B) to such extent
that the Company is thereby reasonably expected to be
prevented from carrying on its normal operations at the
Facilities for a period of three (3) consecutive months;
(ii) title to, or the temporary use of, all or a
substantial part of the Facilities shall have been taken, or
condemned under the exercise of the power of eminent domain,
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by any governmental authority, person, firm or corporation
acting under governmental authority (including such a taking
or takings as result in the Company's being reasonably
expected to be prevented from carrying on its normal
operations in the Facilities for a period of three (3)
consecutive months);
(iii) changes in costs or economic availability of
energy, labor, raw materials, operating supplies, including
fuel, power, or facilities necessary for the operation of all
or a substantial part of the Facilities shall have occurred,
or such technological or other changes shall have occurred,
Which in the Company's reasonable judgment render continued
operation of all or a substantial part of the Facilities
impracticable or uneconomic for their purpose; or
(iv) any court or administrative body shall enter
a judgments order or decree, or shall take administrative
action, requiring the Company to cease all or any substantial
part of its operations at the Facilities to such extent that
the Company is or will be prevented from carrying on its
normal operations at the Facilities for a period of three (3)
consecutive months.
For purposes of this Section 4.3(d), the term "substantial part" when used with
reference to the Facilities shall mean any part of the Facilities as to which
the total acquisition, restoration and equipping cost amounted to (i) at least
twenty-five percent (25%) of the aggregate principal amount of Project Bonds
originally issued pursuant to the Indenture or (ii) an amount equal to the
aggregate principal amount of Project Bonds then outstanding, whichever is
less.
The amount payable by the Company in the event it is required to prepay
the loan pursuant to subsection (a) of this Section 4.3 or it exercises the
option granted to it in this subsection (d) shall be a sum which, when added to
the moneys and investments held to the credit of the Bond Fund and all other
funds and accounts then held by the Trustee in respect of the Project Bonds and
available for the purpose, will be sufficient pursuant to the provisions of
Article VII of the Indenture to pay and discharge all the then outstanding
Project Bonds on the first possible date for redemption plus an amount of money
payable to the Trustee equal to the Trustee's and paying agents' fees, charges
and expenses under the Indenture accrued and to accrue until such final payment
and redemption of the Project Bonds.
Section 4.4. Delivery of Letter of Credit to Trustee. The Company
shall cause the Letter of Credit to be issued and delivered to the Trustee
concurrently with the original issuance and delivery of the Project Bonds. The
Company hereby authorizes and directs the Trustee to draw moneys under the
Letter of Credit, in accordance with the provisions of the Letter of Credit
Agreement and the Indenture.
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Section 4.5. Satisfaction of Company's Obligation. The obligation
of the Company to make any payments required under Sections 4.1 and 4.3 of this
Loan Agreement shall be deemed to be satisfied and discharged to the extent of
the corresponding payment made by the Bank to the Trustee under the Letter of
Credit.
Section 4.6. Alternate Letter of Credit; Alternate Credit
Facility. At any time prior to the sixtieth (60th) day next preceding the
Expiration Date of the Letter of Credit, the Company may at its option, provide
for the delivery to the Trustee of an Alternate Letter of Credit. An Alternate
Letter of Credit shall be an irrevocable letter of credit, other than the
Letter of Credit issued by the Bank and delivered to the Trustee concurrently
with the original issuance and delivery of the Project Bonds, issued by a
commercial bank, the terms of which shall in all material respects be the same
as the Letter of Credit. At least forty-six (46) Business Days but not more
than sixty (60) days prior to the date of delivery of "a Alternate Letter of
Credit, the Company shall (i) deliver to the Trustee an opinion of Independent
Tax Counsel stating that the delivery of such Alternate Letter of Credit to the
Trustee is authorized under this Agreement and Chapter 165 of the Ohio Revised
Code, complies with the terms of this Loan Agreement and will not adversely
affect the exemption from federal income taxation of interest on the Bonds,
(ii) deliver to the Trustee written evidence from Moody's, if the Project Bonds
are rated by Moody's, and S&P. if the Project Bonds are rated by S&P, in each
case to the effect that such rating agency has reviewed the proposed Alternate
letter of Credit and that the substitution of the Alternate Letter of Credit
for the Letter of Credit will not, by itself, result in a reduction of its
ratings of the Project Bonds from those which then prevail and (iii) direct
that the Trustee notify the Bank and the holders of outstanding Project Bonds,
in accordance with subsection (c) of Section 9 of the Bond Legislation for the
Project Bonds, that an Alternate Letter of Credit will be delivered to the
Trustee.
On or after the Conversion Date or the Interest Payment Date next
preceding the Expiration Date of the Letter of Credit, the Company may provide
for the delivery of an Alternate Credit Facility to provide security for
payment of the principal of and interest on the Project Bonds; provided that
the Company shall (i) deliver to the Trustee an opinion of Independent Tax
Counsel stating that the delivery of such Alternate Credit Facility is
authorized under this Agreement and Chapter 165 of the Ohio Revised Code,
complies with the terms of this Agreement and will not adversely affect the
exemption from federal income taxation of interest on the Bonds and UP direct
the Trustee to notify the Bank and the holders of outstanding Project Bonds, in
accordance with subsection (c) of Section 9 of the Bond Legislation for the
Project Bonds, that an Alternate Credit Facility will be delivered to the
Trustee. In the event that such Alternate Credit Facility is to be delivered
prior to the Conversion Date, such Alternate Credit Facility, or a Liquidity
Facility delivered to the Trustee, may provide for payment of the purchase
price of Project Bonds delivered to the Trustee in accordance with Section 7 of
the Bond legislation for the Project Bonds.
Any Alternative Letter of Credit or Alternative Credit Facility shall have
an initial term of not less than one (1) year.
Section 4.7. Extension of Letter of Credit. The Company may at
its election and with the consent of the Bank, provide for one or more
extensions of the Letter of Credit for any period commencing after January 15,
1988.
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Section 4.8. Notice of Prepayments; Issuer to Effect Redemption.
If the Company shall be required or determines to make any payments, or cause
any payments to be made, pursuant to subsections (a), (b), (c) or (d) of
Section 4.3 hereof, it shall give notice In writing of such intention to the
Issuer and the Trustee, which notice shall state the provisions of the
Indenture under which the Issuer is to apply such payment. In such event or in
the event that moneys in the Bond Fund in respect of the Project Bonds are
sufficient to redeem all the Project Bonds then outstanding under the Indenture
and to pay interest to accrue thereon to the redemption date, the Issuer (or
the Company upon the request and on behalf of the Issuer) will, but only upon
the direction of the Company, forthwith take all steps that may be necessary to
effect the redemption of all or part of the then outstanding Project Bonds as
specified by the Company, on the earliest redemption date on which such
redemption may be made under the applicable provisions of the Indenture.
Except as otherwise provided in said subsections (c) and (d) of Section 4.3
hereof, such notice must be received by the Issuer and the Trustee prior to the
first date on which the Issuer would be required to give notice to the Trustee
or to take any other action in respect to the Issuer's right to effect the
redemption of Bonds pursuant to the appropriate provision of the Indenture.
Section 4.9. Relative Position of this Article and the Indenture.
The rights and options granted to the Company in this Article shall be and
remain prior and superior to the Indenture and may be exercised whether or not
the Company is in default under this Agreement, provided that such default will
not result in nonfulfillment of any condition to the exercise of any such right
or option.
Section 4.10. Place of Payment. All amounts payable by the Company
pursuant to Section 4.1 or Section 4.3 of this Agreement shall be paid directly
to the Trustee at its principal corporate trust office on behalf of the Issuer
for deposit into the Bond Fund as provided in the Indenture and the Issuer
consents to said amounts being paid in such manner.
Section 4.11. Payments to the Remarketing Agent and the Trustee.
The Company shall pay to the Remarketing Agent, as defined in the Indenture,
and the Trustee amounts equal to the amounts to be paid by the Remarketing
Agent pursuant to subsection (I) of Section 7 of the Bond Legislation or by the
Trustee pursuant to subsection (j) of Section 7 of the Bond Legislation for the
Project Bonds, such amounts to be paid by the Company to the Remarketing Agent
or the Trustee on the dates such payments are to be made pursuant to said
subsections (i) or (j); provided, however, that the obligation of the Company
to make any such payments hereunder shall be reduced by the amount of any
moneys available for such payments under clause (i), (ii) (iii) or of said
subsection (i) or clause (i) or (ii) of said subsection (j); and provided,
further, that the obligation of the Company to make any payment hereunder shall
be deemed to be satisfied and discharged to the extent that payment is made
using moneys described in clause (iv) of said subsection (i) or clause (iii) of
said subsection (j).
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ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1. Maintenance of Existence. The Company agrees that
during the Loan Term it will maintain its existence, will not voluntarily
dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another entity or permit one or more
other entities to consolidate with or merge into it; provided, that the Company
may, without violating the agreements contained in this Section 5.1,
consolidate with or merge into another entity, or permit one or more other
entities to consolidate with or merge into it, or sell or otherwise transfer to
another entity all or substantially all of its assets as an entirety and
thereafter dissolve, provided that if the surviving, resulting or transferee
entity, as the case may be, is other than the Company, such surviving,
resulting or transferee entity is solvent, assumes in writing all of the
obligations of the Company hereunder, is organized under the laws of the United
States of America, a state thereof or the District of Columbia and is qualified
to do business in the State.
If consolidation, merger or sale or other transfer is made as provided in
this Section 5.1, the provisions of this Section 5.1 shall continue in full
force and effect and no further consolidation, merger or sale or other transfer
shall be made except in compliance with the provisions of this Section 5.1.
Section 5.2. Qualification in the State. The Company warrants
that it is and throughout the Loan Term it will continue to be an entity either
organized under the laws of the State or qualified to do business in the State
as a foreign entity.
Section 5.3. Indemnification of the Issuer and the Trustee by the
Company. The Company releases the Issuer, the Trustee and their officers and
employees from, agrees that neither the Issuer, the Trustee nor their officers
or employees shall be liable for, and agrees to indemnify and hold the Issuer,
the Trustee and their officers and employees harmless against, any loss or
damage to property, or any loss or injury to or death of any person, that may
be occasioned by any cause whatsoever, pertaining to the Facilities or the use
thereof; provided that the Company shall not be liable for, nor obligated to
hold the Issuer, the Trustee or their officers or employees harmless against,
any loss or damage to property, or any loss or injury to or death of any
person, if such loss or damage or such loss, injury or death results from the
willful negligence or wanton misconduct of the Issuer or the Trustee,
respectively, or either of their employees or agents. The Company further
agrees to indemnify and save harmless the Issuer and the Trustee against and
from any and all costs, liabilities, expenses and claims arising from any
breach or default or occurrence of an Event of Default on the part of the
Company in the performance of any covenant or agreement on the part of the
Company to be performed pursuant to the terms of this Agreement, or arising
from any act or failure to act by the Company, or any of its agents,
contractors, servants, employees, or licensees, or arising from any accident,
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injury or damage whatsoever caused to any person, firm or corporation occurring
during the term of this Agreement, directly relating to operation of the
Facilities and from and against all costs, liabilities and expenses incurred in
or in connection with any such claim or action or proceeding brought thereon.
The Company further agrees to indemnify and save harmless the Issuer from any
and all costs, liabilities, expenses and claims arising from any breach or
default on the part of the Trustee in the performance of its obligations under
the Indenture. In case any action or proceeding be brought against the Issuer
or the Trustee by reason of any such claim, the Issuer or the Trustee, as the
case may be, shall promptly give notice of any such action or proceeding to the
Company and the Company upon notice from the Issuer or the Trustee covenants to
resist or defend such action or proceedings at the Company's expense. Any
failure or defect in any notice given by the Issuer or the Trustee under this
Section shall not relieve the Company from any of its obligations, covenants
and indemnification contained herein.
Section 5.4. Payment of Trustee Fees. Except as paid out of the
Construction Fund pursuant to Section 3.3 of this Agreement, the Company agrees
to pay to or upon the order of the Trustee, during the Loan Term, (i) an amount
equal to the fees of the Trustee, as Trustee, which will be payable on such
dates as shall be mutually agreeable to the Trustee and the Company for the
ordinary services of the Trustee rendered and its ordinary expenses incurred
under the Indenture, (ii) the reasonable fees, charges and expenses of the
Trustee, as bond registrar and paying agent (including any charges imposed with
respect to the transfer of Bonds), and of paying agents on the Bonds for acting
as paying agents as provided in the Indenture, as and when the same become due,
and (iii) the reasonable fees, charges and expenses of the Trustee for
Extraordinary Services rendered and Extraordinary Expenses, each as defined in
the Indenture, incurred by it under the Indenture, as and when the same become
due; provided that the Company may contest in good faith the necessity for any
such Extraordinary Services and Extraordinary Expenses and the reasonableness
of any such fees, charges or expenses, (so long as such action shall not impair
the agreements of the Company contained in this Section 5.4) and such contest
or action shall not constitute a default or an Event of Default hereunder.
Section 5.5. Maintenance and Operation of the Facilities. The
Company agrees that it will commence operation of the Facilities as portions
thereof become available for utilization, and during the Loan Term it will keep
the Facilities including all appurtenances thereto in good repair and good
operating condition at its own cost.
The Company shall have the privilege of remodeling the Facilities or
making additions, modifications, substitutions and improvements to the
Facilities from time to time as it, in its sole discretion, may deem to be
desirable for its uses and purposes, provided that such remodeling, additions,
modifications, substitutions and improvements, when constructed do not
materially impair the character of the Facilities as an industrial facility.
The cost of such remodeling, additions, modifications, substitutions and
improvements shall be paid by the Company or, to the extent permitted by this
Agreement and the Indenture, from the Construction Fund or from the proceeds of
Additional Bonds.
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The Company may remove and dispose of any items included as Facilities which
the Company determines have become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary, provided that any such removal will not materially
impair the character of the Facilities as an industrial facility. In the event
any such removal causes damage to the remaining Facilities, the Company shall
restore the same or repair such damage.
The Company may from time to time, in its sole discretion, and at its own
expense, install additional property in conjunction with the Facilities. Such
property may be modified or removed at any time provided that such modification
or removal will not materially adversely affect the character of the Facilities
as an industrial facility.
Section 5.6. Tax-Exempt Status of the Project Bonds. The Company
covenants and agrees that it has not taken and will not take or cause to be
taken any action which results in interest paid on the Project Bonds being
included in gross income of the holders of the Project Bonds for the purposes
of federal income taxation; provided, however, the Company shall not be
responsible under this Section 5.6 for any changes after the original delivery
of the Project Bonds in applicable laws, rules or regulations, or in the
application or official interpretation thereof by any court, administrative
agency or other governmental body affecting the taxation of interest on the
Project Bonds.
The Company covenants and agrees that it will take or cause to be taken
such reasonable actions as it, in its discretion, determines are necessary to
preserve the tax-exempt status of the Project Bonds; and the Issuer covenants
and agrees that it will, at the request of the Company, take all reasonable
actions to preserve the tax-exempt status of the Project Bonds; provided,
however, that neither the Company nor the Issuer shall be required to enter an
appearance in or intervene in any administrative, legislative or judicial
proceeding in connection with any changes in applicable laws, rules or
regulations, or decisions of any court or administrative agency or other
governmental body affecting the taxation of interest on the Project Bonds.
The Company will, and will cause each other "principal user" of the
Facilities to, attach to, and file with, its federal income tax return, for the
first fiscal year of the Company or such "principal user" ending after the date
of the issuance of the Project Bonds, a copy of the tax election filed with
respect to the Project Bonds by the Issuer pursuant to Treasury Regulations
Section 1.103-10(b)(2)(vi)(a). In addition, the Company will, and will cause
each other "principal user" of the Facilities to, attach to, and file with, its
federal income tax returns, for each of the fiscal years of the Company or such
"principal user" ending after the date of the issuance of the Project Bonds to
and including the first fiscal year of the Company or such "principal user"
ending after the same day and month in 1987 as the day and month of the date of
initial authentication of the Project Bonds, the supplemental statement of
capital expenditures required to be filed in accordance with Treasury
Regulation Section 1.03-10(b)(2)(vi)(c). Within thirty (30) days after the
filing of any federal income tax return with which
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any supplemental statement is required to be filed in accordance with the
preceding sentences the Company will deliver a copy of such supplemental
statement to the Trustee.
Section 5.7. Insurance Required. Throughout the Loan Term the
Company shall keep the Facilities continuously insured against such risks as
are customarily insured against by businesses of like size and type, paying as
the same become due all premiums in respect thereto. The insurance hereby
required may be contained in blanket policies now or hereafter maintained by
the Company and may provide for such deductible provisions as are customary
with businesses of like size and type. In addition, the Company shall comply,
or cause compliance, with applicable workers' compensation laws of the State.
Section 5.8. Taxes, Other Governmental Charges and Utility
Charges. The Company agrees to pay, as the same respectively become due, all
taxes, assessments, whether general or special, and governmental or utility
charges of any kind whatsoever that may at any time be lawfully assessed,
levied or imposed against or with respect to or incurred in the operation,
maintenance or use of the Facilities (including, without limiting the
generality of the foregoing, any taxes levied upon or with respect to the
receipts, income or revenues of the Issuer from this Agreement) which, if not
paid, may become or be made a lien or a charge on the amounts payable by the
Company under this Agreement.
The Company may, at its expense and in its own name and behalf, in good
faith contest any such takes, assessments or charges and, in the event of any
such contests may permit the taxes, assessments or charges so contested to
remain unpaid during the period of such contest, including any appeal period,
unless by nonpayment of any such items prior to the final adjudication of said
contest (i) the ability of the Company to make the payments hereunder will be
materially endangered or (ii) the moneys or investments in the Bond Fund or the
Construction Fund will be subject to loss or forfeiture or (iii) the continued
proper and efficient operation of the Facilities will be materially threatened,
and in any such event such taxes, assessments or charges shall be paid
promptly.
Section 5.9. Damage; Destruction and Eminent Domain. If at any
time during the Loan Term, the Facilities, or any portion thereof, shall be
damaged or destroyed by fire, flood, windstorm or other casualty or title to,
or the temporary use of the Facilities, or any portion thereof, shall have been
taken by the exercise of the power of eminent domain, the Company (unless it
shall have exercised its option to prepay the loan in respect of the Project
Bonds made hereunder pursuant to Section 4.3(c) or 4.3(d) hereof) shall cause
the Net Proceeds from insurance or condemnation or an amount equal thereto (i)
to be used for the repair, reconstruction, restoration or improvement of such
Facilities, or such portion thereof, as commercial facilities, or (ii) to be
used for the acquisition, construction or improvement of additional commercial
facilities within the Issuer for use in connection with operational facilities
of the Company, provided that the Company shall first have obtained an opinion
of Independent Tax Counsel or a ruling of the Internal Revenue Service that
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the proposed use pursuant to this clause (ii) will not under applicable
statutes and regulations cause the interest on the Project Bonds to become
included in the gross income of the holders of the Project Bonds for the
purposes of federal income taxation, or (iii) to be deposited into the Bond
Fund (but only for application, as instructed by the Authorized Company
Representative, to the purchase of Bonds in the open market for the purpose of
cancellation at prices not exceeding the then open market price of the Bonds or
to the redemption of the Bonds at the next available optional redemption date
in the manner provided in the Indenture), or (iv) to be used for any
combination of the purposes permitted by (and subject to the conditions
described in) clauses (i), (ii) and (iii) above.
Section 5.10. Company's Obligation To Pay Certain Expenses of the
Issuer. The Company agrees to pay to the Issuer reasonable out-of-pocket or
extraordinary expenses of the Issuer, related to the Facilities and incurred as
a result of a request of the Company or a requirement (in the reasonable
judgment of the Issuer) of this Agreement or the Indenture, and which are not
otherwise required to be paid by the Company under the terms of this Agreement,
including but not limited to the fees and expenses incurred in complying with
Section 15(e) of the Bond Legislation for the Project Bonds.
In the event the Company should fail to make any of the payments required
in this Section 5.10, the item or installment so in default shall continue as
an obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon until paid
at the Interest Rate for Advances.
Section 5.11. Application of Certain Proceeds Prior to the
Expiration Date of the Letter of Credit. Notwithstanding the provisions of
Section 5.9 of this Agreement, prior to the Expiration Date of the Letter of
Credit, any moneys available for application in accordance with clause (iii) of
Section 5.9 of this Agreement shall be held by the Trustee in a separate
account for a period of one hundred twenty-three (123) days from the date of
receipt thereof. If during said one hundred twenty-three (123) day period no
petition in bankruptcy or similar insolvency proceeding has been filed by or
against the Company or by the Issuer, such moneys shall be applied to the
maximum extent possible to the purchase for cancellation or redemption of
outstanding Project Bonds, and any moneys remaining thereafter shall be applied
to payment of interest on the Project Bonds on the Interest Payment Date next
following said one hundred twenty-three (123) day period.
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default. An Event of Default shall
mean one or more of the following described events:
(a) Failure by the Company to pay any amounts
required to be paid under Sections 4.1 or 4.3 of this
Agreement on or prior to the date in which payment is required
to be made by said Sections 4.1 or 4.3;
(b) Failure by the Company to observe and perform
any covenant, condition or agreement on its part to be
observed or performed under this Agreement, other than as
referred to in paragraph (a) of this Section 6.1 or in Section
5.6 of this Agreement, and the continuance thereof for a
period of 60 days after written notice, specifying such
failure and requesting that it be remedied, has been given to
the Company by the Issuer or the Trustee, unless the Trustee
shall agree to an extension of such time prior to its
expiration, or if the failure be such that it cannot be
corrected within the applicable period, it shall not
constitute an Event of Default if corrective action is
instituted by the Company within the applicable period and
diligently pursued until the failure is corrected;
(c) The Company shall (i) apply for or consent to
the appointment of, or the taking or possession by, a
receiver, custodian, trustee or liquidator of the Company or
of all or a substantial part of its property, (ii) admit in
writing its inability to pay its debts as such debts become
due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, winding up, or
composition or adjustment of debts, (vi) fail to controvert in
a timely or appropriate manner, or acquiesce in writing to,
any petition filed against the Company in an involuntary case
under said Federal Bankruptcy Code, or (vii) take any action
for the purpose of effecting any of the foregoing; or
(d) A proceeding or case shall be commenced,
without the application or consent of the Company, in any
court of competent jurisdiction, seeking (i) the liquidation,
reorganization, dissolution, winding-up, or composition or
readjustment of debts, of the Company, (ii) the appointment
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<PAGE> 35
of a trustee, receiver, custodian, liquidator or the like of
the Company or of all or any substantial part of its assets or
(iii) similar relief in respect of the Company, as the case
may be, under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of
debts, and such proceedings or case shall continue
undismissed, or an orders judgment or decree approving or
ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) days from
commencement of such proceeding or case, or an order for
relief against the Company shall be entered in an involuntary
case under said Federal Bankruptcy Code.
The provisions of subsection (b) of this Section are subject to the limitation
that if, by reason of Force Majeure, the Company is unable in whole or in part
to carry out its agreements on its part herein contained, other than the
obligations on the part of the Company contained in Sections 4.1, 4.3, 5.3,
5.4, 5.7 and 5.8 hereof, the Company shall not be deemed in default during the
continuance of such inability. The Company agrees, however, to use all
reasonable efforts to remedy with all reasonable dispatch the cause or causes
preventing the Company from carrying out its agreements; provided, that the
settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Company, unfavorable to the Company.
The declaration of an Event of Default under subsections (c) or (d) of
this Section 6.1, and the exercise of remedies upon any such declaration, shall
be subject to any applicable limitations of federal bankruptcy law affecting or
precluding such declaration or exercise during the pendency of or immediately
following any bankruptcy, insolvency or reorganization proceedings.
The provisions of Sections 6.1 and 6.2 hereof are subject to the
further limitation that the rescission or annulment of a declaration that all
the Bonds outstanding under the Indenture are immediately due and payable shall
also constitute a rescission or annulment of any corresponding declaration made
pursuant to Sections 6.1 or 6.2 hereof and a waiver and rescission of the
consequences of such declaration and of the Event of Default with respect to
which such declaration had been made, provided that no such waiver or
rescission shall extend to or affect any subsequent or other Event of Default
or impair any right consequent thereon.
Section 6.2. Remedies on Events of Default. Whenever any Event of
Default referred to in Section 6.1 hereof shall have happened and be
subsisting, any one or more of the following remedial steps may be taken;
provided, however, that if an Event of Default under subsection b of Section
6.1 occurs as a result of the failure to observe or perform any covenants or
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<PAGE> 36
agreements under Section 5.5 hereof, the remedies of the Issuer and the Trustee
shall be limited to those provided in subsections (c) and (d) of this Section
6.2:
(a) The Issuer or the Trustee may, or the Trustee, under
the circumstances provided in Section 8.02 of the Indenture, shall be
obligated to, declare, as the case may be, all unpaid amounts payable
pursuant to Sections 4.1 or 4.3 of this Agreement to be immediately
due and payable, whereupon the same shall become immediately due and
payable;
(b) The Issuer may at its option, or the Trustee, as
provided in Section 8.03 of the Indenture, may at its option take or
shall be obligated to take, as the case may be, whatever action at law
or in equity may appear necessary or desirable to collect the amounts
then due and thereafter to become due;
(c) The Issuer or the Trustee may take whatever action at
law or in equity may appear necessary or desirable to enforce
performance and observance of any obligation, agreement or covenant of
the Company under this Agreement; and
(d) In the event any of the Bonds shall at the time be
outstanding and unpaid, the Issuer or the Trustee may have access to
and inspect, examine and make copies of the books and records and any
and all accounts and data of the Company as the Issuer may reasonably
request but only, however, in so far as they pertain to the
Facilities.
Any amounts collected pursuant to action taken under this Section 6.2 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if the Bonds have been fully paid (or provision for payment
thereof has been made) in accordance with the provisions of the Indenture, and
all reasonable fees, charges and expenses of the Trustee and paying agents
provided for herein have been paid, shall be paid to the Company; provided,
however, that any such amounts which do not represent payments which the
Company is required to make pursuant to Sections 4.1 or 4.3 of this Agreement
shall be paid to the party to whom such amounts are owed.
Section 6.3. No Remedy Exclusive. No remedy conferred upon or
reserved to the Issuer or the Trustee by this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law, in equity or by
statute. No delay in exercising or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right and power which
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the Issuer or the Trustee to exercise any remedy reserved
-32-
<PAGE> 37
to it in this Article VI, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required.
Section 6.4. Agreement To Pay Attorneys' Fees and Expenses. Should
an Event of Default occur or in the event the Company should default under any
of the provisions of this Agreement and the Issuer or the Trustee should employ
attorneys or incur other expenses for the collection of the amounts payable
hereunder by the Company or the enforcement of performance or observance of any
obligation or agreement on the part of the Company contained in this Agreement,
the Company agrees that it will on demand therefor reimburse the lawful and
reasonable fees of such attorneys and such other expenses so incurred. If any
such fees and expenses are not so reimbursed, the amount thereof, together with
interest thereon from the date of demand for payment at the Interest Rate for
Advances, shall, to the extent permitted by law, constitute indebtedness
secured hereby and by the Indenture, and in any action brought to collect such
indebtedness, the Trustee or the Issuer, as applicable, shall be entitled to
seek the recovery of such fees and expenses in such action except as limited by
law or by judicial order or decision entered in such proceedings.
Section 6.5. No Additional Waiver Implied by One Waiver. In the
event any agreement contained in this Agreement should be breached by either
party and thereafter waived by the other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder.
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<PAGE> 38
ARTICLE VII
MISCELLANEOUS
Section 7.1. Termination of Agreement. This Agreement shall be in
full force and effect from the date hereof until the end of the Loan Term, at
which time the obligations of the Issuer and the Company hereunder shall
terminate, provided that any obligations of the Company with respect to the
payment of costs and expenses under this Agreement shall survive such
termination and continue in effect until such costs and expenses are paid.
Section 7.2. Confidential Information. The Company shall not be
required to disclose, or to permit the Issuer, the Trustee or others to acquire
access to, any information deemed by the Company to be proprietary or
confidential.
Section 7.3. Cancellation of Bonds. The Company shall have the
right to cause Bonds to be delivered to the Trustee for cancellation, and the
Issuer shall cause the Trustee to cancel any Bonds so delivered to the Trustee.
Section 7.4. Amounts Remaining in Bond Fund Construction Fund and
Other funds and Accounts. It is agreed by the parties hereto that any amounts
remaining in the Bond Fund, the Construction Fund or any other fund or account
created under this Agreement or the Indenture and held by the Trustee after
payment in full of the Bonds (or provision for payment thereof having been
made) in accordance with the provisions of the Indenture and the fees, charges
and expenses of the Trustee and paying agents and all other amounts required to
be paid under the Indenture or under this Agreement shall belong to and be paid
by the Trustee to the Bank to the extent that any monies are owed the Bank
pursuant to the Letter of Credit Agreement and, otherwise, to the Company.
Section 7.5. Notices. All notices, certificates, requests or
other communications hereunder shall be sufficiently given and shall be deemed
given when mailed by registered mail, postage prepaid, addressed to the Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, the Bank or the
Trustee shall also be given to the others. The Company, the Issuer and the
Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
Section 7.6. Binding Effect; Parties in Interest. This Agreement
shall inure to the benefit of and shall be binding upon the Issuer, the Company
and their respective successors and assigns, subject, however, to the
limitations contained in Sections 4.1 and 5.1 hereof, and subject to the
further limitation that any obligation of the Issuer created by or arising out
of this Agreement shall not be a general debt of the Issuer but shall be
payable solely out of payments, revenues and other income, charges and moneys
realized under this Agreement, the sale of the Bonds or the Net Proceeds as
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<PAGE> 39
provided herein. Nothing in this Agreement is intended or shall be construed
to give to any person, firm or corporation other than the Trustee and the
parties hereto any legal or equitable remedy or claim under or in respect of
this Agreement or any provision herein contained.
Section 7.7 Extent of Covenants of the Issuer; No
Personal Liability. All covenants, stipulations, obligations and agreements of
the Issuer contained in this Agreement shall be effective to the extent
authorized and permitted by applicable law. No such covenant, stipulation,
obligation or agreement shall be deemed to be a covenant, stipulation,
obligation or agreement or any present or future member, officer, agent or
employee of the Issuer in his individual capacity, and neither the members of
the Legislative Authority nor any official executing the Bonds shall be liable
personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof or by reason of the covenants,
stipulations, obligations or agreements of the Issuer contained in this
Agreement or in the Indenture.
Section 7.8. Amendments, Changes and Modifications. Except as
otherwise provided in this Agreement or in the Indenture, subsequent to the
initial issuance of Bonds and prior to payment of the Bonds in full (or
provision of the payment thereof having been made) in accordance with the
provisions of the Indenture, this Agreement may not be effectively amended,
changed, modified, altered or terminated without the prior written consent of
the Trustee, and prior to the Expiration Date of the Letter of Credit, the
Bank.
Section 7.9. Execution Counterparts. This Agreement may be
executed in several counterparts, each of which shall be regarded as an
original and all of which shall constitute but one and the same Agreement.
Section 7.10. Severability. If any clause, provision or section of
this Agreement be held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any of the remaining clauses,
provisions or sections hereof and this Agreement shall be construed and
enforced as if such illegal or invalid clause, provision or section had not
been contained herein. In case any agreement or obligation contained in this
Agreement be held to be in violation of law then such agreement or obligation
shall be deemed to be the agreement or obligation of the Issuer or the Company,
as the case may be, to the full extent permitted by law.
Section 7.11. Captions. The captions or headings in this Agreement
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Agreement.
Section 7.12. Governing Law. This Agreement shall be governed
exclusively by and construed in accordance with the laws of the State.
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<PAGE> 40
IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective names by their duly authorized
representatives, all as of the date first above written.
Signed and acknowledged COUNTY OF DELAWARE, OHIO
in the presence of:
[SIG]
- ----------------------------- By: [SIG]
------------------------------------
County Commissioner
[SIG]
- -----------------------------
Signed and acknowledged RADIATION STERILIZERS, INCORPORATED
in the presence of:
- ------------------------------ By: /s/ ALLAN CHIN
------------------------------------
- ----------------------------- Its: President
-----------------------------------
STATE OF OHIO :
: ss.
COUNTY OF DELAWARE :
On this 24 day of December, 1984, before me, a Notary Public in and for said
County and State, personally appeared,______________, a member of the Board of
County Commissioners of Delaware County, Ohio who acknowledged the execution of
the foregoing instrument, and that the same is such Commissioner's voluntary act
and deed, on behalf of said County and the voluntary act and deed of said
County as such.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year aforesaid.
/s/ RICHARD KANE
----------------------------------------
Notary Public
[SEAL]
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<PAGE> 41
STATE OF CALIFORNIA :
: ss.
COUNTY OF San Mateo :
On this 20th day of December, 1984, before me , a Notary Public in and for said
County and State, personally appeared Allan Chin, _______________of Radiation
Sterilizers, Incorporated, the corporation which executed the foregoing
instrument, who acknowledged that he executed said instrument as such officer
for and on behalf of said corporation and by authority granted in its bylaws
and by an action by its board of directors; that the same is his free act and
deed as such officer and the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year aforesaid.
/s/ Claudia Belmessieri
----------------------------------------
Notary Public
[SEAL]
This instrument was prepared by Richard F. Kane, Esq., Bricker & Eckler, 100
East Broad Street, Columbus, Ohio 43215.
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<PAGE> 42
EXHIBIT A
FACILITIES
The Facilities consists of a 20,800 square foot building located on a
1.343 acre site. The building is of steel frame construction with an exterior
insulated steel panel that is coated on all sides with a 20-year factory
applied finish. It includes 1,250 square feet of air conditioned office area
and a radiation cell comprising 4,000 square feet. The radiation cell is a
monolithically poured, reinforced concrete structure, with walls and roof being
six feet thick, covering a 23-foot deep, stainless steel lined, water pool.
The balance of the building is used for storage, loading, and shipping
materials.
The building site includes ample on-site parking and a loading dock to
the rear of the building. There are fifty feet of contoured landscaping in
front of the building, and ten to fifteen feet of landscaping along the sides
and rear of the site.
The principal installed equipment consists of a computer controlled
conveyor system and a quantity of Cobalt-60. The business of the Company is to
utilize the Cobalt-60 to sterilize materials--primarily medical
supplies--manufactured by other companies. The process also has potential
applications for sterilizing foodstuffs.
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<PAGE> 43
CERTIFICATE
The undersigned fiscal officer of the County of Delaware, Ohio, hereby
certifies that the moneys required to meet the obligations of the County during
1984 under the aforesaid Loan Agreement have been lawfully appropriated by the
Board of County Commissioners of such County for such purposes and are in the
treasury of the County or in the process of collection to the credit of an
appropriate fund, free from any previous encumbrances. This Certificate is
given in compliance with Sections 5705.41 and 5705.44, Ohio Revised Code.
/s/ DAVID R. THOMAS
----------------------------------------
County Auditor of Delaware County, Ohio
Dated: December 24, 1984
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<PAGE> 1
EXHIBIT 10.22
- --------------------------------------------------------------------------------
TRUST AGREEMENT
Between
COUNTY OF DELAWARE, OHIO
And
BANK ONE TRUST COMPANY, NA, AS TRUSTEE
Dated as of December 1, 1984
-----------------------
Relating to
$4,900,000
County of Delaware, Ohio
Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project)
------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INDEX
(This Index is not a part of the Indenture
but is for convenience of reference only)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Preambles ..................................................................... 1
Authorizing Resolution ........................................................ 2
Form of Project Bond .......................................................... 37
Granting Clauses .............................................................. 55
ARTICLE I
Definitions .......................................................... 57
ARTICLE II
Section 2.01 Form of Bonds ............................................... 58
Section 2.02 Terms of Bonds .............................................. 58
Section 2.03 Execution of Bonds--Authentication........................... 58
Section 2.04 Transfer and Exchange of Bonds .............................. 58
Section 2.05 Mutilated, Lost, Wrongfully Taken or
Destroyed Bonds .................................... 60
Section 2.06 Cancellation of Bonds ....................................... 61
Section 2.07 Delivery of the Project ..................................... 62
Section 2.08 Delivery of Additional Bonds ................................ 63
ARTICLE III
Section 3.01 Privilege of Redemption and Redemption
Price .......................................... 64
Section 3.02 Issuer's Election to Redeem ................................. 64
Section 3.03 Notice of Redemption ........................................ 65
Section 3.04 Payment of Redeemed Bonds ................................... 65
ARTICLE IV
Section 4.01 Provision for Payment ....................................... 66
Section 4.02 Nonpresentment of Bonds ..................................... 66
Section 4.03 Trustee's and Paying Agents Fees,
Charges and Expenses............................ 66
Section 4.04 Moneys to Be Held in Trust .................................. 67
Section 4.05 Repayment to the Company from the Bond
Fund and Other Funds or Accounts................ 67
Section 4.06 Notice of Failure to Make Payments Under
Loan Agreement ................................. 68
Section 4.07 Provision for Payment of Project Bonds....................... 68
Section 4.08 Letter of Credit ............................................ 68
</TABLE>
<PAGE> 3
ARTICLE V
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.01 Records of Construction Fund.................................. 70
Section 5.02 Completion of the Facilities.................................. 70
ARTICLE VI
Section 6.01 Investments .................................................. 70
ARTICLE VII
Section 7.01 Release of Indenture ......................................... 71
Section 7.02 Payment of Bonds ............................................. 71
ARTICLE VIII
Section 8.01 Default; Events of Default.................................... 73
Section 8.02 Acceleration ................................................. 74
Section 8.03 Other Remedies ............................................... 75
Section 8.04 Right of Bondholders to Direct Proceeding..................... 76
Section 8.05 Application of Moneys ........................................ 76
Section 8.06 Remedies Vested in Trustee.................................... 78
Section 8.07 Rights and Remedies of Bondholders............................ 78
Section 8.08 Termination of Proceedings.................................... 79
Section 8.09 Waivers of Events of Default.................................. 79
ARTICLE IX
Section 9.01 Trustee's Acceptance and Responsibilities..................... 81
Section 9.02 Fees, Charges and Expenses of Trustee and
Paying Agents ........................................... 84
Section 9.03 Notice to Bondholders if Event of Default
Occurs .................................................. 84
Section 9.04 Intervention by Trustee ...................................... 85
Section 9.05 Successor Trustee ............................................ 85
Section 9.06 Resignation by the Trustee ................................... 85
Section 9.07 Removal of the Trustee ....................................... 85
Section 9.08 Appointment of Successor Trustee by the
Bondholders ............................................. 85
Section 9.09 Concerning Any Successor Trustee.............................. 86
Section 9.10 Trustee Protected in Relying Upon Resolu-
tions, etc .............................................. 86
Section 9.11 Successor Trustee as Custodian, Bond
Registrar and Paying Agent............................... 86
Section 9.12 Adoption of Authentication ................................... 87
Section 9.13 Succession of Paying Agents .................................. 87
Section 9.14 Right of Trustee to Pay Taxes and Other
Charges ................................................. 87
</TABLE>
<PAGE> 4
ARTICLE X
<TABLE>
<CAPTION>
<S> <C> <C>
Section 10.01 Supplemental Indentures Not Requiring
Consent of Bondholders ............................. 88
Section 10.02 Supplemental Indentures Requiring Consent
of Bondholders ..................................... 88
Section 10.03 Modification by Unanimous Consent............................ 90
Section 10.04 Supplemental Indentures Requiring Consent
of the Bank ........................................ 90
Section 10.05 Rights of Company ........................................... 91
Section 10.06 Execution by Trustee ........................................ 91
ARTICLE XI
Section 11.01 Amendments, etc., to Loan Agreement Not Requiring
Consent of Bondholders ............................. 92
Section 11.02 Amendments, etc., to Loan Agreement
Requiring Consent of Bondholders.................... 92
Section 11.03 Consent by Trustee .......................................... 92
ARTICLE XII
Section 12.01 Consents, etc., of Bondholders .............................. 93
Section 12.02 Limitation of Rights ........................................ 93
Section 12.03 Extent of Covenants; No Personal
Liability .......................................... 94
Section 12.04 Severability ................................................ 94
Section 12.05 Notices ..................................................... 94
Section 12.06 Trustee as Paying Agent and Bond Registrar................... 95
Section 12.07 Payments Due on Days Other Than Business
Days ............................................... 95
Section 12.08 Priority Over Other Liens ................................... 95
Section 12.09 Binding Effect .............................................. 95
Section 12.10 Counterparts ................................................ 95
Section 12.11 Captions .................................................... 95
Section 12.12 Governing Law ............................................... 95
Section 12.13 Notice to S & P ............................................. 96
Signatures .................................................................... 96
Acknowledgments ............................................................... 96
</TABLE>
<PAGE> 5
TRUST AGREEMENT
THIS TRUST AGREEMENT (hereinafter sometimes called the "Trust
Agreement" or "Indenture") dated as of the lst day of December, 1984, by and
between the COUNTY OF DELAWARE, OHIO (hereinafter sometimes called the
"Issuer"), a county and political subdivision in and of the State of Ohio, and
Bank One Trust Company, NA, a national banking association organized and
existing under and by virtue of the laws of the United States of America, with
its principal place of business located in Columbus, Ohio (hereinafter sometimes
called the "Trustee"), as Trustee;
WHEREAS, by virtue of the authority of the Constitution and laws of the
State of Ohio, and particularly Article VIII, Section 13 of the Constitution and
Chapter 165 of the Ohio Revised Code, and pursuant to the Bond Legislation
referred to below, the Issuer is authorized to enter into this Indenture and to
do or cause to be done all the acts and things herein provided or required to be
done; to make loans for the acquisition, construction and equipping of the
Facilities, hereinafter defined, comprising an industrial facility for the
sterilization of packaged products using ionizing radiation, to be owned by
Radiation Sterilizers, Incorporated (the "Company") and located in the Green
Meadows industrial park in Delaware County, Ohio, which Facilities, when
acquired, constructed and equipped, will preserve jobs and create and cause the
creation of additional jobs and employment opportunities and improve the
economic welfare of the people of the Issuer and of the State of Ohio; and to
issue the Bonds, as hereinafter defined, as provided in said Bond Legislation;
and
WHEREAS, the Issuer has, for the purpose of meeting in part the costs
and requirements in connection with the acquisition, construction and equipping
of the Facilities and incidental thereto and the financing thereof, determined
now to sell Project Bonds, as hereinafter defined, in the principal amount of
$4,900,000 to the Original Purchaser, as hereinafter defined, and to enter into
this Indenture to secure the Bonds, as hereinafter defined, issuable hereunder
by the pledge and assignment of revenues from the loan of the Bond proceeds, all
as set forth and declared in the Bond Legislation; and
WHEREAS, said Bond Legislation is incorporated herein, constitutes an
integral part of this Indenture, and provides, in its entirety, as follows:
<PAGE> 6
A RESOLUTION AUTHORIZING THE ISSUANCE OF $4,900,000 VARIABLE RATE
DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS OF THE COUNTY OF DELAWARE,
OHIO (RADIATION STERILIZERS, INCORPORATED PROJECT) FOR THE PURPOSE OF
PROVIDING FUNDS TO MAKE A LOAN TO RADIATION STERILIZERS, INCORPORATED
TO ASSIST IN THE FINANCING OF THE COSTS OF THE ACQUISITION,
CONSTRUCTION AND EQUIPPING OF A PROJECT AS DEFINED IN SECTION 165.01 OF
THE OHIO REVISED CODE; AUTHORIZING THE ISSUANCE OF ADDITIONAL
INDUSTRIAL DEVELOPMENT REVENUE BONDS; PROVIDING FOR THE PLEDGE OF
REVENUES FOR THE PAYMENT OF SAID BONDS; APPOINTING A REMARKETING AGENT;
AUTHORIZING A LOAN AGREEMENT WITH RESPECT TO THE PROCEEDS DERIVED FROM
THE SALE OF SAID BONDS; AUTHORIZING A TRUST AGREEMENT APPROPRIATE FOR
THE PROTECTION AND DISPOSITION OF SUCH REVENUES AND TO FURTHER SECURE
THE PAYMENT OF PRINCIPAL OF AND ANY PREMIUM AND INTEREST ON SUCH BONDS;
AND AUTHORIZING A CONTRACT OF PURCHASE APPROPRIATE FOR THE SALE OF SUCH
BONDS.
WHEREAS the County of Delaware, Ohio (hereinafter sometimes called the
"Issuer") is a county and political subdivision in and of the State of Ohio, and
by virtue of the laws of the State of Ohio, including Article VIII, Section 13
of the Constitution of Ohio and Chapter 165 of the Ohio Revised Code, is
authorized and empowered, among other things, (a) to make loans to persons to
assist in the financing of the costs of acquisition, construction and equipping
of industrial facilities within the boundaries of the Issuer, upon certain
determinations by the Legislative Authority of the Issuer heretofore made and
herein confirmed, (b) to issue revenue bonds of the Issuer for the purpose of
providing funds to make such loans, (c) to secure such revenue bonds by a trust
agreement between the Issuer and a corporate trustee, including therein the
pledge and assignment of revenues from such loans to the payment of such revenue
bonds for the benefit of the bondholders, and (d) to enact this Bond Legislation
and enter into the Indenture, the Loan Agreement and the Contract of Purchase
hereinafter identified, upon the terms and conditions provided therein; and
WHEREAS Radiation Sterilizers, Incorporated (hereinafter sometimes
called the "Company") is a corporation duly organized under the laws of the
State of California and qualified to do business in the State of Ohio; and
WHEREAS, the Legislative Authority of the Issuer has heretofore found
and determined, and does hereby confirm that (a) the property to be acquired,
constructed and equipped with the proceeds of the Bonds herein authorized is a
"project" within the meaning of that term as defined in Section 165.01 of the
Ohio Revised Code, and (b) the utilization of the Facilities (as
-2-
<PAGE> 7
hereinafter defined) is economically sound and will benefit the people of the
Issuer by creating or preserving jobs and increasing opportunities for
employment and strengthening the economic welfare of the people of the Issuer
and the State of Ohio; and the Issuer shall assist in the financing of such
property for the purpose of promoting the industrial and economic development of
the Issuer, and thereby of the State of Ohio; and
WHEREAS, it has been estimated and is determined by the Legislative
Authority that the amount necessary to finance the cost of the Facilities,
including necessary expenses incidental thereto, will require the issuance, sale
and delivery of Project Bonds in the principal amount of $4,900,000 as
hereinafter provided, and hereafter may require the Issuer's best efforts to
issue, sell and deliver Additional Bonds on a parity therewith, as hereinafter
described, at such time or from time to time as may be required under the
provisions of Sections 1 and 14 of this Bond Legislation, all of which Project
Bonds and Additional Bonds are equally and ratably payable from and secured by a
pledge and assignment of the revenues to be derived from the Loan Agreement
hereinafter identified and further secured by a trust agreement hereinafter
provided for between the Issuer and a Trustee;
NOW, THEREFORE, BE IT RESOLVED, by the Board of County Commissioners of
the County of Delaware, Ohio:
Section 1. Authorization of $4,900,000 Industrial Development Revenue
Bonds. It is hereby determined to be necessary to, and the Issuer shall, issue,
sell and deliver, as provided herein, $4,900,000 principal amount of Project
Bonds, pursuant to the authority of Article VIII, Section 13 of the Constitution
of Ohio and Chapter 165 of the Ohio Revised Code, for the purpose of providing
funds to lend to the Company so that the Company may acquire, construct and
equip property comprising an industrial facility for the sterilization of
packaged products using ionizing radiation, located in Delaware County, Ohio, in
order to promote the industrial and economic development of the State of Ohio
and benefit the people of the Issuer by preserving and creating jobs and
increasing opportunities for employment and strengthening the economic welfare
of the people of the Issuer and the State of Ohio. Said Project Bonds shall be
designated "County of Delaware, Ohio Variable Rate Demand Industrial Development
Revenue Bonds (Radiation Sterilizers, Incorporated Project)". The Issuer may
also issue, sell and deliver Additional Bonds on a parity with the Project Bonds
for the purposes and in the manner provided in Section 14 of this Bond
Legislation.
Section 2. Definitions. In addition to the words and terms elsewhere
defined in this Bond Legislation, the following words and terms as used in this
Bond Legislation and in the
-3-
<PAGE> 8
Indenture shall have the following meanings unless the context or use indicates
another or different meaning or intent and such definitions shall be equally
applicable to both the singular and plural forms of any of the words and terms
herein defined:
"Additional Bonds" means the industrial development revenue bonds of
the Issuer which may be issued under Section 14 of this Bond Legislation.
"Adjustment Date" means, after the Conversion Date, the Interest
Payment Date next preceding the Expiration Date of the Alternate Credit Facility
or the Expiration Date of the Letter of Credit, as the case may be.
"Alternate Credit Facility" means a credit facility other than the
Letter of Credit, including without limitation, an irrevocable letter of credit
or bond insurance policy, which provides for payment of the principal of and
interest on the Project Bonds, when due.
"Alternate Interest Index" means for any Interest Period ending prior
to the Conversion Date 65% of the interest rate applicable to 13-week United
States Treasury bills determined by the Remarketing Agent on the basis of the
average per annum bond equivalent yield at which such 13-week Treasury bills
shall have been sold at the most recent Treasury auction during the next
preceding Interest Period. If no such auction shall have been conducted during
the next preceding Interest Period, or if the Remarketing Agent shall fail to
determine the Alternate Interest Index, the Alternate Interest Index during such
Interest Period will be the same as for the preceding Interest Period.
"Alternate Letter of Credit" means an irrevocable letter of credit
issued in accordance with Section 4.6 of the Loan Agreement.
"Available Moneys" means moneys on deposit in trust with the Trustee
for a period of at least one hundred twenty three (123) days during which no
petition in bankruptcy or similar insolvency proceeding has been filed by or
against the Company.
"Bank" means the issuer of the Letter of Credit, initially Wells Fargo
Bank, N.A., San Jose, California.
"Bond Fund" or "County of Delaware, Ohio-Radiation Sterilizers,
Incorporated Revenue Bond Fund" means the fund created in Section 13 hereof.
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<PAGE> 9
"Bond Legislation" means this resolution, and when used in connection
with Additional Bonds or in relation to Bonds when Additional Bonds are
outstanding shall mean or include, as the case may be, the resolution or other
legislation providing for the issuance of such Additional Bonds but only to the
extent consistent with this resolution, all as the same may be amended, modified
or supplemented by any amendments or modifications thereof and supplements
thereto entered into in accordance with the provisions of the Indenture.
"Bond Registrar" means the Trustee acting in such capacity pursuant to
Section 2.04 of the Indenture.
"Bondholder" or "holder" means the person in whose name any Bond is
registered.
"Bonds" means the Project Bonds and any Additional Bonds.
"Business Day" means any day, other than a Saturday or Sunday, on which
banks located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located, and in New York, New
York, are not required or authorized by law to remain closed and on which The
New York Stock Exchange is not closed.
"Code" means the Internal Revenue Code of 1954, as amended, and
references to the Code and Sections of the Code shall include relevant
regulations and proposed regulations thereunder and any successor provisions to
such Sections, regulations or proposed regulations.
"Company" means Radiation Sterilizers, Incorporated, a corporation
organized under the laws of the State of California and qualified to do business
in the State, and its lawful successors and assigns, including any surviving,
resulting or transferee entity as provided in Section 5.1 of the Loan Agreement.
"Construction Fund" or "County of Delaware, Ohio-Radiation Sterilizers,
Incorporated Construction Fund" means the fund created by Section 12 hereof.
"Contract of Purchase" means as to the Project Bonds, the purchase
contract among the Original Purchaser, the Company and the Issuer, providing for
the sale of Project Bonds to the Original Purchaser.
"Conversion Date" means the date upon which the Project Bonds begin to
bear interest at the Fixed Interest Rate, which date shall be established in
accordance with Section 8 of this Bond Legislation.
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<PAGE> 10
"Date of Taxability" means the date as of which all or any part of the
interest on the Bonds is first required to be included in the gross income of
any holder or former holder thereof for federal income tax purposes by reason of
the occurrence of any circumstance on the basis of which a Determination of
Taxability is made.
"Determination of Taxability" means the receipt by the Trustee or a
Bondholder of a ruling or technical advice by the Internal Revenue Service in
which the Company has participated or a written opinion by an attorney or firm
of attorneys of recognized standing on the subject of municipal bonds selected
by the Trustee or a Bondholder and approved by the Company, which approval shall
not be unreasonably withheld, to the effect that interest on the Bonds is
includible in the gross income for federal income tax purposes of a holder
(other than a holder who is a "substantial user" of the Facilities or a "related
person" as such terms are used in Section 103(b) of the Code).
"Eligible Investments" means (i) obligations issued or guaranteed by
the United States of America or by any person controlled or supervised by and
acting as an instrumentality of the United States of America pursuant to
authority granted by Congress, (ii) certificates of deposit issued by or other
time deposits at banks, savings banks, savings and loan associations or trust
companies, including the Trustee or its affiliates, organized under the laws of
the United States of America or any state thereof, which have an aggregate of
capital, paid in surplus and retained earnings of at least $25,000,000, or
issued by or drawn on any branch of such a bank, savings bank, savings and loan
association or trust company whether within or without the United States of
America, (iii) commercial paper or finance company paper, including that of the
Trustee or its affiliates but excluding that of the Company or its affiliates,
rated "P-1" or "A-1" or their equivalents by either Moody's or S&P or any
successor or either, (iv) obligations of any state of the United States of
America or any political subdivision or other instrumentality of any such state
which are rated 'A' or its equivalent or better by either Moody's or S&P or any
successor of either, (v) repurchase agreements or variable amount master demand
notes, including those of the Trustee or its affiliates secured by obligations
described in (i) through (iv) of this paragraph, and (vi) shares of any
Investment Company whose assets are invested exclusively in obligations
described in (i) through (iv) of this paragraph; provided, however, that
"Eligible Investments" with respect to any proceeds resulting from a draw under
the Letter of credit shall mean only Government Obligations maturing at such
time or times as will permit the Trustee or the Remarketing Agent to make
payment of the principal of and interest on, or the purchase price of, the
Project Bonds.
"Event of Default" shall have the meaning assigned in Section 8.01 of
the Indenture.
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<PAGE> 11
"Expiration Date of the Alternate Credit Facility" means the date
established in the Alternate Credit Facility for the expiration thereof, and in
the event such date is extended, such date as extended.
"Expiration Date of the Letter of Credit" means the date established in
the Letter of Credit for the expiration thereof in accordance with its terms,
initially January 15, 1988, and in the event such date is extended, such date as
extended.
"Facilities" means the real, personal and mixed property identified in
Exhibit A to the Loan Agreement, together with any additions and improvements
thereto, modifications thereof and substitutions therefor.
"First Optional Redemption Date" means the December 1 occurring in the
year which is a number of years after the Conversion Date equal to the number of
years between the December 1 immediately following the Conversion Date (unless
the Conversion Date is a December 1, in which case from such December 1) and
December 1, 2004, multiplied by 1/2 and rounded up to the nearest whole number.
"Fixed Interest Rate" means a fixed interest rate on the Project Bonds
established in accordance with Section 8 of this Bond Legislation.
"Government Obligations" means direct-obligations of the United States
of America.
"Indenture" means the Trust Agreement between the Issuer and the
Trustee, dated as of the 1st day of December, 1984, including as part thereof
this Bond Legislation, as the same may be amended, modified or supplemented by
any amendments or modifications thereof and supplements thereto entered into in
accordance with the provisions thereof.
"Interest Reserve Requirement" means $262,000.
"Interest Index" means for any Interest Period ending prior to the
Conversion Date 55% of the rate of interest per annum publicly announced by
Morgan Guaranty Trust Company of New York in New York, New York as its prime
rate.
"Interest Payment Date" means with respect to the Project Bonds prior
to and including the Conversion Date the first (1st) Business Day of each month
commencing February 1, 1985, and after the Conversion Date the first (1st) day
of each June and December. "Interest Payment Date" with respect to Additional
Bonds shall mean the dates identified as such in the Bond Legislation for the
Additional Bonds.
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<PAGE> 12
"Interest Period" means with respect to the Project Bonds prior to the
Conversion Date a period from and including the Interest Payment Date in each
calendar month to and including the day next preceding the Interest Payment Date
in the following calendar month, except that the first Interest Period shall be
the period from and including the Original Issuance Date to and including
January 31, 1985.
"Investment Company" means any open-end diversified management
investment company registered under the Investment company Act of 1940, as
amended.
"Issuer" means the county of Delaware, Ohio, a county and political
subdivision in and of the State, and its lawful successors and assigns.
"Legislative Authority" means the Board of County Commissioners of the
Issuer and any officer, board, commission or other body which hereafter
succeeds, by operation of law, to the powers and duties of such board.
"Letter of Credit" means the irrevocable letter of credit issued by the
Bank contemporaneously with the original issuance of the Project Bonds, except
that upon the issuance and delivery of an Alternate Letter of Credit, "Letter of
Credit" shall mean such Alternate Letter of Credit, and upon the delivery of an
Alternate Credit Facility, "Letter of Credit" shall, unless the context
otherwise requires, include reference to the Alternate Credit Facility.
"Letter of Credit Agreement" means the Letter of Credit Agreement,
dated as of December 1, 1984, between the Company and the Bank pursuant to which
the Letter of Credit is issued by the Bank and delivered to the Trustee, and any
and all modifications, alterations, amendments and supplements thereto, and
includes any agreement between the Company and the Bank pursuant to which any
Alternate Letter of Credit is issued.
"Loan" means the loan by the Issuer to the Company of the proceeds from
the sale of the Bonds to the Original Purchasers.
"Loan Agreement" means the Loan Agreement, dated as of December 1,
1984, between the Issuer and the Company, as from time to time supplemented or
amended in accordance with the provisions thereof.
"Loan Term" means the period commencing on the date of the Loan
Agreement and ending on the date on which the Bonds have been
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<PAGE> 13
fully paid (or provision for their payment has been made) in accordance with the
provisions of the Indenture.
"Moody's" means Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Issuer, at the request of the Company, by notice to the
Trustee and the Bank.
"Original Issuance Date" means as to the Project Bonds the date on
which the Project Bonds are first authenticated and delivered to the Original
Purchasers against payment therefor.
"Original Purchaser" means, as to the Project Bonds, Prudential-Bache
Securities Inc., New York, New York, and, as to Additional Bonds, the person or
persons identified or referred to in the Bond Legislation for such Additional
Bonds.
"Outstanding Bonds" or "Bonds outstanding" means, as of any date, all
Bonds which have been authenticated and delivered by the Trustee under the
Indenture except:
(a) Bonds surrendered for and replaced upon exchange or transfer, or
Bonds theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation;
(b) Bonds for the payment or redemption of which sufficient cash funds
shall have been theretofore deposited with the Trustee (whether upon or prior to
the maturity or redemption date of any such Bonds), or which are deemed to have
been paid and discharged, pursuant to the provisions of the Indenture; provided
that if such Bonds are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given or arrangements satisfactory to the
Trustee shall have been made therefor, or waiver of such notice satisfactory in
form to the Trustee, shall have been filed with the Trustee; and
(c) Bonds in lieu of which others have been authenticated under
Sections 2.05 and 2.06 of the Indenture;
"Paying Agent" means, as to the Project Bonds, the Trustee, and as to
Additional Bonds, any bank or trust company designated as such in the Bond
Legislation or, in the absence of such designation, the Trustee, and their
successors, and any other Paying Agent or Paying Agents as may be appointed by
the Issuer from time to time with the consent of the Company.
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<PAGE> 14
"Person" means a natural person, a firm, an association, a corporation
or a public body.
"Project Bonds" means the industrial development revenue bonds of the
Issuer designated "County of Delaware, Ohio Industrial Development Revenue Bonds
(Radiation Sterilizers Incorporated Project)" identified in Section 1 of this
Bond Legislation.
"Project Purposes" means the purposes of commercial facilities as
described in Chapter 165 of the Ohio Revised Code.
"Record Date" means with respect to any Interest Payment Date on or
before the Conversion Date the fifth (5th) day next preceding such Interest
Payment Date; provided that if such day is not a Business Day, then the next
preceding Business Day, and with respect to any Interest Payment Date after the
Conversion Date the fifteenth (15th) day of the month next preceding such
Interest Payment Date.
"Remarketing Agent" means the remarketing agent appointed in accordance
with Section 19 of this Bond Legislation. "Principal Office" of the Remarketing
Agent shall mean the office thereof designated in writing to the Trustee, the
Company, the Issuer and the Bank.
"Revenues" means (a) the payments and other amounts which under the
Loan Agreement are payable by the Company directly to the Trustee to meet
amounts due with respect to the principal of and premium, if any, and interest
on the Bonds, (b) all other moneys received by the Issuer, or the Trustee on
behalf of the Issuer, in respect of the repayment of the Loan including, but not
limited to, moneys drawn under the Letter of Credit and (c) income and profit
from the investment of the payments and moneys described in (a) and (b) above,
all subject, however, to certain provisions in the Indenture with respect to the
Trustee's holding moneys for the benefit of the holders of particular Bonds.
"S&P" means Standard & Poor's Corporation, a corporation organized and
existing under the laws of the State of New York, its successors and their
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Issuer, at the request of the Company, by notice to the
Trustee and the Bank.
"State" means the State of Ohio.
"Trustee" means Bank One Trust Company, NA, Columbus, Ohio, and its
successors and any corporation or association resulting from
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<PAGE> 15
or surviving any consolidation or merger to which it or its successors may be a
party, and any successor trustee at the time serving as successor trustee under
the Indenture.
Any reference herein to the Issuer, or to any officers thereof, shall
include those succeeding to their functions, duties or responsibilities pursuant
to or by operation of law or who are lawfully performing their functions. Any
reference to a section or provision of the Ohio Constitution or to a section,
provision or chapter of the Ohio Revised Code shall include such section or
provision or chapter as from time to time amended, modified, revised,
supplemented or superseded; provided that no such change in the Constitution or
laws (a) shall alter the obligation to pay the principal of and premium, if any,
and interest on the Bonds in the amounts and manner, at the times, and from the
sources provided in the Bond Legislation and the Indenture, except as otherwise
herein permitted or (b) shall be deemed applicable by reason of this provision
if such change would in any way constitute an impairment of the rights of the
Issuer, the Company, the Trustee, the Bank or the Bondholders under the Loan
Agreement or the Indenture.
Section 3. Form of Project Bonds; Maturity; Place of Payment;
Execution. The Project Bonds shall be issued in fully registered form only in
the denomination of $100,000 or any integral multiple thereof requested by the
Bondholder; provided, however, that any Project Bonds issued upon exchange or
transfer after the Conversion Date shall be in the denomination of $5,000 or any
integral multiple thereof requested by the Bondholder. The Project Bonds shall
be numbered from R-1 upwards and shall mature, subject to prior redemption upon
the terms and conditions hereinafter set forth, on December 1, 2004.
Principal of and premium, if any, and interest on the Project Bonds
shall be payable in lawful money of the United States of America from funds
available therefor under the Indenture, without deduction for services of any
Paying Agent. Principal of and premium, if any, on each Project Bond shall be
paid to the holder thereof upon presentation and surrender of such Project Bond
as it becomes due at the principal corporate trust office of the Trustee.
Interest on each Project Bond shall be payable by check drawn upon the Paying
Agent and mailed on each Interest Payment Date to the holder of such Project
Bond as of the close of business on the Record Date next preceding the Interest
Payment Date at the registered address of such holder as it shall appear as of
the close of business on such Record Date on the registration books maintained
pursuant to the Indenture notwithstanding the cancellation of any of such
Project Bonds upon any exchange or transfer thereof subsequent to the Record
Date and prior to such Interest Payment Date, except that, if and to the extent
that there shall be a default in the payment of the interest due on such
Interest Payment Date, such defaulted interest shall be paid to the holder in
whose name any
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<PAGE> 16
such Project Bond is registered at the close of business on the fifth (5th)
Business Day next preceding the date of payment of such defaulted interest.
Notwithstanding the provisions of the immediately preceding paragraph,
a holder of Project Bonds in an aggregate principal amount of $500,000 or more
may, by notice to the Paying Agent, direct the Paying Agent to make payments of
interest on such holder's Project Bonds by means of wire transfers, in
immediately available funds, to a banking institution located in the United
States of America designated in such notice for the account of such holder.
The Project Bonds shall be executed by at least two (2) members of the
Legislative Authority, provided that such signatures may be facsimilies.
Each Project Bond shall bear interest from and including the Original
Issuance Date, or if authenticated after the Original Issuance Date from and
including the last date to which interest shall have been paid on the Project
Bonds until payment of the principal or redemption price thereof shall have been
made or provided for in accordance with the provisions of the Indenture, whether
at maturity, upon redemption or otherwise. Interest on Project Bonds shall be
paid on each Interest Payment Date and, prior to the Conversion Date, shall be
computed on the basis of a year of 365 or 366 days, as appropriate, for the
actual number of days elapsed. After the Conversion Date, interest on the
Project Bonds shall be computed on the basis of a 360-day year and twelve 30-day
months.
Section 4. Interest Rate Prior to Conversion Date. For the first
Interest Period, the Project Bonds shall bear interest at a rate equal to six
and one-half percentum (6.5%) per annum. Thereafter, for each Interest Period
ending before the Conversion Date, the interest rate on the Project Bonds shall
be a rate determined by the Remarketing Agent, in its discretion, to be that
rate which, if borne by the Project Bonds, would, in the judgment of the
Remarketing Agent, having due regard to prevailing financial market conditions,
be the interest rate necessary to enable the Remarketing Agent to remarket all
Outstanding Project Bonds on the Interest Payment Date occurring in such
Interest Period at a price equal to 100% of the principal amount thereof,
provided, however, that the interest rate so determined shall not be more than
120% of the greater of, nor less than the lesser of, the Interest Index and the
Alternate Interest Index for such Interest Period unless such indices shall have
eliminated pursuant to a supplemental indenture as permitted by Section 10.01(h)
of the Indenture,
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<PAGE> 17
Notwithstanding anything to the contrary contained herein, the interest
rate on the Project Bonds shall never exceed twenty percentum. (20%) per annum.
For the second Interest Period and each Interest Period thereafter
ending prior to the Conversion Date, the interest rate to be borne by the
Project Bonds shall be determined as provided in this Section 4 as of, and shall
be made available to the Company, the Trustee and the Bank on, the fourth
Business Day next preceding the first day of such Interest Period.
Section 5. Optional Redemption.
(a) Prior to the Conversion Date, the Project Bonds are subject to
redemption by the Issuer, at the option of the Company, in whole at any
time or in part in integral multiples of $100,000 on any Interest
Payment Date on a date selected by the Company at a price equal to 100%
of the principal amount redeemed plus accrued interest to the
redemption date. Prior to the Expiration Date of the Letter of Credit
any such redemption shall be made solely from Available Moneys.
(b) After the Conversion Date, the Project Bonds are subject to
redemption by the Issuer, at the option of the Company, in whole at any
time or, to the extent permitted by Section 4.3(c) of the Loan
Agreement, in part in integral multiples of $5,000 on any Interest
Payment Date, at a redemption price of 100% of the principal amount
thereof plus accrued interest to the redemption date, in the event of
(1) condemnation of the Facilities or any part thereof to the extent
provided in Section 4.3(c) of the Loan Agreement or (2) exercise by the
Company of its prepayment option as provided in Section 4.3(d) of the
Loan Agreement. Prior to the Expiration Date of the Letter of Credit,
any such redemption shall be made solely from Available Moneys.
(c) After the Conversion Date, the Project Bonds are subject to
redemption by the Issuer, at the option of the Company, on or after the
First Optional Redemption Date, in whole at any time or in part on any
Interest Payment Date in integral multiples of $5,000, on a date
selected by the Company at the redemption prices (expressed as
percentages of the principal amount redeemed) set forth in the
following table plus accrued interest to the redemption date:
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<PAGE> 18
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
--------
<S> <C>
First optional Redemption Date through 103%
the following November 30
First Anniversary of the First Optional
Redemption Date through the following
November 30 102%
Second Anniversary of the First optional
Redemption Date through the following
November 30 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Prior to the Expiration Date of the Letter of Credit, any such
redemption shall be made from Available Moneys.
(d) If less than all of the Project Bonds are called for
redemption (regardless of whether such redemption is at the option of
the Company or pursuant to any mandatory redemption provisions of the
Indenture), the selection of Project Bonds or portions thereof to be
called shall be made by lot in such manner as the Trustee shall
determine; provided, however, that Project Bonds held by the Bank as a
result of any draw under the Letter of Credit shall be selected for
redemption prior to any other Project Bonds.
(e) The Issuer, or the Company on behalf of the Issuer, shall give
the Trustee written notice of an election to redeem Project Bonds
pursuant to this Section 5 at least ten (10) Business Days prior to the
latest day on which the Trustee may give the Bondholders notice of
redemption pursuant to subsection (a) of Section 9 of this Bond
Legislation, provided, however, that prior to the Expiration Date of
the Letter of Credit, no such notice shall be deemed effective unless
at the time such notice is received by the Trustee the Trustee is
holding sufficient Available Moneys to pay the principal of and
premium, if any, and interest on the Project Bonds to be redeemed.
Section 6. Mandatory Redemption. Upon the occurrence of a Determination
of Taxability, the Project Bonds are subject to mandatory redemption by the
Issuer at a redemption price of 100% of the principal amount redeemed plus
accrued interest to the
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<PAGE> 19
redemption date on the fifteenth (15th) Business Day following the date of such
Determination of Taxability if the date of such Determination of Taxability
precedes the Conversion Date, or on the seventy-fifth (75th) day following the
date of such Determination of Taxability if the date of Determination of
Taxability is on or after the Conversion Date. The Project Bonds shall be
redeemed in whole unless, in the opinion of Independent Tax Counsel (as defined
in the Loan Agreement), the redemption of a portion of the outstanding principal
amount of the Project Bonds would have the result that the interest payable on
the Project Bonds remaining outstanding after such redemption would not be
included in the gross income for federal income tax purposes of any holder of
the Project Bonds (other than a holder who is a "substantial user" of the
Facilities or a "related person" within the meaning of Section 103(b) of the
Code), in which event only such portion of the outstanding Project Bonds shall
be redeemed, Prior to the Expiration Date of the Letter of Credit the redemption
price shall be paid solely with proceeds drawn under the Letter of Credit.
Section 7. Purchase of the Project Bonds.
(a) On or before the Conversion Date, any Project Bond or portion
thereof in an integral multiple of $100,000 shall be purchased by the
Remarketing Agent, on the demand of the holder thereof, on any Interest
Payment Date at a purchase price equal to the principal amount thereof,
upon: (i) delivery to the Remarketing Agent at its Principal office at
or prior to 4:00 p.m., New York City time, on the third Business Day
prior to such Interest Payment Date of a telephone notice (unless the
Trustee shall be serving as Remarketing Agent, in which case written
notice shall be required) which (A) states the principal amount of such
Project Bond to be purchased and (B) states that such Project Bond or
portion thereof shall be purchased on such Interest Payment Date
pursuant to this Section 7(a); and (ii) delivery of such Project Bond
to the Principal office of the Remarketing Agent at or prior to 10:00
a.m., New York City time, on such Interest Payment Date; provided,
however, that such Project Bond or portion thereof shall be so
purchased pursuant to this Section 7(a) only if the Project Bond so
delivered to the Remarketing Agent shall conform in all respects to the
description thereof in the aforesaid notice.
(b) On or before the Conversion Date, any Project Bond or portion
thereof in an integral multiple of $100,000 shall be purchased by the
Trustee on the demand of the holder thereof, if such holder shall be an
Investment Company, on any Business Day at a purchase price equal to
the principal amount thereof plus accrued interest, if any, to the date
of purchase, upon: (i) delivery to the Trustee at its Principal Office
of a written notice which (A) states that such holder
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<PAGE> 20
is an Investment Company, (B) states the principal amount of such
Project Bond to be purchased and (C) states the date on which such
Project Bond or portion thereof shall be purchased pursuant to this
Section 7(b), which date shall be a Business Day not prior to the
seventh (7th) day next succeeding the date of the delivery of such
notice to the Trustee; and (ii) delivery of such Project Bond, and, in
the case of a Project Bond or portion thereof to be purchased prior to
an Interest Payment Date and after the Record Date in respect thereof,
a due-bill check, in form satisfactory to the Trustee, for interest due
on such Interest Payment Date, at the Trustee's principal corporate
trust office at or prior to 10:00 a.m., on the date specified in the
aforesaid notice; provided, however, that such Project Bond or portion
thereof shall be so purchased pursuant to this Section 7(a) only if the
Project Bond so delivered to the Trustee shall conform in all respects
to the description thereof in the aforesaid notice.
(c) On or before the Conversion Date, any Project Bond or portion
thereof in an integral multiple of $100,000 shall be purchased by the
Remarketing Agent, on the demand of the holder thereof, on any Business
Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery
to the Remarketing Agent at its Principal Office of a written notice
which (A) states the principal amount of such Project Bond to be
purchased and (B) states the date on which such Project Bond or portion
thereof shall be purchased pursuant to this Section 7(c), which date
shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of such notice to the Remarketing
Agent; and (ii) delivery of such Project Bond and, in the case of a
Project Bond or portion thereof to be purchased prior to the Interest
Payment Date for any Interest Period and after the Record Date in
respect thereof, a due-bill check, in form satisfactory to the
Remarketing Agent, for interest due on such Interest Payment Date, to
the Principal Office of the Remarketing Agent at or prior to 10:00
a.m., New York City time, on the date specified in the aforesaid
notice; provided, however, that such Project Bond or portion thereof
shall be so purchased pursuant to this Section 7(c) only if the Project
Bond so delivered to the Remarketing Agent shall conform in all
respects to the description thereof in the aforesaid notice.
(d) All Project Bonds shall be purchased by the Trustee on the
Interest Payment Date next preceding the Expiration Date of the Letter
of Credit and on the Interest Payment Date next preceding the
Expiration Date of the Alternate Credit Facility, at a purchase price
equal to the principal amount thereof, except (i) Project Bonds, or
portions thereof in an integral multiple of $100,000 if prior to the
Conversion Date
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<PAGE> 21
or $5,000 if on or after the Conversion Date, with respect to which the
Trustee shall have received written directions not to so purchase such
Project Bonds or portions thereof from the holders of the same, (ii)
Project Bonds delivered to the Trustee or the Remarketing Agent as
described in subsection (a), (b) or (c) of this Section 7 for purchase
on such Interest Payment Date or on any Business Day in the Interest
Period next preceding such Interest Payment Date and (iii) Project
Bonds issued upon the registration of transfer of Project Bonds
referred to in clauses (i) or (ii) above. Any Project Bonds not
delivered to the Trustee for purchase as described above (other than
Project Bonds described in clauses (i), (ii) or (iii) above) shall
nonetheless be deemed to be tendered for sale by the holders thereof
and purchased by the Trustee.
(e) All Project Bonds shall be purchased by the Trustee on the
Conversion Date at a purchase price equal to the principal amount
thereof except (i) Project Bonds, or portions thereof in an integral
multiple of $5,000, with respect to which the Trustee shall have
received written directions not to so purchase such Project Bonds or
portions thereof from the holders of the same, (ii) Project Bonds
delivered to the Trustee or the Remarketing Agent as described in
subsection (a), (b) or (c) of this Section 7 for purchase on the
Conversion Date or on any Business Day in the Interest Period next
preceding the Conversion Date and (iii) Project Bonds issued upon the
registration of transfer of Project Bonds referred to in clauses (i) or
(ii) above. Any Project Bonds not delivered to the Trustee for purchase
(other than Project Bonds described in clauses (i), (ii) or (iii)
above) shall nonetheless be deemed to be tendered for sale by the
holders thereof and purchased by the Trustee. The provisions of this
subsection shall not apply if there has occurred and is continuing on
the prospective purchase date an Event of Default.
(f) In the event that all Project Bonds are to be purchased by the
Trustee pursuant to subsections (d) or (e) of this Section 7, a holder
of Project Bonds may direct the Trustee not to purchase any Project
Bonds or portions thereof owned by him by delivering to the Trustee, on
or before the third (3rd) Business Day preceding the date fixed for
such purchase, an instrument or instruments in writing executed by such
holder (i) specifying the numbers of the Project Bonds held by him,
(ii) specifically acknowledging each of the matters set forth in
clauses (i) through (vii) of Section 9(b) of this Bond Legislation, and
(iii) directing the Trustee not to purchase such Project Bonds or
portions thereof. Any instrument delivered to the Trustee in accordance
with this subsection (d) shall be irrevocable with
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respect to the Project Bonds for which such instrument is delivered and
shall be binding upon subsequent holders of such Project Bonds. Any
Project Bond purchased by the Remarketing Agent or the Trustee pursuant
to the terms of the Indenture after the Trustee has given notice of the
Expiration Date of the Letter of Credit, the Expiration Date of the
Alternate Credit Facility or the Conversion Date, pursuant to
subsection (b) of Section 9 of this Bond Legislation, shall not be
remarketed except to a buyer who either (i) specifically acknowledges,
in writing, on the date of purchase each of the matters set forth in
clauses (i) through (vii) of subsection (b) of Section 9 of this Bond
Legislation, or (ii) agrees to require purchase of such Project Bonds
by the Remarketing Agent or the Trustee on or before the Expiration
Date of the Letter of Credit or the Expiration Date of the Alternate
Credit Facility, as the case may be.
(g) Upon the delivery to the Remarketing Agent of Project Bonds in
accordance with subsection (a) of this Section 7, the Remarketing Agent
shall offer such Project Bonds for sale and shall use its best efforts
to sell such Project Bonds, any such sale to be at a price equal to
100% of the principal amount thereof on the Interest Payment Date on
which such Project Bonds are to be delivered to the Remarketing Agent;
provided, however, that, to the extent any moneys described in clauses
(i) or (ii) of subsection (i) of this Section 7 shall be on deposit
with the Trustee, any Project Bonds delivered to the Remarketing Agent
shall be purchased with such moneys, and shall not be sold by the
Remarketing Agent.
(h) Upon delivery to the Remarketing Agent of Project Bonds in
accordance with subsection (c) of this Section 7, the Remarketing Agent
shall offer such Project Bonds for sale and shall use its best efforts
to sell such Project Bonds, any such sale to be at a price equal to
100% of the principal amount thereof on the date stated in the notice
provided by the holder of such Project Bonds; provided that to the
extent any moneys described in clauses (i) or (ii) of subsection (i) of
this Section 7 shall be on deposit with the Trustee, any Project Bonds
delivered to the Remarketing Agent shall be purchased with such moneys
and shall not be sold by the Remarketing Agent.
(i) On the Interest Payment Date on which Project Bonds are
delivered to the Remarketing Agent for purchase by the Remarketing
Agent in accordance with subsection (a) of this Section 7, or on the
date Project Bonds are to be purchased by the Remarketing Agent in
accordance with subsection (c) of this Section 7, the Remarketing Agent
shall purchase such
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Project Bonds with immediately available funds at the purchase price
specified therein. Funds for the payment of such purchase price shall
be derived solely from the following sources in the order of priority
indicated, and neither the Issuer nor the Remarketing Agent shall be
obligated to provide funds from any other source:
(i) Available Moneys furnished by the Trustee to the
Remarketing Agent representing proceeds of Additional Bonds issued to
refund the Project Bonds;
(ii) Available Moneys furnished by the Trustee to the
Remarketing Agent representing proceeds described in Section 5.11 of
the Loan Agreement;
(iii) proceeds of the sale of such Project Bonds by the
Remarketing Agent, excluding proceeds of any such sale of Project Bonds
to the Company, Charles King & Associates, a California limited
partnership or Charles King, its general partner;
(iv) moneys furnished by the Trustee to the Remarketing Agent
representing proceeds of a drawing by the Trustee pursuant to the
Letter of Credit; and
(v) moneys furnished by the Trustee to the Remarketing Agent
representing moneys furnished by the Company pursuant to Section 4.11
of the Loan Agreement.
The Remarketing Agent shall direct the Trustee, by telephone or telegraph and
confirmed promptly in writing, to provide such moneys to the Remarketing Agent
(and to draw moneys under the Letter of Credit, if necessary) to the extent
necessary to make timely payments required to be made in accordance with this
subsection (i).
(j) On any date on which Project Bonds are to be purchased by the Trustee in
accordance with subsections (b), (d) or (e) of this Section 7, the Trustee shall
purchase such Project Bonds with immediately available funds at the purchase
price specified therein. Funds for the payment of such purchase price shall be
derived solely from the following sources in the order of priority indicated,
and neither the Issuer nor the Trustee shall be obligated to provide funds from
any other source:
(i) Available Moneys representing proceeds of
Additional Bonds issued to refund the Project Bonds;
(ii) Available Moneys representing proceeds described
in Section 5.11 of the Loan Agreement;
(iii) moneys representing proceeds of a drawing by
the Trustee pursuant to the Letter of Credit; and
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(iv) moneys furnished by the Company to the Trustee
pursuant to Section 4.11 of the Loan Agreement.
(k) The Remarketing Agent and the Trustee shall hold in a separate
account moneys representing the purchase price of Project Bonds
purchased in accordance with this Section 7 until such Project Bonds
have been delivered to the Remarketing Agent or the Trustee, as the
case may be, by the holders thereof. The Remarketing Agent and the
Trustee shall invest such moneys only in Government Obligations
maturing not more than thirty days after purchase, as directed by the
Company by telephone and confirmed in writing.
(l) Project Bonds sold by the Remarketing Agent pursuant to
subsections (g) or (h) of this Section 7 shall be delivered to the
purchasers thereof. Project Bonds purchased by the Remarketing Agent
with moneys described in clause (i) or (ii) of subsection (i) of this
Section 7 shall be delivered to the Trustee for cancellation. Project
Bonds purchased by the Remarketing Agent with moneys described in
clause (iv) of subsection (i) of this Section 7 shall be registered in
the name of, and delivered to, the Bank or its nominee. Project Bonds
purchased by the Remarketing Agent with moneys described in clause (v)
of subsection (i) of this Section 7 shall, at the direction of the
Company, be (A) held by the Remarketing Agent for the account of the
Company, (B) delivered to the Trustee for cancellation, or (C)
delivered to the Company; provided, however, that any Project Bonds so
purchased after the selection thereof by the Trustee for redemption
shall be cancelled; and, provided, further that any Project Bonds so
purchased shall be registered in the name of, and delivered to, the
Bank or its nominee if the Trustee shall have received notice from the
Bank of the occurrence of an Event of Default under the Letter of
Credit Agreement. The Remarketing Agent shall deliver to the Person to
whom any Project Bond is delivered the due-bill check relating to such
Project Bond, if any, delivered to the Remarketing Agent in accordance
with subsection (c) of this Section 7.
(m) Project Bonds purchased by the Trustee with moneys described
in clauses (i) or (ii) of subsection (j) of this Section 7 shall be
cancelled. Project Bonds purchased by the Trustee with moneys described
in clause (iii) of subsection (j) of this Section 7 shall be registered
in the name of, and delivered to, the Bank or its nominee. Project
Bonds purchased by the Trustee with moneys described in clause (iv) of
subsection (j) of this Section 7 shall, at the direction of the
Company, be (A) cancelled or (B) delivered to the Company; provided,
however, that any Project Bonds so purchased after the selection
thereof by the Trustee for redemption shall be cancelled; and,
provided, further that
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any Project Bonds so purchased shall be registered in the name of, and
delivered to, the Bank or its nominee if the Trustee shall have
received notice from the Bank of the occurrence of an Event of Default
under the Letter of Credit Agreement.
(n) The Trustee shall deliver to the Bank the due-bill checks, if
any, delivered to the Trustee in accordance with subsection (b) of this
Section 7.
(o) Project Bonds delivered as provided in subsections (1) or (m)
of this Section 7 shall be registered in the manner directed by the
recipient thereof.
(p) Whenever Project Bonds are delivered to the Bank pursuant to
subsections (1) or (m) of this Section 7, the Trustee, as Bond
Registrar, shall notify the Company of the principal amount of such
Project Bonds and the date of delivery thereof to the Bank (which date
of delivery shall be deemed to be the date upon which the draw on the
Letter of Credit resulting in such delivery was made). The Trustee
shall create and maintain records sufficient to permit the Trustee to
determine the interest payable on any Project Bond during any period in
which such Project Bond is held by the Bank as a result of a draw on
the Letter of Credit, the Trustee shall advise the Company not later
than the Business Day immediately preceding each Interest Payment Date
as to the amount of such interest.
(q) The Trustee shall upon receipt of any direction by the
Remarketing Agent pursuant to subsection (i) of this Section 7, draw
moneys under the Letter of Credit in accordance with the terms thereof
in the amounts specified in such direction and furnish such moneys to
the Remarketing Agent.
(r) Any Project Bonds delivered to the Remarketing Agent or the
Trustee pursuant to the terms of the Indenture during the period
commencing on the date that the Trustee has given the first notice
described in Section 9 (c) of this Bond Legislation and ending on the
date of delivery to the Trustee of an Alternate Letter of Credit or
Alternate Credit Facility shall not be remarketed except to a buyer who
expressly acknowledges at the time of such purchase each of the matters
set forth in the notice required by Section 9(c) of this Bond
legislation and agrees to purchase such Project Bonds notwithstanding
the proposed delivery of an Alternate Letter of Credit or Alternate
Credit Facility.
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Section 8. Conversion to Fixed Interest Rate.
(a) At any time, the Company may, by notice in writing to the
Issuer, the Trustee, the Remarketing Agent and the Bank, direct that a
Fixed Interest Rate be established for the Project Bonds. The Company's
notice shall set forth: (i) the Conversion Date desired by the Company,
which shall be an Interest Payment Date not less than thirty (30) days
after the date of such notice; and (ii) the date the Fixed Interest
Rate shall be established, which shall be not less than twelve (12)
Business Days prior to the Conversion Date. The notice shall be
accompanied by an opinion of Independent Tax Counsel stating that the
conversion to a Fixed Interest Rate is authorized and permitted by the
Indenture and Chapter 165, Ohio Revised Code, and that such conversion
will not adversely affect the exemption of interest on the Project
Bonds from federal income taxation. The Remarketing Agent shall
determine the Fixed Interest Rate on the date specified in such notice,
which rate shall be the lowest rate at which the Remarketing Agent
shall have received bids, not later than the twelfth (12th) Business
Day prior to the Conversion Date, to purchase all of the Outstanding
Project Bonds at a purchase price of 100% of the outstanding principal
amount thereof on the Conversion Date. Conversion to the Fixed Interest
Rate shall require the prior written consent of the Company and the
Bank.
(b) Any Project Bonds purchased by the Remarketing Agent or the
Trustee pursuant to the terms of the Indenture after the Trustee has
given notice of the establishment of a Conversion Date, pursuant to
subsection (b) of Section 9 of this Bond Legislation, shall not be
remarketed except to a buyer who agrees at the time of such purchase
either (i) to accept the Fixed Interest Rate on the Conversion Date or
(ii) to require purchase of such Project Bonds by the Remarketing Agent
or the Trustee on or before the Conversion Date pursuant to subsection
(a), (b) or (c) of Section 7 of this Bond Legislation.
(c) The Letter of Credit shall be cancelled on the fifteenth
(15th) day following the Conversion Date, and the Trustee shall deliver
the Letter of Credit to the Bank on such day, unless prior to such day
the Trustee has received written notification from both the Company and
the Bank stating that the Letter of Credit is not to be cancelled on
such day.
(d) In the event that the Letter of Credit or an Alternate Credit
Facility is in effect with respect to the Project Bonds following the
Conversion Date, the Fixed Interest Rate shall be adjusted on the
Adjustment Date so as to equal the rate of interest, recommended by the
Remarketing Agent and approved by the Company, for which the
Remarketing Agent has received bids on or prior to the twelfth (12th)
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(12th) Business Day next preceding the Adjustment Date to purchase all
Outstanding Project Bonds on the Adjustment Date at a price of 100% of
the principal amount thereof. Following such adjustment, the Project
Bonds shall bear interest at the Fixed Interest Rate determined
pursuant to this Section 8(d) until maturity.
Section 9. Notices of Redemption, Conversion Date, Expiration Date of
the Letter of Credit, Expiration Date of the Alternate Credit Facility or
Delivery of an Alternate Letter of Credit or Alternate Credit Facility.
(a) In the event any Project Bonds are called for redemption, the
Trustee, on behalf of the Issuer, shall give notice of such redemption,
which notice shall (i) identify the Project Bonds or portions thereof
to be redeemed, the redemption date, the redemption price and the place
or places where the amounts due upon such redemption shall be payable
(which shall be the principal corporate trust office of the Trustee)
and (ii) state that on the redemption date the Project Bonds to be
redeemed shall cease to bear interest. Such notice may set forth any
additional information relating to such redemption. Such notice shall
be given at least ten (10) Business Days prior to the redemption date
if the redemption date is on or prior to the Conversion Date and at
least thirty (30) days prior to the redemption date if the redemption
is after the Conversion Date.
(b) The Trustee, on behalf of the Issuer, shall give notice of the
establishment of the Conversion Date, the Expiration Date of the Letter
of Credit or the Expiration Date of the Alternate Credit Facility,
which notice shall include a statement (i) of the date on which the
Project Bonds are to be purchased by the Trustee as a result of the
establishment of the Conversion Date or the expiration of the Letter of
Credit or the Alternate Credit Facility, (ii) if applicable, that the
Letter of Credit or the Alternate Credit Facility shall terminate
fifteen (15) days after such purchase date, (iii) that any ratings of
the Project Bonds by Moody's or S&P may be withdrawn or reduced from
the ratings on the Project Bonds then prevailing, (iv) that the
Indenture provides that Project Bonds are required to be delivered to
the Trustee for purchase on the date specified in such notice, and that
Project Bonds not delivered to the Trustee on such date shall
nonetheless be deemed to have been purchased by the Trustee (unless the
holders thereof have directed the Trustee not to purchase such Project
Bonds or portions thereof) and, accordingly, no interest subsequent to
the date specified in such notice shall be payable to such holders, (v)
of the rights of the holders to direct the Trustee not to purchase
Project Bonds held by them, and the method of exercising such rights,
(vi) that on the purchase date designated in such notice the Trustee
shall hold moneys
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equal to the purchase price for all Project Bonds not delivered on such
date, in trust, for the holders of such Project Bonds, which moneys
shall be paid upon surrender of Project Bonds to the Trustee, and (vii)
that, if the purchase of the Project Bonds will result from the
establishment of the Conversion Date, after the Conversion Date the
Project Bonds will bear interest at the Fixed Interest Rate and the
holders of the Project Bonds will not have the right to require the
Trustee to purchase Project Bonds. Such notice shall be given at least
ten (10) Business Days prior to the date on which the Project Bonds are
to be purchased as a result of the establishment of a Conversion Date
or the expiration of the Letter of Credit or the Alternate Credit
Facility.
(c) If the Company, in accordance with Section 4.6 of the Loan
Agreement, shall direct the Trustee to notify the Bank and the holders
of Outstanding Project Bonds that an Alternate Letter of Credit or an
Alternate Credit Facility will be delivered to the Trustee, the Trustee
shall give such notice, which notice shall state (i) the proposed date
of delivery to the Trustee of the Alternate Letter of Credit or
Alternate Credit Facility, (ii) the date of the Alternate Letter of
Credit or Alternate Credit Facility, (iii) the expiration date of the
Letter of Credit for which the Alternate Letter of Credit or Alternate
Credit Facility is to be substituted, (iv) the expiration date of the
Alternate Letter of Credit or Alternate Credit Facility, (v) the issuer
of the Alternate Letter of Credit or Alternate Credit Facility, and a
brief description of such issuer, and (vi) if the Project Bonds are
then rated by Moody's or S&P, either (A) that any ratings of the
Project Bonds by Moody's or S&P may be withdrawn or reduced from such
ratings then prevailing, or (B) such ratings of the Project Bonds by
Moody's or S&P as shall have been based upon such Alternate Letter of
Credit or Alternate Credit Facility. Such notice shall be given at
least thirty (30) Business Days prior to the delivery of the Alternate
Letter of Credit or Alternate Credit Facility to the Trustee. The
Company shall cause a description of the issuer of the Alternate Letter
of Credit or Alternate Credit Facility to be furnished to the Trustee
in time sufficient to permit the Trustee to give the notice provided
for in this subsection (c).
(d) Any notice required to be given pursuant to subsections (a),
(b) or (c) of this Section 9 shall be given by mailing a copy thereof
by registered or certified mail to the holder of each Project Bond
(provided however, that a
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notice of redemption need be given only to holders of Project Bonds to
be redeemed in whole or in part) at the address for such holder shown
on the registration books maintained by the Trustee pursuant to the
Indenture. Failure to give such notice by mailing, or any defect in
such notice, to the holder of any Project Bonds shall not affect the
validity of the proceedings with respect to any other Project Bonds.
(e) If, because of the temporary or permanent suspension of
regular mail service, or for any other reason, it is impossible or
impractical to mail such notice of redemption or purchase in the manner
herein provided, then such other manner of giving notice in lieu
thereof as shall be made with the approval of the Trustee shall
constitute a sufficient notice. Failure to give or receive such notice
with respect to any Project Bond shall not affect the validity of any
proceedings for the redemption or purchase of any other Project Bonds.
(f) Any notice required to be given pursuant to subsection (a) or
(b) of this Section 9 shall also be given to the Bank. Any such notice
and any notice required to be given to the Bank pursuant to subsection
(c) of this Section 9 shall be given to the Bank by telephone or
telegraph, promptly confirmed in writing. Immediately after the
redemption or cancellation of any Project Bonds, the Trustee shall
promptly notify the Bank, in accordance with the provisions of the
Letter of Credit, of the aggregate principal amount of Project Bonds
redeemed or cancelled and the aggregate principal amount of Project
Bonds Outstanding after such cancellation or redemption.
Section 10. Terms of All Bonds. All Bonds shall bear such designations
as May be necessary to distinguish them from any other series of Bonds. All
Bonds shall be payable as to principal, premium, if any, and interest in lawful
money of the United States of America, shall be in such form as may be provided
in the Bond Legislation authorizing them or in the Indenture, shall be
negotiable instruments, subject to provisions for registration and shall express
on their face the purpose for which they are issued and such other statements or
legends as may be required by law.
All Bonds shall be executed in the manner provided in the Bond
Legislation authorizing their issuance or in the manner provided by the
applicable law in effect at the time of their issuance. In case any officer
whose signature or a facsimile of whose signature shall appear on any Bonds
shall cease to be such officer before the issuance, authentication or delivery
of such Bonds, such signature or such facsimile shall nevertheless be valid and
sufficient for all purposes, as if such officer had remained in office until
that time.
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Unless otherwise provided in the Bond Legislation authorizing the
issuance of Additional Bonds, notice of redemption of all Bonds shall be given
in the manner provided in Section 9 hereof. If Bonds or portions of Bonds are
duly called for redemption and if on the redemption date moneys for the
redemption of all the Bonds to be redeemed, together with premium, if any, and
interest to the redemption date, shall be held by the Trustee or Paying Agents
so as to be available therefor, then from and after such redemption date such
Bonds or portions of Bonds shall cease to bear interest.
As provided herein, the Bonds shall be equally and ratably payable
solely from the Bond Fund and secured by a pledge and assignment of the Bond
Fund, the Construction Fund and the Revenues as herein provided, and further
secured by the Indenture (provided, however, that proceeds of the Letter of
Credit shall be applied only to the payment of the purchase price of, or the
principal of and interest on, the Project Bonds); and anything in the Bond
Legislation, the Bonds or the Indenture to the contrary notwithstanding, neither
the Bond Legislation, the Bonds, nor the Indenture shall constitute a debt or a
pledge of the faith and credit of the Issuer, the State or any political
subdivision thereof and the Bondholders shall have no right to have taxes levied
by the General Assembly of the State or the taxing authority of any political
subdivision of the State for the payment of the principal of and premium, if
any, and interest on the Bonds, but such Bonds shall be payable solely from the
Revenues and the funds herein pledged, and the Bonds shall contain an the face
thereof a statement to that effect; provided, however, that nothing herein shall
be deemed to prohibit the Issuer, of its own volition, from using, to the extent
it is lawfully authorized to do so, any other resources or revenues for the
fulfillment of any of the terms, conditions or obligations of the Indenture, the
Bond Legislation or any of the Bonds.
Section 11. Sale of the Project Bonds. Any member of the Legislative
Authority is hereby authorized and directed to execute and deliver the Contract
of Purchase in substantially the form submitted to the Legislative Authority,
which form of Contract of Purchase is hereby approved in all respects with such
changes as shall not be inconsistent with the terms and provisions of this Bond
Legislation and not substantially adverse to the Issuer as may be permitted by
law and approved by the officer executing the same. The approval of such changes
by such officer, and the determination that such changes are not substantially
adverse to the Issuer, shall be conclusively evidenced by the execution of the
Contract of Purchase. Any member of the Legislative Authority is hereby
authorized and directed to make the necessary arrangements on behalf of the
Issuer to establish the date, location, procedure and conditions for the
delivery of the Project Bonds to the Original Purchasers and to take all steps
necessary to effect due authentication, delivery and security of the Project
Bonds under
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the terms of this Bond Legislation and the Indenture, and it is hereby
determined that the price and the interest rate for the Project Bonds and the
manner of sale, as provided in this Bond Legislation and in the Contract of
Purchase, are in the best interest of the Issuer and consistent with all legal
requirements.
The preparation, use and circulation by the Original Purchasers of an
official statement relating to the Project Bonds in accordance with the Contract
of Purchase is hereby authorized. The Issuer has not confirmed, and assumes no
responsibility for the accuracy or completeness of, any of the information in
the official statement or any supplements thereto, except as otherwise expressly
provided therein.
Section 12. Creation of Construction Fund; Deposit of Proceeds of
Project Bonds. There is hereby created by the Issuer and ordered maintained as a
separate bank account in the custody of the Trustee a trust fund to be
designated "County of Delaware, Ohio - Radiation Sterilizers, Incorporated
Construction Fund". Except for an amount equal to the Interest Reserve
Requirement, the aggregate amount received from the sale of the Project Bonds
and of any Additional Bonds (unless otherwise provided in the Bond Legislation
for such Additional Bonds) shall be deposited in the Construction Fund. Moneys
in the Construction Fund shall be held in trust by the Trustee for the purposes
set forth in this Bond Legislation and shall be invested in accordance with
Section 16 of this Bond Legislation and disbursed in accordance with the
provisions of the Loan Agreement.
The Issuer covenants and agrees to take all necessary and appropriate
action promptly in approving and ordering all such disbursements. The Trustee is
hereby authorized and directed to make any such disbursement from the
Construction Fund in accordance with the provisions of the Loan Agreement and to
transfer moneys and investments from the Construction Fund to the Bond Fund as
provided in Section 8.05 of the Indenture.
Section 13. Source of Payment; Creation of Bond Fund. There is hereby
created by the Issuer and ordered maintained as a separate bank account in the
custody of the Trustee a trust fund to be designated "County of Delaware, Ohio -
Radiation Sterilizers, Incorporated Revenue Bond Fund", and within the Bond
Fund, two separate subaccounts, to wit: the A Subaccount and the B Subaccount.
From the proceeds received from the sale of the Project Bonds, the Trustee shall
deposit an amount equal to the Interest Reserve Requirement in the A Subaccount
of the Bond Fund. All payments by the Company pursuant to Sections 4.1 or 4.3 of
the Loan Agreement are to be remitted directly to the Trustee for the account of
the Issuer and deposited in the B Subaccount of the Bond
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Fund, except that monies drawn under the Letter of Credit shall be maintained by
the Trustee in a separate account. Such payments are required to be sufficient
in amount to pay the principal of and premium, if any, and interest on the
Bonds, and the entire amount of such payments is pledged to the payment of the
principal of and premium, if any, and interest on the Bonds.
The Trustee shall maintain a record of the date and amount of each
deposit to the B Subaccount of the Bond Fund. On the day on which each such
deposit becomes Available Money, the Trustee shall transfer an amount equal to
the amount of such deposit to the A Subaccount of the Bond Fund. On the
Expiration Date of the Letter of Credit, the Trustee shall combine the balances
in the A Subaccount of the Bond Fund and the B Subaccount of the Bond Fund into
one account in the Bond Fund.
The Issuer hereby covenants and agrees that so long as any of the Bonds
issued hereunder are outstanding it will deposit, or cause to be deposited, in
the Bond Fund sufficient Revenues promptly to meet and pay the principal of and
premium, if any, and interest on the Bonds as the same become due and payable.
The Issuer further covenants and agrees that should there be a default or Event
of Default under the Loan Agreement the Issuer shall fully cooperate with the
Trustee and with the Bondholders to the end of fully protecting the rights and
security of the Bondholders. Nothing herein shall be construed as requiring the
Issuer to use or deposit any moneys from any source other than Revenues.
Subject to the provisions of Section 4.05 of the Indenture, moneys in
the Bond Fund shall be used solely for the payment of the principal of and
premium, if any, and interest on the Bonds and for the redemption of the Bonds
at or prior to maturity, all in accordance with the provisions of the Indenture.
After the Conversion Date, whenever the amount in the Bond Fund, from
any source whatsoever, is sufficient to redeem all the Bonds outstanding
hereunder and to pay interest to accrue thereon prior to such redemption, the
Issuer covenants and agrees that upon the request of the Company it will take
and cause to be taken the necessary steps to redeem all of said Bonds on the
next succeeding redemption date for which the required redemption notice may be
given.
Nothing in this Bond Legislation is intended to prevent the Company
from delivering moneys to the Trustee pursuant to Section 4.3(b) of the Loan
Agreement for application as provided in such Section.
Section 14. Additional Bonds. The Issuer, at the request of the Company
and to the extent permitted by and consistent with the law in effect at the time
thereof, shall use its best efforts to issue Additional Bonds from time to time
for
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providing funds (i) to refund, in advance or otherwise, the Project Bonds or any
Additional Bonds; (ii) to make repairs to the Facilities of a major nature
arising from casualty or unanticipated conditions; (iii) to acquire, construct,
equip or improve land, buildings, structures, facilities, machinery or
equipment, all to be used in connection with the Facilities when such
acquisition, construction, equipping or improvement will fulfill the purposes of
Chapter 165 of the Ohio Revised Code, or any successor law; (iv) to pay that
portion of the costs of the Facilities as may be in excess of the moneys
available therefor in the Construction Fund prior to the issuance of such
Additional Bonds; or (v) for any combination of the foregoing, on a parity with
the Project Bonds and any Additional Bonds theretofore or thereafter issued and
payable from the Bond Fund; provided that before any Additional Bonds are
authenticated there is delivered to and filed with the Trustee (a) any necessary
amendment to the Loan Agreement so that the aggregate amounts payable by the
Company pursuant to the Loan Agreement, as amended, shall be sufficient in
amount to make all required payments into the Bond Fund in order to pay, or
redeem at or prior to maturity, all Bonds then to be outstanding, and to pay all
other charges required to be paid under the provisions of the Loan Agreement and
this Bond Legislation and all Bond Legislation authorizing Additional Bonds; and
(b) the other items required by Section 2.08 of the Indenture; and provided,
further, that prior to the Expiration Date of the Letter of Credit, no
Additional Bonds shall be issued unless (i) the proceeds thereof are to be used
to refund the Project Bonds, in full; or (ii) the Company has received the prior
written consent of the Bank to the issuance of such Additional Bonds.
Additional Bonds shall be in such principal amounts, shall be dated,
shall bear interest at such rate or rates, shall be subject to redemption at
such times and prices, and shall mature in such years as the Bond Legislation
authorizing the issuance thereof shall fix and determine, subject to Section 10
of this Bond Legislation.
Section 15. Covenants of the Issuer. In addition to the other covenants
of the Issuer in this Bond Legislation and in the Indenture, the Issuer further
covenants with the Bondholders and the Trustee as follows:
(a) Payment of Principal, Premium, if Any, and Interest. The Issuer
will, solely from the sources herein provided, pay the principal of and premium,
if any, and interest on every Bond on the dates and at the places and in the
manner mentioned in the Bonds according to the true intent and meaning thereof.
(b) Performance of Covenants, Authority and Actions. The Issuer
covenants that it will faithfully observe and perform at all times all
agreements, covenants, undertakings, stipulations on its part to be observed and
performed and
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contained in the Bond Legislation, the Indenture and in any and every
Bond executed, authenticated and delivered under the Indenture and in all
proceedings pertaining to the Bonds or the Loan Agreement. The Issuer covenants
that it is duly authorized by the Constitution and laws of the State,
particularly and without limitation Chapter 165 of the Ohio Revised Code, and
the authorities therein mentioned, to issue the Bonds authorized hereby and to
execute, deliver and perform the Indenture, and to assign and pledge the
Revenues in the manner and to the extent herein and in the Indenture set forth;
that all actions on its part for the issuance of the Project Bonds and
execution, delivery and performance of the Indenture have been duly and
effectively taken and, if Additional Bonds are issued pursuant hereto, will be
duly taken as provided herein and in the Indenture, and that the Bonds in the
hands of the holders thereof are and will be valid and binding special
obligations of the Issuer according to the terms thereof. All the obligations
and duties of the Issuer and its officers in its behalf, under the Loan
Agreement, this Bond Legislation and the Indenture are hereby established as
duties specifically enjoined by law and resulting from an office, trust or
station of the Issuer and its officers within the meaning of Section 2731.01 of
the Ohio Revised Code.
(c) Maintenance of Lien. The Issuer will not pledge or assign the
Revenues, or create or suffer to be created any debt, lien or charge thereon
other than the pledge and assignment under this Bond Legislation and Indenture.
(d) Inspection of Books. The Issuer covenants and agrees that all books
and documents in its possession relating to the Facilities and the Revenues
shall at all times during Issuer's regular business hours be open to inspection
by such accountants or other agencies as the Trustee may from time to time
designate.
(e) Recordings and Filings. The Issuer covenants that it will do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered such indentures supplemental hereto and such further acts, instruments
and transfers as the Trustee may reasonably require for better pledging and
confirming unto the Trustee any right, title and interest assigned, transferred
and pledged hereby. At the expense of the Company, the Issuer will cause the
Loan Agreement and the Indenture, and any amendments or supplements to either,
and all necessary financing statements, amendments thereto, continuation
statements, and instruments of similar character relating to the pledges and
assignments made by it to secure the Bonds, to be registered, recorded and filed
and re-registered, re-recorded and re-filed in such manner and in such places as
may be required by law in order at all times fully to preserve and protect the
security of the holders of the Bonds and the rights of the Trustee under the
Indenture.
(f) Rights Under Loan Agreement. The Loan Agreement, a duly executed
counterpart of which upon delivery of the Project Bonds will have been filed
with the Trustee, sets forth the
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covenants and obligations of the Issuer and the Company, including a provision
in Section 7.8 thereof that subsequent to the issuance of Project Bonds and
prior to payment of the Bonds in full or provision for payment thereof in
accordance with the provisions hereof and of the Indenture, the Loan Agreement
may not be amended, changed, modified, altered, or terminated (other than as
provided therein or herein) without the prior written consent of the Trustee,
and reference is hereby made to the Loan Agreement for a detailed statement of
said covenants and obligations of the Company under the Loan Agreement.
(g) Rights and Enforcement of the Loan Agreement. The Trustee may
enforce, in its name or in the name of the Issuer, all rights of the Issuer for
and on behalf of the Bondholders, except for rights expressly reserved to the
Issuer, and may enforce covenants, agreements and obligations of the Company
under and pursuant to the Loan Agreement, regardless of whether the Issuer is in
default in the pursuit or enforcement of those rights, covenants, agreements or
obligations. The Issuer, however, will do all things and take all actions on its
part necessary to comply with covenants, agreements, obligations, duties and
responsibilities on its part to be observed or performed under the Loan
Agreement and will take all actions within its authority to keep the Loan
Agreement in effect in accordance with the terms thereof,
Section 16. Investments. Any moneys held as a part of the Bond Fund,
the Construction Fund or any other fund or account held by the Trustee pursuant
to the Indenture or the Loan Agreement shall, at the written direction of the
Authorized Company Representative, as defined in the Loan Agreement, or at the
oral direction of such Authorized Company Representative, confirmed as soon as
practicable in writing, be held as a cash account or be invested or reinvested
by the Trustee in Eligible Investments. The type, amount and maturity (which
shall be such so that the moneys invested will be available to make payments
from the respective funds in accordance with the provisions of the Bond
Legislation) of such investments shall be as specified by said Authorized
Company Representative. Any such investment made by the Trustee may be purchased
from or through the Trustee or any affiliate of the Trustee, and such
investments shall be held by or under the control of the Trustee and shall be
deemed at all times a part of the Bond Fund, Construction Fund or such other
fund or account, as the case may be, and the interest accruing thereon and any
profit realized therefrom shall be credited to such respective fund or account
and any loss resulting from such investments shall be charged to such respective
fund or account. The Trustee shall sell and reduce to cash a sufficient portion
of investments held in any fund or account under the provisions of this Section
whenever the cash balance in any such fund or account is insufficient to pay the
obligations properly chargeable to such fund or account when due and shall
advise the Company when any such action is taken. The Issuer covenants that the
Loan Agreement will include a covenant by the Company that moneys in all funds
and accounts will be so invested as
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not to make any of the Bonds arbitrage bonds within the meaning of Section
103(c) of the Code.
Section 17. Arbitrage Provisions. The Issuer will restrict the use of
the proceeds of the Project Bonds in such manner and to such extent, if any, as
may be necessary, after taking into account reasonable expectations at the time
of the delivery of and payment for the Project Bonds, so that they will not
constitute arbitrage bonds within the meaning of Section 103(c) of the Code. Any
member of the Legislative Authority is authorized and directed, alone or in
conjunction with any other officer, employee, consultant or agent of the Issuer,
or with the Company or any employee, consultant or agent of the Company, to give
an appropriate certificate of the Issuer for inclusion in the transcript of
proceedings for the Project Bonds, setting forth the reasonable expectations of
the Issuer regarding the amount and use of the proceeds of the Project Bonds and
the facts and estimates on which they are based, all as of the date of delivery
of and payment for the Project Bonds, such certificate to be premised on the
reasonable expectations and the facts, estimates and circumstances on which
those expectations are based as provided by the Company. The Issuer shall
furnish to the Original Purchasers a true transcript of proceedings, certified
by the Clerk or Assistant Clerk of the Legislative Authority, of all proceedings
with reference to the issuance of the Project Bonds along with such other
information from the records as is necessary to determine the regularity and
validity of the issuance of the Project Bonds.
Section 18. Indenture and Loan Agreement. In order to secure the
payment of The principal of and premium, if any, and interest on the Bonds, a
member of the Legislative Authority shall execute, acknowledge and deliver, as
may be appropriate, in the name and on behalf of the Issuer, the Indenture and
the Loan Agreement, in substantially the forms submitted to the Issuer, which
instruments are hereby approved in all respects with such changes therein not
inconsistent with this Bond Legislation and not substantially adverse to the
Issuer as may be permitted by law and approved by the officer executing the
same, The approval of such changes by such officer and that such are not
substantially adverse to the Issuer, shall be conclusively evidenced by the
execution of the Indenture and the Loan Agreement, respectively, by such
officer, The Clerk of the Legislative Authority is hereby directed to insert
copies thereof in the record of proceedings of the Issuer with the minutes of
this meeting and to certify thereon that the same is in the form so submitted to
the Issuer and approved by this Bond Legislation and identified herein as the
Indenture and the Loan Agreement. The Indenture contains provisions authorized
and permitted by Chapter 165 of the Ohio Revised Code, and this Bond Legislation
shall constitute a part thereof as therein provided and for all purposes of the
Indenture, including the provisions thereof relating to supplemental indentures
and to the severability of provisions of the Indenture,
Section 19. Remarketing Agent. Prudential-Bache Securities Inc., New
York, New York, is hereby appointed the
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Remarketing Agent for the Project Bonds. The Remarketing Agent shall designate
to the Trustee, the Company, the Issuer and the Bank its principal office and
signify the acceptance of the duties and obligations imposed upon it under the
Indenture by a written instrument of acceptance delivered to the Issuer and the
Trustee under which the Remarketing Agent will agree, particularly:
(a) to hold all Project Bonds delivered to it pursuant to the
Indenture in trust for the benefit of the respective Bondholders who
shall have so delivered such Project Bonds until moneys representing
the purchase price of such Project Bonds shall have been delivered to
or for the account of or to the order of such Bondholders;
(b) to hold all moneys delivered to it for the purchase of
Project Bonds in trust for the benefit of the Person who shall have so
delivered such moneys until the Project Bonds purchased with such
moneys shall have been delivered to or for the account of such Person;
(c) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available
for inspection by the Issuer, the Company, the Bank and the Trustee at
all reasonable times;
(d) not later than 10:30 a.m., New York City time., on each
Interest Payment Date, to give telegraphic or telephonic notice,
promptly confirmed by a written notice, to the Company, the Trustee and
the Bank specifying the principal amount of Project Bonds, if any,
delivered to it for purchase on such Interest Payment Date pursuant to
Section 7(a) of this Bond Legislation;
(e) not later than 10:30 a.m., New York City time on each
Interest Payment Date, to give telegraphic or telephonic notice,
promptly confirmed by a written notice, to the Company, the Trustee and
the Bank specifying the principal amount of such Project Bonds, if any,
sold by it pursuant to Section 7(g) of this Bond Legislation;
(f) not later than the fourth Business Day preceding each
Interest Payment Date, to give telegraphic or telephonic notice,
promptly confirmed by a written notice, to the Company, the Trustee and
the Bank specifying the interest rate on the Project Bonds for the
Interest Period commencing on such Interest Payment Date, determined
pursuant to and in accordance with Section 4 of this Bond Legislation;
(g) to deliver to the Company, the Trustee and the Bank a copy
of each notice delivered to it in accordance
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with Section 7(c) of this Bond Legislation and, immediately upon the
delivery to it of Project Bonds in accordance with said Section 7(c),
to give telephonic or telegraphic notice to the Company, the Trustee
and the Bank specifying the principal amount of the Project Bonds so
delivered and the principal amount of such Project Bonds remarketed;
and
(h) to deliver all Project Bonds and due-bill checks delivered
to it pursuant to the Indenture to the Persons to whom the same are to
be delivered in accordance with Section 7(1) of this Bond Legislation.
The Issuer shall cooperate with the Trustee to cause the necessary
arrangements to be made and to be thereafter continued whereby Project Bonds
executed by the Issuer and authenticated by the Trustee shall be made available
to the Remarketing Agent to the extent necessary for delivery to purchasers
thereof.
The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by the Indenture by giving at least ninety (90)
days' written notice to the Issuer, the Company, the Bank and the Trustee. The
Remarketing Agent may be removed at any time, at the direction of the Company,
by an instrument signed by a member of the Legislative Authority and filed with
the Remarketing Agent, the Bank and the Trustee. In the event of the resignation
or removal of the Remarketing Agent, a successor Remarketing Agent shall be
designated by a member of the Legislative Authority, at the direction of the
Company and with the consent of the Bank. Any successor Remarketing Agent shall
be authorized by law to perform all the duties imposed upon it by the Indenture
and shall be a commercial bank having an aggregate of capital, paid in surplus
and retained earnings of not less than $50,000,000 or a member of the National
Association of Securities Dealers, Inc. having a capitalzation of at least
$15,000,000 or having a line of credit with a commercial bank in the amount of
at least $15,000,000. In addition, any successor Remarketing Agent (or its
parent corporation, if such successor is a subsidiary of a holding company)
shall have outstanding securities rated not lower than Baa3 (or a substantially
equivalent rating) by Moody's if such a requirement is a condition to the
maintenance of the then existing Moody's rating of the Project Bonds.
Section 20. Other Documents. Any member of the Legislative Authority is
hereby further authorized and directed to execute such certifications, financing
statements, assignments and instruments and to accept delivery of such
instruments as are in the opinion of the counsel to the Issuer necessary to
perfect the pledges set forth in the Indenture and to consummate the
transactions provided for in the Indenture, the Loan Agreement and the Contract
of Purchase.
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Section 21. Prevailing Wage Rates. All wages paid to laborers and
mechanics employed on the Facilities shall be paid at the prevailing rates of
wages of laborers and mechanics for the class of work called for by the
Facilities, which wages shall be determined in accordance with the requirements
of Chapter 4115 of the Ohio Revised Code, for determination of prevailing wages;
provided, that such requirements shall not apply where the federal government or
any of its agencies furnished by loan or grant all or any part of the funds used
in connection with the Facilities and prescribes predetermined minimum wages to
be paid to such laborers and mechanics; and provided, further, that should the
Company or other non public user beneficiary undertake construction of the
Facilities to be performed by its regular bargaining unit employees who are
covered under a collective bargaining agreement which was in existence prior to
the Commitment Date, as defined in the Loan Agreement, the rate of pay provided
under the collective bargaining agreement may be paid to such employees. To the
extent required by section 4115.032 of the Ohio Revised Code, the Company shall
comply, and shall require compliance by all contractors and subcontractors
working on the Facilities, with Sections 4115.03 through 4115.16, inclusive, of
the Ohio Revised Code. Barry Fairand is hereby appointed Prevailing Wage
Coordinator, within the meaning of Section 4115.071 of the Ohio Revised Code,
for the Facilities,
Section 22. Open Meetings. It is found and determined that all formal
actions of the Issuer concerning and relating to the adoption of this resolution
were adopted in an open meeting of the Legislative Authority, and that all
deliberations of the Legislative Authority and any of its committees that
resulted in such formal action were in meetings open to the public, in
compliance with all legal requirements, including Section 121.22 of the Ohio
Revised Code,
Section 23. Determination and Approval of Legislative Authority.
Pursuant to section 165.03, Ohio Revised Code, the Legislative Authority hereby
finds and determines that the Facilities constitute a "project" as defined in
Chapter 165 of the Ohio Revised Code and are consistent with the provisions of
Section 13 of Article VIII, Ohio Constitution.
The Legislative Authority, as the "applicable elected representative"
of the Issuer for purposes of Section 103(k) of the Code, hereby approves the
issuance of the Project Bonds in the principal amount of $4,900,000, the
proceeds of which will be loaned to the Company to assist in financing the costs
of the Project, generally consisting of the acquisition, construction and
equipping of a 20,800 square foot steel frame one-story facility for the
sterilization of packaged products using ionizing radiation, located in the
Green Meadows Corporate Park.
Section 24. Effective Date. This Bond Legislation shall take effect and
be in force upon its adoption.
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Commissioner ___________________ moved adoption of the foregoing resolution.
Commissioner ___________________ seconded adoption of the foregoing resolution.
__________________________________
Voting aye: Commissioner
__________________________________
Commissioner
__________________________________
Commissioner
The undersigned Assistant Clerk of the Board of County Commissioners of
Delaware County, Ohio hereby certifies that the foregoing resolution was duly
adopted by the Board of County Commissioners of Delaware County, Ohio on
December 24, 1984,
Dated: December 24, 1984 ____________________________________
Assistant Clerk of the
Board of County Commissioners
County of Delaware, Ohio
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WHEREAS, all acts, conditions and things required to happen, exist, and
be performed precedent to and in the issuance of the Project Bonds and in the
execution and delivery of this Indenture have happened, exist and have been
performed in order to make the Project Bonds, when delivered, valid and binding
special obligations of the Issuer in accordance with the terms thereof and
hereof, and in order to make this Indenture a valid, binding and legal trust
agreement for the security of the Bonds in accordance with its terms; and
WHEREAS, the Trustee has accepted the trusts created by this Indenture,
and in evidence thereof has joined in the execution hereof; and
WHEREAS, the text of the Project Bonds, the certificate of
authentication of the Trustee to be endorsed thereon and other provisions to be
included therein are to be substantially in the following form with the
appropriate omissions, insertions and variation as in this Indenture provided or
permitted:
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[FORM OF PROJECT BOND - FRONT]
No. R- $
UNITED STATES OF AMERICA
STATE OF OHIO
COUNTY OF DELAWARE, OHIO
VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BOND
(RADIATION STERILIZERS, INCORPORATED PROJECT)
Maturity Date: December 1, 2004
Original Issuance Date: December __ 1984 CUSIP
Registered Holder
Principal Amount______________ Dollars ($____________________)
The County of Delaware, Ohio (hereinafter sometimes called the
"Issuer"), a county and political subdivision in and of the State of Ohio, for
value received, promises to pay to the Registered Holder identified above, or
registered assigns, but solely from the sources and in the manner hereinafter
set forth, the Principal Amount identified above on the Maturity Date identified
above, and to pay from said sources interest thereon from the Original Issuance
Date identified above, or if this Bond is authenticated after the Original
Issuance Date, from and including the last date to which interest shall have
been paid on the Project Bonds, as hereinafter defined, at the rates and on the
dates set forth herein until payment of such principal sum has been made or
provided for, subject to the provisions hereinafter mentioned with respect to
redemption prior to maturity. The principal sum of this Bond is payable in
lawful money of the United States of America without deduction for services of
any paying agent, at the principal corporate trust office of the Trustee,
currently BANK ONE TRUST COMPANY, NA, Columbus, Ohio, but only upon presentation
and surrender of this Bond at maturity. Interest payable on any Interest Payment
Date (as hereinafter defined) will be paid, in lawful money of the United States
of America without deduction for services of the paying agent and, subject to
certain exceptions provided in the Indenture hereinafter identified, to the
person in whose name this Bond is registered at the close of business on the
Record Date, as hereinafter defined, for such Interest Payment Date. Except as
otherwise provided in the Indenture, interest on this Bond is payable by check
drawn upon the Trustee and mailed to the registered holder of this Bond at his
address as it appears on the registration books of the Trustee. This Bond shall
be purchased on the demand of the registered holder by the Trustee as
hereinafter described.
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This Bond is one of a duly authorized issue of County of Delaware, Ohio
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project) (hereinafter sometimes referred to as the
"Project Bonds"), issuable under a Trust Agreement, dated as of December 1, 1984
(hereinafter, as the same may be amended and supplemented in accordance with its
terms, referred to as the "Indenture"), duly executed and delivered by the
Issuer to Bank One Trust Company, NA, as Trustee (the term "Trustee" where used
herein referring to said Trustee or its successors in said trust appointed
pursuant to the Indenture), aggregating in principal amount Four Million Nine
Hundred Thousand Dollars ($4,900,000) and issued for the purpose of providing
funds to lend to Radiation Sterilizers, Incorporated (the "Company") so that the
Company may acquire, construct and equip property comprising an industrial
facility for the sterilization of packaged products using ionizing radiation,
located in Delaware County, Ohio (the "Facilities"), in order to promote the
industrial and economic development of the State of Ohio and benefit the people
of the Issuer by preserving and creating jobs and increasing opportunities for
employment and strengthening the economic welfare of the people of the Issuer
and the State of Ohio, The proceeds of the Project Bonds will be loaned to the
Company pursuant to the terms of the Loan Agreement (the "Loan Agreement") dated
as of December 1, 1984 between the Issuer and the Company,
The Project Bonds are issued pursuant to the Constitution and laws of
the State of Ohio, particularly Chapter 165, Ohio Revised Code, the authorities
therein mentioned and a resolution duly adopted by the Board of County
Commissioners of the Issuer. The Project Bonds are special obligations of the
Issuer, are payable as to principal, premium, if any, and interest solely from
the Revenues as defined in the Indenture (generally the loan payments and other
amounts which under the Loan Agreement are payable by or on behalf of the
Company directly to the Trustee to meet amounts due with respect to the
principal of and premium, if any, and interest on the Project Bonds, all other
moneys received by the Issuer, or the Trustee on behalf of the Issuer, in
respect of the payment of loan payments under the Loan Agreement, and income and
profit from the investment of such payments and moneys, subject to certain
provisions in the Indenture with respect to the Trustee's holding moneys for the
benefit of the holders of particular Bonds) and are not otherwise an obligation
of the Issuer, the State of Ohio or any political subdivision thereof. The
Project Bonds do not represent or constitute a debt, or a pledge of the faith
and credit, of the Issuer or of the State of Ohio or of any political
subdivision thereof, and the holders or owners thereof have no right to have
taxes levied by the General Assembly of the State of Ohio or the taxing
authority of any political subdivision thereof for the payment of the principal
of and premium, if any, and interest thereon. Payments sufficient for the prompt
payment when due of the
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principal of and premium, if any, and interest on the Project Bonds are required
by the Loan Agreement to be paid to the Trustee for the account of the Issuer
and have been duly pledged and assigned for that purpose.
The registered holder of this Project Bond shall not be entitled to
enforce the provisions of the indenture or to institute, appear in or defend any
suit, action or proceeding at law or in equity to enforce any rights, remedies
or covenants granted by the Indenture, or to take any action with respect to any
Event of Default as defined in the Indenture, except as provided in the
Indenture.
If an Event of Default shall occur, the principal of this Project Bond
and all other Bonds secured by the Indenture then issued and outstanding may be
declared due and payable in the manner and with the effect provided by the
Indenture, but subject to waiver of such Event of Default as provided in the
Indenture.
The Project Bonds shall not constitute the personal obligation, either
jointly or severally, of any officer or employee of the Issuer,
Reference is made to the further provisions of this Project Bond set
forth on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
AND IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and
things necessary to be done by the Issuer precedent to and in the issuing of the
Project Bonds in order to make them legal, valid and binding special obligations
of the Issuer in accordance with their terms, and in the execution and delivery
of the Indenture and the Loan Agreement, have been done and performed and have
happened in regular and due form as required by law; that the Issuer has, on its
behalf, received payment in full for the Project Bonds; and that the Project
Bonds do not exceed or violate any constitutional or statutory limitation.
This Project Bond shall not be entitled to any security or benefit
under the Indenture or become valid or obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, the County of Delaware, Ohio has caused this
Project Bond to be executed in its name by the
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facsimile signatures of at least two members of its Board of County
Commissioners.
COUNTY OF DELAWARE, OHIO
________________________________
County Commissioner
________________________________
County Commissioner
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Project Bond is one of the Project Bonds described in the
within-mentioned Indenture.
BANK ONE TRUST COMPANY, NA, Trustee
By: ______________________________
Authorized Signature
Date of Authentication: __________
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<PAGE> 46
[FORM OF PROJECT BOND - BACK]
Definitions
In addition to the words and terms defined on the face of this Project
Bond, the following words and terms as used herein shall have the following
meanings unless the context or use indicates another or different meaning or
intent and such definitions shall be equally applicable to both the singular and
plural forms of any of the words and terms herein defined:
"Additional Bonds" means the industrial development revenue bonds of
the Issuer which may be issued under Section 14 of the Bond Legislation.
"Adjustment Date" means, after the Conversion Date, the Interest
Payment Date next preceding the Expiration Date of the Alternate Credit Facility
or the Expiration Date of the Letter of Credit, as the case may be.
"Alternate Credit Facility" means a credit facility other than the
Letter of Credit, including without limitation, an irrevocable letter of credit
or bond insurance policy, which provides for payment of the principal of and
interest on the Project Bonds, when due.
"Alternate Interest Index" means for any Interest Period ending prior
to the Conversion Date 65% of the interest rate applicable to 13-week United
States Treasury bills determined by the Remarketing Agent on the basis of the
average per annum bond equivalent yield at which such 13-week Treasury bills
shall have been sold at the most recent Treasury auction during the next
preceding Interest Period. If no such auction shall have been conducted during
the next preceding Interest Period, or if the Remarketing Agent shall fail to
determine the Alternate Interest Index, the Alternate Interest Index during such
Interest Period will be the same as for the preceding Interest Period.
"Alternate Letter of Credit" means an irrevocable letter of credit
other than the Letter of Credit issued in accordance with the Loan Agreement.
"Bank" means the issuer of the Letter of Credit, initially Wells Fargo
Bank, N.A., San Jose, California.
"Business Day" means any day, other than a Saturday or Sunday, on which
banks located in the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located and in New York, New
York are not required or authorized by law to remain closed and on which The New
York Stock Exchange is not closed.
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<PAGE> 47
"Conversion Date" means the date upon which the Project Bonds begin to
bear interest at the Fixed Interest Rate.
"Date of Taxability" means the date as of which all or any part of the
interest on the Bonds is first required to be included in the gross income of
any holder or former holder thereof for federal income tax purposes by reason of
the occurrence of any circumstance on the basis of which a Determination of
Taxability is made.
"Determination of Taxability" means the receipt by the Trustee or a
Bondholder of a ruling or technical advice by the Internal Revenue Service in
which the Company has participated or a written opinion by an attorney or firm
of attorneys of recognized standing on the subject of municipal bonds selected
by the Trustee or a Bondholder and approved by the Company, which approval shall
not be unreasonably withheld, to the effect that interest on the Project Bonds
is includible in the gross income for federal income tax purposes of a holder
thereof (other than a holder who is a "substantial user" of the Facilities or a
"related person", as such terms are used in Section 103(b) of the Internal
Revenue Code of 1954, as amended).
"Expiration Date of the Alternate Credit Facility" means the date
established in the Alternate Credit Facility for the expiration thereof, and in
the event such date is extended, such date as extended,
"Expiration Date of the Letter of Credit" means the date established in
the Letter of Credit for the expiration thereof in accordance with its terms,
initially January 15, 1988, and in the event such date is extended, such date as
extended.
"First Optional Redemption Date" means the December 1 occurring in the
year which is a number of years after the Conversion Date equal to the number of
years between the December 1 immediately following the Conversion Date (unless
the Conversion Date is a December 1, in which case from such December 1) and
December 1, 2004, multiplied by 1/2 and rounded up to the nearest whole number.
"Fixed Interest Rate" means a fixed non-floating interest rate on the
Project Bonds.
"Interest Index" means for any Interest Period ending prior to the
Conversion Date 55% of the rate of interest per annum publicly announced by
Morgan Guaranty Trust Company of New York in New York, New York as its prime
rate.
"Interest Payment Date" means with respect to the Project Bonds prior
to and including the Conversion Date the first
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Business Day of each month commencing February 1, 1985, and after the Conversion
Date the first day of each June and December.
"Interest Period" means with respect to the Project Bonds prior to the
Conversion Date a period from and including the Interest Payment Date in each
calendar month to and including the day next preceding the Interest Payment Date
in the following calendar month, except that the first Interest Period shall be
the period from and including the Original Issuance Date to and including
January 31, 1985.
"Investment Company" means any open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended.
"Letter of Credit" means the irrevocable letter of credit issued by the
Bank contemporaneously with the original issuance of the Project Bonds, except
that upon the issuance and delivery of an Alternate Letter of Credit, "Letter of
Credit" shall mean such Alternate Letter of Credit, and upon the delivery of an
Alternate Credit Facility, "Letter of Credit" shall, unless the context
otherwise requires, include reference to the Alternate Credit Facility.
"Letter of Credit Agreement" means the Letter of Credit Agreement,
dated as of December 1, 1984, between the Company and the Bank pursuant to which
the Letter of Credit is issued by the Bank and delivered to the Trustee, and any
and all modifications, alterations, amendments and supplements thereto, and
includes any agreement between the Company and the Bank pursuant to which any
Alternate Letter of Credit is issued.
"Loan Agreement" means the Loan Agreement, dated as of December 1,
1984, between the Issuer and the Company, as from time to time supplemented or
amended in accordance with the provisions thereof.
"Moody's" means Moody's Investors Service, Inc.
"Record Date" means with respect to any Interest Payment Date on or
before the Conversion Date the fifth (5th) day next preceding such Interest
Payment Date; provided that if such day is not a Business Day, then the next
preceding Business Day, and with respect to any Interest Payment Date after the
Conversion Date the fifteenth (15th) day of the month next preceding such
Interest Payment Date.
"Remarketing Agent" means the remarketing agent appointed in accordance
with the Indenture, initially Prudential-Bache Securities Inc., New York, New
York.
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"S&P" means Standard & Poor's Corporation.
Interest
For the first Interest Period, the Project Bonds shall bear interest at
the rate set forth in the Indenture. Thereafter, for each Interest Period ending
before the Conversion Date, the interest rate on the Project Bonds shall be a
rate determined by the Remarketing Agent, in its discretion to be that rate
which, if borne by the Project Bonds, would, in the judgment of the Remarketing
Agent, having due regard to prevailing financial market conditions, be the
interest rate necessary to enable the Remarketing Agent to remarket all
outstanding Project Bonds on the Interest Payment Date occurring in such
Interest Period at a price equal to 100% of the principal amount thereof,
provided, however, that the interest rate so determined shall not be more than
120% of the greater of, nor less than the lesser of, the Interest Index and the
Alternate Interest Index for such Interest Period unless the Interest Index and
the Alternate Interest Index have been eliminated pursuant to a supplemental
indenture entered into in accordance with the provisions of the Indenture.
Notwithstanding anything to the contrary contained herein, the interest
rate on the Project Bonds shall never exceed twenty percentum (20%) per annum.
Redemption
Prior to the Conversion Date, the Project Bonds are subject to
redemption by the Issuer, at the option of the Company, in whole or in part in
integral multiples of $100,000 on any Interest Payment Date on a date selected
by the Company at a price equal to 100% of the principal amount redeemed plus
accrued interest to the redemption date.
After the Conversion Date, the Project Bonds are subject to redemption
by the Issuer, at the option of the Company, in whole at any time or, to the
extent permitted by Section 4.3(c) of the Loan Agreement, in part in integral
multiples of $5,000 on any Interest Payment Date, at a redemption price of 100%
of the principal amount thereof plus accrued interest to the redemption date, in
the event of (1) condemnation of the Facilities or any
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part thereof to the extent provided in Section 4.3(c) of the Loan Agreement or
(2) exercise by the Company of its prepayment option as provided in Section
4.3(d) of the Loan Agreement.
After the Conversion Date, the Project Bonds are subject to redemption
by the Issuer, at the option of the Company, on or after the First Optional
Redemption Date, in whole at any time or in part on any Interest Payment Date in
integral multiples of $5,000, on a date selected by the Company at the
redemption prices (expressed as percentages of the principal amount redeemed)
set forth in the following table plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date through
the following November 30 103%
First Anniversary of the First Optional
Redemption Date through the following
November 30 102%
Second Anniversary of the First Optional
Redemption Date through the following
November 30 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Upon the occurrence of a Determination of Taxability, the Project Bonds
are subject to mandatory redemption by the Issuer at a redemption price of 100%
of the principal amount redeemed plus accrued interest to the redemption date on
the fifteenth (15th) Business Day following the date of such Determination of
Taxability if the date of such Determination of Taxability precedes the
Conversion Date, or on the seventy-fifth (75th) day following the date of such
Determination of Taxability if the date of Determination of Taxability is on or
after the Conversion Date. The Project Bonds shall be redeemed in whole unless,
in the opinion of Independent Tax Counsel (as defined in the Loan Agreement) the
redemption of a portion of the outstanding principal amount of the Project Bonds
would have the result that the interest payable on the Project Bonds remaining
outstanding after such redemption would not be included in the gross income for
federal income tax purposes of any holder of the Project Bonds (other than a
holder who is a "substantial user" of the Facilities or a "related person"
within the meaning of Section 103(b) of the Internal Revenue Code of 1954, as
amended), in which event only such portion of the outstanding Project Bonds
shall be redeemed,
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If less than all of the Project Bonds are called for redemption at any
time, the selection of Project Bonds or portions thereof to be called shall be
made by lot in such manner as the Trustee shall determine.
Purchase of Project Bonds
On or before the Conversion Date, any Project Bond or portion thereof
in an integral multiple of $100,000 shall be purchased by the Remarketing Agent,
on the demand of the holder thereof, on any Interest Payment Date at a purchase
price equal to the principal amount thereof, upon: (i) delivery to the
Remarketing Agent at its principal office in New York, New York at or prior to
4:00 p.m., New York City time, on the third Business Day prior to such Interest
Payment Date of a telephone notice (unless the Trustee shall be serving as
Remarketing Agent, in which case written notice shall be required) which (A)
states the principal amount of such Project Bond to be purchased and (B) states
that such Project Bond or portion thereof shall be purchased on such Interest
Payment Date pursuant to this paragraph; and (ii) delivery of such Project Bond
to an office designated by the Remarketing Agent in New York, New York,
presently c/o Marine Midland Bank, 140 Broadway, New York, New York 10004
Attention: Clearance Department Level A. at or prior to 10:00 a.m., New York
City time, on such Interest Payment Date; provided, however, that such Project
Bond or portion thereof shall be so purchased pursuant to this paragraph only if
the Project Bond so delivered to the Remarketing Agent shall conform in all
respects to the description thereof in the aforesaid notice.
On or before the Conversion Date, any Project Bond or portion thereof
in an integral multiple of $100,000 shall be purchased by the Trustee, on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Trustee at its principal office in Columbus, Ohio of a written notice which
states (A) that such holder is an Investment Company, (B) the principal amount
of such Project Bond to be purchased and (C) the date on which such Project Bond
or portion thereof shall be purchased pursuant to this paragraph, which date
shall be a Business Day not prior to the seventh (7th) day next succeeding the
date of the delivery of such notice to the Trustee; and (ii) delivery of such
Project Bond, and, in the case of a Project Bond or portion thereof to be
purchased prior to an Interest Payment Date and after the Record Date in respect
thereof, a due-bill check, in form satisfactory to the Trustee, for interest due
on such Interest Payment Date,
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<PAGE> 52
at the Trustee's principal corporate trust office in Columbus, Ohio at or prior
to 10:00 a.m., on the date specified in the aforesaid notice; provided, however,
that such Project Bond or portion thereof shall be so purchased pursuant to this
paragraph only if the Project Bond so delivered to the Trustee shall conform in
all respects to the description thereof in the aforesaid notice.
On or before the Conversion Date, any Project Bond or portion thereof
in an integral multiple of $100,000 shall be purchased by the Remarketing Agent,
on the demand of the holder thereof, on any Business Day at a purchase price
equal to the principal amount thereof plus accrued interest, if any, to the date
of purchase, upon: (i) delivery to the Remarketing Agent at its principal office
in New York, New York of a written notice which (A) states the principal amount
of such Project Bond to be purchased and (B) states the date on which such
Project Bond or portion thereof shall be purchased pursuant to this paragraph,
which date shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of such notice to the Remarketing Agent; and
(ii) delivery of such Project Bond and, in the case of a Project Bond or portion
thereof to be purchased prior to the Interest Payment Date for any Interest
Period and after the Record Date in respect thereof, a due-bill check, in form
satisfactory to the Remarketing Agent, for interest due on such Interest Payment
Date to an office designated by the Remarketing Agent in New York, New York,
presently c/o marine Midland Bank, 140 Broadway, New York, New York 10004,
Attention: Clearance Department Level A, at or prior to 10:00 am., New York City
time, or the date specified in the aforesaid notice; provided, however, that
such Project Bond or portion thereof shall be so purchased pursuant to this
paragraph only if the Project Bond so delivered to the Remarketing Agent shall
conform in all respects to the description thereof in the aforesaid notice.
All Project Bonds shall be purchased by the Trustee on the Interest
Payment Date next preceding the Expiration Date of the Letter of Credit and on
the Interest Payment Date next preceding the Expiration Date of the Alternate
Credit Facility, at a purchase price equal to the principal amount thereof,
except (i) Project Bonds, or portions thereof in an integral multiple of
$100,000 if prior to the Conversion Date or $5,000 if on or after the Conversion
Date, with respect to which the Trustee shall have received written directions
not to so purchase such Project Bonds from the holders of the same, (ii) Project
Bonds delivered to the Remarketing Agent or the Trustee as described in the
three preceding paragraphs for purchase on any Business Day in the Interest
Period next preceding such Interest Payment Date and (iii) Project Bonds issued
upon the registration of transfer of Project Bonds referred to in clauses (i) or
(ii) above. Any
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Project Bonds not delivered to the Trustee for purchase as described above
(other than Project Bonds described in clauses (i) (ii) or (iii) above) shall
nonetheless be deemed to be tendered for sale by the holders thereof and
purchased by the Trustee,
All Project Bonds shall be purchased by the Trustee on the Conversion
Date at a purchase price equal to the principal amount thereof except (i)
Project Bonds, or portions thereof in an integral multiple of $5,000, with
respect to which the Trustee shall have received written directions not to so
purchase such Project Bonds or portions thereof from the holders of the same,
(ii) Project Bonds delivered to the Remarketing Agent or the Trustee as
described in the second, third and fourth preceding paragraphs for purchase on
any Business Day in the Interest Period next preceding the Conversion Date and
(iii) Project Bonds issued upon the registration of transfer of Project Bonds
referred to in clauses (i) or (ii) above. Any Project Bonds not delivered to the
Trustee for purchase (other than Project Bonds described in clauses (i), (ii) or
(iii) above) shall nonetheless be deemed to be tendered for sale by the holders
thereof and purchased by the Trustee. The provisions of this paragraph shall not
apply if there has occurred and is continuing on the prospective purchase date
an Event of Default as defined in the Indenture.
In the event that all Project Bonds are to be purchased by the Trustee
pursuant to either of the two next preceding paragraphs; a holder of Project
Bonds may direct the Trustee not to purchase any Project Bonds or portion
thereof owned by him by delivering to the Trustee, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Project Bonds held by him, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of the second paragraph under the heading
"Notices" hereinafter set forth, and (iii) directing the Trustee not to purchase
such Project Bonds or portions thereof. Any instrument delivered to the Trustee
in accordance with this paragraph shall be irrevocable with respect to the
Project Bonds for which such instrument is delivered and shall be binding upon
subsequent holders of such Project Bonds.
Conversion to Fixed Interest Rate
At any time, the Company may, by notice in writing to the Issuer, the
Trustee, the Remarketing Agent and the Bank, direct that a Fixed Interest Rate
be established for the Project Bonds, The Company's notice shall set forth: (i)
the Conversion Date desired by the Company, which shall be an Interest Payment
Date not less than thirty (30) days after the date of such notice; and
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(ii) the date the Fixed Interest Rate shall be established which shall be not
less than twelve (12) Business Days prior to the Conversion Date. The notice
shall be accompanied by an opinion of Independent Tax Counsel stating that the
conversion to a Fixed Interest Rate is authorized and permitted by the Indenture
and Chapter 165 of the Ohio Revised Code, and that such conversion will not
adversely affect the exemption of interest on the Project Bonds from federal
income taxation. The Remarketing Agent shall determine the Fixed Interest Rate
on the date specified in such notice, which rate shall be the lowest rate at
which the Remarketing Agent shall have received bids, not later than the twelfth
(12th) Business Day prior to the Conversion Date, to purchase all of the
outstanding Project Bonds at a purchase price of 100% of the outstanding
principal amount thereof on the Conversion Date. Conversion to the Fixed
Interest Rate shall require the prior written consent of the Company and the
Bank.
Any Project Bonds purchased by the Trustee pursuant to the terms of the
Indenture after the Trustee has given notice of the establishment of a
Conversion Date shall not be remarketed except to a buyer who agrees at the time
of such purchase either (i) to accept the Fixed Interest Rate on the Conversion
Date or (ii) to require purchase of such Project Bonds by the Trustee on or
before the Conversion Date pursuant to the first paragraph under the heading
"Purchase of Project Bonds" set forth above.
The Letter of Credit shall be cancelled on the fifteenth (15th) day
following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank stating that
the Letter of Credit is not to be cancelled on such day.
In the event that the Letter of Credit or an Alternate Credit Facility
is in effect with respect to the Project Bonds following the Conversion Date,
the Fixed Interest Rate shall be adjusted on the Adjustment Date so as to equal
the rate of interest, recommended by the Remarketing Agent and approved by the
Company, for which the Remarketing Agent has received commitments on or prior to
the twelfth (12th) Business Day next preceding the Adjustment Date to purchase
all outstanding Project Bonds on the Adjustment Date at a price of 100% of the
principal amount thereof. Following such adjustment, the Project Bonds shall
bear interest at such Fixed Interest Rate until maturity.
Notices
In the event any Project Bonds are called for redemption, the Trustee,
on behalf of the Issuer, shall give notice of such redemption, which notice
shall (i) identify the Project Bonds or
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<PAGE> 55
portions thereof to be redeemed, the redemption date, the redemption price and
the place or places where the amounts due upon such redemption shall be payable
(which shall be principal corporate trust office of the Trustee) and (ii) state
that on the redemption date the Project Bonds to be redeemed shall cease to bear
interest. Such notice shall be given at least ten (10) Business Days prior to
the redemption date if the redemption date is on or prior to the Conversion Date
and at least thirty (30) days prior to the redemption date if the redemption
date is after the Conversion Date.
The Trustee, on behalf of the Issuer, shall give notice of the
establishment of the Conversion Date or the Expiration Date of the Letter of
Credit or the Expiration Date of the Alternate Credit Facility, which notice
shall include a statement (i) of the date on which the Project Bonds are to be
purchased by the Trustee as a result of the establishment of the Conversion Date
or the expiration of the Letter of Credit or the Alternate Credit Facility, (ii)
if applicable, that the Letter of Credit or the Alternate Credit Facility shall
terminate fifteen (15) days after such purchase date, (iii) that any ratings of
the Project Bonds by Moody's or S&P may be withdrawn or reduced from the ratings
on the Project Bonds then prevailing, (iv) that the Indenture provides that
Project Bonds are required to be delivered to the Trustee for purchase on the
date specified in such notice, and that Project Bonds not delivered to the
Trustee on such date shall nonetheless be deemed to have been purchased by the
Trustee (unless the holders thereof have directed the Trustee not to purchase
such Project Bonds or portions thereof) and, accordingly, no interest subsequent
to the date specified in such notice shall be payable to such holders, (v) of
the rights of the holders to direct the Trustee not to purchase Project Bonds
held by them, and the method of exercising such rights, (vi) that on the
purchase date designated in such notice the Trustee shall hold moneys equal to
the purchase price for all Project Bonds not delivered on such date, in trust,
for the holders of such Project Bonds, which moneys shall be paid upon surrender
of Project Bonds to the Trustee, and (vii) that, if the purchase of the Project
Bonds will result from the establishment of the Conversion Date, after the
Conversion Date the Project Bonds will bear interest at the Fixed Interest Rate
and the holders of the Project Bonds will not have the right to require the
Trustee to purchase Project Bonds. Such notice shall be given at least ten (10)
Business Days prior to the date on which the Project Bonds are to be purchased
as a result of the establishment of a Conversion Date or the expiration of the
Letter of Credit or the Alternate Credit Facility.
If the Company shall direct the Trustee to notify the Bank and the
holders of outstanding Project Bonds that an Alternate Letter of Credit or an
Alternate Credit Facility will be delivered to the Trustee, the Trustee shall
give such notice, which notice
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<PAGE> 56
shall state (i) the proposed date of delivery to the Trustee of the Alternate
Letter of Credit or Alternate Credit Facility, (ii) the date of the Alternate
Letter of Credit or Alternate Credit Facility, (iii) the expiration date of the
Letter of Credit for which the Alternate Letter of Credit or Alternate Credit
Facility is to be substituted, (iv) the expiration date of the Alternate Letter
of Credit or Alternate Credit Facility, (v) the issuer of the Alternate Letter
of Credit or Alternate Credit Facility, and a brief description of such issuer,
and (vi) if the Project Bonds are then rated by Moody's or S&P, either (A) that
any ratings of the Project Bonds by Moody's or S&P may be withdrawn or reduced
from such ratings then prevailing, or (B) such ratings of the Project Bonds by
Moody's or S&P as shall have been based upon such Alternate Letter of Credit or
Alternate Credit Facility. Such notice shall be given at least thirty (30)
Business Days prior to the delivery of the Alternate Letter of Credit or
Alternate Credit Facility to the Trustee.
Any notice required to be given pursuant to any of the preceding three
(3) paragraphs shall be given by mailing a copy thereof by registered or
certified mail to the holder of each Project Bond (provided, however, that a
notice of redemption need be given only to holders of Project Bonds to be
redeemed in whole or in part) at the address for such holder shown on the
registration books maintained by the Trustee pursuant to the Indenture. Failure
to give such notice by mailing, or any defect in such notice, to the holder of
any Project Bonds shall not affect the validity of the proceedings with respect
to any other Project Bonds.
If, because of the temporary or permanent suspension of regular mail
service, or for any other reason, it is impossible or impractical to mail such
notice of redemption or purchase in the manner herein provided, then such other
manner of giving notice in lieu thereof as shall be made with the approval of
the Trustee shall constitute a sufficient notice. Failure to give or receive
such notice with respect to any Project Bond shall not affect the validity of
any proceedings for the redemption or purchase of any other Project Bonds.
Miscellaneous
Pursuant to the Loan Agreement, the Company has agreed to make loan
payments in the amounts and at the times necessary to meet the principal of and
premium, if any, and interest on the Project Bonds and any Additional Bonds (the
Project Bonds and any Additional Bonds hereafter referred to as the "Bonds").
The obligation of the Company to make any loan payments under the
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<PAGE> 57
Loan Agreement shall be deemed to be satisfied and discharged to the
extent of corresponding payments made by the Bank to the Trustee under the
Letter of Credit.
The Project Bonds, together with any Additional Bonds, are all issued
or may be issued under and are to be equally and ratably secured and entitled to
the protection given by the Indenture, which Indenture is on file in the office
of the Trustee, and reference is hereby made to the Indenture and to all
indentures supplemental thereto for a more complete description of the
provisions, among others, with respect to the nature and extent of the security,
the rights, duties and obligations of the Issuer, the Trustee, the Bank and the
holders of the Bonds and the terms and conditions upon which the Bonds are
issued and secured, to all of the provisions of which Indenture each holder, by
the acceptance hereof, assents.
The Project Bonds are issuable only as fully registered bonds in the
denomination of $100,000 or any integral multiple thereof, provided, however,
that any Project Bonds issued upon exchange or transfer on or after the
Conversion Date shall be in the denomination of $5,000 or any integral multiple
thereof. Project Bonds are interchangeable in equal aggregate principal amounts
and in authorized denominations at the principal corporate trust office of the
Trustee, as Bond Registrar, in the manner, subject to the limitations and on
payment of the charges provided in the Indenture.
This Project Bond is transferable by the registered holder hereof in
person or by his attorney duly authorized in writing at the principal corporate
trust office of the Bond Registrar, upon presentation hereof to the Bond
Registrar, all subject to the terms and conditions provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the Trustee
without the consent of the holders of the Bonds at the time outstanding or the
Bank to execute supplemental indentures in certain cases enumerated in the
Indenture and, with the consent of the holders of a majority in aggregate
principal amount of the Bonds at the time outstanding and, under certain
conditions prior to the Expiration Date of the Letter of Credit, the Bank, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or any supplemental
indenture restricting in any manner the rights of the holders of the Bonds;
provided, however, that no such supplemental indenture shall (i) extend the
maturity of the principal of or the interest on any Bond or reduce the principal
amount of any Bond or the rate of interest or redemption premium thereon, or
change the terms of the purchase thereof by the Trustee, or reduce the amount or
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<PAGE> 58
extend the time of any sinking fund payment, without the consent of the holders
of each Bond affected; or (ii) permit a privilege or priority of any Bond or
Bonds over any other Bond or Bonds, or reduce the aggregate principal amount of
the Bonds required for consent to such supplemental indentures, without the
consent of the holders of all Bonds then outstanding.
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<PAGE> 59
(FORM OF ASSIGNMENT]
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
___________ the within Project Bond and all rights thereunder, and does hereby
irrevocably constitute and appoint ________________, Attorney to transfer the
within Project Bond on the books kept for registration thereof, with full power
of substitution in the premises.
Dated:
__________________________
In the Presence of: Signature guaranteed,
____________________________ ____________________________
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<PAGE> 60
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and premium, if any, and interest on the Bonds
according to their true intent and meaning and to the extent herein provided,
and to secure the performance and observance of all of the covenants and
conditions therein and herein contained and to declare the terms and conditions
upon and subject to which the Bonds are and are intended to be issued,
authenticated, held, secured and enforced, and for and in consideration of the
premises and of the purchase and acceptance of the Bonds by the holders thereof
from time to time, and the acceptance by the Trustee of the trusts hereby
created, and for other good and valuable considerations, the receipt of which is
hereby acknowledged, the Issuer has executed and delivered this Indenture and,
subject to and in accordance with this Indenture, has pledged and assigned and
does hereby pledge and assign to the Trustee and to its successor in trust, and
it and their assigns: (a) all the Revenues; (b) any right, title and interest of
the Issuer in the proceeds derived from the sale of the Bonds, and in any
securities in which moneys in the Bond Fund, the Construction Fund or any other
fund or account created by the Indenture are invested and the proceeds derived
therefrom, and in any moneys in such funds; and (c) subject to the proviso
below, the Issuer's right, title and interest in and to the Loan Agreement.
TO HAVE AND TO HOLD to the Trustee and its successors in said Trust and
to its and their assigns forever;
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit,
security and protection of all present and future holders of the Bonds issued or
to be issued under and secured by this Indenture, and for the enforcement of the
payment of the principal of and premium, if any, and interest on the Bonds, when
payable, according to the true intent and meaning thereof and of this Indenture
and to secure the performance of and compliance with the covenants, terms and
conditions of this Indenture, without preference, priority or distinction, as to
lien or otherwise, of any one Bond over any other by reason of priority in the
issue or negotiation thereof or otherwise, so that each and all Bonds shall have
the same right, lien and privilege under this Indenture, and shall be equally
and ratably secured hereby, as if all the Bonds had been made, issued and
negotiated simultaneously with the delivery of this Indenture (provided,
however, that moneys drawn under the Letter of Credit shall be applied only to
the payment of the purchase price of, or the principal of and interest on, the
Project Bonds), it being intended that the lien and security of this Indenture
shall take effect from the date hereof, without regard to the date of actual
issue, sale or disposition of the Bonds as if upon such date all the Bonds were
actually issued, sold and delivered to purchasers for value; provided, however,
that if the Issuer, its successors
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<PAGE> 61
or assigns, shall pay, or cause to be paid the principal of the Bonds and the
interest due or to become due thereon together with any premium required by
redemption of any of the Bonds prior to maturity, at the times and in the manner
mentioned in the Bonds, respectively, according to the true intent and meaning
thereof, and shall cause the payments to be made into the Bond Fund as required
under Section 13 of the Bond Legislation authorizing the Project Bonds and as
required by the Bond Legislation authorizing any Additional Bonds, or shall have
caused the Bonds to have been paid and discharged in accordance with Sections
7.01 and 7.02 of this Indenture, and shall keep, perform and observe all the
covenants and conditions pursuant to the terms of this Indenture to be kept,
performed and observed by it, and shall pay or cause to be paid to the Trustee
and any Paying Agents any sums of money due or to become due to them in
accordance with the terms and provisions hereof, then this Indenture and the
rights hereby granted shall cease, determine and be void; otherwise, this
Indenture shall remain in full force and effect.
PROVIDED, that the pledge and assignment of the Issuer's right, title
and interest in and to the Loan Agreement pursuant to this Indenture is intended
solely for purposes of securing the Bonds, the enforcement of the payment of the
principal thereof and any premium and interest thereon, when payable, according
to the true intent and meaning thereof and of this Indenture and the performance
of and compliance with the covenants, terms and conditions of this Indenture,
and such pledge and assignment shall not in any way (a) affect, diminish or
impair the Issuer's obligations under the Loan Agreement or impose any such
obligations on the Trustee; (b) affect, restrict or preclude the Issuer from
exercising its rights, or enforcing the Company's obligations, under the Loan
Agreement; or (c) constitute a pledge or assignment, or affect the collection by
or receipt of the Issuer of moneys (other than moneys received in respect of the
repayment of the Loan) which, pursuant to the Loan Agreement, are to be paid
directly to the Issuer including, without limitation, (i) amounts paid to the
Issuer in reimbursement of expenses incurred by it pursuant to the Loan
Agreement and (ii) any moneys to which the Issuer may be entitled under Section
5.3 of the Loan Agreement.
And it is expressly declared that the Bond Legislation set forth above
is part of this Indenture and that all Bonds issued and secured hereunder are to
be issued, authenticated and delivered and all said amounts hereby pledged are
to be dealt with and disposed of under, upon and subject to the terms,
conditions, stipulations, covenants, agreements, trusts, uses and purposes
provided in this Indenture and the Issuer has agreed and covenanted, and does
hereby further agree and covenant, with the Trustee and with the respective
holders from time to time of the Bonds, or any part thereof as follows:
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ARTICLE I
Definitions
In addition to the words and terms elsewhere defined in this Indenture,
including the Bond Legislation, the following words and terms as used in this
Indenture shall have the following meanings unless the context or use indicates
another or different meaning or intent:
"Extraordinary Services" and "Extraordinary Expenses" mean all
services rendered and all reasonable expenses (including counsel fees)
properly incurred under this Indenture other than Ordinary Services and
ordinary Expenses.
"Ordinary Services" and "Ordinary Expenses" mean those
services normally rendered and those expenses (including counsel fees)
normally incurred by a trustee under instruments similar to this
Indenture.
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ARTICLE II
Form, Terms, Execution, Authentication,
Registration and Exchange of Bonds
SECTION 2.01. Form of Bonds. The Bonds and Trustee's certificate of
authentication shall be substantially in the forms hereinabove set forth and, in
the case of Additional Bonds, with such omissions, insertions and variations as
may be authorized or permitted by the Bond Legislation authorizing such
Additional Bonds consistent with this Indenture.
SECTION 2.02. Terms of Bonds. The terms of the Project Bonds shall be
as provided in this Indenture. Any series of Additional Bonds shall have
maturities, interest rates, interest payment dates, redemption provisions,
denominations, registration provisions and other terms as provided in the Bond
Legislation authorizing issuance or award thereof, provided that such terms and
provisions shall not be otherwise inconsistent with this Indenture.
SECTION 2.03 Execution of Bonds-Authentication. The Bonds shall be
executed in the manner provided in the Bond Legislation authorizing such Bonds,
provided, however, that such manner of execution shall not be inconsistent with
any requirements of this Indenture.
No Bond shall be valid or become obligatory for any purpose or shall be
entitled to any security or benefit under this Indenture unless and until a
certificate of authentication substantially in the form hereinabove set forth in
connection with the Project Bonds, shall have been duly endorsed upon such Bond,
and such authentication by the Trustee upon any Bond shall be conclusive
evidence that the Bond so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the security of this
Indenture. Such certificate of authentication of the Trustee may be executed by
any person duly authorized by the Trustee, but it shall not be necessary that
the same person sign the certificate of authentication on all the Bonds.
SECTION 2.04. Transfer and Exchange of Bonds. Bonds of each series are
issuable only as fully registered Bonds in the denominations set forth in the
Bond Legislation for such series. Each Bond shall be of a single maturity;
provided, however, that any member of the Legislative Authority, with approval
of the Trustee, may authorize issuance of one or more Bonds representing more
than one maturity of the same series with appropriate changes in the Bond form
to cover more than the maturity. Except
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as otherwise provided in the Bond Legislation, each Bond shall bear interest
from its date and shall be dated as of the Interest Payment Date next preceding
the date of its authentication, unless authenticated upon an Interest Payment
Date, in which case it shall be dated as of the date of its authentication;
provided, however, that if at any time of authentication of any Bond, interest
is in default, such Bond shall be dated as of the date to which interest has
been paid.
Unless otherwise provided in the Bond Legislation, the principal of and
premium, if any, on all Bonds shall be payable at the principal corporate trust
office of the Trustee, and payment of the interest on all Bonds shall be made on
each Interest Payment Date to the person appearing on the registration books
hereinafter provided for as the registered holder thereof on the Record Date for
such Interest Payment Date, by check or draft by the Trustee to such registered
holder at his address as it appears on such registration books.
Upon surrender thereof at the corporate trust office of the Trustee, as
Bond Registrar, together with an assignment duly executed by the registered
holder or his duly authorized attorney in such form as shall be satisfactory to
the Bond Registrar, Bonds may, at the option of the registered holder thereof,
be exchanged for other Bonds of the same series of any denomination or
denominations authorized by the applicable Bond Legislation in the aggregate
principal amount not exceeding the unmatured and unredeemed principal amount of
such fully registered Bonds, and bearing interest at the same rate and maturing
on the same date.
Any Bond may be transferred only upon the books kept for the
registration and transfer of Bonds, upon surrender thereof at the corporate
trust office of the Trustee, as Bond Registrar, together with an assignment duly
executed by the registered holder or his duly authorized attorney in such form
as shall be satisfactory to the Bond Registrar. Upon the transfer of any Bond
and on request of the Bond Registrar, the Issuer shall execute in the name of
the transferee and the Trustee shall authenticate and deliver at the option of
the transferee, a new Bond or Bonds of the same series of any denomination or
denominations permitted by this Indenture and the applicable Bond Legislation in
aggregate principal amount equal to the unmatured and unredeemed principal
amount of such transferred Bond and bearing interest at the same rate and
maturing on the same date.
In all cases in which Bonds shall be exchanged or transferred
hereunder, the Issuer shall execute and the Trustee shall authenticate and
deliver Bonds in accordance with the provisions of this Indenture. Except as
otherwise provided in the Bond Legislation authorizing the Bonds, if approved by
the
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Company, the Issuer and Bond Registrar may make a charge for every such exchange
or transfer of Bonds sufficient to reimburse themselves for any tax, fee or
other governmental charge required to be paid with respect to such exchange or
transfer and such charge or charges shall be paid before any new Bond shall be
delivered. In the event the Company does not approve any such charges, then the
Company shall reimburse the Bond Registrar or the Issuer, as the case may be,
for any such tax, fee or other governmental charge. Except in connection with
the purchase of Project Bonds in accordance with Section 7 of the Bond
Legislation for the Project Bonds, neither the Issuer nor the Bond Registrar
shall be required to make any such exchange or transfer of any Bond during the
ten (10) days next preceding any selection of Bonds to be redeemed, or after
such Bond has been selected for redemption.
The person in whose name a Bond shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of the principal of and premium, if any, on any such Bond and the
interest on such Bond shall be made only to or upon the order of the registered
holder thereof or his duly authorized attorney in such form as shall be
satisfactory to the Bond Registrar, and neither the Issuer, the Bond Registrar
nor any Paying Agent shall be affected by any notice to the contrary, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Bond,
including the interest and any premium thereon, to the extent of the sum or sums
so paid.
In case any Bond is redeemed in part only, the Issuer on or after the
redemption date and upon surrender of such Bond, shall cause execution of, and
the Trustee shall authenticate and deliver, a new Bond or Bonds in an authorized
denomination or denominations and in an aggregate principal amount equal to the
unredeemed portion of such Bon.
So long as any of the Bonds remain outstanding, the Issuer will cause
to be maintained and kept, at the corporate trust office of the trustee as Bond
Registrar, books for the aforesaid registration and transfer of Bonds.
SECTION 2.05. Mutilated, Lost, Wrongfully Taken or Destroyed Bonds. In
the event any Bond is mutilated, lost, wrongfully taken or destroyed, the Issuer
may execute a new Bond, as the case may be, and the Trustee may authenticate
such new Bond, of like date, maturity and denomination and of the same series as
that mutilated, lost, wrongfully taken or destroyed, provided that, in the case
of any mutilated Bond, such mutilated Bond shall first be surrendered to the
Trustee, and in the case
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of any lost, wrongfully taken or destroyed Bond, there shall be first furnished
to the Company and the Trustee evidence of such loss, wrongful taking or
destruction satisfactory to the Authorized Company Representative, as defined in
the Loan Agreement, and the Trustee, together with indemnity satisfactory to
them. In the event any such lost, wrongfully taken or destroyed Bond shall have
matured, instead of issuing a duplicate Bond the Issuer, by any member of the
Legislative Authority, may direct the Trustee to pay the same without surrender
thereof upon the furnishing of the satisfactory evidence and indemnity as in the
case of issuance of a new Bond. The Issuer, the Company and the Trustee may
charge the holder of such Bond with their reasonable fees and expenses in
connection with their action pursuant to this Section 2.05.
Every substituted Bond issued pursuant to this Section 2.05 by reason
of any Bond being lost, wrongfully taken or destroyed shall, with respect to
such Bond constitute an additional contractual obligation of the Issuer, whether
or not the lost, wrongfully taken or destroyed Bond shall be found at any time,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder. All Bonds
shall be held and owned on the express condition that the foregoing provisions
are exclusive with respect to the replacement or payment of mutilated, lost,
wrongfully taken or destroyed Bonds and shall preclude any and all rights or
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.06. Cancellation of Bonds. Any Bond surrendered for the
purpose of payment or retirement, or for exchange or transfer, or for
replacement pursuant to Section 2.05 hereof, shall be cancelled upon surrender
thereof to the Trustee or any Paying Agent. Any Bonds cancelled by any Paying
Agent other than the Trustee shall be promptly transmitted by such Paying Agent
to the Trustee. Certification of Bonds cancelled by the Trustee and Bonds
cancelled by a Paying Agent other than the Trustee which are transmitted to the
Trustee shall be made to the Issuer and to the Company at least once each
calendar year. Unless otherwise directed by the Issuer or other lawful
authority, cancelled Bonds shall be destroyed by shredding or cremation by the
Trustee, and certificates of such destruction (describing the manner thereof)
shall be provided by the Trustee to the Issuer and the Company at least once
each calendar year.
If any Project Bonds are deemed to have been purchased by the Trustee
pursuant to subsections (d) or (e) of Section 7 of the Bond Legislation for the
Project Bonds with moneys described
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in clause (iii) of subsection (j) of said Section 7, then such Project Bonds
shall be deemed cancelled whether or not such Project Bonds shall have been
delivered to the Trustee; and the Issuer shall execute and the Trustee shall
authenticate and deliver to or upon the order of the Company, a Project Bond in
the principal amount equal to the aggregate principal amount of Project Bonds
deemed cancelled in accordance with this paragraph.
SECTION 2.07. Delivery of the Project Bonds. Upon the execution and
delivery of this Indenture and subject to Section 5 of the Bond Legislation, the
Issuer shall execute and deliver to the Trustee and the Trustee shall
authenticate the Project Bonds and deliver them to, or for the account of, the
Original Purchasers thereof as may be directed by the Issuer as hereinafter in
this Section 2.07 provided.
Prior to the delivery by the Trustee of any of the Project Bonds there
shall be filed with the Trustee:
1. Executed counterparts of the Indenture, the Loan Agreement and
the Letter of Credit Agreement.
2. The executed Letter of Credit.
3. A copy, duly certified by the Clerk or Assistant Clerk of the
Legislative Authority, of the Bond Legislation authorizing the execution
and delivery of this Indenture and the Loan Agreement and the issuance and
sale of the Project Bonds.
4. A request and authorization to the Trustee on behalf of the
Issuer, signed by any member of the Legislative Authority, to authenticate
and deliver the Project Bonds to, or on the order of, the Original
Purchasers upon payment to the Trustee, but for the account of the Issuer,
of the sum specified therein, which shall be deposited as provided in
Section 12 of the Bond Legislation.
5. A copy, duly certified by the secretary or an Assistant
Secretary of the Company, of the resolutions of the board of directors of
the Company authorizing the execution and delivery of the Loan Agreement
and the Letter of Credit Agreement,
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6. An executed counterpart of the written instrument of
acceptance of the Remarketing Agent required pursuant to Section 19 of the
Bond Legislation for the Project Bonds.
7. Such other items as may be required by bond counsel.
SECTION 2.08. Delivery of Additional Bonds. Before any Additional Bonds
authorized by Section 14 of the Bond Legislation authorizing the Project Bonds
shall be authenticated and delivered by the Trustee, there shall be filed with
the Trustee those items required by Section 14 of such Bond Legislation and the
following:
1. An executed counterpart of a supplemental indenture of the
character permitted by Section 10.01(g) of the Indenture setting forth the
terms and provisions of such Additional Bonds.
2. Executed counterparts of any amendment to the Loan Agreement
entered into in connection with the issuance of such Additional Bonds.
3. A copy, duly certified by the Clerk of the Legislative
Authority, of the resolution of the Legislative Authority authorizing the
execution and delivery of any required amendment or amendments to the Loan
Agreement together with a copy of the written request from the Company to
the Issuer or issuance of such Additional Bonds.
4. A copy, duly certified by the Clerk of the Legislative
Authority, of the Bond Legislation authorizing the execution and delivery
of the supplemental indenture referred to above and the issuance and sale
of such Additional Bonds.
5. A request and authorization to the Trustee on behalf of the
Issuer, signed by any member of the Legislative Authority, to authenticate
and deliver such Additional Bonds to, or on the order of, the Original
Purchasers thereof who are therein identified, upon payment to the Trustee
for the account of the Issuer of the sum specified in such request and
authorization.
6. A copy, duly certified by the Secretary or an Assistant
Secretary of the Company, of the resolutions of the board of directors of
the Company authorizing the execution and delivery of an amendment to the
Loan Agreement, if applicable.
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7. The written opinion of counsel for the Issuer, or other
counsel satisfactory to the Company and to the Trustee, to the effect that
the issuance of such Additional Bonds has been duly authorized, and that
such Additional Bonds constitute valid and binding special obligations of
the Issuer in accordance with the terms and provisions thereof and are
payable from, and secured equally and ratably with any other Bonds
outstanding under the Indenture by a pledge of, the Bond Fund and the
Revenues.
8. The written opinion of Independent Tax Counsel, as defined in
the Loan Agreement, or a ruling of the Internal Revenue Service that the
issuance of the Additional Bonds will not adversely affect the exemption
from federal income taxation of the interest on any outstanding Bonds.
9. Such other items as may be specified in any supplemental
indenture relating to such Additional Bonds.
When the foregoing documents have been duly filed and the Trustee shall
have determined that no Event of Default exists with respect to the payment of
any amounts required to be paid by the Company pursuant to Sections 4.1 or 4.3
of the Loan Agreement, and the Additional Bonds have been executed and
authenticated, the Trustee shall deliver them to or upon the order of the
Original Purchasers thereof identified in the request and authorization referred
to in subsection 5 of this Section 2.08, but only upon payment to the Trustee
for the account of the Issuer of the specified sum set forth in the request and
authorization referred to in such subsection 5.
ARTICLE III
Redemption of Bonds
SECTION 3.01 Privilege of Redemption and Redemption Price. The Bonds
shall be subject to redemption prior to maturity at such times, to the extent
and in the manner provided in the applicable Bond Legislation, all subject to
this Indenture.
SECTION 3.02. Issuer's Election to Redeem. The Issuer, or the Company
at the request and on behalf of the Issuer, except in the case of sinking fund
redemption as provided in the Bond
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Legislation, shall give written notice to the Trustee of its intention so to
redeem in accordance with the Bond Legislation, of the redemption date and of
the principal amount of Bonds to be redeemed, which notice shall be given in
accordance with the requirements of the Bond Legislation for the series of Bonds
being redeemed. In the event notice of redemption shall have been given as
provided in Section 3.03 hereof, the Issuer shall, and hereby covenants that it
will prior to the redemption date, pay to the Trustee an amount in cash which,
in addition to other moneys, if any, available therefor held by the Trustee,
will be sufficient to redeem at the redemption price thereof, plus interest
accrued to the redemption date, all of the redeemable Bonds which the Issuer has
so elected to redeem.
SECTION 3.03 Notice of Redemption. When the Trustee shall receive
notice from the Issuer with respect to its intention to redeem Bonds or in order
to carry out the sinking fund redemption requirements of the Bond Legislation,
the Trustee shall give notice of redemption as provided in the applicable Bond
Legislation.
SECTION 3.04. Payment of Redeemed Bonds. Notice having been given in
the manner provided in Section 3.03 hereof, the Bonds so called for redemption
shall become due and payable on the redemption date so designated at the
redemption price, plus interest accrued to the redemption date, and, upon
presentation and surrender thereof at the place or places specified in such
notice, such Bonds shall be paid at the redemption price plus interest accrued
to the redemption date. If, on the redemption date, moneys for the redemption of
all such Bonds to be redeemed, together with interest to the redemption date,
shall be held by the Trustee or any Paying Agent so as to be available therefor
on said date and if notice of redemption shall have been given as aforesaid,
then, from and after the redemption date such Bonds so called for redemption
shall cease to bear interest, and said Bonds shall no longer be considered as
outstanding hereunder. If said moneys shall not be so available on the
redemption date, such Bonds shall continue to bear interest until paid at the
same rate as they would have borne had they not been called for redemption.
All moneys deposited in the Bond Fund and held by the Trustee or Paying
Agents for the redemption of particular Bonds shall be held in trust for the
account of the holders thereof and shall be paid to them respectively upon
presentation and surrender of such Bonds.
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ARTICLE IV
Further Provision as to Funds and Payments
SECTION 4.01. Provision for Payment. The Issuer hereby authorizes and
directs the Trustee to cause withdrawal of sufficient funds from the Bond Fund
to pay the principal of and premium, if any, and interest on the Bonds as the
same become due and payable, for the purposes of paying, or transferring
necessary funds to Paying Agents to pay, said principal of and premium, if any,
and interest, which authorization and direction the Trustee hereby accepts. The
Trustee shall provide the Company with a written statement of any amounts
withdrawn from the Bond Fund and transferred to any other fund or account.
Nothing in this Section 4.01 is intended to prevent the Company from delivering
to the Trustee moneys pursuant to Section 4.3 of the Loan Agreement for the
purchase or redemption of Bonds in accordance with that Section.
SECTION 4.02. Nonpresentment of Bonds. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity, at the date fixed for redemption thereof, or otherwise, if funds
sufficient to pay such Bond shall have been made available to the Trustee for
the benefit of the holder thereof, all liability of the Issuer to the holder
thereof for the payment of such Bond shall thereupon cease and be completely
discharged, and it shall be the duty of the Trustee to hold such funds, without
liability for interest thereon, for the benefit of the holder of such Bond, who
shall thereafter be restricted exclusively to such funds, for any claim of
whatever nature on his part under this Indenture or on, or with respect to, said
Bond; provided that any funds which shall be so held by the Trustee and which
remain unclaimed by the holder of the Bond not presented for payment for a
period of four (4) years after the date on which such Bond shall have become
payable, shall be paid to the Company and thereafter the holder of such Bond
shall look only to the Company for payment and then only to the amounts so
received without any interest thereon and the Trustee shall have no
responsibility with respect to such moneys.
SECTION 4.03. Trustee's and Paying Agents' Fees, Charges and Expenses.
Pursuant to the provisions of the Loan Agreement, the Company has agreed to pay
to the Trustee, commencing with the commencement of the Loan Term, as defined in
the Loan Agreement, and continuing until the principal of and premium, if any,
and interest on the Bonds shall have been fully paid or provision for the
provisions thereof shall have been made in accordance with the provisions of
this Indenture: (i) an amount equal to the fee of the Trustee, as Trustee, which
will be
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payable in each year on such date as is mutually agreeable to the Trustee and
the Company, and the Trustee will give notice to the Company of the Ordinary
Services of the Trustee rendered and its Ordinary Expenses incurred under this
Indenture, (ii) any reasonable fees, charges and expenses of the Trustee, as
Bond Registrar and Paying Agent, not reimbursed by any holder pursuant to
Section 2.04 hereof as and when the same become due, and (iii) the reasonable
fees, charges and expenses of the Trustee for necessary Extraordinary Services
and Extraordinary Expenses under this Indenture, as and when the same become due
and payments of all such amounts shall be given preference in payment over any
of the Bonds, and shall be paid out of the Revenues; provided however, that such
amounts shall not be paid with proceeds from a draw on the Letter of Credit; and
provided, further, that either the Issuer or the Company may, without creating a
default or Event of Default hereunder, contest in good faith the necessity for
any such Extraordinary Services and Extraordinary Expenses and the
reasonableness of any such fees, charges or expenses. It is further understood
and agreed that the initial or acceptance fee of the Trustee and the fees,
charges and expenses of the Trustee referred to in the first sentence of this
Section 4.03 which become due during the Construction Period (as defined in the
Loan Agreement), may be paid by the Trustee from the Construction Fund as and
when the same shall become due.
SECTION 4.04. Moneys to Be Held in Trust. All moneys required to be
deposited with or paid to the Trustee on behalf of the Issuer to be used in the
payment of the principal of or premium, if any, or interest on the Bonds, under
any provision of this Indenture and the Loan Agreement shall be held by the
Trustee in trust for the benefit of the Bondholders, and except for moneys
deposited with or paid to the Trustee for the redemption of Bonds, notice of
redemption of which has been duly given, shall, while held by the Trustee, be
subject to the lien hereof.
SECTION 4.05. Repayment to the Company from the Bond Fund and Other
Funds or Accounts. Except as provided in Section 4.02 of this Indenture, any
amounts remaining in the Bond Fund or any other funds or accounts held by the
Trustee under any provision of this Indenture or the Loan Agreement, after all
of the Bonds shall be deemed to have been paid and discharged under the
provisions of this Indenture and the fees, charges and expenses of the Trustee
and the Paying Agents and all other amounts required to be paid under this
Indenture and the Loan Agreement shall have been paid, shall be paid to the Bank
if there are outstanding obligations of the Company to the Bank under the Letter
of Credit Agreement, or otherwise to the Company as provided in section 7.4 of
the Loan Agreement.
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SECTION 4.06. Notice of Failure to Make Payments Under Loan Agreement.
If any amounts payable pursuant to Sections 4.1. or 4.3 of the Loan Agreement
shall not be paid at the time therein specified, then the Trustee shall, within
three hours of the occurrence of such failure, use its best efforts to give
telephonic or personal notice of such failure to the Authorized Company
Representative, as defined in the Loan Agreement, and the Bank, and the Trustee
shall immediately thereafter confirm such notice by telegram or by letter mailed
by special delivery, postage prepaid.
SECTION 4.07. Provision for Payment of Project Bonds. Notwithstanding
the provisions of Section 4.01 of this Indenture, funds for the payment of
principal of and premium, if any, and interest on the Project Bonds, whether at
maturity, by optional or mandatory redemption, acceleration or otherwise, shall
be derived from the following sources in the order of priority indicated:
(i) Available moneys constituting proceeds from the sale of Additional
Bonds issued for the purpose of refunding the Project Bonds;
(ii) Available Moneys constituting proceeds described in Section 5.11
of the Loan Agreement;
(iii) prior to the Expiration Date of the Letter of Credit, moneys
deposited in the A Subaccount of the Bond Fund, provided, however, that
such moneys shall be used only to pay principal of or interest on the
Project Bonds;
(iv) moneys drawn by the Trustee under the Letter of Credit, provided,
however, that such moneys shall be used only to pay the principal of and
interest on Project Bonds other than Project Bonds delivered to the Bank
pursuant to any draw under the Letter of Credit;
(v) amounts deposited into the Bond Fund pursuant to Section 3.3(k) of
the Loan Agreement; and
(vi) other moneys furnished by the Company to the Trustee pursuant to
the Loan Agreement for application to the payment of principal of and
premium, if any, and interest on the Project Bonds.
SECTION 4.08. Letter of Credit.
(a) The Trustee shall draw moneys under the Letter of Credit in
accordance with the terms thereof to the extent necessary to make timely
payments of principal of and interest on the Project Bonds and to pay the
purchase price of Project Bonds purchased pursuant to Section 7 of the Bond
Legislation for the Project Bonds,
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(b) If at any time there shall have been delivered to the Trustee (i)
an Alternate Letter of Credit or an Alternate Credit Facility and (ii) an
opinion of Independent Tax Counsel stating that the delivery of such
Alternate Letter of Credit or Alternate Credit Facility to the Trustee is
authorized under the Loan Agreement and Chapter 165, Ohio Revised Code, and
complies with the terms of the Loan Agreement, then the Trustee shall
accept such Alternate Letter of Credit or Alternate Credit Facility and
immediately surrender the previously held Letter of Credit to the Bank, in
accordance with the terms of such Letter of Credit, for cancellation.
Unless the Company and the Bank shall have given written notice to the
Trustee to the contrary, the Trustee shall 15 days after the Conversion
Date surrender the Letter of Credit to the Bank, in accordance with the
terms of the Letter of Credit, for cancellation. If at any time there shall
cease to be any Project Bonds outstanding under the Indenture, other than
Project Bonds delivered to the Bank pursuant to any draw under the Letter
of Credit, the Trustee shall immediately surrender the Letter of Credit to
the Bank, in accordance with the terms of the Letter of Credit, for
cancellation. The Trustee shall comply with the procedures set forth in the
Letter of Credit Agreement and the Letter of Credit (including, but not
limited to, execution and delivery of appropriate certificates) relating to
the extension, reduction, reinstatement or termination of the Letter of
Credit.
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ARTICLE V
Further Provisions as to Construction Fund and Project
SECTION 5.01. Records of Construction Fund. The Trustee shall cause to
be kept and maintained adequate records pertaining to the Construction Fund and
all disbursements therefrom and not less than monthly the Trustee shall file an
accounting thereof with the Company.
SECTION 5.02. Completion of the Facilities. The completion of the
Facilities and payment of all costs and expenses incident thereto shall be
evidenced by the filing with the Trustee of (i) the certificate of the
Authorized Company Representative, as defined in the Loan Agreement, required by
the provisions of Section 3.5 of the Loan Agreement and (ii) a certificate
signed by the Authorized Company Representative, which certificate shall state
that all obligations and costs in connection with the Facilities and payable out
of the Construction Fund have been paid and discharged except for amounts
retained by the Trustee, as approved under the Loan Agreement, for the payment
of costs of the Facilities as provided in the Loan Agreement. Any balance
remaining in the Construction Fund after the Completion Date (as defined in the
Loan Agreement) shall be applied by the Trustee in accordance with Section
3.3(k) of the Loan Agreement.
ARTICLE VI
Investments
SECTION 6.01. Investments. Any moneys held as part of the Construction
Fund, the Bond Fund or any other fund or account held by the Trustee pursuant to
this Indenture or the Loan Agreement shall be held as a cash account or invested
and reinvested in accordance with the provisions of Section 16 of the Bond
Legislation for the Project Bonds.
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ARTICLE VII
Defeasance
SECTION 7.01. Release of Indenture. When all of the Bonds shall have
been paid and discharged, and there shall have been paid all fees, charges and
expenses of the Trustee and any Paying Agents due or to become due through the
date on which the last of the Bonds is retired, then this Indenture shall cease,
determine and become null and void, and thereupon the Trustee shall release this
Indenture including the cancellation and discharge of the lien hereof, and
execute and deliver to the Issuer such instruments in writing as shall be
requisite to satisfy the lien hereof and to enter on the records such
satisfaction and discharge and to reconvey to the Issuer the estate hereby
conveyed and such other instruments to evidence such release and discharge as
may be reasonably required by the Issuer, and the Trustee and Paying Agents
shall each assign and deliver to the Issuer any property at the time subject to
the lien of this Indenture which may then be in its possession, except amounts
in the Bond Fund or any other funds or accounts held by the Trustee under any
provision of this Indenture or the Loan Agreement required to be paid to the
Bank or the Company under Section 4.05 hereof and except such cash and
investments as held by the Trustee and Paying Agents for the payment of the
principal of and premium, if any, and interest on the Bonds. Prior to the
Expiration Date of the Letter of Credit, Project Bonds shall be paid and
discharged only with funds derived from the sources, and in the order of
priority, set forth in Section 4.07 hereof.
SECTION 7.02. Payment of Bonds. On or after the Conversion Date, Bonds
shall be deemed to have been paid and discharged within the meaning of Section
7.01:
(a) if the Trustee and any Paying Agent shall hold, in trust for and
irrevocably committed thereto, sufficient moneys; or
(b) if the Trustee shall hold, in trust for and irrevocably committed
thereto, Government Obligations certified by an independent accounting firm
of national reputation to be of such maturities and bearing such interest
payable on such dates as will, without further investment or reinvestment
of either the principal amount thereof or the interest earnings therefrom
(likewise to be held in trust and committed, except as hereinafter
provided), be sufficient together with moneys referred to in subsection (a)
above;
for the payment, at their maturity or redemption date, of the principal thereof,
together with any redemption premium and interest accrued to the date of
maturity or redemption, as the
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case may be, or if failure to make such payment shall have occurred on such date
then to the date of the tender of such payment; provided, that if any Bonds are
to be redeemed prior to the maturity thereof, notice of such redemption shall
have been duly given or provision satisfactory to the Trustee shall have been
duly made for giving notice. Any moneys held in accordance with the provisions
of this Section 7.02 shall be invested, upon written direction of the Authorized
Company Representative, only in direct obligations of the United States of
America, which shall mature or be redeemable at the option of the Trustee not
later than the time or times at which said moneys will be required for the
aforesaid purposes. Any income or interest earned by, or increment to, the
investments held under this Section shall, to the extent not required for the
purposes of this Section 7.02, be transferred to the Bond Fund.
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ARTICLE VIII
Default Provisions and Remedies of Trustee
and Bondholders
SECTION 8.01. Default; Events of Default. If any of the following
events occur, subject to the provisions of Section 8.09 hereof, it is hereby
defined as and declared to be and to constitute an Event of Default:
(a) failure in the payment of the principal of or any interest or
premium on any Bond when and as the same shall have become due, whether at
the stated maturity thereof, by acceleration or call for redemption;
(b) the occurrence of an Event of Default specified in subsection (a)
of Section 6.1 of the Loan Agreement;
(c) failure in the performance or observance of any covenant, agreement
or condition on the part of the Issuer included in this Indenture, in the
Bonds or in the Loan Agreement, other than as set forth in subsection (a)
or (b) above, which materially adversely affects the lien of this Indenture
on the Revenues, the Bond Fund or the Construction Fund; provided, however,
that prior to the Expiration Date such failure shall not constitute an
Event of Default;
(d) the occurrence of any Event of Default specified in subsections
(b), (c) or (d) of Section 6.1 of the Loan Agreement; provided, however,
that prior to the Expiration Date of the Letter of Credit such occurrences
shall not constitute an Event of Default;
(e) failure to pay amounts due to holders of Project Bonds who have
delivered Project Bonds to the Trustee for purchase for a period of five
(5) days after such payment has become due and payable; or
(f) receipt by the Trustee of notice from the Bank of the occurrence of
an Event of Default under the Letter of Credit Agreement.
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The term "default" shall mean (i) any Event of Default described above;
and (ii) the occurrence of an event specified in subsections (b), (c) or (d) of
Section 6.1 of the Loan Agreement exclusive of any period of grace required to
constitute such occurrence an Event of Default as defined in the Loan Agreement.
If a default or an Event of Default shall occur under the provisions of
this Section 8.01, the Trustee shall, within two Business Days after having
actual knowledge of such default or Event of Default or being deemed to have
notice thereof under subsection (g) of Section 9.01 hereof, give written notice
of such default or Event of Default to the Issuer, the Company, the Bank, the
Guarantor and the original Purchasers of each series of Bonds.
SECTION 8.02. Acceleration. Upon the occurrence of any Event of Default
described in subsections (a) through (e), inclusive, of Section 8.01 hereof the
Trustee may, and upon the written request of the holders of not less than
twenty-five percent (25%) in aggregate principal amount of Bonds then
outstanding the Trustee shall, by notice in writing delivered to the Issuer and
the Company, declare the principal of all Bonds then outstanding and premium, if
any, on Bonds called for redemption, and the interest accrued thereon
immediately due and payable. Upon the occurrence of an Event of Default
described in subsection (f) of Section 8.01 and receipt by the Trustee of a
request from the Bank to do so, the Trustee shall, by notice in writing
delivered to the Issuer and the Company, declare the principal of all Bonds then
outstanding and premium, if any, on Bonds called for redemption, and the
interest accrued thereon immediately due and payable. Any such principal,
premium and interest shall thereupon become and be immediately due and payable.
Upon such declaration of acceleration and if an Event of Default under Section
6.1 of the Loan Agreement shall have happened and be subsisting, the Trustee
shall immediately declare all amounts payable under Sections 4.1 or 4.3 of the
Loan Agreement to be immediately due and payable in accordance with Section 6.2
of the Loan Agreement.
The provisions of this Section 8.02 are subject, however, to the
condition that after the Expiration Date of the Letter of Credit if, at any time
after the principal of and premium, if any, and interest accrued on the Bonds
shall have been so declared due and payable, all sums payable hereunder except
the principal of the Bonds which have not reached their maturity date shall have
been duly paid and all existing Events of Default shall have been cured, all
before a judgment or decree
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for payment of moneys due has been obtained by the Trustee, then and in every
such case such payment or cure of such Event of Default shall constitute a
waiver of such Event of Default and its consequences and an automatic rescission
and annulment of such declaration but no such waiver shall extend to or affect
any subsequent Event of Default or impair any rights consequent thereon.
The provisions of this Section 8.02 are further subject to the
condition that any waiver of any Event of Default under the Letter of Credit
Agreement and a rescission and annulment of its consequences shall constitute a
waiver of the corresponding Event of Default under this Indenture and a
rescission and annulment of the consequences thereof. If notice of such Event of
Default under the Letter of Credit Agreement shall have been given and if the
Trustee shall thereafter have received notice that such Event of Default shall
have been waived, the Trustee shall promptly give written notice of such waiver,
rescission and annulment to the Issuer, the Company and the Remarketing Agent,
and shall give notice thereof to holders of the Bonds in the same manner as a
notice of redemption; but no such waiver, rescission and annulment shall extend
to or affect any subsequent Event of Default under this Indenture or impair any
right or remedy consequent thereon.
SECTION 8.03. Other Remedies. Upon the occurrence of an Event of
Default the Trustee may pursue any available remedy to enforce the payment of
the principal of and any premium and interest on the Bonds then outstanding.
If an Event of Default shall have occurred, and if requested to do so
by the holders of twenty-five percent (25%) in aggregate principal amount of
Bonds then outstanding, and prior to the Expiration Date of the Letter of
Credit, the Bank if it is not then in default in making any payment under the
Letter of Credit and indemnified as provided in Section 9.01 hereof, the Trustee
shall be obligated to exercise such one or more of the rights and powers
conferred by this Section 8.03 as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the holders or owners of the Bonds.
No remedy by the terms of this Indenture conferred upon or reserved to
the Trustee (or to the holders or owners of the Bonds) is intended to be
exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to any other remedy given to the Trustee or
to the holders or owners of the Bonds hereunder or now or hereafter existing.
No delay or omission to exercise any right or power accruing upon any
default or Event of Default shall impair any
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such right or power or shall be construed to be a waiver of any such default or
Event of Default or acquiescence therein; and every such right and power may be
exercised from time to time and as often as may be deemed expedient.
No waiver of any Event of Default hereunder, whether by the Trustee or
by the holders or owners of the Bonds shall extend or shall affect any
subsequent default or Event of Default or shall impair any rights or remedies
consequent thereon.
SECTION 8.04. Right of Bondholders to Direct Proceeding. Anything in
this Indenture to the contrary notwithstanding, the holders of a majority in
aggregate principal amount of Bonds then outstanding shall have the right, at
any time, by an instrument or instruments in writing executed and delivered to
the Trustee, to annul or overrule any direction given to the Trustee by holders
of less than a majority in aggregate principal amount of Bonds or to direct the
method and place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture or any other
proceedings hereunder; provided, that (i) such direction shall not be otherwise
than in accordance with the provisions of law and of this Indenture, (ii) the
Trustee shall be indemnified to its satisfaction, and (iii) prior to the
Expiration Date of the Letter of Credit and so long as the Bank is not then in
default in making any payment under the Letter of Credit, the Bank shall have
the exclusive right to annul or overrule or give any such direction to the
Trustee.
SECTION 8.05. Application of Moneys. If, prior to the Completion Date
as defined in the Loan Agreement, all of the Bonds should be called for
redemption pursuant to Section 3 of the Bond Legislation for the Project Bonds
or there shall occur a declaration by the Trustee that the principal of all
Bonds then outstanding and premium, if any, on Bonds called for redemption, and
the interest accrued thereon are immediately due and payable, then the Trustee
shall immediately transfer all moneys and investments then on deposit in the
Construction Fund to the Bond Fund and shall hold the same in a special account
in the Bond Fund which account is hereby created and use such moneys and those
resulting from the liquidation of such investments for the retirement of
principal of the Bonds ratably to the principal amount of Bonds then
outstanding. All moneys, other than those received pursuant to the next
preceding sentence, received by the Trustee pursuant to any right given or
action taken under the provisions of this Article VIII shall, after payment of
the cost and expenses of the proceedings resulting in the collection of such
moneys and of the expenses, liabilities and advances incurred or made by the
Trustee, including, without limitation, any amounts payable to the Trustee
pursuant to Section 9.02, hereof, be deposited in the Bond Fund and all such
moneys in the Bond Fund shall be applied as follows:
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(a) unless the principal of all the Bonds shall have become or have
been declared due and payable, all such moneys shall be applied:
First--To the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, in the order of the
maturity of the installments of such interest and, if the amount
available shall not be sufficient to pay in full any particular
installment, then to the payment ratably, according to the amounts due
on such installment, to the persons entitled thereto, without any
discrimination or privilege; and
Second--To the payment to the persons entitled thereto of the
unpaid principal of any of the Bonds which shall have become due (other
than Bonds previously called for redemption for the payment of which
moneys are held pursuant to the provisions of this Indenture), in the
order of their due date, with interest on such Bonds from the
respective dates upon which they become due and if the amount available
shall not be sufficient to pay in full all Bonds due on any particular
date, together with such interest, then to the payment ratably,
according to the amount of principal due on such date, to the persons
entitled thereto without any discrimination or privilege;
(b) if the principal of all the Bonds shall have become due or shall
have been declared due and payable, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid upon the Bonds,
without preference or priority of principal over interest or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and interest, to
the persons entitled thereto without any discrimination or privilege; and
(c) if the principal of all the Bonds shall have been declared due and
payable, and if such declaration shall thereafter have been rescinded and
annulled under the provisions of Section 8.02 or 8.09 then, subject to the
provisions of subsection (b) of this Section 8.05 in the event that the
principal of all the Bonds shall later become due or be declared due and
payable, the moneys shall be applied in accordance with the provisions of
subsection (a) of this Section 8.05.
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Whenever the Trustee shall apply such funds, it shall fix the date
(which shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made and upon such date interest
on the amounts of principal to be paid on such date, and for which moneys are
available, shall cease to accrue. The Trustee shall give such notice as it may
deem appropriate of the deposit with it of any moneys and of the fixing of any
such date, and may make payment but shall not be required to make payment to the
holder of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement, or for cancellation if fully paid.
Whenever all Bonds and interest thereon have been paid under the
provisions of this section 8.05 and all expenses and charges of the Trustee and
Paying Agents have been paid, any balance remaining in the Bond Fund shall be
paid to the Bank or the Company as provided in Section 4.05 hereof.
Notwithstanding the provisions of this Section 8.05 proceeds of a draw
on the Letter of Credit received by the Trustee pursuant to the exercise of any
right or action taken under this Article VIII shall be applied only to the
payment of principal of and interest on the Project Bonds.
SECTION 8.06. Remedies Vested in Trustee. All rights of action
(including the right to file proof of claims) under this Indenture or under any
of the Bonds may be enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any trial or other proceeding relating
thereto and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any holders of the Bonds, and any recovery of judgment shall (except
for any amounts payable to the Trustee pursuant to Section 9.02 hereof) be
applied first for the ratable benefit of the holders of the outstanding Bonds
and when all such Bonds have been paid or provision for their payment has been
made in accordance with the Indenture then for the benefit of the Bank or the
Company pursuant to Section 4.05 hereof.
SECTION 8.07. Rights and Remedies of Bondholders. No holder of any Bond
shall have any right to institute any suit, action or proceeding for the
enforcement of this Indenture or for the execution of any trust thereof or any
other remedy hereunder, unless an Event of Default has occurred of which the
Trustee has been notified as provided in subsection (g) of Section 9.01, or of
which by said subsection it is deemed to have notice, and the holders of a
majority in aggregate principal amount of Bonds then outstanding, or the Bank,
in accordance with the provisions of Section 8.04 hereof, shall have made
written request to the
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Trustee and shall have offered reasonable opportunity either to proceed to
exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name, nor unless also they have offered to the Trustee
indemnity as provided in Section 9.01 nor unless the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its, his, her or their own name or names; and such
notification, request and offer of indemnity are hereby declared in every case
at the option of the Trustee to be conditions precedent to any action or cause
of action for the enforcement of this Indenture or for any other remedy
hereunder; it being further understood and intended that no one or more holders
of the Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by its, his, her or their action or to
enforce any right hereunder except in the manner herein provided and that
proceedings shall be instituted, had and maintained in the manner herein
provided and for the ratable benefit of the holders and owners of all Bonds then
outstanding. Nothing in this Indenture contained shall, however, affect or
impair the right of any Bondholder to enforce the payment of the principal of
and interest on any Bond at and after the maturity thereof, or the obligation of
the Issuer to pay the principal of, premium, if any, and interest on each of the
Bonds issued hereunder to the respective holders thereof at the time, place,
from the source and in the manner provided in the Bonds.
SECTION 8.08. Termination of Proceedings. In case the Trustee shall
have proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer and the Trustee shall be restored to their former
positions and rights hereunder with respect to the property herein conveyed, and
all rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.
SECTION 8.09. Waivers of Events of Default. The Trustee may in its
discretion waive any Event of Default hereunder and its consequences and rescind
any declaration of maturity of principal, and shall do so upon the written
request of (a) the holders of (i) a majority in aggregate principal amount of
all the Bonds then outstanding in respect of which an Event of Default in the
payment of principal or interest exists, or (ii) a majority in aggregate
principal amount of all Bonds then outstanding in case of any other default or
Event of Default and (b) prior to the Expiration Date of the Letter of credit,
the Bank; provided, however, that there shall not be waived any Event of Default
after the Trustee has drawn on the Letter of Credit to
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provide funds for the payment of the principal of and interest on the Project
Bonds called for redemption pursuant to section 8.02 of this Indenture; and
there shall not be waived (a) an Event of Default in respect of any failure in
the payment of the principal of any outstanding Bonds when due, whether at the
date of maturity specified therein, by acceleration or by call for redemption or
(b) an Event of Default in respect of any failure in the payment when due of the
interest on any such Bonds unless prior to such waiver or rescission, all
arrears of payments of principal, premium and interest (with interest to the
extent permitted by law at the rate borne by the Bonds in respect of which such
failure shall have occurred on overdue installments of interest), as the case
may be, and all expenses of the Trustee, in connection with such Event of
Default, shall have been paid or provided for, In case of any such waiver or
rescission or in case any proceeding taken by the Trustee on account of any such
Event of Default shall have been discontinued or abandoned or determined
adversely, then and in every such case the Issuer, the Trustee, the Bank and the
Bondholders shall be restored to their former positions and rights hereunder
respectively, but no such waiver or rescission shall extend to any subsequent or
other Event of Default, or impair any right consequent thereon.
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ARTICLE IX
The Trustee
SECTION 9.01. Trustee's Acceptance and Responsibilities. The Trustee
hereby accepts the trusts imposed upon it by this Indenture, and agrees to
perform said trusts, but only upon and subject to the following terms and
conditions:
(a) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees but shall be answerable for the conduct of the same in accordance
with the standard specified in subsection (f) of this Section 9.01, and
shall be entitled to advice of counsel concerning all matters or trusts
hereof and duties hereunder, and may in all cases pay such reasonable
compensation (and shall be entitled to reimbursement thereof by the
Company) to all such attorneys, agents, receivers and employees as may
reasonably be employed in connection with the trusts hereof. The Trustee
may act upon the opinion or advice of any attorney (who may be the attorney
or attorneys for the Issuer or the Company), approved by the Trustee in the
exercise of reasonable care. The Trustee shall not be responsible for any
loss or damage resulting from any action or nonaction in good faith in
reliance upon such opinion or advice.
(b) Except for its certificate of authentication on the Bonds, the
Trustee shall not be responsible for any recital herein or in the Bonds, or
for the validity, priority, recording or re-recording, filing or re-filing
of this Indenture or the Loan Agreement or any financing statements,
amendments thereto or continuation statements, or for the validity of the
execution by the Issuer of this Indenture or of any supplements hereto or
instruments of further assurance, or for the sufficiency of the security
for the Bonds issued hereunder or intended to be secured hereby or for the
value or title of the Facilities or for insuring the Facilities, nor shall
the Trustee be bound to ascertain or inquire as to the performance or
observance of any covenants, conditions or agreements on the part of the
Issuer or on the part of the Company under Section 5.5 of the Loan
Agreement, but the Trustee may require of the Issuer and the Company full
information as to performance and observance thereof. The Trustee shall not
be responsible or liable for any loss suffered in connection with any
investment of funds made in accordance with Article VI hereof. The Trustee
shall have no obligation to perform any of the duties of the Issuer under
the Loan Agreement.
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(c) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder or the application of the proceeds
thereof. The Trustee may become the owner of Bonds secured hereby with the
same rights which it would have if not Trustee.
(d) The Trustee shall be protected in acting upon any notice, request,
consent, certificate, order, affidavit, letter, telegram or other paper or
document believed to be genuine and correct and to have been signed or sent
by the proper person or persons, Any action taken by the Trustee pursuant
to this Indenture upon the request or authority or consent of any person
who at the time of making such request or giving such authority or consent
is the holder of any Bonds, shall be conclusive and binding upon all future
holders of the same Bond and upon Bonds issued in exchange therefor or in
place thereof.
(e) As to the existence or nonexistence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate signed on behalf of the Issuer
by an authorized officer thereof as sufficient evidence of the facts
therein contained and, prior to the occurrence of a default of which the
Trustee has been notified as provided in subsection (g) of this Section
9.01, or of which by said subsection it is deemed to have notice, shall
also be at liberty to rely on a similar certificate to the effect that any
particular dealing, transaction or action is necessary or expedient, but
may at its discretion require such further evidence deemed necessary or
advisable, but shall in no case be bound to do so. The Trustee may accept a
certificate of the officer, or an assistant thereto, having charge of the
appropriate records to the effect that legislation or resolutions in the
form therein set forth have been adopted by the Issuer or by the partners
of the Company as conclusive evidence that such legislation or resolutions
have been duly adopted and are in full force and effect.
(f) The permissive right of the Trustee to take actions under this
Indenture shall not be construed as a duty and the Trustee, except during
the continuance of an Event of Default, undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture, the
Loan Agreement and the Letter of Credit Agreement. In the performance of
such duties, the Trustee shall be answerable only for its gross negligence
or wilful default. In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, the Loan Agreement and the Letter of Credit
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Agreement, and use the same degree of care and skill in their exercise, as
an ordinarily prudent trustee would exercise or use under a trust
agreement.
(g) The Trustee shall not be required to take notice or be deemed to
have notice of any default or Event of Default hereunder, except Events of
Default defined in subsection (a) of Section 6.1 of the Loan Agreement or
subsections (a) or (b) of Section 8.01 of this Indenture, unless the
Trustee shall be specifically notified in writing of such default or Event
of Default by the Issuer, the Bank or the holders of at least twenty-five
percent (25%) in aggregate principal amount of Bonds then outstanding, and
in the absence of such notice so delivered the Trustee may conclusively
assume there is no default or Event of Default except as aforesaid.
(h) At any and all reasonable times the Trustee, and its duly
authorized agents, attorneys, experts, accountants and representatives
shall have the right fully to inspect any and all books, papers and records
of the Issuer pertaining to Revenues and the Bonds, and to take such
memoranda from and in regard thereto as may be desired.
(i) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(j) Notwithstanding anything elsewhere in this Indenture contained, the
Trustee shall have the right, but shalll not be required, to demand, in
respect of the authentication of any Bonds, the withdrawal of any cash, the
release of any property, or any action whatsoever within the purview of
this Indenture, any showings, certificates opinions, appraisals, or other
information, or corporate action or evidence thereof, in addition to that
by the terms hereof required as a condition of such action by the Trustee,
deemed desirable for the purpose of establishing the right of the Issuer to
the authentication of any Bonds, the withdrawal of any cash, or the taking
of any other action by the Trustee.
(k) Before taking action under Article VIII or Section 9.04 hereof, the
Trustee may require that a satisfactory indemnity bond be furnished for the
reimbursement of all expenses to which it may be put and to protect it
against all liability by reason of any action so taken, except liability
which is adjudicated to have resulted from its gross negligence or wilful
default.
(l) All moneys received by the Trustee shall, until used or applied or
invested as herein provided be held in trust
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for the purposes for which they were received but need not be segregated
from other funds except to the extent required by law. The Trustee shall
not be under any liability for interest on any moneys received hereunder.
(m) The Trustee shall not be personally liable for any debts
contracted, or for injury or damage to persons or to personal property, or
with respect to the Facilities, for salaries or nonfulfillment of
contracts.
SECTION 9.02. Fees, Charges and Expenses of Trustee and Paying Agents.
The Trustee shall be entitled to payment or reimbursement for reasonable fees
for its Ordinary Services rendered hereunder and all advances, counsel fees and
other Ordinary Expenses reasonably and necessarily made or incurred by the
Trustee in connection with such Ordinary Services and, in the event that it
should become necessary that the Trustee perform Extraordinary Services, it
shall be entitled to reasonable extra compensation therefor, and to
reimbursement for reasonable and necessary Extraordinary Expenses in connection
therewith; provided, that if such Extraordinary Services or Extraordinary
Expenses are occasioned by the neglect or misconduct of the Trustee, it shall
not be entitled to compensation or reimbursement therefor. The obligation to pay
the fees, charges and expenses of the Trustee shall survive the termination of
this Indenture. The Trustee and any Paying Agent shall be entitled to payment
and reimbursement for the reasonable fees, charges and expenses of the Trustee,
as Paying Agent, and any Paying Agent for the Bonds.
The obligation for all payments or reimbursements pursuant to this
Section 9.02 shall be that of the Company as set forth in the Loan Agreement and
shall be subject to Section 4.03 of this Indenture. Proceeds resulting from a
draw on the Letter of Credit shall not be applied to any payments described in
this Section 9.02.
SECTION 9.03. Notice to Bondholders if Event of Default Occurs. If an
Event of Default occurs of which the Trustee is by subsection (g) of Section
9.01 hereof required to take notice or if notice of an Event of Default be given
as in said subsection (g) provided, then the Trustee shall, within 30 days after
the Trustee has or is deemed to have such notice, give written notice thereof
unless previously cured or waived by first class, postage prepaid mail to the
holders of all Bonds then outstanding as shown by the registration books
maintained by the Bond Registrar pursuant to Section 2.04 of this Indenture
unless the board of directors, the executive committee, or a trust committee of
directors or responsible officers of the Trustee in good faith determines that
the withholding of such notice is in the best interests of the Bondholders.
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SECTION 9.04. Intervention by Trustee. In any judicial proceeding to
which the Issuer or the Company is a party and which in the opinion of the
Trustee and its attorney has a substantial bearing on the interests of holders
of the Bonds, the Trustee may intervene on behalf of Bondholders and shall do so
if requested in writing by the holders of at least twenty-five percent (25%) of
the aggregate principal amount of Bonds then outstanding.
SECTION 9.05. Successor Trustee. Any corporation or association into
which the Trustee may be converted or merged, or with which it or any successor
to it may be consolidated, or to which it may sell or transfer its assets and
trust business as a whole or substantially as a whole, or any corporation or
association resulting from any such conversion sale, merger, consolidation or
transfer to which it is a party, ipso facto, shall be and become successor
Trustee hereunder and vested with all of the title to the whole property or
trust estate and all the trusts, powers, discretions, immunities, privileges and
all other matters as was its predecessor, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 9.06. Resignation by the Trustee. The Trustee may at any time
resign from the trusts hereby created by giving sixty (60) days' written notice
to the Issuer, the Company and the Bank, if prior to the Expiration Date, and to
each holder of Bonds then outstanding as shown on the registration books
maintained by the Bond Registrar pursuant to Section 2.04 of this Indenture, and
such resignation shall take effect at the appointment of a successor Trustee by
the Bondholders or by the Issuer and acceptance by the successor Trustee of such
trusts. If no successor Trustee shall have been so appointed and have accepted
appointment within thirty (30) days of the giving of written notice by the
resigning Trustee as aforesaid, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
SECTION 9.07. Removal of the Trustee. The Trustee may be removed at any
time, by an instrument or concurrent instrument in writing delivered to the
Trustee, to the Issuer, and to the Company and signed by or on behalf of the
holder or holders of a majority in aggregate principal amount of Bonds then
outstanding. Such removal shall not become effective until the appointment of a
successor Trustee by the Bondholders or by the Issuer and acceptance by the
successor Trustee of the trusts hereby created.
SECTION 9.08. Appointment of Successor Trustee by the Bondholders. In
case the Trustee hereunder shall resign or be removed, or be dissolved, or
otherwise become incapable of acting hereunder, or in case it shall be taken
under the control of any public officer or officers, or of a receiver appointed
by a
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court, a successor shall be appointed by the Issuer with the written consent of
the Company and, prior to the Expiration Date of the Letter of Credit, the Bank;
provided that if a successor Trustee is not so appointed within ten (10) days
after the notice of resignation is mailed or instrument of removal is delivered
as provided in section 9.06 and 9.07, respectively or the Trustee is dissolved,
taken under control or otherwise incapable of action as above provided, then the
holders of a majority in aggregate principal amount of Bonds then outstanding,
by an instrument or concurrent instruments in writing signed by or on behalf of
such holders may designate a successor Trustee. Every such successor Trustee
appointed pursuant to the provisions of this Section 9.08 shall be a trust
company or bank in good standing, duly authorized to exercise trust powers
within the State, having a reported capital and surplus of not less than
$25,000,000 and willing to accept the trusteeship under the terms and conditions
of this Indenture.
SECTION 9.09. Concerning Any Successor Trustee. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Issuer and the Company, an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act
shall become fully vested with all the rights, powers, trusts, duties and
obligations of its predecessor; but such predecessor shall, nevertheless, on the
written request of the Issuer, or of its successor, execute and deliver any
instrument transferring to such successor trustee all the estates, properties,
rights, powers and trusts of such predecessor hereunder, and shall duly assign,
transfer and deliver all property, securities and moneys held by it as Trustee
to its successor. Should any instrument in writing from the Issuer be required
by any successor Trustee for more fully and certainly vesting in such successor
the rights, powers and duties hereby vested or intended to be vested in the
predecessor any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Issuer.
SECTION 9.10. Trustee Protected in Relying Upon Resolutions, etc. The
resolutions, opinions, certificates and other instruments provided for in this
Indenture may be accepted by the Trustee as conclusive evidence of the facts and
conclusions stated therein and shall be full warrant, protection and authority
to the Trustee for its actions taken hereunder.
SECTION 9.11. Successor Trustee as Custodian, Bond Registrar and Paying
Agent. In the event of a change in the office of Trustee, the predecessor
Trustee which has resigned or been removed shall cease to be custodian of any
funds it may hold pursuant to this Indenture or any indenture supplemental
hereto, and cease to be Bond Registrar and Paying Agent for principal of and
premium, if any, or interest on the Bonds and the successor Trustee shall become
such custodian, Bond Registrar and Paying Agent.
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SECTION 9.12. Adoption of Authentication. In case any of the Bonds
contemplated to be issued hereunder shall have been authenticated but not
delivered, any successor Trustee may adopt the certificate of authentication of
the original Trustee or of any successor of it as Trustee hereunder and deliver
the said Bonds so authenticated as hereinbefore provided; and in case any of
such Bonds shall not have been authenticated, any successor Trustee may
authenticate such bonds in its own name. In all such cases such certificate of
authentication shall have the same force and effect as provided in the Bonds or
in this Indenture with respect to the certificate of authentication of the
Trustee.
SECTION 9.13. Succession of Paying Agents. Any bank or trust company
with or into which any Paying Agent may be merged or consolidated, or to which
the assets and business of such Paying Agent may be sold, shall be deemed the
successor of such Paying Agent for the purposes of this Indenture. If the
position of Paying Agent shall become vacant for any reason, the Issuer shall,
within thirty (30) days thereafter, appoint a bank or trust company selected by
the Company (and, prior to the Expiration Date of the Letter of Credit, approved
by the Bank) and located in the same city as such Paying Agent to fill such
vacancy; provided, however, that if the Issuer shall fail to select such
successor within said period, the Trustee shall make such appointment.
The Paying Agents shall enjoy the same protective provisions in the
performance of their duties hereunder as are specified in section 9.01 with
respect to the Trustee, in so far as such provisions may be applicable.
Section 9.14. Right of Trustee to Pay Taxes and other Charges. In case
any tax, assessment or governmental or other charge upon any part of the
Facilities, is not paid as required therein, the Trustee may, but shall not be
obligated to, pay such tax, assessment or governmental charge without prejudice,
however, to any rights of the Trustee or the holders of the Bonds hereunder
arising in consequence of such failure; and any amount at any time so paid under
this Section, with interest thereon from the date of payment at the Interest
Rate for Advances, as defined in the Loan Agreement, shall become so much
additional indebtedness secured by this Indenture, and the same shall be given
preference in payment over any of the Bonds, and shall be paid out of the
Revenues, if not otherwise caused to be paid; provided, however, that such
amounts shall not be paid with proceeds from a draw on the Letter of Credit.
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ARTICLE X
Supplemental Indentures
SECTION 10.01. Supplemental Indentures Not Requiring Consent of
Bondholders. The Issuer and the Trustee may, without the consent of, or notice
to, any of the Bondholders, but, if prior to the Expiration Date of the Letter
of Credit, with prior written notice to the Bank, enter into indentures
supplemental to this Indenture for any one or more of the following purposes:
(a) to cure any ambiguity, inconsistency or formal defect or omission
in this Indenture;
(b) to grant to or confer upon the Trustee for the benefit of the
Bondholders any additional rights, remedies, powers or authority that may
lawfully be granted to or conferred upon the Bondholders or the Trustee or
either of them;
(c) to subject to the lien and pledge of this Indenture additional
revenues;
(d) to add to the covenants and agreements of the Issuer contained in
this Indenture other covenants and agreements thereafter to be observed for
the protection of the Bondholders, or to surrender or limit any right,
power or authority herein reserved to or conferred upon the Issuer;
(e) to evidence any succession to the Issuer and the assumption by such
successors of the covenants and agreements of the Issuer herein and in the
Loan Agreement and Bonds contained;
(f) to modify, amend or supplement the Indenture in such manner as to
permit the qualification thereof under the Trust Indenture Act of 1939, as
amended, or to comply with any similar requirements of any other law;
(g) in connection with the issuance of Additional Bonds in accordance
with Section 2.08 hereof; or
(h) to change the method for determining the Interest Index or the
Alternate Interest Index or to eliminate such indices or to implement the
Fixed Interest Rate.
SECTION 10.02. Supplemental Indentures Requiring Consent of
Bondholders. Exclusive of supplemental indentures covered by Section 10.01
hereof and subject to the terms and provisions contained in this Section 10.02,
and not otherwise the holders of a majority in aggregate principal amount of the
Bonds then
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outstanding shall have right, from time to time, anything contained in this
Indenture to the contrary notwithstanding, to consent to and approve the
execution by the Issuer and the Trustee of such other indenture or indentures
supplemental hereto as shall be deemed necessary and desirable by the Issuer for
the purpose of modifying, altering, amending, adding to or rescinding, in any
particular any of the terms or provisions contained in this Indenture or in any
supplemental indenture; provided, however, that nothing in this Section 10.02
contained shall permit, or be construed as permitting (a) an extension of the
maturity of the principal of or the interest on any Bond issued hereunder, or a
reduction in the principal amount of any Bond or the rate of interest or
redemption premium thereon, or a change in the terms of purchase thereof by the
Trustee or a reduction in the amount or extension of the time of any payment
required by any mandatory sinking fund requirements provided in the Bond
Legislation, without the consent of the holder of each Bond so affected, or (b)
a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or a
reduction in the aggregate principal amount of the Bonds required for consent to
such supplemental indenture, without the consent of the holders of all of the
Bonds then outstanding.
If at any time the Issuer shall request the Trustee to enter into any
such supplemental indenture for any of the purposes of this Section 10.02, the
Trustee shall, upon being satisfactorily indemnified with respect to expenses,
cause notice of the proposed execution of such supplemental indenture to be
mailed by first class mail, postage prepaid, to all holders of Bonds then
outstanding at their addresses as they appear on the registration books provided
for herein. Such notice shall briefly set forth the nature of the proposed
supplemental indenture and shall state that copies thereof are on file at the
corporate trust office of the Trustee for inspection by all Bondholders. If
because of temporary or permanent suspension of mail service, or for any other
reason, it is impossible or impractical to publish or mail such notice in the
manner herein provided, then any such other manner of giving notice as shall be
made with the approval of the Trustee shall constitute a sufficient notice.
If within sixty (60) days or such longer period, as shall be prescribed
by the Issuer following the giving of such notice, the Trustee shall receive an
instrument or instruments purporting to be executed by the holders of a majority
in aggregate principal amount of the Bonds then outstanding which instrument or
instruments shall refer to the proposed supplemental indenture described in such
notice and shall specifically consent to and approve the execution thereof in
substantially the form of the copy thereof referred to in such notice as on file
with the Trustee, thereupon, but not otherwise,
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the Trustee shall execute such supplemental indenture in substantially such
form, without liability or responsibility to any holder of any Bond, whether or
not such holder shall have consented thereto.
Any such consent shall be binding upon the holder of the Bond giving
such consent and, anything in Section 12.01 hereof to the contrary
notwithstanding, upon any subsequent holder of such Bond and of any Bond issued
in exchange therefor (whether or not such subsequent holder thereof has notice
thereof), unless such consent is revoked in writing by the holder of such Bond
giving such consent or by a subsequent holder thereof by filing with the
Trustee, prior to the execution by the Trustee of such supplemental indenture,
such revocation. At any time after the holders of the required percentage of
Bonds shall have filed their consents to the supplemental indenture, the Trustee
shall make and file with the Issuer a written statement that the holders of such
required percentage of Bonds have filed such consents. Such written statement
shall be conclusive that such consents have been so filed.
If the holders of the required percentage in aggregate principal amount
of the Bonds outstanding shall have consented to and approved the execution
thereof as herein provided, no holder of any Bond shall have any right to object
to the execution of such supplemental indenture, or to object to any of the
terms and provisions contained therein or the operation thereof, or in any
manner to question the propriety of the execution thereof or to enjoin or
restrain the Trustee or the Issuer from executing the same or from taking any
action pursuant to the provisions thereof.
Upon the execution of any such supplemental indenture as in this
Section 10.02 permitted and provided, this Indenture shall be and is deemed to
be modified and amended in accordance therewith.
SECTION 10.03. Modification by Unanimous Consent. Notwithstanding
anything contained elsewhere in the Indenture, the rights and obligations of the
Issuer and of the holders of the Bonds, and the terms and provisions of the
Bonds and this Indenture or any supplemental indenture, may be modified or
altered in any respect with the consent of the Issuer and the consent of the
holders of all of the Bonds then outstanding and, if required by Section 10.04
hereof, the consent of the Company.
SECTION 10.04. Supplemental indentures Requiring Consent of the Bank.
Notwithstanding the provisions of Sections 10.02 and 10.03 of this Indenture,
the Issuer and the Trustee shall not enter into any supplemental indenture after
the initial authentication and delivery of Project Bonds and prior to the
Expiration Date without the prior written consent of the Bank.
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SECTION 10.05. Rights of Company. Anything herein to the contrary
notwithstanding, a supplemental indenture under this Article X which affects any
rights of the Company shall not become effective unless and until the Company
shall have consented to the execution and delivery of such supplemental
indenture. In this regard, the Trustee shall cause notice of the proposed
execution and delivery of any such supplemental indenture together with a copy
of the proposed supplemental indenture to be mailed as provided in Section 12.04
of this Indenture to the Company at least thirty (30) days prior to its proposed
execution.
SECTION 10.06. Execution by Trustee. The Trustee may require an opinion
of counsel (who may be counsel for the Issuer or the Company and who shall be
satisfactory to the Trustee) that any supplemental indenture entered into by the
Issuer and the Trustee complies with the provisions of this Article X and the
Trustee may rely on such opinion. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which adversely affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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ARTICLE XI
Amendment of Loan Agreement
SECTION 11.01. Amendments, etc., to Loan Agreement Not Requiring
Consent of Bondholders. The Issuer and the Trustee may, without the consent of
or notice to the Bondholders, consent to any amendment, change or modification
of the Loan Agreement as may be required (i) by the provisions of the Loan
Agreement and this Indenture, (ii) in connection with the issuance of Additional
Bonds as specified in Section 2.08 hereof, (iii) for the purpose of curing any
ambiguity, inconsistency or formal defect or omission or (iv) in connection with
any other change herein which, in the judgment of the Trustee, is not to the
prejudice of the Trustee or the holders of the Bonds.
SECTION 11.02. Amendments, etc., to Loan Agreement Requiring Consent of
Bondholders. Except for the amendments, changes or modifications as provided in
Section 11.01 hereof, neither the Issuer nor the Trustee shall consent to any
amendment, change or modification of the Loan Agreement which would change the
amounts payable under Section 4.1 of the Loan Agreement, Bond maturities or
interest rates or payment dates for the Bonds without publication of notice and
the written approval or consent of the holders of all of the then outstanding
Bonds, or to any other amendment, change or modification of the Loan Agreement
without giving of notice to, and the written approval or consent of, the holders
of not less than a majority in aggregate principal amount of the Bonds at the
time outstanding, given and procured as in Section 10.02 provided. If at any
time the Issuer and the Company shall request the consent of the Trustee to any
such proposed amendment, change or modification of the Loan Agreement, the
Trustee shall, upon being satisfactorily indemnified with respect to expenses,
cause notice of such proposed amendment, change or modification to be given in
the same manner as provided by Section 10.02 hereof with respect to supplemental
indentures. Such notice shall briefly set forth the nature of such proposed
amendment, change or modification and shall state that copies of the instrument
embodying the same are on file at the corporate trust office of the Trustee for
inspection by all Bondholders.
SECTION 11.03. Consent by Trustee. In consenting to any amendment,
change or modification of the Loan Agreement, the Trustee may require an opinion
of counsel (who may be counsel for the Issuer or the Company and who shall be
satisfactory to the Trustee) that such amendment, change or modification
complies with the provisions of this Article XI, and the Trustee may rely on
such opinion.
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ARTICLE XII
Miscellaneous
Section 12.01. Consents, etc., of Bondholders. Any consent, request,
direction, approval, objection or other instrument required by this Indenture to
be signed and executed by the Bondholders may be in any number of concurrent
writings of similar tenor and may be signed or executed by such Bondholders in
person or by agent appointed in writing. Proof of the execution of any such
consent, request, direction, approval, objection or other instrument or of the
writing appointing any such agent and of the ownership of Bonds, if made in the
following manner shall be sufficient for any of the purposes of this Indenture,
and shall be conclusive in favor of the Trustee with regard to any action taken
under such request or other instrument, namely:
(1) The fact and date of the execution by any person of any
such writing may be proved by the certificate of any officer in any
jurisdiction who by law has power to take acknowledgments within such
jurisdiction that the person signing such writing acknowledged before
him the execution thereof, or by affidavit of any witness to such
execution,
(2) The fact of ownership of Bonds shall be proved by the
registration books maintained by the Bond Registrar.
Nothing contained herein shall be construed as limiting the Trustee to
such proof, it being intended that the Trustee may accept any other evidence of
the matter herein stated which it deems to be sufficient. Any request or consent
of the holder of any Bond shall bind every future holder of the same Bond in
respect to anything done or suffered to be done by the Issuer, the Trustee or
any Paying Agent in pursuance of such request or consent.
Section 12.02. Limitation of Rights. With the exception of rights
herein expressly conferred, nothing expressed or mentioned in or to be implied
from this Indenture or the Bonds is intended or shall be construed to give to
any person other than the parties hereto, the Bank, the Company and the holders
of the Bonds, any legal or equitable right, remedy or claim under or in respect
to this Indenture or any covenants; conditions and provisions herein contained;
this Indenture and all of the covenants, conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto, the Bank, the Company and the holders of the Bonds as
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herein provided. No recourse shall be had for any claim based on the Loan
Agreement, the Indenture or the Bonds against any member, officer or employee
past, present or future, of the issuer either directly or through the Issuer
under any constitutional provision, statute or rule of law or by the enforcement
of any assessment, penalty or otherwise.
Section 12.03. Extent of Covenants; No Personal Liability. All
covenants, stipulations, obligations and agreements of the Issuer contained in
this Indenture shall be effective to the extent authorized and permitted by
applicable law. No such covenant, stipulation, obligation or agreement shall be
deemed to be a covenant, stipulation, obligation or agreement of any present or
future member, officer, agent or employee of the Issuer in his individual
capacity, and neither the members of the Legislative Authority nor any official
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof.
Section 12.04. Severability. If any provision of this Indenture shall
be held or deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or
Sections in this Indenture contained, shall not affect the remaining portions of
this Indenture or any part thereof.
Section 12.05. Notices. It shall be sufficient service or giving of any
notice, request, complaint demand or other paper if the same shall be duly
mailed by first class mail addressed as follows: if to the Issuer, at County of
Delaware, Ohio, 91 North Sandusky Street, Delaware, Ohio 43015, Attention:
Clerk; if to the Company, at Radiation Sterilizers, Incorporated, 3000 Sand Hill
Road, Menlo Park, California 94025; if to the Trustee, at Bank One Trust
Company, NA, 100 East Broad Street, Columbus, Ohio 43271-0181, Attention:
Corporate Trust Administration; and if to the Bank, at the address of the Bank
set forth in the Letter of Credit Agreement. Duplicate copies of each notice,
certificate or other communication given hereunder by the Issuer, Trustee, the
Bank or the Company to one or both of the others, shall also be given to the
others, The Issuer, the Company, the Bank and the Trustee may, by notice given
hereunder,
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designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent. Except as otherwise provided
in this Indenture, all notices and other communications shall, when mailed, be
effective three days after the date of deposit in the mails, or when received,
if earlier, and if personally delivered, telegrammed or telexed, upon receipt.
Section 12.06. Trustee as Paying Agent and Bond Registrar. The Trustee
is hereby designated and agrees to act as a Paying Agent and Bond Registrar for
and in respect to the Bonds.
Section 12.07. Payments Due on Days Other Than Business Days. After the
Conversion Date, in any case where the date of maturity of principal of or
interest on the Bonds or the date fixed for redemption of any Bonds shall not be
a Business Day, then payment of interest or principal and any premium need not
be made on such date but may be made on the next succeeding Business Day with
the same force and effect as if made on the date of maturity or the date fixed
for redemption and if made on such next succeeding Business Day no additional
interest shall accrue for the period after such date.
Section 12.08. Priority Over Other Liens. It is intended that this
Indenture shall be superior to any other liens which may be placed upon the
Revenues, the Bond Fund, the Construction Fund or any other funds or accounts
created pursuant to this Indenture or the Loan Agreement.
Section 12.09. Binding Effect. This instrument shall inure to the
benefit of and shall be binding upon the Issuer and the Trustee and their
respective successors and assigns, subject, however, to the limitations
contained in this Indenture.
Section 12.10. Counterparts. This Indenture 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 12.11. Captions. The captions or headings in this Indenture are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Indenture.
Section 12.12. Governing Law. This Indenture and the Bonds shall be
governed exclusively by and construed in accordance with the laws of the State.
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Section 12.13. Notice to S & P
The Trustee agrees to notify S & P in writing, signed by an authorized
officer of the Trustee, with respect to: (a) any change of Trustee under the
Indenture; (b) any amendment of or supplement to the Indenture or the Loan
Agreement; (c) redemption, in full, of the Project Bonds; (d) conversion of the
interest rate borne by the Project Bonds to a Fixed Interest Rate; (e) the
expiration of the Letter of Credit; or (f) any amendment to the Letter of
Credit.
IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed
in its name and on its behalf by its authorized officer; and the Trustee, in
token of its acceptance of the trusts created hereunder, has caused this
Indenture to be executed in its name and by its duly authorized agent; all as of
the day and year first above written.
Signed and acknowledged COUNTY OF DELAWARE, OHIO
in the presence of:
[SIG] By: [SIG]
- ------------------------ ----------------------------
[SIG] Commissioner
- ------------------------
Signed and acknowledged BANK ONE TRUST COMPANY, NA
in the presence of: Trustee
[SIG] By: [SIG]
- ------------------------ ----------------------------
Authorized Officer
/s/ INGRID KELLNER
- ------------------------
STATE OF OHIO :
:ss.
COUNTY OF DELAWARE :
On this 24 day of December, 1984, before me, a Notary Public in and for
said County and State, personally appeared ______________ of the Board of County
Commissioner of the County of Delaware, Ohio, and acknowledged the execution of
the foregoing instrument, and that the same is
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his voluntary act and deed on behalf of said County and the voluntary act and
deed of said Commissioner as such.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year aforesaid.
/s/ [SIG]
------------------------
Notary Public
[SEAL]
STATE OF OHIO :
:ss
COUNTY OF FRANKLIN :
On this 20 day of December, 1984, before me, a Notary Public in and for
said County and State, personally appeared Stephen Mintos, an Authorized Officer
of Bank One Trust Company, NA, the bank which executed the foregoing instrument
as Trustee, who acknowledged that he did sign said instrument as such officer,
for and on behalf of said bank and by authority granted in its rules and
regulations and by its Board of Directors; that the same is his free act and
deed as such officer and the free act and deed of said bank.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
official seal on the day and year aforesaid.
/s/ INGRID KELLNER
------------------
Notary Public
[SEAL]
This instrument was prepared by Richard F. Kane, Esq., Bricker & Eckler, 100
East Broad Street, Columbus, Ohio 43215.
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EXHIBIT 10.23
LETTER OF CREDIT
AGREEMENT
Between
RADIATION STERILIZERS, INCORPORATED
and
WELLS FARGO BANK, N.A.
Dated as of December 1, 1984
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions and Accounting Terms ...................................... 1
1.1 Defined Terms ................................................. 1
1.2 Use of Defined Terms .......................................... 5
1.3 Accounting Terms .............................................. 5
1.4 Exhibits ...................................................... 5
2. Bonds ................................................................. 5
3. Letter of Credit ...................................................... 5
4. Loan Documents ........................................................ 5
4.1 Notes ......................................................... 5
4.2 Guaranty ...................................................... 6
4.3 Security Documents ............................................ 6
4.4 Pledge Agreement .............................................. 7
4.5 Other Documents and Actions ................................... 7
4.6 Additional Security ........................................... 7
5. Conditions to Issuance and Disbursements .............................. 8
5.1 Conditions to Issuance ........................................ 8
5.2 Conditions to Disbursements ................................... 10
6. Reimbursement and Other Payments; Extension ........................... 10
6.1 Reimbursement ................................................. 10
6.2 Fees .......................................................... 11
6.3 Increased Cost Due to Change in Law 12
6.4 Obligations Absolute .......................................... 12
6.5 Extension of Letter of Credit 13
7. Representations and Warranties by Company 13
7.1 Formation of Company .......................................... 13
7.2 Execution, Delivery and Performance of
Loan Documents and Bond Documents .......................... 14
7.3 Financial Statements .......................................... 15
7.4 No Material Adverse Change .................................... 16
7.5 Tax Liability ................................................. 16
7.6 Compliance with Laws .......................................... 16
7.7 Litigation .................................................... 16
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.8 Official Statement ............................................ 16
7.9 Conditions to Disbursement .................................... 17
8. Representations and Warranties by Bank ................................ 17
8.1 Formation of Bank ............................................. 16
8.2 Authorization ................................................. 17
8.3 No Conflict ................................................... 17
8.4 Actions and Proceedings ....................................... 17
9. Affirmative Covenants ................................................. 18
9.1 Governmental Approvals ........................................ 18
9.2 Continued Existence ........................................... 18
9.3 Books and Records ............................................. 18
9.4 Annual Operating Statements ................................... 18
9.5 Notice of Certain Events ...................................... 19
9.6 Opinions ...................................................... 19
9.7 Defaults of Others ............................................ 19
9.8 Tax Appeals ................................................... 19
9.9 Surplus Construction Funds .................................... 20
9.10 Notice Re Disbursement Conditions ............................. 20
10. Negative Covenants .................................................... 20
10.1 Transfers of Project or Obligations ........................... 20
10.2 Liens on Project .............................................. 20
10.3 Liens on Personal Property .................................... 20
11. Events of Default and Remedies Upon Default ........................... 21
11.1 Events of Default ............................................. 21
11.2 Remedies Upon Default ......................................... 22
11.3 Cumulative Remedies; No Waiver ................................ 23
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
12. Miscellaneous ......................................................... 24
12.1 Actions ....................................................... 24
12.2 Nonliability of Bank .......................................... 25
12.3 No Representations by Bank .................................... 26
12.4 No Third Parties Benefited .................................... 26
12.5 Indemnity by Company .......................................... 26
12.6 Commissions ................................................... 27
12.7 Binding Effect ................................................ 27
12.8 Execution in Counterparts ..................................... 27
12.9 Prior Agreements; Amendments; Contents ........................ 28
12.10 Survival of Representations and
Warranties .................................................. 28
12.11 Notices ....................................................... 28
12.12 Further Assurances ............................................ 29
12.13 Governing Law ................................................. 30
12.14 Severability of Provisions .................................... 30
12.15 Inconsistency With Security Documents ......................... 30
12.16 Headings ...................................................... 30
12.17 Time of the Essence ........................................... 30
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
EXHIBITS
--------
"A" Letter of Credit .................................................. 31
"B" Promissory Note ................................................... 32
"C" Conditions to Disbursement ........................................ 33
"D" Legal Descriptions of the Properties .............................. 34
"E" Permitted Title Exceptions ........................................ 35
</TABLE>
-iv-
<PAGE> 6
LETTER OF CREDIT AGREEMENT
This Letter of Credit Agreement is entered into as of December
1, 1984, by and between RADIATION STERILIZERS, INCORPORATED, a California
corporation ("Company"), and WELLS FARGO BANK, N.A., a national banking
association ("Bank").
1. Definitions And Accounting Terms.
1.1 Defined Terms. As used in this Letter of Credit
Agreement, the following terms shall have the meanings set forth respectively
after each:
(a) "Agreement" means this Letter of Credit
Agreement, either as originally executed or as it may from time to
time be supplemented, modified or amended.
(b) "ALTA Policies" means the policies of title
insurance covering the Properties required pursuant to Section 5.1.3
of this Agreement.
(c) "Bond Documents" means all of the
instruments, documents and agreements which may be executed from time
to time by Issuer, Trustee, the Original Purchaser and/or Company in
connection with the Bonds, including without limitation the following,
each of which were executed as of even date herewith unless otherwise
indicated and in each case either as originally executed or as the
same may from time to time be supplemented, modified or amended:
(1) Loan Agreement between Issuer and
Company (the "Loan Agreement");
(2) Trust Agreement between Issuer and
Trustee (the "Trust Agreement");
(3) Bond Purchase Agreement between Company,
Issuer and the Original Purchaser (the "Bond Purchase
Agreement").
(d) "Bond Legislation" means the resolution
adopted by the Board of County Commissioners of the Issuer authorizing
the issuance of the Bonds.
(e) "Bond Proceeds" means the proceeds of the
Bonds, including without limitation any insurance or condemnation
proceeds or other assets held by the
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Trustee in special funds established pursuant to the Bond Documents or
otherwise.
(f) "Bonds" means the County of Delaware, Ohio
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project) to be issued pursuant to the Trust
Agreement.
(g) "Business Day" means any day of the year,
other than a Saturday or a Sunday, (a) on which banks located (i) in
the cities in which the principal corporate trust office of the
Trustee and the principal office of the Bank are located, and (ii) in
New York, New York, are not required or authorized by law to remain
closed, and (b) on which the New York Stock Exchange is not closed.
(h) "Code" means the Internal Revenue Code of
1954, as amended, and references to the Code and Sections of the Code
shall include relevant regulations and proposed regulations thereunder
and any successor provisions to such Sections, regulations or proposed
regulations.
(i) "Company Bonds" means Bonds (a) purchased by
Trustee or the Remarketing Agent (as defined in the Trust Agreement)
with moneys furnished by Company pursuant to Section 4.11 of the Loan
Agreement and (b) delivered to Bank or its nominee pursuant to Section
7(l) or 7(m) of the Bond Legislation as a result of the occurrence of
an Event of Default.
(j) "Conditions to Disbursement" means the
conditions set forth in Exhibit "C" hereto, either as now existing or
as it may from time to time be supple- mented, modified or amended.
(k) "Deeds of Trust" means the deeds of trust
covering the Properties required pursuant to Section 4.3(a) of this
Agreement, either as originally executed or as any of them may from
time to time be supplemented, modified or amended.
(l) "Designated Representative" means either the
"Authorized Company Representative" under the Loan Agreement or, if
Bank so requests, a different Person, authorized by Company, with the
approval of Bank, to deliver certificates, requests for disbursements
and other documents and material to Bank pursuant to this Agreement.
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<PAGE> 8
(m) "Disbursement" means each of the
disbursements by Trustee of Bond Proceeds pursuant to this Agreement
and the Bond Documents.
(n) "Documents" means, collectively, the Bond
Documents and the Loan Documents.
(o) "Drawing Bonds" means Bonds delivered or
deemed delivered to Bank or its nominee pursuant to the Trust
Agreement and Section 7 of the Bond Legislation as the result of a "C
Drawing," or a "C Drawing" and a "D Drawing," under the Letter of
Credit.
(p) "Event of Default" means each of those events
so designated in Article 11 of this Agreement.
(q) "Financing Statements" means the UCC-1
financing statements required pursuant to Section 4.3(c) of this
Agreement, either as originally executed or as they may from time to
time be supplemented, modified or amended.
(r) "Fiscal Year" means Company's fiscal year,
ending on March 31 of each calendar year.
(s) "Guarantor" means Charles King & Associates, a
California limited partnership.
(t) "Guaranty" means the guaranty required
pursuant to Section 4.2 of this Agreement, either as originally
executed or as it may from time to time be supplemented, modified or
amended.
(u) "Issuer" means the County of Delaware, Ohio.
(v) "Letter of Credit" means the letter of credit
to be issued by Bank pursuant to this Agreement, either as originally
executed or as it may from time to time be supplemented, modified or
amended.
(w) "Loan Documents" means, collectively, this
Agreement, the Notes and the Security Documents, in each case either
as originally executed or as the same may from time to time be
supplemented, modified or amended.
(x) "Notes" means the promissory note or notes
required pursuant to Section 4.1 of this Agree-
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<PAGE> 9
ment, either as originally executed or as from time to time
supplemented, modified or amended.
(y) "Original Purchaser" means Prudential-Bache
Securities Inc., a Delaware corporation.
(z) "Person" means any person or entity, whether
an individual, trustee, corporation, partnership, trust,
unincorporated organization or otherwise.
(aa) "Personal Property" means all of Guarantor's
right, title, interest in and to all furniture, furnishings, fixtures,
machinery, equipment, inventory and personal property of every kind
and nature, whether tangible or intangible, now or hereafter located
at, upon or about any of the Properties, or used or to be used in
connection with or relating to or arising with respect to any
Property.
(bb) "Pledge Agreement" means the pledge and
security agreement required pursuant to Section 4.4 of this Agreement,
either as originally executed or as it may from time to time be
supplemented, modified or amended.
(cc) "Project" means the construction and
operation of the industrial facility described in Exhibit "F" hereto
for the sterilization of packaged products using ionizing radiation,
as provided in the Loan Agreement.
(dd) "Project Costs" means all costs of any nature
whatsoever incurred by or on behalf of Company in connection with the
Project.
(ee) "Properties" means, collectively, the parcels
of real property described in Exhibit "D" attached hereto.
(ff) "Security Agreement" means the security
agreement covering the Personal Property required pursuant to Section
4.3(b) of this Agreement, either as originally executed or as it may
from time to time be supplemented, modified or amended.
(gg) "Security Documents" means, collectively, the
Deeds of Trust, the Security Agreement, the Financing Statements, the
Guaranty, the Pledge Agreement, and any other mortgage, deed of trust,
security agreement, financing statement, assignment or guaranty now,
hereto-
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<PAGE> 10
fore or hereafter executed to secure the Notes, the obligations of
Company to Bank under this Agreement, the obligations of Guarantor to
Bank under the Guaranty or the obligations of Company to Trustee under
the Loan Agreement and other Documents, in each case either as
originally executed or as the same may from time to time be
supplemented, modified or amended.
(hh) "Trustee" means Bank One Trust Company, N.A., a
national banking association, or its successors as trustee under the
Trust Agreement.
1.2 Use of Defined Terms. Any defined term used in the
plural shall refer to all members of the relevant class, and any defined term
used in the singular shall refer to any number of the members of the relevant
class.
1.3 Accounting Terms. All accounting terms not
specifically defined in this Agreement shall be construed in conformity with,
and all financial data required to be submitted by this Agreement shall be
prepared in conformity with, generally accepted accounting principles applied
on a consistent basis.
1.4 Exhibits. All Exhibits to this Agreement, either as
now existing or as the same may from time to time be supplemented, modified or
amended, are incorporated herein by this reference.
2. Bonds Company contemplates entry into the Bond Documents in
order to cause the issuance of the Bonds, so that the Bond Proceeds may be used
to finance the Project.
3. Letter of Credit. In order to enhance the market ability of
the Bonds, Company has requested Bank to issue an irrevocable letter of credit
in the form attached hereto as Exhibit "A" (such letter of credit and any
successor or substitute letter of credit issued pursuant to this Agreement
being herein individually and collectively referred to as the "Letter of
Credit") in an aggregate amount not exceeding $5,047,672.00, of which an amount
not exceeding $4,900,000.00 shall be available to pay the principal amount or
purchase price of the Bonds, an amount not exceeding $147,672.00 shall be
available in accordance with the terms of the Letter of Credit to pay for
interest accrued on the Bonds, all as more particularly provided in the Letter
of Credit. Bank is willing to issue the Letter of Credit on the terms and
conditions contained in this Agreement and the other Loan Documents.
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<PAGE> 11
4. Loan Documents.
4.1 Notes. The obligation of Company to make payment to
Bank of its obligations pursuant to this Agreement and the other Loan Documents
shall be evidenced by, and shall bear interest at the rates specified in, one
or more promissory notes of Company which shall be executed by Company and
delivered by Company to Bank in such form and content, and at such times, as
Bank may from time to time require by notice to Company. The promissory note
to be executed by Company and delivered pursuant to Section 5.1.1(a), below,
shall be in the form attached hereto as Exhibit "B". Such promissory note(s),
together with any and all other promissory notes required by Bank pursuant to
this Section 4.1 shall be modified or amended by Company from time to time as
required by Bank. Without limitation upon the generality of the foregoing, in
the event that the obligations of Company under this Agreement or any of the
other Loan Documents exceeds or may exceed the face amount of the promissory
note delivered pursuant to Section 5.1.1(a), below, Company shall execute and
deliver to Bank, at Bank's request, an additional note or notes in substitution
for, or in addition to, the promissory note delivered pursuant to Section
5.1.1(a), below. The interest rate under any such promissory notes or
amendments thereto shall be consistent with the interest rate in the promissory
note attached hereto as Exhibit "B". All of the promissory notes required
pursuant to this Section 4.1 are referred to collectively in this Agreement as
the "Notes."
4.2 Guaranty. In consideration of Bank's entry into this
Agreement and the other Loan Documents, and as security for the prompt payment
when due of all sums of principal and interest advanced by Bank pursuant to the
Letter of Credit as well as for payment of any other sums owing pursuant to
this Agreement, the Notes or any of the other Loan Documents, Company shall, at
its sole expense, deliver or cause to be delivered to Bank a guaranty (the
"Guaranty") executed by Guarantor, in such form and content as Bank shall in
its sole discretion require.
4.3 Security Documents. In consideration of Bank's entry
into this Agreement and the other Loan Documents, and as security for (1) each
and every obligation of Guarantor under the Guaranty, and (2) each and every
obligation of Company to Trustee under the Loan Agreement and the other
Documents, Company shall, at its sole expense, deliver or cause to be delivered
by Guarantor to the Bank, and record or cause to be recorded, if appropriate,
the
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<PAGE> 12
following documents, each of which shall be in such form and content, and
executed by such persons and/or entities, as Bank shall in its sole discretion
require, and all of which, along with the Guaranty, are collectively referred
to in this Agreement as the "Security Documents":
(a) A deed of trust covering each of the
Properties (collectively, the "Deeds of Trust").
(b) A security agreement granting to Bank and
Trustee a security interest in the Personal Property (the "Security
Agreement").
(c) Two financing statements covering the
Personal Property (the "Financing Statements").
4.4 Pledge Agreement. In consideration of Bank's entry
into this Agreement and the other Loan Documents, and as security for the
prompt payment when due of all sums of principal and interest advanced by Bank
pursuant to the Letter of Credit as well as for payment of any other sums owing
pursuant to this Agreement, the Notes or any of the other Loan Documents,
Company shall, at its sole expense, deliver or cause to be delivered to Bank a
pledge and security agreement (the "Pledge Agreement") executed by Company, in
such form and content as Bank shall in its sole discretion require, assigning
to Bank Company's right, title and interest to the Drawing Bonds and the
Company Bonds.
4.5 Other Documents and Actions. Company agrees to
execute, acknowledge and/or deliver or cause to be executed, acknowledged
and/or delivered to Bank such other instruments, agreements and other documents
(including without limitation such amendments to the Security Documents as may
be required by Bank in order to reflect amendments or supplements to this
Agreement or the Notes, as provided in Section 4.1, above), and to take such
actions, upon request by Bank, as Bank may reasonably request in order to carry
out the purposes of this Agreement and the other Loan Documents and the
transactions contemplated thereby and to protect and/or further the validity,
priority and/or enforceability of the Security Documents or subject to the
Security Documents any property, together with any renewals, additions,
substitutions, replacements or betterments thereto, intended by the terms of
this Agreement or the other Loan Documents to be covered by the Security
Documents.
4.6 Additional Security. Bank shall not acquire any
security for the obligations of Company, Guarantor or
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<PAGE> 13
Charles W. King, Jr. under this Agreement or the other Loan Documents, other
than the rights granted to Bank under the Pledge Agreement and the Guaranty as
of the date hereof unless Company shall have afforded to Trustee, for the
benefit of the holders of the Bonds, prior to or simultaneously with the taking
by Bank of such security, rights which shall, at the option of Bank, be either
senior to the rights of Bank or of equal priority with the rights of Bank in
connection with such security.
5. Conditions to Issuance and Disbursements.
5.1 Conditions to Issuance. The obligation of Bank to
issue the Letter of Credit is subject to the following conditions precedent:
5.1.1 Bank shall have received all of the
following, each of which shall be in form and substance satisfactory to Bank:
(a) the original promissory note to be delivered
pursuant to Section 4.1. above;
(b) the original Guaranty;
(c) the original Deeds of Trust;
(d) the original Security Agreement;
(e) the original Financing Statements;
(f) the original Pledge Agreement;
(g) copies of the articles and by-laws of Company
and any and all supplements and amendments thereto, all
certified to be true and correct by the Secretary of Company;
(h) an original of each of the opinions,
certificates, letters and other documents specified in,
Section 5(b) of the Bond Purchase Agreement, in each case
addressed to Bank;
(i) a written opinion of Company's counsel, in
form and substance satisfactory to Bank, covering such matters
relating to Company and the Loan Documents as may be required
by Bank;
(j) a copy of the partnership agreement of
Guarantor and a copy of the certificate of limited
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<PAGE> 14
partnership of Guarantor as recorded in San Mateo County,
California, and copies of any and all amendments to such
documents, all certified as true, complete and correct by
Charles W. King, Jr.;
(k) a written opinion of Guarantor's counsel, in
form and substance satisfactory to Bank, covering such matters
relating to Guarantor and the Loan Documents as may be required
by Bank;
(l) the certificate required pursuant to Section
7.2.1, below;
(m) a copy of the Bond Legislation, certified by
the Clerk of the Board of County Commissioners of Issuer (which
certificate shall state that the Bond Legislation is in full
force and effect on the date of initial authentication and
delivery of the Bonds to the Original Purchaser);
(n) an executed copy (or a duplicate thereof) of
the Trust Agreement and the Loan Agreement;
(o) the financial statements of Company and
Guarantor required to be furnished hereunder and under the
Guaranty, and the insurance policies required to be furnished
by the Guarantor under the Guaranty; and
(p) such other instruments, certificates,
opinions, consents and other documents as Bank may reasonably
require.
5.1.2 The Deeds of Trust shall have been duly
recorded.
5.1.3 Company shall, at its sole expense, have
delivered or caused to be delivered to Bank original ALTA form extended coverage
lender's policies of title insurance, or evidence of commitments therefor
satisfactory to Bank, in form and substance and issued by an insurer or insurers
satisfactory to Bank, together with such indorsements (including without
limitation CLTA Form 100 and 116 endorsements) and binders thereto as may from
time to time be required by Bank, naming Bank and Trustee, as their interests
appear, as insured, in an aggregate policy amount of not less than
$5,047,672.00, insuring the Deeds of Trust to be valid liens upon the
Properties, subordinate to no prior mortgages, deeds of trust or like
encumbrances other than the matters listed in Exhibit "E" attached hereto (the
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<PAGE> 15
"Permitted Encumbrances"), and showing the Properties to be owned by Guarantor
in fee simple.
5.1.4 The Financing Statements shall have been
filed with the California Secretary of State, and Bank shall have received a
certificate of the California Secretary of State, in form and substance
satisfactory to Bank, showing the Financing Statements to be subject to no
prior filings other than filings perfecting rights of other lenders with
respect to security interests ("Permitted Liens") granted by Company in
conjunction with any Permitted Encumbrance.
5.1.5 The Bonds shall have been simultaneously
duly executed and delivered, all of the Bonds shall have been sold, and the
full authorized face amount of the Bonds (less such fees to the Original
Purchaser as are paid therefrom at the time of sale, as provided in the Bond
Documents) shall have been received by Trustee, as required pursuant to the
Bond Documents.
5.2 Conditions to Disbursements. The conditions described
in Exhibit "C" attached here all be conditions precedent to each Disbursement.
Following the initial purchase of the Bonds by the Original Purchaser, Bank
shall provide Trustee with a standing written approval of all Disbursements
thereafter requested by the Authorized Company Representative (as defined in
the Loan Agreement); provided, however, that such standing approval shall be
revoked in the event that either Bank or Trustee learns that any Condition to
Disbursement was not on the date of this Agreement, or has since ceased to be,
fulfilled. Following any such revocation, Bank's approval shall be required at
the time of each Disbursement unless and until Bank, in its sole discretion,
chooses to provide Trustee with another revocable standing approval.
6. Reimbursement and Other Payments; Extension.
6.1 Reimbursement. Company hereby agrees to pay to Bank
at the times indicated, in cash or by such other means as may be satisfactory
to Bank in its sole discretion, the following:
(a) on the date of any disbursement of funds by
Bank under the Letter of Credit, the entire amount of any and all
funds disbursed by Bank under the Letter of Credit;
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(b) upon demand, all reasonable amounts expended,
advanced or incurred by Bank (i) in connection with the negotiation,
preparation, execution, delivery, issuance, administration and
performance of the Letter of Credit, this Agreement or any other Loan
Document, or any matter related thereto; (ii) to satisfy any
obligation of Company or Guarantor under this Agreement or any of the
Loan Documents; and (iii) to collect the Notes and to enforce the
rights of the Bank under this Agreement or any other Loan Document
(including without limitation any costs incurred by Bank in connection
with any insolvency or bankruptcy proceeding affecting Company or
Guarantor or any other Person involved in the Project), which amounts
will include all court costs, appraisal fees, reasonable attorneys'
fees, fees of auditors and accountants and investigation expenses
reasonably incurred by Bank in connection with any such matters;
(c) upon demand, all other amounts owing to Bank
by Company under this Agreement or any of the other Loan Documents,
together with interest thereon from the date such amounts become due
at the interest rate provided in the Notes.
All sums owing pursuant to this Section 6.1 shall be evidenced by, and shall be
payable with interest as provided in, the Notes. Any disbursement of funds by
Bank under the Letter of Credit is hereby deemed a demand for payment of a like
amount under the Notes.
6.2 Fees. Company hereby agrees to pay to Bank, in cash
or by such other means as may be satisfactory to Bank in its sole discretion,
amounts as follows:
(a) (i) on or before the date on which the Bonds
are sold to the Original Purchaser pursuant to the Bond Purchase
Agreement, as a loan administration fee for the first year of the term
of the Letter of Credit, in advance, an amount equal to one percent
(1%) of the undrawn amount initially available to be drawn under the
Letter of Credit; and (ii) for each subsequent year that the Letter of
Credit remains in effect until the expiration of its three (3) year
term, Company will pay to Bank, in advance, on or before the
anniversary of issuance of the Letter of Credit, a loan administration
fee in an amount equal to one percent (1%) of the undrawn amount
available to be drawn under the Letter of Credit as of the last day of
the pre-
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<PAGE> 17
ceding year of the term of the Letter of Credit (which amount will
take into account principal reductions of the Bonds).
In no event shall Bank have any obligation to make reimbursement or to
otherwise account to Company in respect of fees paid by Company as a result of
any reduction in the undrawn amount under the Letter of Credit.
6.3 Increased Costs Due to Change in Law. If any change
in any law or regulation or in the interpretation thereof by any court or
administrative agency shall either (i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against letters of credit
issued by Bank, or (ii) impose on Bank any other condition regarding this
Agreement or the Letter of Credit (other than changes in the rates of income
taxation generally applicable to Bank), and the result of any such event shall
be to increase the cost to Bank of issuing or maintaining the Letter of Credit
(which increase in cost shall be determined by Bank's reasonable allocation of
the aggregate of such cost increases resulting from such events), and such
requirement or cost shall remain in effect for more than one hundred eighty
(180) days after notice thereof from Bank to Company, then (a) Bank shall so
notify Company, and (b) upon receipt of such notice from Bank, Company shall
promptly pay to Bank, from time to time as specified by Bank, additional
amounts which shall be sufficient to compensate Bank for such increased costs
as accrue after the expiration of such one hundred eighty (180) day period,
together with interest on each such amount from the date of such notice until
payment in full thereof at the rate contained in the Notes. A certificate as
to such increased cost incurred by Bank as a result of any such event,
submitted by Bank to Company, shall be conclusive as to the amount thereof.
6.4 Obligations Absolute. The obligations of Company
under this Agreement and the Notes shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and the Notes, under all circumstances whatsoever, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of the
Letter of Credit, or any of the Loan Documents or the Bond Documents
or any other agreement or instrument related thereto;
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<PAGE> 18
(b) any amendment or waiver of or any consent to
departure from the terms of the Letter of Credit or any of the Loan
Documents or the Bond Documents or any other agreement or instrument
related thereto;
(c) the existence of any claim, set-off, defense
or other right which the Company, Guarantor or Issuer may have at any
time against Trustee, any beneficiary or any transferee of the Letter
of Credit (or any Person for whom Trustee, any such beneficiary or any
such transferee may be acting), Bank or any other Person, whether in
connection with this Agreement, the Letter of Credit, any of the other
Loan Documents, the Bonds or any other agreement or instrument related
thereto, or in connection with the Project or any unrelated
transaction;
(d) any statement, draft or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect, or any statement therein being
untrue or inaccurate in any respect whatsoever;
(e) the surrender or impairment of any security
for the performance or observance of the terms of this Agreement, any
of the other Loan Documents or any other agreement related thereto; or
(f) any other circumstance, happening or omission
whatsoever, whether or not similar to any of the foregoing.
6.5 Extension of Letter of Credit. The term of the Letter
of Credit may be extended if, following Company's request, Bank and Company
reach agreement on the terms of such extension. Bank shall not be obligated to
enter into any such extension or to otherwise extend, modify or supplement the
Letter of Credit or any of the other Loan Documents.
7. Representations and Warranties by Company. As a material
inducement to Bank's entry into this Agreement and the transactions
contemplated hereby, Company represents and warrants to Bank that:
7.1 Formation of Company. Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, (b) has all requisite power and authority to conduct its
business and to own and lease its properties, and (c) is duly qualified to do
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<PAGE> 19
business in, and is in good standing in, every jurisdiction in which the nature
of business conducted by it makes such qualification necessary or where failure
to so qualify would have a material adverse effect on its business or financial
condition or its performance of its obligations under the Loan Documents or the
Bond Documents.
7.2 Execution, Delivery and Performance of Loan Documents
and Bond Documents.
7.2.1 Company and Guarantor have all requisite
power and authority to execute and deliver, and to perform all of their
obligations under, the Loan Documents and the Bond Documents, and shall execute
and deliver to Bank, prior to the issuance of the Letter of Credit and as a
condition thereto, a certificate evidencing the due authorization and consent
of the board of directors of Company and the partners in Guarantor to the
execution of the Loan Documents and Bond Documents and the entry by Company and
Guarantor into the transaction contemplated thereby.
7.2.2 The execution and delivery by Company and
Guarantor of, and the performance by Company and Guarantor of all of their
obligations under, each Loan Document and Bond Document have been duly
authorized by all necessary action and do not and will not:
(a) require any consent or approval not
heretofore obtained of any Person having any interest in Company or
Guarantor;
(b) violate any provision of, or require any
consent under the articles or by-laws of Company or the partnership
agreement or certificate of partnership of Guarantor;
(c) result in or require the creation or
imposition of any mortgage, deed of trust, pledge, lien, security
interest, claim, charge, right of others, or other encumbrance of any
nature (other than as contemplated under the Loan Documents and the
Bond Documents) upon or with respect to any property now owned or
leased or hereafter acquired by Company or Guarantor;
(d) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to Company or
Guarantor; or
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<PAGE> 20
(e) result in a breach of or constitute a default
under, or cause or permit the acceleration of any material obligation
owed under, any indenture or loan or credit agreement or any other
agreement, lease, or instrument to which Company or Guarantor is a
party or by which Company or Guarantor or any of their property is
bound or affected.
7.2.3 At the time of execution of this Agreement,
neither Company nor Guarantor is in default in any respect that is materially
adverse to the interests of the holders of the Loan Documents or the Bond
Documents or that would have any material adverse effect on the financial
condition of Company or Guarantor or the conduct of their business under any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination, award, indenture, agreement, lease or instrument described in
Section 7.2.2(d) or Section 7.2.2(e), above,
7.2.4 No authorization, consent, approval, order,
license, exemption from, or filing or registration or qualification with, any
court or governmental department, public body, authority, commission, board,
bureau, agency, or instrumentality, is or will be required to authorize, or is
otherwise required (except for such authorizations, consents, approvals,
orders, licenses, exemptions or filings as may be required under the state
securities or "Blue Sky" laws in connection with the sale of the Bonds by the
Original Purchaser under the Bond Purchase Agreement, which shall be obtained
to the extent necessary by the Original Purchaser) in connection with the
following:
(a) the execution and delivery by Company and
Guarantor of, and the performance by Company and Guarantor of all of
their respective obligations under, the Loan Documents and the Bond
Documents, or
(b) the creation of the liens, security
interests, or other charges or encumbrances described in the Loan
Documents and the Bond Documents.
7.2.5 Each of the Loan Documents and the Bond
Documents, when executed and delivered, will constitute the legal, valid, and
binding obligations of Company and Guarantor (to the extent each is a party
thereto or obligated thereunder), enforceable against Company and Guarantor in
accordance with its terms.
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7.3 Financial Statements. Company and Guarantor have
each furnished to Bank their respective financial statements, and such
statements and any other financial statements or reports submitted by Company
or Guarantor to Bank or to the Original Purchaser accurately reflect the
financial position of Company and Guarantor as of the date thereof.
7.4 No Material Adverse Change. There has been no
material adverse change in the condition, financial or otherwise, of Company or
Guarantor since the dates of the financial statements described in Section 7.3,
above.
7.5 Tax Liability. Company and Guarantor have each filed
all tax returns (federal, state and local) required to be filed and has paid
all taxes shown thereon to be due and all property taxes due, including
interest and penalties, if any; provided, however, that Company and Guarantor
shall not be required to pay and discharge any such tax so long as the legality
thereof shall be promptly and actively contested in good faith and by
appropriate proceedings. Company and Guarantor have each established and are
maintaining adequate reserves for tax liabilities, if any (including any tax
liabilities contested pursuant to this Section 7.5).
7.6 Compliance with Laws. Company and Guarantor are and
shall remain in compliance in all material respects with all laws, regulations
and requirements applicable to their respective businesses and have each
obtained all authorizations, consents, approvals, orders, licenses, exemptions
from, and have each accomplished all filings or registrations or qualifications
with, any court or governmental department, public body, authority, commission,
board, bureau, agency or instrumentality, failure to obtain or comply with
which would have a material and adverse effect upon their respective
businesses.
7.7 Litigation. There are no actions, suits or
proceedings pending or threatened against or affecting Company or Guarantor or
the property of Company or Guarantor before any court or governmental
department, public body, authority, commission, board, bureau, agency or
instrumentality, except as expressly disclosed to Bank in writing by Company or
Guarantor prior to the execution of this Agreement.
7.8 Official Statement. To the best of Company's
knowledge, neither the Official Statement nor the Preliminary Official
Statement provided in connection with the Bonds,
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<PAGE> 22
nor any certificate or statement or any data furnished by Company to Bank or to
Trustee or any other person or entity in connection with the negotiation of
this Agreement or any of the other Loan Documents or the Bond Documents or the
transactions contemplated thereby (other than statements contained in the
Preliminary Official Statement which were revised or corrected in the Official
Statement) contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in the light
of the circumstances under which they were made, not misleading.
7.9 Conditions to Disbursement. All of the Conditions to
Disbursement have been fulfilled, except as expressly disclosed to Bank in
writing by Company prior to the execution of this Agreement.
8. Representations and Warranties by Bank. As a material
inducement to Company's entry into this Agreement and the transactions
contemplated hereby, Bank represents and warrants to Company that:
8.1 Formation of Bank. Bank is a national banking
association, duly organized, validly existing and in good standing; Bank has
all requisite corporate power to carry on its business as now being conducted,
and has all requisite corporate power and authority to enter into this
Agreement, issue the Letter of Credit, and perform its obligations hereunder
and thereunder.
8.2 Authorization. The execution, delivery and
performance of this Agreement and the issuance of the Letter of Credit by the
Bank have been duly authorized by all necessary corporate action on the part of
Bank.
8.3 No Conflict. The execution, delivery and performance
of this Agreement and the issuance of the Letter of Credit by Bank do not
conflict with or violate any provision of the articles of incorporation or
by-laws of Bank and do not, to the best of Bank's knowledge, conflict with,
violate, result in a breach of, or cause a default under (i) any provision of
federal, state or local law or regulation relating to the business or assets of
Bank, (ii) any provision of any consent, arbitration award, judgment or decree
by which Bank is bound, or (iii) any provision of any agreement or instrument
to which Bank is a party or by which Bank or its assets are bound or
restricted.
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<PAGE> 23
8.4 Actions and Proceedings. There is no pending action
or proceeding before any court, governmental agency or arbitrator against Bank
and, to the best of Bank's knowledge, there is no threatened action or
proceeding against Bank before any court, governmental agency or arbitrator
which would materially and adversely affect the ability of the Bank to perform
its obligations under this Agreement or the Letter of Credit, subject to
applicable laws, principles and judicial decisions.
9. Affirmative Covenants. For so long as any obligation of
Company in connection with this Agreement or any of the other Loan Documents
remains outstanding, Company shall, unless Bank otherwise consents in writing:
9.1 Governmental Approvals. Deliver to Bank, from time
to time at Bank's request, evidence in form and substance satisfactory to Bank
that Company has complied with all applicable laws, ordinances, regulations and
other requirements relating thereto.
9.2 Continued Existence. Maintain its existence, and
continue to be a corporation in good standing in the State of California. In
connection with the covenants given pursuant to this Section 9.2, Company
agrees that it will not dissolve or otherwise dispose of all or substantially
all of its assets.
9.3 Books and Records. Maintain full and complete books
of account and other records reflecting the results of its operations (in
conjunction with any other ventures as well as specifically with respect to the
Project), including without limitation all contributions of equity investment
capital, and provide to Bank, promptly after request by Bank therefor, such
financial statements and other information pertaining to Company, and the
assets and operations of Company, as Bank may from time to time request.
9.4 Annual Operating Statements. Deliver to Bank the
following:
(a) Promptly and in any event within ninety
(90)days after the end of each Fiscal Year, balance sheets and
statements of income for Company's operations for such Fiscal Year,
accompanied with all supporting schedules and certificates of
Company's chief financial officer that the statements are true and
correct.
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<PAGE> 24
(b) Upon request, to copies of all such regular
or periodic financial statements or financial reports as Company shall
send to its shareholder(s).
(c) Upon request, copies of all such regular or
periodic reports which are available for public inspection which
Company may be required to file with any federal or state department,
bureau, commission or agency, including without limitation tax
returns.
(d) Promptly and in any event within one hundred
twenty (120) days after the end of each Fiscal Year, a certification
of a Designated Representative that no Event of Default has occurred
and Company is in compliance with all covenants and agreements made by
Company and contained in this Agreement or any of the Loan Documents.
9.5 Notice of Certain Events. Promptly notify Bank if
(a) Company learns of the occurrence of any event which constitutes, or will,
with the passage of time or the giving of notice or both, constitute an Event
of Default or a default under this Agreement or any of the other Loan Documents
or any of the Bond Documents, together with a detailed statement by a
responsible officer of Company specifying the nature thereof and what action
Company is taking or proposes to take with respect thereto, or (b) Company
receives any notice from, or the taking of any other action by, the holder of
any promissory note, debenture or other evidence of indebtedness of Company or
of any security (as defined in the Securities Act of 1933, as amended) of
Company with respect to a claimed default, together with a detailed statement
by a responsible officer of Company specifying the notice given or other action
taken by such holder and the nature of the claimed default and what action
Company is taking or proposes to take with respect thereto, or (c) Company
learns of the existence of any legal, judicial or regulatory proceedings
affecting Company or any property of Company in which the amount involved is
material and is not covered by insurance or which, if adversely determined,
would cause a material adverse change in the financial condition of Company, or
(d) there shall occur or exist any other event or condition causing a material
adverse change in the financial condition of Company.
9.6 Opinions. Deliver to Bank, concurrently with the
delivery thereof to Trustee, a copy of each opinion of counsel required
pursuant to the Bond Documents, in each case addressed to Bank.
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<PAGE> 25
9.7 Defaults of Others. Use its best efforts to cure or
cause to be cured all defaults of Trustee or Issuer under the Bond Documents,
if economically practical and/or required in order to avoid an event of default
under the Bonds.
9.8 Tax Appeals. Bring, maintain and diligently
prosecute any and all actions, appeals and proceedings which are available to
Company in order to challenge, reverse or set aside a "determination of
taxability," as that term is defined in the Bond Documents.
9.9 Surplus Construction Funds. Subsections 3.3(k)(iii)
and (iv) of the Loan Agreement notwithstanding, use moneys in the Construction
Fund (as defined in the Loan Agreement) remaining after the Project is complete
and fully paid for solely for the purposes described in Subsections 3.3(k)(i)
and (ii) of the Loan Agreement and/or for the purchase of Cobalt- 60 and
similar raw materials for use in the operation of the Project.
9.10 Notice re Disbursement Conditions. Promptly notify
Bank if Company learns that any Condition to Disbursement was not on the date
of this Agreement, or has since ceased to be, fulfilled.
10. Negative Covenants. For so long as any obligation of Company
in connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall not, unless Bank otherwise consents in writing:
10.1 Transfers of Project or Obligations. Assign or
delegate any obligations under the Bonds, the Letter of Credit, this Agreement
or any of the other Loan Documents or Bond Documents, or sell, assign, convey,
lease as a whole or otherwise transfer the Project or any interest therein,
without the express prior written consent of Bank, which consent may be granted
or withheld in its sole discretion. In connection with the restrictions
contained in this Section 10.1, Company acknowledges that Bank has entered into
the transaction contemplated by this Agreement in reliance upon the financial
strength, creditworthiness, reputation and management expertise of Company and
would not have entered into such transaction but for such reliance.
10.2 Liens on Project. Create or cause or suffer to
become effective any mortgage, deed of trust or like lien or encumbrance
affecting the Project or any portion of the same, except for the lien of
non-delinquent real property
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<PAGE> 26
taxes and those matters listed in Exhibit "G" hereto. In connection with the
restrictions contained in this Section 10.2 and in Section 10.3, below, Company
acknowledges that liens and encumbrances of the Project will, in Bank's view,
impair Company's financial strength and creditworthiness.
10.3 Liens on Personal Property. Install in, or otherwise
use in connection with, the Project any personal property under any security
agreements or similar agreements however denominated whereby the right is
reserved or accrues to anyone to remove or repossess any such items or whereby
any Person other than Bank or Trustee reserves or acquires a lien upon such
items.
11. Events of Default and Remedies Upon Default.
11.1 Events of Default. The occurrence of any one or more
of the following, whatever the reason therefor, shall constitute an Event of
Default hereunder:
(a) Company shall fail to pay any amount of
principal or interest owing under this Agreement, the Notes or any of
the Loan Documents, together with interest thereon from the due date
until payment at the rate provided in the Notes, within ten (10) days
after the date on which payment is due; or
(b) Either Company or Guarantor shall fail to
perform or observe any term, covenant or agreement contained in any of
the Loan Documents on its part to be performed or observed the breach
of which can be cured by the payment of money, within ten (10) days
after notice; or
(c) Either Company or Guarantor shall fail to
perform or observe any term, covenant or agreement contained in any of
the Loan Documents on its part to be performed or observed, other than
terms, covenants or agreements the breach of which can be cured by the
payment of money, within thirty (30) days after notice (provided,
however, that if cure cannot reasonably be effected within such thirty
(30) day period there shall be no Event of Default under this Section
11.1(c) so long as Company or Guarantor commences cure within such
thirty (30) day period and thereafter diligently prosecutes such cure
to completion); or
(d) Trustee declares any default in connection
with the Bonds or the Bond Documents; or
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<PAGE> 27
(e) Company shall fail to perform or observe any
term, covenant or agreement contained in any of the Bond Documents on
its part to be performed or observed; or
(f) Any representation or warranty in any of the
Loan Documents or Bond Documents or in any certificate, agreement,
instrument or other document made or delivered pursuant to or in
connection with any of the Loan Documents or Bond Documents proves to
have been incorrect in any material respect when made; or
(g) All or a substantial portion of any Property
is condemned, seized or appropriated by a governmental authority; or
(h) The dissolution or liquidation of Company or
Guarantor or failure by Company or Guarantor promptly to lift any
execution, garnishment or attachment of such consequence as will
materially impair its ability to make any payments under the Loan
Documents, or the entry of an order for relief by a court of competent
jurisdiction in any proceeding for the liquidation or reorganization
of Company or Guarantor, or the filing of a petition by or against
Company or Guarantor under the provisions of any bankruptcy act or
under any similar act which may be hereafter enacted, or an assignment
by Company or Guarantor for the benefit of its creditors, or the entry
by Company or Guarantor into an agreement of composition with its
creditors or the appointment of a receiver, trustee, custodian,
liquidator or similar officer for Company or Guarantor; or
(i) Cessation of ownership or operation by
Guarantor of any Property (except as a result of damage, destruction
or condemnation of the Property, if Guarantor thereafter complies with
the provisions of the Loan Documents pertaining thereto) without the
prior approval of Bank required under Section 11.3 of the Guaranty.
11.2 Remedies Upon Default. Upon the occurrence of any
Event of Default, Bank may, at its option, do any or all of the following:
(a) Declare the principal of all amounts owing
under the Notes, this Agreement and the other Loan Documents
(including all obligations secured by the Security Documents) and all
other indebtedness of
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<PAGE> 28
Company to Bank, together with interest thereon, to be forthwith due
and payable, regardless of any other specified maturity or due date,
without notice of default, presentment or demand for payment, protest
or notice of nonpayment or dishonor, or other notices or demands of
any kind or character, and without the necessity of prior recourse to
any security;
(b) Implement any remedies available to Bank
under or in connection with the Bond Documents;
(c) Terminate its consent to the disbursement or
release of the Bond Proceeds;
(d) If the Event of Default may be cured by Bank
by taking actions or making payments of money, Bank shall have the
right (but not the obligation) to take such actions (including without
limitation the retention of attorneys and the commencement or
prosecution of actions on its own behalf or on behalf of Company),
make such payments and pay for the costs of such actions (including
without limitation attorneys' fees and court costs) from its own
funds; provided, that the taking of such actions at Bank's expense or
the making of such payments by Bank out of Bank's own funds shall not
be deemed to cure such Event of Default, and the same shall not be so
cured unless and until Company shall have reimbursed Bank for such
payment, together with interest at the rate provided for in the Notes,
from the date of such payment until the date of reimbursement. If
Bank advances its own funds for such purposes, such funds shall be
considered advances under the Notes and shall be secured by the
Security Documents, notwithstanding that such advances may cause the
total amount advanced hereunder to exceed the face amount of the Notes
or the amount committed to be advanced pursuant to this Agreement, and
Company shall immediately upon demand reimburse Bank therefor with
interest at the rate provided for in the Notes, from the date of such
advance until the date of reimbursement; and
(e) Exercise any and all of its rights under the
Loan Documents or the Bond Documents or as provided by law including,
without limitation, foreclosing on any security, and exercise any
other rights with respect to any security, whether under the Security
Documents or any other agreement or as provided by law, all in such
order and in such manner as Bank in its sole discretion may determine.
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<PAGE> 29
11.3 Cumulative Remedies; No Waiver. All remedies of Bank
provided for herein are cumulative and shall be in addition to any and all
other rights and remedies provided in the Letter of Credit, the Notes, the
Security Documents, the Bond Documents or any of the Loan Documents, or
provided by law from time to time; provided, however, that Bank hereby agrees
to waive, at any time after the commencement of a proceeding by or against
Company, Guarantor or Charles W. King, Jr. in bankruptcy or reorganization, its
right to set off any and all deposits (general or special) at any time held and
other indebtedness at any time owing by Bank to or for the credit or the
account of Company, Guarantor or Charles W. King, Jr., as applicable, against
any and all of the obligations of Company, Guarantor or Charles W. King, Jr.,
as applicable, now or hereafter existing in respect of the obligations of
Company, Guarantor or Charles W. King, Jr., as applicable, set forth herein or
in any of the other Loan Documents. The exercise of any right or remedy by
Bank hereunder shall not in any way constitute a cure or waiver of default
hereunder or under the Letter of Credit, the Notes, the Security Documents, the
Bond Documents or any of the Loan Documents, nor invalidate any notice of
default or any act done pursuant to any such notice, nor prejudice Bank in the
exercise of any rights hereunder or under the Letter of Credit, the Notes, the
Security Documents, the Bond Documents or the Loan Documents, unless in the
exercise of said rights, Bank and Trustee realize all amounts owed to either
under the Letter of Credit, this Agreement, the Notes, the Security Documents,
the Bond Documents and the Loan Documents and all Events of Default are cured.
No waiver by Bank of any default or breach by Company or Guarantor hereunder
shall be implied from any omission by Bank to take action on account of such
default if such default persists or is repeated, and no express waiver shall
affect any default other than the default expressly made the subject of the
waiver. Any such express waiver shall be operative only for the time and to
the extent therein stated. Any waiver of any covenant, term or condition
contained herein shall not be construed as a waiver of any subsequent breach of
the same covenant, term or condition. The consent or approval by Bank to or of
any act by Company or Guarantor requiring further consent or approval shall not
be deemed to waive or render unnecessary consent or approval to or of any
subsequent act,
12. Miscellaneous.
12.1 Actions. Bank shall have the right to commence,
appear in, and defend any action or proceeding pur-
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<PAGE> 30
porting to affect the rights or duties of Bank, Company or Guarantor hereunder
or under the Guaranty or the payment of any funds hereunder or under the
Guaranty, and in connection therewith Bank may pay necessary expenses, employ
counsel and pay reasonable attorneys' fees. Company agrees to pay to Bank, on
demand, all costs and expenses incurred by Bank in connection therewith,
including without limitation reasonable attorneys' fees, together with interest
from the date of expenditure at the rate provided in the Notes. In the event
that either Bank or Company shall bring an action against the other to
interpret or enforce the terms or provisions of the Letter of Credit, the
Notes, this Agreement or any of the other Loan Documents, the prevailing party
in such action shall be entitled to recover its attorneys' fees and costs
(whether or not taxable) as awarded by a court of competent jurisdiction,
whether or not such action is prosecuted to final judgment.
12.2 Nonliability of Bank. Company acknowledges and
agrees that:
(a) the relationship between Company and Bank is,
and shall at all times remain, solely that of borrower and lender, and
Bank neither undertakes nor assumes any responsibility or duty to
Company to select, review, inspect, supervise, pass judgment upon or
inform Company of any matter in connection with the Project, including
without limitation matters relating to the adequacy or legal
sufficiency of any of the documents, agreements or arrangements
pertaining to the Bonds, the Bond Documents or the rights or
obligations of any Person in connection therewith; and Company shall
rely entirely upon its own judgment with respect to such matters, and
any review, inspection, supervision, exercise of judgment or
information supplied to Company by Bank in connection with such
matters is for the protection of Bank only and neither Company nor any
other Person is entitled to rely thereon;
(b) Bank owes no duty of care to protect Company
against negligent, faulty, inadequate or defective building or
construction;
(c) Bank shall not be responsible or liable to
Company for any loss, damage, liability or claim of any kind relating
to injury or death to persons or damage to property or negligent,
faulty, inadequate or defective building or construction and Company
hereby
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<PAGE> 31
indemnities and holds Bank harmless from any such loss, damage,
liability or claim.
(d) Bank shall not be responsible or liable to
Company for use which may be made of the Letter of Credit or for any
acts or omissions of Trustee and any beneficiary or transferee in
connection therewith;
(e) Bank shall not be responsible or liable to
Company for the validity, sufficiency or genuineness of documents
(except as to Bank's signatures thereon), or of any endorsements
thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent, or forged
(except to the extent Bank is grossly negligent in accepting or
relying upon such documents);
(f) Bank shall not be responsible or liable to
Company as a result of any circumstances in any way related to the
making or failure to make payment under the Letter of Credit, other
than as a result of the gross negligence or willful misconduct of
Bank.
12.3 No Representations by Bank. By accepting or
approving anything required to be observed, performed or fulfilled, or to be
given to Bank pursuant to this Agreement or any of the other Loan Documents or
Bond Documents, including any certificate, statement of profit and loss or
other financial statement, survey, appraisal or insurance policy, Bank shall
not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation to anyone with respect thereto by
Bank. Bank may accept documents in connection with the Letter of Credit or any
of the other Loan Documents or Bond Documents which appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
12.4 No Third Parties Benefited. This Agreement is made
for the purpose of defining and setting forth certain obligations, rights and
duties of Company and Bank in connection with the Letter of Credit. It shall
be deemed a supplement to the Notes and the Security Documents. It is made for
the sole protection of Company, Bank, and Bank's successors and assigns. No
other Person shall have any rights of any nature hereunder or by reason hereof,
except to the extent that Trustee is expressly granted rights hereunder.
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<PAGE> 32
12.5 Indemnity by Company. Company hereby indemnifies and
holds harmless Bank and its directors, officers, agents and employees
(collectively the "indemnities") from and against:
(a) any and all claims, demands, actions or
causes of action that are asserted against any indemnitee by any
Person if the claim, demand, action or cause of action directly or
indirectly relates to a claim, demand, action or cause of action that
the Person has or asserts against Company in connection with the
issuance of the Letter of Credit, the Bonds, any of the Bond
Documents, or the transaction to which such documents pertain;
(b) any and all claims, demands, actions or
causes of action that are asserted against any indemite by any Person
and arise from or in connection with (i) any statement or omission,
actual or alleged, in the Bond Documents, or (ii) any breach or
default, actual or alleged, of the representations, warranties,
covenants, conditions or agreements contained in this Agreement or any
of the other Loan Documents or in any of the Bond Documents; and
(c) any and all liabilities, losses, costs or
expenses (including court costs and attorneys' fees) that any
indemnitee suffers or incurs as a result of the assertion of any
claim, demand, action or cause of action specified in Section 12.5(a)
or Section 12.5(b), above.
The indemnity contained in this Section 12.5 shall not extend to any claims,
demands, actions, causes of action, liabilities, losses, costs or expenses
which result solely from the gross negligence or willful misconduct of Bank.
12.6 Commissions. Company hereby indemnities and holds
Bank harmless any responsibility, cost and/or liability, including any
attorneys' fees incurred, in connecm tion with any claim by any Person for the
payment of any commission, charge or brokerage fee in connection with the Bonds
or any of the other transactions contemplated in con- nection with this
Agreement.
12.7 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of Company, Bank and their respective successors and
assigns, subject to the provisions of Section 10.1. above.
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<PAGE> 33
12.8 Execution in Counterparts. This Agreement and any other Loan
Document except the Notes may be executed in any number of counterparts and any
party hereto or thereto may execute any counterpart, each of which when executed
and delivered will be deemed to be an original and all of which counterparts of
this Agreement or any other Loan Document, as the case may be, taken together
will be deemed to be but one and the same instrument. The execution of this
Agreement or any other Loan Document by any party hereto or thereto will not
become effective until counterparts hereof or thereof, as the case may be, have
been executed by all the parties hereto or thereto.
12.9 Prior Agreements; Amendments; Consents. This Agreement,
together with the other Documents, contains the entire agreement between Bank
and Company with respect to the Letter of Credit, and all prior negotiations,
understandings and agreements with respect to the Letter of Credit are
superseded by this Agreement and the other Documents. No amendment,
modification, supplement, termination or waiver of any provision of this
Agreement or any of the other Loan Documents, and no consent to any departure
by Company therefrom, may in any event be effective unless in writing signed by
Bank, and then only in the specific instance and for the specific purpose
given.
12.10 Survival of Representations and Warranties. All
representations and warranties of Company contained herein or in any other Loan
Document (qualified in each case by the facts and circumstances surrounding
each such document at the time such document was executed) will survive the
delivery of the Letter of Credit and the execution and delivery of the Notes,
and are material and have been and will be relied upon by Bank, notwithstanding
any investigation made by Bank or on behalf of Bank. For the purpose of the
foregoing, all statements contained in any certificate, agreement or other
writing delivered by or on behalf of Company or Guarantor pursuant hereto or
pursuant to any other Loan Document or in connection with the transactions
contemplated hereby or thereby shall be deemed to be representations and
warranties of Company contained herein or in the other Loan Documents, as the
case may be.
12.11 Notices. All notices, requests, demands, directions and other
communications provided for in this Agreement and under any of the other Loan
Documents must be in writing and must be mailed, telegraphed, delivered or sent
by Telex or cable to the appropriate party at its address as follows:
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<PAGE> 34
If to Company:
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
Attention: Charles W. King, Jr.
with a copy to:
Gerald Wright, Esq.
General Counsel
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4. Suite 245
Menlo Park, California 94025
If to Bank:
Wells Fargo Bank, N.A,
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: George Huxtable,
Vice President
with a copy to:
Sheppard, Mullin, Richter & Hampton
333 South Hope Street
48th Floor
Los Angeles, California 90071
Attention: Robert E. Williams
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 12.11. Any
notice, request, demand, direction or other communication given by telegram,
Telex or cable must be confirmed within 48 hours by letter mailed or delivered
to the appropriate party at its respective address. If any notice, request,
demand, direction or other communication is given by mail it will be effective
upon the earlier of (a) 96 hours after deposit in the U.S. Mail, certified or
registered mail, return receipt requested postage prepaid or (b) actual
receipt, as indicated by the return receipt; if given by telegraph or cable,
when delivered to the telegraph company with charges prepaid; if given by
Telex, when sent; or if given by personal delivery, when delivered.
12.12 Further Assurances. Company shall, at its expense and without
expense to Bank, do, execute and deliver
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<PAGE> 35
such further acts and documents as Bank from time to time requires for the
purpose of assuring and confirming unto Bank the rights hereby created or
intended now or hereafter so to be, or for carrying out the intention or
facilitating the performance of the terms of any Loan Document, or for assuring
the validity of any security interest or lien under any Security Document.
12.13 Governing Law. All of the Loan Documents shall be governed
by, and construed and enforced in accordance with, the laws of the State of
California.
12.14 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid shall be
inoperative, unenforceable or invalid without affecting the remaining
provisions, and to this end the provisions of all Loan Documents are declared
to be severable.
12.15 Inconsistency With Security Documents. In the event that any
of the provisions of the Security Documents are inconsistent with the provisions
of this Agreement, the provisions of this Agreement shall prevail.
12.16 Headings. Article and section headings in this Agreement are
included for convenience of reference only and are not part of this Agreement
for any other purpose,
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<PAGE> 36
12.17 Time of the Essence. Time is of the essence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
"Company":
RADIATION STERILIZERS, INCORPORATED
a California corporation
By /s/ Allan Chin
-------------------------------
Its President
By /s/ Charles W. King Jr.
-------------------------------
Its Secretary
"Bank":
WELLS FARGO BANK, N.A.,
a national banking association
By [SIG]
-------------------------------
[SIG]
-------------------------------
Printed/Name and Title
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<PAGE> 37
EXHIBIT "A"
LETTER OF CREDIT
Irrevocable Letter of
Credit No. _____
Dated as of _______, 1984
Bank One Trust Company, N.A.
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your favor for
the account of Radiation Sterilizers, Incorporated, a California corporation
("Company"), its Irrevocable Letter of Credit No. ______ ("Letter of Credit")
in a maximum amount of up to 5,047,672.00 (as more fully described below)
effective immediately and expiring at Bank's counters by 4:00 P.M., San
Francisco time, on January 15, 1988, unless extended by Bank (the "Expiration
Date").
This Letter of Credit is being issued in connection with that
certain Trust Agreement (the "Trust Agreement") dated as of December 1, 1984,
between you, as Trustee, and the County of Delaware, Ohio (the "Issuer"),
pursuant to which the Issuer has agreed to authorize and issue and sell certain
County of Delaware, Ohio Variable Rate Demand Industrial Development Revenue
Bonds (Radiation Sterilizers, Incorporated Project) (the "Bonds") in the
aggregate principal amount of $4,900,000.00, the payment of which Bonds is
secured by, among other things, this Letter of Credit.
As used in this Letter of Credit, the term "business day"
shall mean a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon
which banking institutions in the State of California or the City of New York
are authorized or required by law to close, or (iv) a day on which the New York
Stock Exchange is closed.
You, as Trustee and Paying Agent, pursuant to the Trust
Agreement, are hereby irrevocably authorized to draw on Bank for the account of
Company, in accordance with the terms and conditions hereof and subject to
reductions in amounts as hereinafter set forth, an aggregate amount not
exceeding $5,047,672,00 (Five Million Forty-Seven Thousand Six Hundred
Seventy-Two Dollars) (the "Stated Amount"), of
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EXHIBIT "A"--Page 1 of 18
<PAGE> 38
which (A) an aggregate amount not exceeding $4,900,000.00 may be drawn upon
with respect to "A Drawings" and "C Drawings", as defined below, to cover
principal of the Bonds, and (B) an aggregate amount not exceeding $147,672.00
may be drawn upon with respect to "B Drawings," "D Drawings" and E Drawings",
as defined below, to cover 55 days of interest on the Bonds.
Funds under this Letter of Credit are only available to you
against your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face:
"Drawn under Wells Fargo Bank, N.A. Irrevocable Letter of Credit No. ________"
and upon your presenting to Wells Fargo Bank, N.A. one or more of the
following written certificates:
(A) Your written certificate signed by you in the form of
Exhibit A attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of
Exhibit B attached hereto appropriately completed (a "B Drawing");
(C) Your written certificate signed by you in the form of
Exhibit C attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of
Exhibit D attached hereto appropriately completed (a "D Drawing"),
(E) Your written certificate signed by you in the form of
Exhibit E attached hereto appropriately completed (an "E Drawing").
All documents presented to Bank in connection with any demand
for payment hereunder, as well as all notices and other communications to Bank
with respect to this Letter of Credit, shall be in writing and addressed and
presented to Bank at its offices at 475 Sansome Street, San Francisco,
California 94111, Attention: Letter of Credit Operations -- AU 1175, or any
other place in the United States which may be designated by Bank by written
notice delivered to you. Such documents, notices and other communications
shall be personally delivered to Bank, or may be sent to Bank by tested Telex
or over a telecopier, in which case draft requirements are waived, to the
following numbers, as applicable:
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<PAGE> 39
Telex No: ________________(Answerback: ________________)
Telecopier No: _______________ (Telecopy Model ________)
If Bank receives any of your drafts drawn hereunder at such office, all in
strict conformity with the terms and conditions of this Letter of Credit, on or
prior to the Expiration Date, Bank will honor the same and make payment
hereunder. Payments to you under this Letter of Credit shall be made by wire
transfer of immediately available funds into your Account No. ______________ at
Bank, or into such other account as you designate to bank in writing from time
to time. If a proper draft and certificate are presented by 11:30 A.M., New
York time, payment will be made that same business day; otherwise payment will
be made the next business day.
Upon a Drawing hereunder, the total amount of this Letter of
Credit shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount
of this Letter of Credit shall be reduced by the amount of such
Drawing; and
(B) With respect to any C or D Drawing, the total amount
of this Letter of Credit shall be reduced by the amount of such
Drawing, provided that Bank shall reinstate the amount of such drawing
if such amount is paid to Bank by Company prior to default under that
certain Letter of Credit Agreement, dated as of December 1, 1984 (the
"Reimbursement Agreement"), by and between Company and Bank. In
addition, in the event Bank transfers any Drawing Bonds (as defined in
the Reimbursement Agreement) in its possession following any C Drawing
to any person or entity (other than to you, as Trustee, for
cancellation), an amount equal to the amount of such C Drawing (and
any corresponding D Drawing) which was applied to pay principal and
interest on the Bonds being so transferred shall automatically be
reinstated hereunder. Bank will send notice of any such reinstatement
to you, as Trustee, in the form attached hereto as Exhibit F.
(C) With respect to any E Drawing, the total amount of
this Letter of Credit shall be reduced by the amount of such Drawing
and such amount shall then be immediately and automatically
reinstated, and Bank will send notice of such reinstatement to you, as
Trustee, in the form attached hereto as Exhibit F.
-3-
<PAGE> 40
Only you, as Trustee and Paying Agent, may make a drawing
under this Letter of Credit. Upon the payment to you, as Trustee and Paying
Agent, of the amount specified in a draft drawn hereunder, Bank will be fully
discharged on its obligation under this Letter of Credit with respect to such
draft and shall not thereafter be obligated to make any further payments under
this Letter of Credit in respect to such draft to you or any other person who
may have made to you or makes to you a demand for payment of principal of,
purchase price of or interest on any Bond. By paying to you an amount demanded
in such draft(s) we make no representation as to the correctness of the amount
demanded in such draft(s).
Upon the earliest of (i) 15 days after the making by you of an
A Drawing (and any associated B Drawing) hereunder; (ii) Bank's receipt of a
certificate signed by your officer and an officer of Company stating (a) that
no Bonds are Outstanding within the meaning of the Trust Agreement and (b) that
such officers are duly authorized to sign such certificate on behalf of you and
Company; (iii) Bank's receipt of a certificate signed by your officer and an
officer of Company stating (a) that an Alternate Letter of Credit (as defined
in the Trust Agreement) has been accepted by you as Trustee under the Trust
Agreement and (b) that such officers are duly authorized to sign such
certificate on behalf of you and on behalf of Company; (iv) Bank's receipt of a
certificate signed by your officer and an officer of Company stating (a) that
no less than 15 days prior to the date of such certificate, the interest rate
on the Bonds was converted to a Fixed Interest Rate (as defined in the Trust
Agreement), (b) that you have not received written notification from both
Company and Bank stating that this Letter of Credit is not to be cancelled, and
(c) that such officers are duly authorized to sign such certificate on behalf
of you and on behalf of Company; or (v) the Expiration Date, this Letter of
Credit shall automatically terminate and be delivered to Bank for cancellation.
This Letter of Credit shall be governed by (i) the Uniform
Customs and Practice for Documentary Credit as fixed by the Congress of the
International Chamber of Commerce from time to time (the "Uniform Customs") and
(ii) the laws of the State of California, including the Uniform Commercial Code
as in effect in the State of California. In the event of a conflict between the
Uniform Customs and the laws of the State of California, the Uniform Customs
shall prevail. Communications with respect to this Letter of Credit shall be
in writing and shall be addressed to Bank at its offices at 475 Sansome Street,
San Francisco, California 94111,
-4-
<PAGE> 41
Attention: Letter of Credit Operations - AU 1175, specifically referring
to the number of this Letter of Credit.
This Letter of Credit is transferable in its entirety to any
transferee who has succeeded you as Trustee under the Trust Agreement. Each
letter of credit issued upon any such transfer may be successively transferred.
Transfer of the available balance under this Letter of Credit to such
transferee shall be effected by the presentation to Bank of this Letter of
Credit accompanied by a certificate substantially in the form of Exhibit G
attached hereto. Following such presentation, and as soon as this original
Letter of Credit is returned to the Bank and the Bank has been paid its
customary transfer fee, Bank shall forthwith transfer the same to your
transferee or, if so requested by your transferee, issue an irrevocable letter
of credit to your transferee with provisions therein consistent with those of
this Letter of Credit.
This Letter of Credit sets forth in full Bank's undertaking,
and such undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to
herein (including, without limitation, the Bonds and the Trust Agreement),
except only the certificates) and the draft(s) 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) and such draft(s).
Very truly yours,
WELLS FARGO BANK, N.A.
By __________________________________
Its ______________________________
-5-
<PAGE> 42
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
(PRINCIPAL UPON ACCELERATION, FULL
REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A,, a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of
Credit No. ___________ (the "Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Agreement for the holders of the Bonds.
(2) Trustee and Paying Agent is making a drawing under
LaeLetter of Credit with respect to the payment of principalupon acceleration,
full redemption or maturity of the Bonds.
(3) Trustee presently holds $________ in the A Subaccount of
the Bond Fund and $__________ in the B Subaccount of the Bond Fund. Trustee
presently holds no other amounts in the Bond Fund, holds no amounts in the
Construction Fund, and holds no other funds in its capacity as Trustee or
Paying Agent under the Trust Agreement.
(4) All funds in the B Subaccount of the Bond Fund have
been delivered to Trustee by Company within the past 123 days and so do not
constitute "available funds." Of the funds in the A Subaccount of the Bond
Fund, $ ________ is needed by Trustee to pay current interest on the
outstanding Bonds; the remainder of the funds in such A Subaccount are
"available funds."
(5) The amount of principal of the Bonds which is due and
payable for which Trustee does not have available funds will and the amount of
the draft accompanying this certificate does not exceed such amount.
(6) The amount of the draft accompanying this
certificate, together with the aggregate of all prior
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<PAGE> 43
payments made pursuant to A Drawings and C Drawings (other than reinstated
amounts), under the Letter of Credit for the payment of the principal amount or
purchase price of the Bonds, does not exceed $4,900,000.00.
(7) The amount of the draft accompanying this certificate
was computed in accordance with the terms and conditions of the Bonds and the
Trust Agreement.
(8) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply it directly to the payment when
due of the appropriate amount of principal owing on account of the Bonds
pursuant to the Trust Agreement, (b) no portion of it shall be applied by the
undersigned for any other purpose, and (c) no portion of it shall be commingled
with other funds held by the undersigned. This drawing is made in accordance
with the provisions of the Trust Agreement.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _____ day of __________, 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association,
as Trustee and Paying Agent
By ________________________________
Title __________________________
A-2
<PAGE> 44
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
(ACCRUED INTEREST UPON ACCELERATION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank one Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of
Credit No. ______ (the "Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Agreement for the holders of the Bonds.
(2) Trustee and Paying Agent is making a drawing under
one setter of Credit with respect to the payment of accrued and unpaid interest
upon acceleration, full redemption, or maturity of the Bonds.
(3) Interest on the Bonds is due and payable and the
amount of the draft accompanying this certificate does not exceed the amount
available on the date hereof to be drawn under the Letter of Credit in respect
of payment of interest accrued on the Bonds on or prior to their stated
maturity date.
(4) The amount held by Trustee in the A Subaccount of the
Bond Fund is $_____________. This amount, together with the amount of the
accompanying draft, equals the accrued interest which is due and payable on the
Bonds.
(5) The amount of the draft accompanying this
certificate, together with the aggregate of all prior B, D and E Drawings under
the Letter of Credit (other than reinstated amounts), does not exceed
$147,672.00
(6) The amount of the draft accompanying this certificate
was computed in accordance with the terms and conditions of the Bonds and the
Trust Agreement.
(7) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply it directly
B-1
<PAGE> 45
to the payment when due of the appropriate amount of interest owing on account
of the Bonds pursuant to the Trust Agreement, (b) no portion of it shall be
applied by the undersigned for any other purpose, and (c) no portion of it
shall be commingled with other funds held by the undersigned. This drawing is
made in accordance with the provisions of the Trust Agreement.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _________ day of _______________, 19__.
BANK ONE TRUST COMPANY, N.A
a national banking association
as Trustee and Paying Agent
By ____________________________
Title ______________________
B-2
<PAGE> 46
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
(PRINCIPAL OF BONDS DELIVERED
TO REMARKETING AGENT OR TRUSTEE)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee"), and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of
Credit No. ___________ (the "Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Agreement for the holders of the Bonds.
(2) Trustee and Paying Agent is making a drawing under
the Letter of Credit (a) at the written request of the Remarketing Agent (as
defined in the Reimbursement Agreement) to pay, pursuant to Section 7(i) of the
Bond Legislation (as defined in the Trust Agreement), the principal amount of
the purchase price of those repurchased Bonds which the Remarketing Agent has
been unable to remarket, the principal amount of which is equal to the amount
of the draft accompanying this certificate and which Bonds (i) are now held by
the undersigned and (ii) shall be reregistered in the name of Bank, or its
agent, as pledgee, and delivered to Bank, or such agent, within 5 business days
following receipt by the undersigned of the amount demanded hereby; or (b) to
pay, pursuant to Section 7(j) of the Bond Legislation (as defined in the Trust
Agreement), the portion of the purchase price of the Bonds delivered to Trustee
for purchase equal to the principal amount of such Bonds, and Trustee shall
deliver to Bank, or its agent, as pledgee, within 5 business days following
receipt by the undersigned of the amount demanded hereby, a principal amount of
Bonds equal to the amount of the draft accompanying this certificate.
(3) The amount of the draft accompanying this
certificate, together with the aggregate of all prior payments made pursuant to
A Drawings and C Drawings under the Letter of Credit for the payment of the
principal amount or purchase price of the Bonds (other than reinstated
amounts), does not exceed $4,900,000.00.
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<PAGE> 47
(4) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will either (i) deliver it to the
Remarketing Agent only for the purpose of purchase of the Bonds referenced in
Paragraph 2(a) hereof, or (ii) use it for the purpose of purchase of the Bonds
referred to in Paragraph 2(b) hereof; (b) no portion of it shall be applied by
the undersigned for any other purpose; and (c) no portion of it shall be
commingled with other funds held by the undersigned. This drawing is made in
accordance with the provisions of the Trust Agreement.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the day of ______________ 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Paying Agent and Trustee
By _____________________________
Title _______________________
C-2
<PAGE> 48
EXHIBIT D
CERTIFICATE FOR "D DRAWING"
(ACCRUED INTEREST ON BONDS DELIVERED
TO REMARKETING AGENT OR TRUSTEE)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of
Credit No. _____________ (the "Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Agreement for the holders of the Bonds.
(2) Trustee and Paying Agent is making a drawing under
one Letter of Credit (a) at the written request of the Remarketing Agent (as
defined in the Reimbursement Agreement), to pay, pursuant to Section 7(i) of
the Bond Legislation (as defined in the Trust Agreement), the amount of accrued
interest on those Bonds that the Remarketing Agent has been unable to remarket,
which amount of accrued interest is equal to the amount of the draft
accompanying this certificate; or (b)to pay, pursuant to Section 7(j) of the
Bond Legislation (as defined in the Trust Agreement), the portion of the
purchase price of the Bonds delivered to Trustee for purchase equal to the
amount of accrued and unpaid interest on such Bonds to the date of purchase
thereof, which amount of accrued interest is equal to the amount of the draft
accompanying this certificate.
(3) The amount of the draft accompanying this
certificate, together with the aggregate of all prior B, D and E Drawings under
the Letter of Credit (other than reinstated amounts), does not exceed
$147,672.00
(4) The amount of the draft accompanying this certify was
computed in accordance with the terms and conditions of the Bonds and the Trust
Agreement.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will either (i) deliver it to the
Remarketing Agent only for the purpose of reimburse-
D-1
<PAGE> 49
ment or payment of accrued interest referenced in Paragraph 2(a) hereof, or
(ii) use it for the purpose of reimbursement or payment of accrued interest
referenced in Paragraph 2(b) hereof; (b) no portion of it shall be applied by
the undersigned for any other purpose; and (c) no portion of it shall be
commingled with other funds held by the undersigned. This drawing is made in
accordance with the provisions of the Trust Agreement.
(6) To the extent that the payment demanded hereby is to
be made in accordance with the Letter of Credit on a date between a Record Date
and the corresponding Interest Payment Date (as those terms are defined in the
Trust Agreement), Trustee now holds and shall, within 5 business days following
receipt by the undersigned of the payment demanded hereby, deliver to Bank,
due-bill checks that, in the aggregate, are in the amount and in the form
required by the Trust Agreement.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the __________ day of _______, 19____.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Paying Agent and Trustee
By _____________________________
Title _______________________
D-2
<PAGE> 50
EXHIBIT E
CERTIFICATE FOR "E DRAWING"
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE)
The undersigned, a duly authorized officer of Bank one Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of
Credit No. ______ (the "Letter of Credit," the capitalized terms defined
therein and not defined herein being used as therein defined) issued by Bank in
favor of Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the
Trust Agreement for the holders of the Bonds.
(2) Trustee and Paying Agent is making a drawing under
the Letter of Credit with respect to the payment of accrued and unpaid interest
upon an Interest Payment Date during the continuance of an Event of Default
under the Reimbursement Agreement for which Bank has not yet exercised its
right to demand that Trustee accelerate the Bonds.
(3) Interest on the Bonds is due and payable and the
amount of the draft accompanying this certificate does not exceed the amount
available on the date hereof to be drawn under the Letter of Credit in respect
of payment of interest accrued on the Bonds on or prior to their stated
maturity date.
(4) The amount held by Trustee in the A Subaccount of the
Bond Fund is $____. This amount, together with the amount of the accompanying
draft, equals the accrued interest which is due and payable on the Bonds.
(5) The amount of the draft accompanying this
certificate, together with the aggregate of all prior B, D and E Drawings under
the Letter of Credit (other than reinstated amounts), does not exceed
$147,672.00
(6) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Agreement.
E-1
<PAGE> 51
(7) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply it directly to the payment when
due of the appropriate amount of interest owing on account of the Bonds
pursuant to the Trust Agreement, (b) no portion of it shall be applied by the
undersigned for any other purpose, and (c) no portion of it shall be commingled
with other funds held by the undersigned. This drawing is made in accordance
with the provisions of the Trust Agreement.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate is of the __________ day of _____________, 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Trustee and Paying Agent
By _____________________________
Title _______________________
E-2
<PAGE> 52
EXHIBIT F
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. _____________
DATED AS OF _______, 1984
The undersigned, a duly authorized officer of Wells Fargo
Bank, N.A. ("Bank"), hereby certifies to the Trustee under the Trust Agreement
dated as of December 1, 1984, between the County of Delaware, Ohio and Bank One
Trust Company, N.A., a national banking association ("Trustee"), with reference
to Irrevocable Letter of Credit No._______ (the "Letter of Credit") issued by
Bank in favor of Trustee, that the amount drawn by Trustee pursuant to its
Drawing dated as of ___________________, has been reinstated as of ___________
and is available for draw subject to the terms of the Letter of Credit.
In witness whereof, Bank has executed and delivered this
Certificate this _______ day of ________ 19__.
WELLS FARGO BANK, N.A.
By: ____________________________
Its ________________________
F-1
<PAGE> 53
EXHIBIT G
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Letter of Credit Operations
AU 1175
Re: Wells Fargo Bank, N.A.,
Irrevocable Letter of Credit No.
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in
and to such Letter of Credit are transferred to the transferee and the
transferee shall have sole rights as beneficiary thereof, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned beneficiary.
The advice of such Letter of Credit is returned herewith,
along with your customary transfer fee, and we ask
G-1
<PAGE> 54
you to endorse the transfer on the reverse thereof and forward it direct to the
transferee with your customary notice of transfer.
Very truly yours,
________________________________
Signature of Beneficiary
SIGNATURE AUTHENTICATED
______________________
(Bank)
_______________________
(Authorized Signature)
G-2
<PAGE> 55
EXHIBIT "B"
PROMISSORY NOTE
San Jose, California
$5,047,672.00 December 1, 1984
On demand, RADIATION STERILIZERS, INCORPORATED ("Borrower"), a
California corporation, with offices at 3000 Sand Hill Road, Menlo Park,
California 94025, for value received, promises and agrees to pay to the order
of WELLS FARGO BANK, N.A., a national banking association ("Bank") at its
banking offices at 2055 Gateway Place, Suite 200, San Jose, California 95110,
in coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts, the lesser
of the principal sum of Five Million Forty-Seven Thousand Six Hundred
Seventy-Two Dollars ($5,047,672.00), or so much thereof as may be paid by Bank
under the Letter of Credit issued pursuant to the Reimbursement Agreement
hereinafter mentioned, together with such additional sums as may become owing
by Borrower to Bank pursuant to the Reimbursement Agreement or any of the Loan
Documents, whether by acceleration or otherwise, together with interest thereon
as hereinafter provided.
All capitalized terms which are used but not defined in this
Note shall have the meanings set forth in that certain Letter of Credit
Agreement of even date herewith between Borrower and Bank (such Letter of
Credit Agreement, together with all amendments, modifications or supplements
thereto, is referred to herein as the "Reimbursement Agreement").
In addition to the principal sum referred to in the first
paragraph of this Note, Borrower also agrees to pay interest on all amounts
hereof so paid by Bank under the Letter of Credit or otherwise owing under the
Reimbursement Agreement and remaining from time to time unpaid from the date so
paid by Bank or otherwise becoming owing under the Reimbursement Agreement
until payment thereof at a varying rate per annum (based on an actual day basis
using a 360 day year) which is two percent (2%) above the floating commercial
loan rate announced by Bank from time to time as its prime rate. Adjustments
in the varying interest rate shall be made of, the same day as each change in
the announced prime rate.
Each payment made by Borrower under this Note shall be made in
immediately available funds before 1:00 p.m.,
-1-
EXHIBIT "B"--Page 1 of 3
<PAGE> 56
San Francisco, California, time, on the date that such payment is required to
be made. Any payment received and accepted by the Bank after such time shall
be considered for all purposes (including the calculation of interest, to the
extent permitted by law) as having been made on the Bank's next following
business day. As used herein the term "business day" shall mean a day other
than a Saturday, Sunday or a day upon which banking institutions in the State
of California are authorized or required by law to close.
If the date for any payment hereunder falls on a day that is
not a business day, then for all purposes of this Note the same shall be deemed
to have fallen on the next following business day, and such extension of time
shall in such case be included in the computation of payments of interest.
Borrower and any and each co-maker, guarantor, accommodation
party, endorser or other person liable for the payment or collection of this
Note expressly waive demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and in the
handling of any collateral at any time existing as security in connection
herewith, and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder or in connection with any lien or security interest at any
time had or existing as security for any amount called for hereunder.
If this Note is not paid when due, Borrower promises and
agrees to pay all costs of collection, foreclosure fees and reasonable
attorneys' fees incurred by Bank whether or not suit is filed.
This Note is issued pursuant to and is entitled to the
benefits of the Reimbursement Agreement and is issued to evidence the
indebtedness, if any, of the Borrower under the Reimbursement Agreement.
Reference is made to the Reimbursement Agreement for all pertinent purposes.
-2-
<PAGE> 57
This Note has been made and issued and is payable in the State
of California and shall be governed by the laws of such State.
"Borrower"
RADIATION STERILIZERS, INCORPORATED
a California corporation
By ________________________________
Its ____________________________
By ________________________________
Its ____________________________
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<PAGE> 58
EXHIBIT "C"
CONDITIONS TO DISBURSEMENT
1. Conditions to All Disbursements. Bank shall not be
obligated to approve any disbursement of Bond proceeds under Section 3.3 of the
Loan Agreement unless each of the following conditions are fulfilled:
1.1 Completion of Project. The acquisition and
construction of the Project shall have been completed in accordance with the
plans and specifications therefor.
1.2 Permits, Etc. All required governmental inspections,
reports and certifications shall have been made, and all occupancy, use and
other permits required by all applicable governmental regulatory authorities
and public utility companies shall have been issued, for the full operation of
the Project.
EXHIBIT "C"
Page 1 of 1
<PAGE> 59
EXHIBIT "D"
(14054-14072 Catalina Street)
All that certain real property together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
City of San Leandro, County of Alameda, State of California and described as
follows:
PARCEL ONE:
PARCEL A, PARCEL MAP NO. 1871, FILED MAY 6, 1976 BOOK 89 OF PARCEL MAPS, PAGE
85, ALAMEDA COUNTY RECORDS.
RESERVING FROM PARCEL ONE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE SOUTHEASTERLY LINE THEREOF BEING THE
SOUTHEASTERLY LINE OF SAID PARCEL A OF PARCLE MAP NO. 1871.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY LINE THEREOF BEING THE
SOUTHEASTERLY LINE OF PARCEL A, PARCEL MAP NO. 1871, FILED MAY 6, 1976, BOOK
89, OF PARCEL MAPS, PAGE 85, ALAMEDA COUNTY RECORDS.
A.P. NO. 080G-0931-018
Exhibit "D"
Page 1 of 5
<PAGE> 60
EXHIBIT "D"
(14226 - 14266 Catalina Street)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereone
situated in the City of San Leandro, County of Alameda, State of California,
and described as follows:
PARCEL ONE:
PARCEL 1, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976 BOOK 94 OF PARCEL MAPS,
PAGE 21, ALAMEDA COUNTY RECORDS.
RESERVING FROM PARCEL ONE:
A) A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES
FOR THE BENEFIT OF PARCEL A, PARCEL MAP NO. 1871, FILED MAY 6, 1976,
BOOK 89 OF PARCEL MAPS, PAGE 85, OFFICIAL RECORDS, OVER A STRIP OF
LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF SAID PARCEL A, OF PARCEL MAP NO. 2044.
B) A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES
FOR THE BENEFIT OF PARCEL 2, PARCEL MAP 2044, FILED DECEMBER 16, 1976,
BOOK 94, PAGE 21, OFFICIAL RECORDS, OVER A STRIP OF LAND 30 FEET WIDE,
THE SOUTHEASTERLY LINE THEREOF BEING THE SOUTHEASTERLY LINE OF SAID
PARCEL 1 OF PARCEL MAP NO. 2044.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHEASTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF PARCEL 19, PARCEL MAP NO, 2044, FILED DECEMBER 16, 1976,
BOOK 94, OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY LINE THEREOF BEING THE
SOUTHEASTERLY LINE OF PARCEL 1, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976,
BOOK 94, OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 080G-0932-027
Exhibit "D"
Page 2 of 5
<PAGE> 61
EXHIBIT "D"
(14400 Catalina Street)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the City of San Leandro, County of Alameda State of California, and
described as follows: PARCEL ONE:
PARCEL ONE:
PARCEL 1, PARCEL MAP NO. 2379, FILED DECEMBER 27, 1977, BOOK 98, OF PARCEL
MAPS, PAGE 92, ALAMEDA COUNTY RECORDS.
RESERVING FROM PARCEL ONE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF SAID PARCEL I OF PARCEL MAP NO. 2379.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT APPURTENANT TO PARCEL 1 ABOVE FOR OPEN SPACE AND
VEHICLE ACCESS PURPOSES OVER A STRIP OF LAND 30 FEET WIDE THE SOUTHERLY LINE
THEREOF BEING THE NORTHWESTERN LINE OF PARCEL 1, PARCEL MAP NO. 2181, FILED
JULY 29, 1977, BOOK 97, OF PARCEL MAPS PACE 72, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT APPURTENANT TO PARCEL ONE ABOVE FOR OPEN SPACE AND
VEHICULAR ACCESS PURPOSES OVER A STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY
LINE OF WHICH IS THE NORTHERLY LINE OF PARCEL 2 OF PARCEL MAP NO. 2379, FILED
DECEMBER 27, 1977, BOOK 98, OF PARCEL MAPS, PAGE 92, ALAMEDA COUNTY RECORDS,
ASSESSOR'S PARCEL NO. O80G-0932-031
Exhibit "D"
Page 3 of 5
<PAGE> 62
EXHIBIT "D"
(20408 Corsair Boulevard)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the City of Hayward, County of Alameda, State of California, and
described as follows:
LOTS 1 AND 2, AS SHOWN ON THE MAP OF TRACT 3046, FILED AUGUST l4, 1969, IN BOOK
63 OF MAPS, PAGES 8 TO 14, INCLUSIVE, ALAMEDA COUNTY RECORD.
ASSESSOR'S PARCEL NO. 432-0114-012-01
Exhibit "D"
Page 4 of 5
<PAGE> 63
EXHIBIT "D"
(20464-20472 Corsair Boulevard)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the City of Hayward, County of Alameda State of California, and
described as follows:
PARCEL 1 AS SHOWN ON PARCEL MAP NO. 417, FILED JANUARY 10, 1969, IN BOOK 58 OF
MAPS, PAGE 76, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY
ASSESSOR'S PARCEL NO. 432-0101-030
Exhibit "D"
Page 5 of 5
<PAGE> 64
ORDER NO. 16081: 20464-20472 CORSAIR BOULEVARD
At the date hereof exceptions to coverage in addition to the printed exceptions
and exclusions in said policy form would be as follows:
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $9,798.75 OPEN
2ND INSTALLMENT: $9,798.75 OPEN
LAND $306,971.00
IMPROVEMENTS $874,4O3.00
PERSONAL PPTY. $7,491.00
A.P. NO. 432-0101-030
CODE AREA 25-060
2. ASSESSMENT FOR HAYWARD AIR TERMINAL UNDER ACT 1915
ASSESSMENT NO. 489 SERIES 5 ISSUED JANUARY 19, 1970 FOR $64,120.17
PAYABLE IN 50 INSTALLMENTS WITH COUNTY TAXES. ALL AMOUNTS PAID TO AND
INCLUDING 2ND INSTALLMENT OF 1983 - 1984 TAXES AMOUNT TO PAY IN FULL
(NOT INCLUDING AMOUNTS PAYABLE WITH 1984 - 1985 TAX INSTALLMENTS)
$390,34.33 WHICH INCLUDES $30,995.3l PRINCIPAL AND $8,038.12 INTEREST
IF PAID PRIOR TO AUGUST 1, 1985 SAID BOND PAYABLE TO CITY OF HAYWARD.
3. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED
PURSUANT TO CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA,
WHICH CHAPTER BECAME LAW ON JULY 29TH, 1983.
4. CONDITIONS AS RESERVED IN DEED FROM THE CITY OF HAYWARD, A MUNICIPAL
CORPORATION BY INSTRUMENT RECORDED JANUARY 16, 1967, IN REEL 1902,
IMAGE 397, OFFICIAL RECORDS.
5. EASEMENT AS CONTAINED IN THE DECLARATION ABOVE REFERRED TO AS FOLLOWS:
FOR: : RIGHT OF FLIGHT FOR PASSAGE OF AIRCRAFT
AFFECTS: : PORTION OF AIRSPACE
6. COVENANTS, CONDITIONS AND RESTRICTION AS SET FORTH IN A DECLARATION OF
RESTRICTIONS RECORDED JUNE 6, 1967, IN REEL 1975, IMAGE 605, OFFICIAL
RECORDS AND PRERECORDED JUNE 14, 1967, IN REEL 1980, IMAGE 934,
OFFICIAL RECORDS WHICH PROVIDES THAT A VIOLATION THEREOF SHALL NOT
DEFEAT OR RENDER INVALID THE LIEN OF ANY MORTGAGE OR DEED OF TRUST
MADE IN GOOD FAITH AND FOR VALUE DELETING THEREFROM ANY RESTRICTIONS
WHICH ARE BASED UPON "RACE, COLOR RELIGION SEX OF NATIONAL ORIGIN."
SAID RESTRICTION DO NOT CONTAIN A REVERSIONARY CLAUSE
AN INSTRUMENT DECLARING AND ANNEXATION OF SAID COVENANTS, CONDITIONS
AND RESTRICTIONS WAS RECORDED AUGUST 29, 1960, IN REEL 2245, IMAGE
747, OFFICIAL RECORDS.
EXHIBIT "E"
Page 1 of 15
<PAGE> 65
ORDER NO. 16081
7. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : RAILROAD
AFFECTS : NORTHEASTERLY 30 FEET OF PREMISES
8. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : PUBLIC UTILITIES
AFFECTS : SOUTHWESTERLY 5 FEET OF PREMISES
9. EASEMENT, UPON THE TERMS, COVENANTS AND CONDITIONS THEREOF, FOR THE
PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS CREATED IN THAT
CERTAIN INSTRUMENT
RECORDED : FEBRUARY 27, 1969, REEL 2355, IMAGE 47,
OFFICIAL RECORDS
GRANTED TO : PG. & E & AND P.T. & T
PURPOSE : ELECTRICAL FACILITIES
AFFECTS : THE NORTHEASTERLY 5 FEET OF THE SOUTHWESTERLY
10 FEET OF PREMISES
TERMS AND CONDITIONS CONTAINED IN THE INSTRUMENT LAST ABOVE REFERRED TO
10. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : CABOT, CABOT & FORBES HAYWARD PROPERTIES,
INC, A DELAWARE CORPORATION
RECORDED : AUGUST 29, 1968, REEL 2245, IMAGE 747, SERIES
NO. BA95374, OFFICIAL RECORDS
11. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS. IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : CABOT, CABOT & FORBES HAYWARD PROPERTIES,
INC., A DELAWARE CORPORATION
RECORDED : MAY 15, 1969, REEL 2402, IMAGE 690, SERIES NO.
69-54120, OFFICIAL RECORDS
12. EASEMENT, UPON THE TERMS, COVENANTS AND CONDITIONS THEREOF, FOR THE
PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES CREATED IN THAT CERTAIN
INSTRUMENT
RECORDED : MAY 27, 1969, REEL 2409, IMAGE 810, OFFICIAL RECORDS
RESERVED BY : CABOT, CABOT, AND FORBES HAYWARD PROPERTIES, INC.
PURPOSE : GAS, POWER, TELEPHONE AND TELEVISION LINES
AFFECTS : PORTION OF PREMISES
TERMS AND CONDITIONS CONTAINED IN THE INSTRUMENT LAST ABOVE REFERRED
TO.
EXHIBIT "E"
Page 2 of 15
<PAGE> 66
ORDER NO. 16081
13. EASEMENT, UPON THE TERMS, COVENANTS AND CONDITIONS THEREOF, FOR THE
PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES CREATED IN THAT CERTAIN
INSTRUMENT
RECORDED : MAY 27, 1969, REEL 2409, IMAGE 810, OFFICIAL RECORDS
RESERVED BY : CABOT, CABOT, & FORBES HAYWARD PROPERTIES, INC.
PURPOSE : RAILROAD
AFFECTS : PORTION OF PREMISES
TERMS AND CONDITIONS CONTAINED IN THE INSTRUMENT LAST ABOVE REFERRED
TO.
14. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $690,000.00
DATED : APRIL 6, 1970
TRUSTOR : CHARLES W. KING, Jr. AND CAROL ANNE KING, HIS WIFE
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
A CORPORATION
ADDRESS : 8 HOMEWOOD PLACE, MENLO PARK, CALIFORNIA 94005
LOAN NO. : 2 163 616
RECORDED : APRIL 13, 1970, REEL 259, IMAGE 200, SERIES
NO. 70-37725,
OFFICIAL : RECORDS
15. EASEMENT, UPON THE TERMS, COVENANTS AND CONDITIONS THEREOF, FOR THE
PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS CREATED IN THAT
CERTAIN INSTRUMENT
RECORDED : JANUARY 11, 1971, REEL 2765, IMAGE 707, SERIES
NO. 71-2817, OFFICIAL RECORDS
GRANTED TO : SOUTHERN PACIFIC TRANSPORTATION COMPANY, A
CORPORATION
PURPOSE : RAILROAD AND TRANSPORTATION PURPOSES
AFFECTS : PORTION OF PREMISES
EXHIBIT "E"
Page 3 of 15
<PAGE> 67
ORDER NO. 16084: 20408 CORSAIR BOULEVARD
At the date hereof exceptions to coverage in addition to the printed exceptions
and exclusions in said policy form would be as follows:
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR. 1984 - 1985
1ST INSTALLMENT: $13,088.05 OPEN
2ND INSTALLMENT: $13,088.05 OPEN
LAND : $289,030.00
IMPROVEMENTS : $1,439,299.00
PERSONAL PPTY : $15,614.00
A.P. NO. : 432-0114-012-01
CODE AREA : 25-060
3. ASSESSMENT FOR HAYWARD AIR TERMINAL UNDER ACT 1915 ASSESSMENT NO. 60,
SERIES J ISSUED JANUARY 1, 1970 FOR (NOT SHOWN) PAYABLE IN 50
INSTALLMENTS WITH COUNTY TAXES. ALL AMOUNTS PAID TO AND INCLUDING 2ND
INSTALLMENT OF 1983 - 1984 TAXES. AMOUNT TO PAY IN FULL (NOT
INCLUDING AMOUNTS PAYABLE WITH 1984 - 1985 TAX INSTALLMENTS) SEV ASST,
#59 WHICH INCLUDES (NOT SHOWN) PRINCIPAL AND (NOT SHOWN) INTEREST IF
PAID PRIOR TO AUGUST 1, 1985, SAID BOND PAYABLE TO CITY OF HAYWARD.
4. ASSESSMENT FOR HAYWARD AIR TERMINAL UNDER ACT 1915 ASSESSMENT NO. 59
ASST. #59 & 60 COMBINED, SERIES J ISSUED JANUARY 1, 1970 FOR
$7,9497.89 PAYABLE IN 50 INSTALLMENTS WITH COUNTY TAXES, ALL AMOUNTS
PAID TO AND INCLUDING 2ND INSTALLMENT OF 1983 - 1984 TAXES. AMOUNT TO
PAY IN FULL (NOT INCLUDING AMOUNTS PAYABLE WITH 1984 - 1985 TAX
INSTALLMENTS) $38,639.31 WHICH INCLUDES $31,761.78 PRINCIPAL AND
$60,877.53 INTEREST IF PAID PRIOR TO AUGUST 1, 1985, SAID BOND PAYABLE
TO CITY OF HAYWARD.
5. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED
PURSUANT TO CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA
WHICH CHAPTER BECAME LAW ON JULY 29TH, 1983.
EXHIBIT "E"
Page 4 of 15
<PAGE> 68
ORDER NO. 16084
6. COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATIONS
IN THE DEED
EXECUTED BY : CITY OF HAYWARD, A MUNICIPAL CORPORATION
RECORDED : JANUARY 16, 1967, REEL 1902, IMAGE 397,
OFFICIAL RECORDS INSTRUMENT NO. AZ/4479
7. COVENANTS, CONDITIONS AND RESTRICTIONS IN THE DECLARATION OF
RESTRICTIONS
EXECUTED BY : CABOT, CABOT & FORBES HAYWARD PROPERTIES,
INC.
RECORDED : JUNE 6, 1967, REEL 1975, IMAGE 605, OFFICIAL
RECORDS, INSTRUMENT NO, AZ/52801
RESTRICTIONS, IF ANY, BASED UPON RACE, COLOR, RELIGION OR NATIONAL
ORIGIN ARE DELETED.
AND RE-RECORDED : JUNE 14, 1967, REEL 1980, IMAGE 934,
OFFICIAL RECORDS, INSTRUMENT NO. AZ/56218
SAID COVENANTS, CONDITIONS AND RESTRICTIONS WERE IMPOSED UPON PREMISES
BY INSTRUMENT RECORDED MAY 15, 1969, ON REEL 2402, IMAGE 690,
INSTRUMENT NO. 54120, ALAMEDA COUNTY RECORDS.
SAID COVENANT, CONDITIONS AND RESTRICTIONS HAVE BEEN INCORPORATE BY
REFERENCE THERETO IN A DEED
EXECUTED BY : CABOT, CABOT & FORBES HAYWARD-PROPERTIES,
INC.
RECORDED : FEBRUARY 10, 1971, REEL 2785, IMAGE 418,
OFFICIAL RECORDS, INSTRUMENT NO, 15699
8. AN EASEMENT AFFECTING THE PORTION OF SAID LAND AND FOR THE PURPOSES
STATED HEREIN, AND INCIDENTAL PURPOSES,
IN FAVOR OF : PACIFIC GAS AND ELECTRIC COMPANY AND THE
PACIFIC TELEPHONE AND TELEGRAPH COMPANY
FOR : ELECTRICAL AND COMMUNICATION FACILITIES
RECORDED : FEBRUARY 27, 1969, REEL 2355, IMAGE 47,
OFFICIAL RECORDS,INSTRUMENT NO. 22346
AFFECTS : THE SOUTHWESTERN 10 FEET OF THE
SOUTHEASTERN 40 FEET Of LOT 1 Of PREMISES
9. EASEMENT FOR PUBLIC UTILITY PURPOSES, AS SHOWN UPON THE FILED MAP.
AFFECTS: THE SOUTHWESTERLY PORTION OF PREMISES
10. EASEMENT FOR RAILROAD PURPOSES, AS SHOWN UPON THE FILED MAP,
AFFECTS: THE NORTHERLY AND THE NORTHEASTERLY PORTION
OF SAID PREMISES
EXHIBIT "E"
Page 5 Of 15
<PAGE> 69
ORDER NO. 16084
11. AN EASEMENT AFFECTING THE PORTION OF SAID LAND AND FOR THE PURPOSES
STATED HEREIN, AND INCIDENTAL PURPOSES
IN FAVOR OF : SOUTHERN PACIFIC TRANSPORTATION COMPANY
FOR : RAILROAD AND TRANSPORTATION PURPOSES
RECORDED : JANUARY 11, 1971, REEL 2765, IMAGE 707,
OFFICIAL RECORDS, INSTRUMENT NO. 2847
AFFECTS : A NORTHERN AND NORTHEASTERN PORTION OF
PREMISES
12. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF $1,015,000.00
DATED : SEPTEMBER 22, 1971
TRUSTOR : CHARLES KING & ASSOCIATES, A GENERAL
PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A
CALIFORNIA CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, A CORPORATION
ADDRESS : 555 CALIFORNIA ST. 24TH FL., SAN FRANCISCO,
CA 94104
LOAN NO. : 2 166 404
RECORDED : SEPTEMBER 29, 1971, REEL 2960, IMAGE 605
OF OFFICIAL RECORDS, SERIES NO. 71-127548
ASSIGNMENT OF RENTS, AS ADDITIONAL SECURITY FOR THE PAYMENT OF THE
INDEBTEDNESS SECURED BY SAID DEED OF TRUST, WHICH ASSIGNMENT WAS
EXECUTED BY CHARLES KING & ASSOCIATES, A GENERAL PARTNERSHIP, TO THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, A NEW JERSEY CORPORATION,
RECORDED SEPTEMBER 29, 1971, REEL 2960, IMAGE 610, OF OFFICIAL
RECORDS.
A MODIFICATION OF SAID DEED OF TRUST AS THEREIN PROVIDED WAS RECORDED
NOVEMBER 30, 1972, REEL 3268, IMAGE 960, OF OFFICIAL RECORDS.
ASSIGNMENT OF RENTS, AS ADDITIONAL SECURITY FOR THE PAYMENT OF THE
INDEBTEDNESS SECURED BY SAID DEED OF TRUST, WHICH ASSIGNMENT WAS
EXECUTED BY CHARLES KING & ASSOCIATES, A GENERAL PARTNERSHIP, TO THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA A NEW JERSEY CORPORATION.
RECORDED SEPTEMBER 26, 1974, REEL 3782, IMAGE 966, OF OFFICIAL
RECORDS.
AS ADDITIONAL SECURITY FOR THE OBLIGATION SECURED BY SAID INSTRUMENT,
THE LESSORS INTEREST IN THE LEASE(S) REFERRED TO IN EXCEPTION NO. 14
HEREIN WAS ASSIGNED TO SAID BENEFICIARY BY INSTRUMENT RECORDED
SEPTEMBER 8, 1981, SERIES NO. 81-152987, OFFICIAL RECORDS.
EXHIBIT "E"
Page 6 of 15
<PAGE> 70
ORDER NO. 16084
13. ANY UNRECORDED LEASE AS DISCLOSED BY ASSIGNMENT OF LEASE AND
AGREEMENT, EXECUTED BY CHARLES KING AND ASSOCIATES, A GENERAL PARTNER,
TO SHAKEE CORPORATION, A CALIFORNIA CORPORATION, RECORDED SEPTEMBER
26, 1974, REEL 3782, IMAGE 966, OF OFFICIAL RECORDS.
TERMS AND CONDITIONS CONTAINED IN THE INSTRUMENT ABOVE REFERRED TO.
14. UNRECORDED LEASE UPON THE TERMS AND CONDITIONS CONTAINED THEREIN
LESSOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
LESSEE : BAYSHORE LANDMARK, N.V.
DISCLOSED BY : ASSIGNMENT OF LEASE AND AGREEMENT
RECORDED : SEPTEMBER 8, 1981, SERIES No. 81-152897 OFFICIAL
RECORDS
SAID LEASE ADDITIONALLY ENCLOSED BY NOTICE Of NON-RESPONSIBILITY
RECORDED FEBRUARY 4, 1982, SERIES No. 82-17441, OFFICIAL RECORDS.
THE PRESENT OWNERSHIP OF SAID LEASEHOLD AND OTHER MATTERS AFFECTING
THE INTEREST OF THE LESSEE ARE NOT SHOWN HEREIN.
EXHIBIT "E"
Page 7 of 15
<PAGE> 71
ORDER NO. 16086: 14054-14072 CATALINA STREET
At the date hereof exceptions to coverage in addition to the printed exceptions
and exclusions in said policy form would be as follows:
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $89,138.59 OPEN
2ND INSTALLMENT: $89,138.59 OPEN
LAND : $240,190.00
IMPROVEMENTS : $1,243,610.00
A.P. NO. : 080G-0931-018
CODE AREA : 10-057
2. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED
PURSUANT TO CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA,
WHICH CHAPTER BECAME LAW ON JULY 29TH, 1983.
3. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED THAT CERTAIN INSTRUMENT
RECORDED : SEPTEMBER 25, 1959, BOOK 9162, PAGE 181, OF
OFFICIAL RECORDS
GRANTED TO : PACIFIC GAS & ELECTRIC COMPANY
PURPOSE: : PUBLIC UTILITIES
AFFECTS : NORTHEASTERLY 90.22 FEET
THE RIGHT TO THIN AND REMOVE TREES AS RESERVED IN THE ABOVE MENTIONED
INSTRUMENT.
SAID EASEMENT WAS ALSO RECORDED IN BOOK 2053 OF DEEDS, PAGE 245, OF
OFFICIAL RECORDS
SAID EASEMENT IS ALSO SHOWN ON THE FILED MAP
4. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED IN THAT CERTAIN INSTRUMENT
RECORDED : MAY 10, 1965, REEL 1500, IMAGE 323, SERIES
NO. AX-63856, OF OFFICIAL RECORDS
GRANTED TO : PACIFIC TELEPHONE AND TELEGRAPH COMPANY
A CORPORATION AND PACIFIC GAS AND ELECTRIC COMPANY,
A CORPORATION
PURPOSE : ANCHOR
AFFECTS : A PORTION OF PREMISES
SAID EASEMENT ALSO SHOWN ON THE FILED MAP
5. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : WINDSOR LAND COMPANY, A PARTNERSHIP
RECORDED : JUNE 20, 1966, REEL 1790, IMAGE 422, Of OFFICIAL
RECORDS
EXHIBIT "E"
Page 8 of 15
<PAGE> 72
ORDER NO. 16086
CONTAINS NO REVERSIONARY CLAUSE.
CONTAINS NO MORTGAGEE PROTECTION CLAUSE.
MODIFICATION AND/OR AMENDMENT THEREFORE RECORDED NOVEMBER 14, 1966,
REEL 1872, IMAGE 60, OF OFFICIAL RECORDS BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
MODIFICATION AND/OR AMENDMENT THEREOF, RECORDED AUGUST 7, 1974, REEL
3747, IMAGE 489, OF OFFICIAL RECORDS BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
6. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : WINDSOR LAND COMPANY
RECORDED : NOVEMBER 29, 1968, REEL 2301, IMAGE 419, OF OFFICIAL
RECORDS
7. DECLARATION OF COVENANT TO PROVIDE RECIPROCAL EASEMENTS MADE BY
CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP. RECORDED MAY 61,
1976, REEL 4356, IMAGE 513, OFFICIAL RECORDS
8. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : OPEN SPACE
AFFECTS : SOUTHERLY 30 FEET OF SAID LAND
9. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $1,450,000.00
DATED : JUNE 70, 1977
TRUSTOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 555 CALIFORNIA ST., 24TH FLOOR
: SAN FRANCISCO, CALIFORNIA 94104
LOAN NO. : 2 169 514
RECORDED : JUNE 15, 1977, REEL 4909, IMAGE 86, SERIES NO.
77-116896, OFFICIAL RECORDS
EXHIBIT "E"
Page 9 of 15
<PAGE> 73
ORDER NO. 16086
10. EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS AND THE INCIDENTS
THERETO, WHICH ENCUMBERS THE LAND DESCRIBED HEREIN, AS CREATED IN THAT
CERTAIN DEED OF TRUST
EXECUTED BY : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
RECORDED : SEPTEMBER 28, 1977, REEL 5067, IMAGE 280, SERIES
NO. 77-192764, OF OFFICIAL RECORDS
AFFECTS : SOUTHERLY 30 FEET OF SAID LAND
UPON RECONVEYANCE OF SAID DEED OF TRUST THIS EASEMENT WILL BE
EXTINGUISHED OF RECORD.
INQUIRY OF THE VESTEE SHOULD BE HAD AS TO ITS DESIRE TO PERMANENTLY
CREATE THIS SERVITUDE.
EXHIBIT "E"
Page 10 of 15
<PAGE> 74
ORDER NO. 16087: 14226-14266 CATALINA STREET
At the date hereof exceptions to coverage in addition to the printed exceptions
and exclusions in said policy form would be as follows:
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $6,753.48 OPEN
2ND INSTALLMENT: $6 753.48 OPEN
LAND : $196,044.00
IMPROVEMENTS : $1,034,892,00
PERSONAL PPTY : $4,713.00
A.P. NO. : 080G-0932-027
CODE AREA : 10-057
2 THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED
PURSUANT TO CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA,
WHICH CHAPTER BECAME LAW ON JULY 29TH, 1983.
3. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED IN THAT CERTAIN INSTRUMENT
RECORDED : SEPTEMBER 25, 1959, BOOK 9162, PAGE 181, OF
OFFICIAL RECORDS
GRANTED TO : PACIFIC GAS & ELECTRIC COMPANY
PURPOSE : PUBLIC UTILITIES
AFFECTS : NORTHEASTERLY 90.22 FEET
THE RIGHT TO THIN AND REMOVE TREES AS RESERVED IN THE ABOVE MENTIONED
INSTRUMENT.
SAID EASEMENT WAS ALSO RECORDED IN BOOK 2053 OF DEEDS, PAGE 245, OF
OFFICIAL RECORDS
SAID EASEMENT IS ALSO SHOWN ON THE FILED MAP
4. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : WINDSOR LAND COMPANY, A PARTNERSHIP
RECORDED : JUNE 20, 1966, REEL 1790, IMAGE 422, OF OFFICIAL
RECORDS
CONTAINS NO REVERSIONARY CLAUSE.
CONTAINS NO MORTGAGEE PROTECTION CLAUSE.
MODIFICATION AND/OR AMENDMENT THEREOF, RECORDED NOVEMBER 14, 1966,
REEL 1872, IMAGE 60, OF OFFICIAL RECORDS BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
MODIFICATION AND/OR AMENDMENT THEREOF RECORDED AUGUST 70, 1974, REEL
3747, IMAGE 489, OF OFFICIAL RECORDS BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
EXHIBIT "E"
Page 11 of 15
<PAGE> 75
ORDER NO. 16087
5. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : WINDSOR LAND COMPANY
RECORDED : NOVEMBER 29, 1968, REEL 2301, IMAGE 419, OF
OFFICIAL RECORDS
6. DECLARATION OF COVENANT TO PROVIDE RECIPROCAL EASEMENTS MADE BY
CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP, RECORDED HAY 6,
1976, REEL 4356, IMAGE 513, OFFICIAL RECORDS
7. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : OPEN SPACE
AFFECTS : SOUTHERLY 30 FEET AND NORTHERLY 30 FEET OF PREMISES
8. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $1,050,000.00
DATED : SEPTEMBER 23, 1977
TRUSTOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 555 CALIFORNIA ST., 24TH FL., SAN FRANCISCO,
CALIF, 94104
LOAN NO. : 2 169 510
RECORDED : SEPTEMBER 28, 1977, REEL 5067, IMAGE 280, SERIES
NO. 77-192764, OFFICIAL RECORDS
9. EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS AND THE INCIDENTS
THERETO, WHICH ENCUMBERS THE LAND DESCRIBED HEREIN, AS CREATED IN THAT
CERTAIN DEED OF TRUST
EXECUTED BY : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
RECORDED : SEPTEMBER 28, 1977, REEL 5067, IMAGE 280, SERIES
NO. 77-192764, OF OFFICIAL RECORDS
AFFECTS : SOUTHERLY 30 FEET AND NORTHERLY 30 FEET OF PREMISES
UPON RECONVEYANCE OF SAID DEED OF TRUST THIS EASEMENT WILL BE
EXTINGUISHED OF RECORD.
INQUIRY OF THE VESTEE SHOULD BE HAD AS TO ITS DESIRE TO PERMANENTLY
CREATE THIS SERVITUDE.
EXHIBIT "E"
Page 12 of 15
<PAGE> 76
ORDER NO. 16092 : 14400 CATALINA STREET
At the date hereof exceptions to coverage in addition to the printed exceptions
and exclusions in said policy form would be as follows:
1.A A COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $2,738.79 OPEN
2ND INSTALLMENT: $2,738.79 OPEN
LAND : $66,402.00
IMPROVEMENTS : $432,786.00
A.P. NO. : 080G-0932-031
CODE AREA : 10-057
1.B COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $185.53 OPEN
2ND INSTALLMENT: $185.53 OPEN
LAND : -$61.00
IMPROVEMENTS : $34,32.00
A.P. NO. : 080G-0932-031
CODE AREA : 10-057
REASON : ESCAPED ASSESSMENT
ACTION : ESCAPED ASSESSMENT 1983
3. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED
PURSUANT TO CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA,
WHICH CHAPTER BECAME LAW ON JULY 29TH, 1983.
4. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED IN THAT CERTAIN INSTRUMENT
RECORDED : SEPTEMBER 25, 1959, BOOK 9162, PAGE 181,
OFFICIAL RECORDS
GRANTED TO : PACIFIC GAS & ELECTRIC COMPANY
PURPOSE : PUBLIC UTILITIES
AFFECTS : NORTHEASTERLY 90.22 FEET
THE RIGHT TO THIN AND REMOVE TREES AS RESERVED IN THE ABOVE MENTIONED
INSTRUMENT
SAID EASEMENT WAS ALSO RECORDED IN BOOK 2053 OF DEEDS, PAGE 245.
5. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED IN THAT CERTAIN INSTRUMENT
RECORDED : JULY 26, 1965, REEL 1559, IMAGE 237, OFFICIAL
RECORDS
GRANTED TO : THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY AND
PACIFIC GAS AND ELECTRIC COMPANY
PURPOSE : PUBLIC UTILITIES
AFFECTS : A PORTION OF SAID PREMISES
EXHIBIT "E"
Page 13 of 15
<PAGE> 77
ORDER NO. 16092
6. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, 1F
ANY, BASED ON RACE, COLOR RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : WINDSOR LAND COMPANY, A PARTNERSHIP
RECORDED : JUNE 20, 1966, REEL 1790, IMAGE 4229 OFFICIAL
RECORDS
CONTAINS NO REVERSIONARY CLAUSE.
CONTAINS NO MORTGAGEE PROTECTION CLAUSE.
MODIFICATION AND/OR AMENDMENT THEREOF, RECORDED NOVEMBER 14, 1966,
REEL 1872, IMAGE 60 OFFICIAL RECORDS BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
MODIFICATION AND/OR AMENDMENT THEREOF, RECORDED AUGUST 7, 1974, REEL
374,, IMAGE, 489, OFFICIAL RECORDS BUT DELETING RESTRICTIONS, IF ANY,
BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
7. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF
ANY, BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN
THE DECLARATION
BY : WINDSOR LAND COMPANY
RECORDED : NOVEMBER 29, 1968, REEL 2301, IMAGE 419, OFFICIAL
RECORDS
8. DECLARATION OF COVENANT TO PROVIDE RECIPROCAL EASEMENTS MADE BY
CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP, RECORDED MAY 69,
1976, REEL 4356, IMAGE 513, OFFICIAL RECORDS,
9. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : OPEN SPACE AND ACCESS
AFFECTS : NORTHWESTERLY 30 FEET AND THE SOUTHEASTERLY
30 FEET
10. UNRECORDED LEASE UPON THE TERMS AND CONDITIONS CONTAINED THEREIN
LESSOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
LESSEE : COMPUTERLAND CORPORATION, A CALIFORNIA CORPORATION
DISCLOSED BY : ASSIGNMENT OF LEASE AND AGREEMENT
RECORDED : APRIL 14, 1978, REEL 5346, IMAGE 214, OFFICIAL
RECORDS
SAID LEASE WAS SUBORDINATED TO THE LIEN OF THE DEED OF TRUST REFERRED
TO IN EXCEPTION NO. 11 BY AGREEMENT RECORDED APRIL 14, 1970, REEL
5346, IMAGE 204, OFFICIAL RECORDS.
EXHIBIT "E"
Page 14 of 15
<PAGE> 78
ORDER NO. 16092
11. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $475,000.00
DATED : APRIL 6, 1978
TRUSTOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : NOT SHOWN
LOAN NO. : 2 169 651
RECORDED : APRIL 14, 1978, REEL 5346, IMAGE 208, SERIES
NO. 78-068115, OFFICIAL RECORDS
AS ADDITIONAL SECURITY FOR THE OBLIGATION SECURED BY SAID INSTRUMENT,
THE LESSOR'S INTEREST IN THE LEASE REFERRED TO IN EXCEPTION NO. 10
HEREIN WAS ASSIGNED TO SAID BENEFICIARY BY INSTRUMENT RECORDED APRIL
14, 1978, REEL 5346, IMAGE 214, OFFICIAL RECORDS
12. EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS AND THE INCIDENTS
THERETO, WHICH ENCUMBERS THE LAND DESCRIBED HEREIN, AS CREATED IN THAT
CERTAIN DEED OF TRUST
EXECUTED BY : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
RECORDED : APRIL 14, 1978, REEL 5346, IMAGE 208, OFFICIAL
RECORDS
AFFECTS : NORTHWESTERLY 30 FEET AND SOUTHEASTERLY 30 FEET
UPON RECONVEYANCE OF SAID DEED OF TRUST THIS EASEMENT WILL BE
EXTINGUISHED OF RECORD.
INQUIRY OF THE VESTEE SHOULD BE HAD AS TO ITS DESIRE TO PERMANENTLY
CREATE THIS SERVITUDE.
13. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED IN THAT CERTAIN INSTRUMENT
RECORDED : MAY 25, 1979, SERIES NO, 79-100886, OFFICIAL
RECORDS
GRANTED TO : GATHER & KING, A GENERAL PARTNERSHIP
PURPOSE : OPEN SPACE AND VEHICULAR ACCESS
AFFECTS : SOUTHEASTERLY 30 FEET
14. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS
CREATED IN THAT CERTAIN INSTRUMENT
RECORDED : (TO BE RECORDED)
RESERVED BY : CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP
PURPOSE : OPEN SPACE AND VEHICULAR ACCESS
AFFECTS : NORTHWESTERLY 30 FEET
EXHIBIT "E"
Page 15 of 15
<PAGE> 79
EXHIBIT "F"
$4,900,000
County of Delaware, Ohio
Variable Rate Demand Industrial Development Revenue Bond
DESCRIPTION OF PROJECT
Bond proceeds loaned to the Company, Radiation Sterilizers, Inc., will
be used to acquire, construct and equip an industrial facility located at 305
Enterprise Drive, Westerville, Ohio 43081. The facility consists of a 20,8OO
square foot building located on a 1.343 acre site. The building is of steel
frame construction with an exterior insulated steel panel that is coated on all
sides with a 20-year factory applied finish. It includes 1,250 square feet of
air conditioned office area and a radiation cell comprising 4,000 square feet.
The radiation cell is a monolithically poured, reinforced concrete structure,
with walls and roof being six feet thick, covering a 23-foot deep, stainless
steel lined, water pool, The balance of the building is used for storing,
loading, and shipping materials.
The building site includes ample on-site parking and a loading dock to
the rear of the building. There are fifty feet of contoured landscaping in
front of the building, and ten to fifteen feet of landscaping along the sides
and rear of the site.
The principal installed equipment consists of a computer controlled
conveyor system and a quantity of Cobalt-60. The business of the Company is to
utilize the Cobalt-60 to sterilize materials--primarily medical
supplies--manufactured by other companies. The process also has potential
applications for sterilizing foodstuffs. The Company, which operates under
licenses from the federal Nuclear Regulatory Commission, has three other
similar, operational facilities: in Tustin, California, Schaumburg, Illinois,
and Decatur, Georgia.
Exhibit "F"
Page 1 of 1
<PAGE> 80
SCHEDULE B
Policy Number 65757 File Number __________
This policy does not insure against loss or damage by reason of the following:
1. The lien of all taxes for the ______________ year 1983 and
thereafter.
2. Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the
public records.
3. Any encroachments, easements, measurements, variations in area or
content, party walls or other facts which a correct survey of the
premises would show.
4. Rights or claims of parties in possession.
5. Roads ways streams or easements, if any, not shown of record, riparian
rights and the title to any filled-in lands.
6. Assessments, if any, which are a lien but not yet certified to the
County Auditor.
7. Subject to easements, set-back lines and restrictions as shown on the
recorded plat in plat Book 16, Page 107, copy attached.
8. Subject to an easement to Columbus and Southern Ohio Electric Co.
recorded in Deed Book 433, Page 499, copy attached.
EXHIBIT "G"
Page 1 of 1
<PAGE> 81
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of December 1, 1984 ("Security Agreement"),
is executed by CHARLES KING & ASSOCIATES, a California limited partnership
("Debtor"), for the benefit of WELLS FARGO BANK, N.A., a national banking
association ("Bank"), and Bank One Trust Company, N.A., a national banking
association ("Trustee"), Bank and Trustee being collectively referred to herein
as "Secured Party."
WHEREAS, the County of Delaware, Ohio (the "Issuer") and Radiation Sterilizers,
Incorporated, a California corporation ("RSI"), have entered into a Loan
Agreement as of even date herewith (the "Loan Agreement") whereby the Issuer
has agreed to issue bonds (the "Bonds") in the aggregate principal amount of
$4,900,000 and to lend the proceeds thereof to RSI to finance the construction
and operation of an industrial facility in Delaware County, Ohio, for the
sterilization of packaged products using ionizing radiation; and
WHEREAS, Bank is issuing a Letter of Credit (the "Letter of Credit")
as security for the obligations of RSI with regard to the Bonds and RSI is
executing, in connection therewith, a Letter of Credit Agreement (the
"Reimbursement Agreement"), one or more promissory notes evidencing advances
under the Letter of Credit (the "Notes") and various other documents defined in
the Reimbursement Agreement (and herein) as the "Loan Documents"; and
WHEREAS, Debtor has executed a General Continuing Guaranty of even
date herewith (the "Guaranty") pursuant to which Debtor has guaranteed all of
the obligations of RSI to Bank arising from or in connection with the Letter of
Credit, the Reimbursement Agreement or the other Loan Documents; and
WHEREAS, Debtor, pursuant to those certain deeds of trust dated as of
even date herewith (the "Deeds of Trust"), executed by Debtor, as trustor, in
favor of Secured Party, as beneficiary, has granted liens on the parcels of
real property described in Exhibit "A" hereto (the "Properties"), as security
for Debtor's obligations under the Guaranty; and
WHEREAS, in order to induce Bank to issue its Letter of Credit, Debtor
has agreed to enter into this Security Agreement in order to secure the payment
and performance required under the Guaranty;
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<PAGE> 82
NOW THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein, Debtor hereby agrees as follows:
1. Grant of Security Interest. To secure the payment and
performance by RSI of all obligations and indebtedness to Trustee under the
Loan Agreement and all related agreements, the Deeds of Trust and this Security
Agreement, and the payment and performance by Debtor of all obligations and
indebtedness to Bank under the Guaranty, the Deeds of Trust and this Security
Agreement, whether such obligations and indebtedness are now existing or owing
or are hereafter incurred or are absolute or contingent (the "Obligations"),
Debtor hereby grants, assigns and transfers to Secured Party a continuing
security interest in all of its right, title and interest in and to the
following described property (the "Collateral"):
(a) All Debtor's present and future accounts,
instruments, chattel paper, notes, drafts, contract rights,
governmental permits, rights to payment of any kind, any insurance
proceeds, condemnation proceeds, and any general intangibles and
inventory arising from or relating to any Property;
(b) All Debtor's present and future equipment, machinery,
tools, furniture and furnishings, whether owned or leased by Debtor,
now or hereafter located at any Property or relating to any Property;
(c) All fixtures located upon or within any Property or
now or hereafter attached to, or installed in, or used in connection
with any Property including, but not limited to, any and all
partitions; generators; screens; awnings; motors; engines; boilers;
furnaces; pipes; plumbing; elevators; cleaning, call and sprinkler
systems; fire extinguishing apparatus and equipment; water tanks;
heating, ventilating, air-conditioning and air-cooling equipment;
built-in refrigerated rooms and gas and electric machinery,
appurtenances and equipment; in each case whether or not permanently
affixed to that Property; together with all present and future
attachments, accessories, replacements, equipment, additions and any
proceeds thereof;
(d) All water stock, if any, relating to any Property and
all shares of stock or other evidence of ownership of any part of or
interest in any Property that is owned by Debtor in common with
others;
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<PAGE> 83
(e) All present and future trade marks and trade names,
and all present and future books and records pertaining to any
Property or the collateral described in subparagraphs (a) through (e)
above, and the equipment containing such books and records; and
(f) All proceeds and products of any of the foregoing,
including without limitation all monies, deposit accounts, insurance
proceeds and other tangible or intangible property received upon a
sale or other disposition of any of the foregoing.
2. Representations and Warranties of Debtor. Debtor hereby
represents to Secured Party that:
(a) Debtor is the true and lawful owner of and has good
and clear title to the Collateral, subject only to the rights of
Secured Party hereunder and to the rights of other lenders with
respect to each security interest ("Permitted Lien") granted by Debtor
in conjunction with any lien on the related Property that is described
in the Reimbursement Agreement as a "Permitted Encumbrance."
(b) This Security Agreement creates a valid security
interest in favor of Secured Party in the Collateral as it shall exist
from time to time, which security interest will, when perfected, be
superior and prior in right to all claims of creditors of Debtor and
to all other security interests, liens and encumbrances in respect
thereof except the Permitted Liens.
(c) There is no financing statement covering the
Collateral on file in any public office except those perfecting the
Permitted Liens, and, except for the Permitted Liens and the security
interests which inure to the benefit of Secured Party pursuant to this
Security Agreement, there is no adverse lien, security interest or
encumbrance in or upon the Collateral.
(d) Debtor's principal Place of business and chief
executive and accounting offices are located at 3000 Sand Hill Road,
Building 4, Suite 245, Menlo Park, California 94025.
3. Covenants by Debtor. Debtor hereby covenants in favor of
Secured Party that:
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<PAGE> 84
(a) Prior to or simultaneously with Debtor's execution of
the Guaranty, Debtor will execute and cause to be filed in accordance
with the Commercial Code of the State of California, financing
statements in form and substance satisfactory to Secured Party, and
thereafter will execute and deliver such other documents (including
but not limited to continuation statements) as Secured Party may
reasonably require in order to perfect or maintain as perfected such
security interests and, to the extent so required by Secured Party,
will give public notice of all such transactions.
(b) Debtor shall notify Secured Party prior to changing
its principal place of business and chief executive and accounting
offices from the location set forth in Section 2(d) of this Security
Agreement.
(c) Debtor shall at all times maintain the Collateral
ingood repair, working order and condition and will fromtime to time
make or cause to be made all needed and proper replacements, repairs,
renewals and improvements so that the efficiency and value of the
Collateral shall not be impaired.
(d) Debtor will at all times keep accurate and complete
records with respect to the Collateral and agrees that the
representatives of Secured Party shall have the right, at any time
during normal business hours or at any other reasonable time, and from
time to time, to call at Debtor's place or places of business where
the Collateral or any part thereof may be held or located or the
records pertaining to the Collateral may be kept and to inspect the
Collateral and/or examine or cause to be examined such records and to
make abstracts therefrom or copies thereof; in addition, Debtor shall
furnish Secured Party with periodic reports as to the Collateral, in
such form and detail and at such times as Secured Party may require.
(e) Monies received because of any court or arbitration
award or settlement or insurance payment, for any loss or damage to
the Collateral, and proceeds from any condemnation award or settlement
relating to the Collateral shall be treated as provided in the Deed of
Trust with regard to the related Property.
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<PAGE> 85
4. Notice to Secured Party.
(a) Debtor covenants that, as soon as practicable, and in
any event within 10 days, it shall notify Secured Party of:
(i) The occurrence or non-occurrence of any event
which constitutes, or which with the passage of time would
constitute, an Event of Default under this Security Agreement;
(ii) Any attachment or other legal process levied
against any of the Collateral; and
(iii) Any information received by Debtor relevant to
the Collateral which may in any manner materially and
adversely affect the value of the Collateral or the rights and
remedies of Secured Party in respect thereto.
Any notice delivered pursuant to this Section 4(a) shall set
forth the nature of such event or non-event and the action which
Debtor proposes to take with respect thereto.
(b) Debtor covenants that it shall immediately notify
Secured Party of the removal of any of the Collateral to a new
location and of each office of Debtor at which records of Debtor
relating to the Collateral are kept.
5. Events of Default. The term Event of Default whenused in this
Security Agreement shall mean any one or more of the following events:
(a) Any statement, representation or warranty made by
Debtor hereunder or in the Guaranty shall prove to be false,
inaccurate or incorrect in any material respect when made.
(b) Debtor shall fail to pay any amount owing under the
Guaranty, this Security Agreement or any Deed of Trust, within ten
(10) days after notice.
(c) Debtor shall fail to perform or observe any term,
covenant or agreement contained in the Guaranty, this Security
Agreement or any Deed of Trust the breach of which can be cured by the
payment of money, within ten (10) days after notice.
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<PAGE> 86
(d) Debtor shall fail to perform or observe any term,
covenant or agreement contained in the Guaranty, this Security
Agreement or any Deed of Trust (other than terms, covenants or
agreements the breach of which can be cured by the payment of money)
within thirty (30) days after notice; provided, however, that if cure
cannot reasonably be effected within such thirty (30) day period there
shall be no Event of Default under this Section 5(d) so long as Debtor
promptly (in any event, within such thirty (30) day period) commences
cure and thereafter diligently prosecutes such cure to completion.
(e) Any statement, representation or warranty made by RSI
for the benefit of Trustee in the Loan Agreement or any related
document shall prove to be false, inaccurate or incorrect in any
material respect when made.
(f) RSI shall fail to pay any amount owing to Trustee
under the Loan Agreement or any related document within ten (10) days
after notice.
(g) RSI shall fail to perform or observe any term,
covenant or agreement contained in the Loan Agreement or any related
document the breach of which can be cured by the payment of money,
within ten (10) days after notice.
(h) RSI shall fail to perform or observe any term,
covenant or agreement contained in the Loan Agreement or any related
document (other than terms, covenants or agreements the breach of
which can be cured by the payment of money) within thirty (30) days
after notice; provided, however, that if cure cannot reasonably be
effected within such thirty (30) day period there shall be no Event of
Default under this Section 5(h) so long as RSI promptly (in any event,
within such thirty (30) day period) commences cure and thereafter
diligently prosecutes cure to completion.
6. Remedies on Default. Secured Party shall have the following
remedies if an Event of Default shall have occurred:
(a) Secured Party shall have the right to exercise all
remedies and powers provided to Secured Party in the Deeds of Trust.
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<PAGE> 87
(b) Secured Party shall have the right to take whatever
legal action may appear necessary or desirable to collect the payments
declared due under this Security Agreement or the Guaranty.
(c) Secured Party shall have the right to exercise any
remedies granted to a secured party under the Commercial Code of the
State of California and the general laws of the State of California
with respect to the enforcement of the security interests granted or
reserved hereunder.
(d) Secured Party may require Debtor to assemble all or
any part of the Collateral and make it available to Secured Party at
any reasonably convenient location.
(e) Secured Party shall have the right to exercise any
and all other rights and remedies which may be available at law or in
equity.
Secured Party shall have the right to enforce one or more remedies
provided by this Section 6 successively or concurrently, and such action shall
not stop or prevent Secured Party from pursuing any further remedy which it may
have under this Section 6 or which is described under said laws. Debtor shall
reimburse Secured Party for any and all legal costs, including reasonable
attorneys' fees, and other expenses incurred in collecting any sums payable by
Debtor pursuant to any Obligation secured hereunder, enforcing any term or
provision of this Security Agreement, checking, handling, preparing for sale,
collecting or selling the Collateral or in preparing or enforcing any agreement
relating thereto. If a sufficient sum is not realized from the disposition of
the Collateral to pay all of the Obligations, Debtor hereby promises and agrees
to pay Secured Party any deficiency.
7. Obligation of Debtor Unconditional. Debtor's requirements to
perform and observe the agreements and covenants on its part contained herein
shall be absolute and unconditional. Until such time as all payments under the
Deeds of Trust, this Security Agreement, the Guaranty and the Loan Agreement
shall have been made, Debtor (i) shall perform and observe all of its
agreements and covenants contained in this Security Agreement; and (ii) shall
not terminate this Security Agreement for any cause, including without
limitation any acts or circumstances that may constitute failure of
consideration, destruction of, or damage to, the Collateral, commer-
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<PAGE> 88
cial frustration of purpose, any change in the laws of the United States of
America or of the State of California or any political subdivision of either,
or any failure of Secured Party to perform or observe any agreement, whether
express or implied, or any duty, liability or obligation, arising out of or
connected with this Security Agreement.
8. Entire Agreement; Waiver. This Security Agreement,
togetherwith those provisions of the Guaranty and the Deeds of Trust alluded to
herein, constitutes the entire agreement between Debtor and Secured Party
pertaining to the subject matter contained herein. This Security Agreement may
not be amended, changed, modified, altered or terminated except by a written
instrument signed by Secured Party and Debtor.
9. Notices. All notices or communications herein required or
permitted to be given shall be in writing and shall be governed in all respects
pursuant to Section 16 of the Guaranty, except that notices to Trustee shall be
governed by the Loan Agreement.
10. Severability. In the event any provision of this Security
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
11. Section Headings. The subject headings and the sections and
subsections of this Security Agreement are included for purposes of convenience
only and shall not affect the construction or interpretation of any such
provisions.
12. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the State of California.
13. Definitions. Unless otherwise defined, words used herein have
the meanings given them in the Commercial Code of California.
14. Execution of Counterparts. This Security Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original, and all of which shall constitute but one and the same instrument.
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<PAGE> 89
IN WITNESS WHEREOF, Debtor has caused this Security Agreement
to be duly executed as of the date and year first above written.
"Debtor":
CHARLES KING & ASSOCIATES
a California limited partnership
By: /s/ Charles W. King Jr.
-------------------------------
Charles W. King., Jr.,
its sole general partner
-9-
<PAGE> 90
EXHIBIT "A"
(14054-14072 Catalina Street)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located
thereon, situated in the City of San Leandro, County of Alameda, State
of California, and described as follows:
PARCEL ONE:
PARCEL A, PARCEL MAP NO. 1871, PILED MAY 6, 1976 BOOK 89 OF PARCEL MAPS, PAGE
85, ALAMEDA COUNTY RECORDS.
RESERVING FROM PARCEL ONE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE SOUTHEASTERLY LINE THEREOF BEING THE
SOUTHEASTERLY LINE OF SAID PARCEL A OF PARCEL MAP NO. 1871.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY LINE THEREOF BEING THE
SOUTHEASTERLY LINE OF PARCEL A. PARCEL MAP NO. 1071, FILED MAY 69, 1976, BOOK
89, OF PARCEL MAPS, PAGE 85, ALAMEDA COUNTY RECORDS.
A.P. NO. 080G-0931-018
Exhibit "A"
Page 1 of 5
<PAGE> 91
EXHIBIT "A"
(14226 - 14266 Catalina Street)
All that certain real property together with all appurtenances
thereto and all improvements now or hereafter located thereon,
situated in the City of San Leandro, County of Alameda, State of
California, and described as follows:
PARCEL ONE:
PARCEL 1, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976 BOOK 94 OF PARCEL MAPS,
PACE 21, ALAMEDA COUNTY RECORDS.
RESERVING FROM PARCEL ONE:
A) A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES
FOR THE BENEFIT OF PARCEL AT PARCEL MAP NO. 1871, FILED MAY 6, 1976,
BOOK 89 OF PARCEL MAPS, PAGE 85, OFFICIAL RECORDS, OVER A STRIP OF
LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF SAID PARCEL As OF PARCEL MAP NO. 2044.
B) A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES
FOR THE BENEFIT OF PARCEL 2, PARCEL MAP 2044, FILED DECEMBER 16, 1976,
BOOK 94, PAGE 21, OFFICIAL RECORDS, OVER A STRIP OF LAND 30 FEET WIDE,
THE SOUTHEASTERLY LINE THEREOF BEING THE SOUTHEASTERLY LINE OF SAID
PARCEL 1 OF PARCEL MAP NO. 2044.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHEASTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF PARCEL 1, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976,
BOOK 94, OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF BEING THE
SOUTHEASTERLY LINE OF PARCEL 1, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976,
BOOK 94, OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 080G-0932-027
Exhibit "A"
Page 2 of 5
<PAGE> 92
EXHIBIT "A"
(14400 Catalina Street)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located
thereon, situated in the City of San Leandro, County of Alameda, State
of California, and described as follows:
PARCEL ONE:
PARCEL IS PARCEL MAP NO. 2379, FILED DECEMBER 27, 1977, BOOK 98, OF PARCEL
MAPS, PAGE 92, ALAMEDA COUNTY RECORDS.
RESERVING FROM PARCEL ONE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF SAID PARCEL 1 OF PARCEL MAP NO. 2379.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT APPURTENANT TO PARCEL 1 ABOVE, FOR OPEN SPACE AND
VEHICLE ACCESS PURPOSES OVER A STRIP OF LAND 30 FEET WIDE THE SOUTHERLY LINE
THEREOF BEING THE NORTHWESTERN LINE OF PARCEL R, PARCEL MAP NO. 2181, FILED
JULY 29, 1977, BOOK 97, OF PARCEL MAPS PAGE 72, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT APPURTENANT TO PARCEL ONE ABOVE, FOR OPEN SPACE AND
VEHICULAR ACCESS PURPOSES OVER A STRIP OF LAND 30 FEET WIDE THE NORTHWESTERLY
LINE OF WHICH IS THE NORTHERLY LINE OF PARCEL 2 OF PARCEL MAP NO. 2379, FILED
DECEMBER 27, 1977, BOOK 98, OF PARCEL MAPS, PAGE 92, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 080G-0932-031
Exhibit "A"
Page 3 of 5
<PAGE> 93
EXHIBIT "A"
(20408 Corsair Boulevard)
All that certain real property, together with all appurtenances
thereto and all improvements now or hereafter located thereon, situated in the
City of Hayward, County of Alameda, State of California, and described as
follows:
LOTS 1 AND 2, AS SHOWN ON THE MAP OF TRACT 3046, FILED AUGUST
14, 1969, IN BOOK 63 OF MAPS, PAGES 8 TO 14, INCLUSIVE, ALAMEDA
COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 432-0114-012-01
EXHIBIT "A"
Page 4 of 5
<PAGE> 94
EXHIBIT "A"
(20464-20472 Corsair Boulevard)
All that certain real property, together with all
appurtenances thereto and all improvements now or hereafter located thereon,
situated in the City of Hayward, County of Alameda, State of California, and
described as follows:
PARCEL 1 AS SHOWN ON PARCEL MAP NO. 417, FILED JANUARY 10, 1969, IN BOOK 58 OF
MAPS, PAGE 76, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY
ASSESSOR'S PARCEL NO. 432-0101-030
EXHIBIT "A"
Page 5 of 5
<PAGE> 1
EXHIBIT 10.24
GENERAL CONTINUING GUARANTY
This General Continuing Guaranty (the "Guaranty"), dated as of
December 1, 1984, is executed by CHARLES KING & ASSOCIATES, a California
limited partnership ("Guarantor") in favor of WELLS FARGO BANK, N.A., a
national banking association ("Bank"), in order to induce Bank to issue a
letter of credit in the amount of $5,047,672.00 (the "Letter of Credit") in
favor of Bank One Trust Company, N.A., a national banking association
("Trustee"), pursuant to that certain Letter of Credit Agreement (the
"Reimbursement Agreement") between Bank and Radiation Sterilizers,
Incorporated, a California corporation ("Company") dated as of even date
herewith. Pursuant to the Reimbursement Agreement, the indebtedness of Company
to Bank may be evidenced by one or more promissory notes (the "Notes").
Capitalized terms used herein and not otherwise defined in this Guaranty shall
have the same meanings as set forth in the Reimbursement Agreement.
1. Guaranty of Indebtedness. For valuable
consideration, Guarantor irrevocably and unconditionally guarantees and
promises to pay to Bank, or order, on demand in lawful money of the United
States of America, any and all Indebtedness of Company to Bank arising from or
in connection with the Reimbursement Agreement or the other Loan Documents or
the issuance by Bank of the Letter of Credit or any payments by Bank thereon.
The word "Indebtedness" is used herein in its most comprehensive sense and
includes (a) the indebtedness evidenced by the Notes; (b) any and all existing
and future obligations of Company to Bank under the Loan Documents and
including any and all other present and future advances, debts, obligations and
liabilities of Company heretofore, now, or hereafter made, incurred or created,
whether voluntary or involuntary and however arising from the transaction in
which the Loan Documents were created, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Company may be liable individually or jointly with others, or whether recovery
upon such indebtedness may be or hereafter become barred by any statute of
limitations, or whether such indebtedness may be or hereafter become invalid or
otherwise unenforceable; and (c) any and all amendments, modifications,
renewals and/or extensions of any of the foregoing, including but not limited
to amendments, modifications, renewals or extensions which are evidenced by a
new or additional instrument, document or agreement or which change the rate of
interest on any Indebtedness.
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<PAGE> 2
2. Continuing Nature of Guaranty. This is a continuing
guaranty relating to any indebtedness, including that arising under successive
and future transactions which shall either increase or continue the
Indebtedness or from time to time renew it after it has been satisfied.
3. Loan Documents. Guarantor has read, is familiar with
and approves all of the Loan Documents including without limitation the
Reimbursement Agreement and the Notes.
4. Rights Independent. The obligations hereunder are
independent of the obligations of Company or any other guarantor, and a
separate action or actions may be brought and prosecuted against Guarantor
whether or not action is brought and prosecuted against Company or any other
guarantor and whether or not Company or any other guarantor is joined in any
such action or actions; and Guarantor waives the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof. The
liability of Guarantor hereunder shall be reinstated and revived, and the
rights of Bank shall continue, with respect to any amount at any time paid on
account of the Indebtedness guaranteed hereby, which shall thereafter be
required to be restored or returned by Bank upon the bankruptcy, insolvency or
reorganization of Company, or otherwise, all as though such amount had not been
paid.
5. Authority to Modify Obligations. To the extent
permitted under Section 4.6 of the Reimbursement Agreement, Guarantor
authorizes Bank, without notice or demand and without affecting its liability
hereunder; from time to time to: (a) renew, extend, accelerate or otherwise
change the time for payment of, or otherwise change the terms of the
Indebtedness or any part thereof, including increase or decrease of the rate of
interest thereon; (b) accept partial payments on the Indebtedness; (c) accept
new or additional documents, instruments or agreements relative to the
Indebtedness; (d) take and hold security or additional guarantees for the
payment of this Guaranty or the Indebtedness, and amend, alter, exchange,
substitute, transfer, enforce, waive, subordinate, terminate, modify and
release in any manner any such security or guarantees; (e) apply such security
and direct the order or manner of sale thereof as Bank in its discretion may
determine; (f) release or substitute any one or more of any other guarantors;
and (g) settle, release on terms satisfactory to Bank or by operation of law or
otherwise, compound, compromise, collect or otherwise liquidate any
Indebtedness
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<PAGE> 3
and/or security therefor in any manner, consent to the transfer of security and
bid and purchase at any sale, without affecting or impairing the obligations of
Guarantor hereunder. Bank may without notice assign this Guaranty in whole or
in part.
6. Waiver of Defenses. Guarantor waives any right to
require Bank to: (a) proceed against Company or any other guarantor; (b)
proceed against or exhaust any security for the Indebtedness; (c) give notice
of the terms, time and place of any public or private sale of any real or
personal property security for the Indebtedness; or (d) pursue any other remedy
in Bank's power whatsoever. Guarantor waives any defense arising by reason of
any disability or other defense of Company, or by reason of the cessation from
any cause whatsoever of the liability of Company, or by reason of any act or
omission of Bank or others which directly or indirectly results in or aids the
discharge or release of Company or any Indebtedness or any security or guaranty
therefor by operation of law or otherwise. Until all indebtedness of Company
to Bank shall have been paid in full, Guarantor shall have no right of
subrogation, and Guarantor waives any right to enforce any remedy which Bank
now has or may hereafter have against Company or any other guarantor, and
waives any benefit of, and any right to participate in, any security now or
hereafter held by Bank. Guarantor waives all setoffs and counterclaims and all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty and of the existence, creation, or incurring of new or additional
Indebtedness.
7. Reliance. Guarantor acknowledges that Bank is
relying on this Guaranty and on the financial strength, solvency and business
reputation of Guarantor in issuing the Letter of Credit and executing the Loan
Documents, and that Bank would be unwilling to issue the Letter of Credit in
the absence of this Guaranty.
8. Attorney's Fees. Guarantor agrees to pay a
reasonable attorney's fee and all other costs and expenses which may be
incurred by Bank in the enforcement of this Guaranty and in the collection of
the indebtedness of Company to Bank.
9. Representations and Warranties. Guarantor represents
and warrants to Bank that:
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<PAGE> 4
(a) Formation of Guarantor. Guarantor (i) is a
limited partnership duly organized, validly existing and in good
standing under the laws of the State of California, (ii) has all
requisite power and authority to conduct its business and to own and
lease its properties, and (iii) is in good standing in every
jurisdiction in which the nature of business conducted by it makes
such qualification necessary or where failure to so qualify would have
a material adverse effect on its business or financial condition or
its performance of its obligations hereunder.
(b) Execution, Delivery and Performance of
Guaranty.
(i) Guarantor has all requisite power
and authority to execute and deliver, and to perform
all of its obligations under, this Guaranty.
(ii) The execution and delivery by
Guarantor of, and the performance by Guarantor of all
of its obligations under, this Guaranty have been
duly authorized by all necessary action and do not
and will not:
(1) require any consent or approval
not heretofore obtained of any Person having
any interest in Guarantor;
(2) violate any provision of, or
require any consent under, the partnership
agreement, statement of partnership or any
other governing document applicable to
Guarantor;
(3) result in or require the
creation or imposition of any mortgage, deed
of trust, pledge, lien, security interest,
claim, charge, right of others, or other
encumbrance of any nature (other than under
the Loan Documents) upon or with respect to
any property now owned or leased or hereafter
acquired by Guarantor;
(4) violate any provision of any
law, rule, regulation (including without
limitation Regulations U or X of the Board of
Governors of the Federal Reserve System),
order, writ, judgment, injunction, decree,
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<PAGE> 5
determination or award presently in effect
having applicability to Guarantor; or
(5) result in a breach of or
constitute a default under, or cause or
permit the acceleration of any obligation
owed under, any indenture or loan or credit
agreement or any other agreement, lease, or
instrument to which Guarantor is a party or
by which Guarantor or any of its property is
bound or affected.
(iii) At the time of execution of this
Guaranty, Guarantor is not in default in any respect
that is materially adverse to the interests of the
holder of this Guaranty or that would have any
material adverse effect on the financial condition of
Guarantor or the conduct of its business under any
law, rule, regulation, order, writ, judgment,
injunction, decree, determination, award, indenture,
agreement, lease or instrument described in
subsections (b)(ii)(4) or (5), above.
(iv) No authorization, consent, approval,
order, license, exemption from, or filing or
registration or qualification with, any court or
governmental department, public body, authority,
commission, board, bureau, agency, or
instrumentality, is or will be required to authorize,
or is otherwise required in connection with the
following:
(1) the execution and delivery by
Guarantor of, and the performance by
Guarantor of all of its obligations under,
this Guaranty, or
(2) the creation of the liens,
security interests, or other charges or
encumbrances created by the Deeds of Trust
and the Security Agreement, which secure
Guarantor's obligations hereunder.
(v) This Guaranty, when executed and
delivered, will constitute the legal, valid, and
binding obligation of Guarantor, enforceable against
it in accordance with its terms.
(c) Financial Statements. Guarantor has
furnished to Bank the balance sheet and statement of profit and loss
for Guarantor for the year ending
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<PAGE> 6
December 31, 1983, and for the period ending August 31, 1984, and such
statements fairly present the financial position of Guarantor as of
the date thereof, in conformity with generally accepted accounting
principles.
(d) No Material Adverse Change. There has been
no material adverse change in the condition, financial or otherwise,
of Guarantor since the date of the financial statements described in
subsection (c), above; since that date, Guarantor has not entered into
any material transaction not disclosed in such financial statements or
otherwise disclosed in writing to Bank; Guarantor has no material
liability or contingent liability not reflected or disclosed in such
financial statements or writings; and there are no material mortgages,
deeds of trust, pledges, liens, security interests, claims, charges,
rights of others or encumbrances for borrowed money (including liens
or retained security titles of conditional vendors) of any nature
whatsoever on any property of Guarantor, and no material indebtedness
of Guarantor, not disclosed in such financial statements or otherwise
disclosed to Bank in writing.
(e) Tax Liability. Guarantor has filed all tax
returns (federal, state and local) required to be filed and has paid
all taxes shown thereon to be due and all property taxes due,
including interest and penalties, if any; provided, however, that
Guarantor shall not be required to pay and discharge any such tax so
long as the legality thereof shall be promptly and actively contested
in good faith and by appropriate proceedings. Guarantor has
established and is maintaining adequate reserves for tax liabilities,
if any, in accordance with generally accepted accounting principles
(including any tax liabilities contested pursuant to this subsection
(e)).
(f) Compliance with Laws. Guarantor is and shall
remain in compliance in all material respects with all laws,
regulations and requirements applicable to it and has obtained all
authorizations, consents, approvals, orders, licenses, exemptions
from, and has accomplished all filings or registrations or
qualifications with, any court or governmental department, public
body, authority, commission, board, bureau, agency or instrumentality,
that is necessary for the transaction of its business.
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<PAGE> 7
(g) Litigation. There are no material actions,
suits or proceedings pending or threatened against or affecting
Guarantor or any property of Guarantor before any court or
governmental department, public body, authority, commission, board,
bureau, agency or instrumentality, except as expressly disclosed to
Bank in writing by Guarantor prior to the execution of this Guaranty.
10. Affirmative Covenants. For so long as any obligation
of Company or Guarantor in connection with any Loan Document remains
outstanding, Guarantor shall, unless Bank otherwise consents in writing:
10.1 Protection of Liens on Properties. Maintain the
liens created by the Deeds of Trust upon the Properties and take such actions
and execute and deliver to Bank such instruments and documents as Bank may
reasonably require from time to time in connection therewith.
10.2 Protection of Security Interest in Personal
Property. Maintain the lien created by the Security Agreement upon the
Personal Property, and take such actions and execute and deliver to Bank such
instruments and documents as Bank may reasonably require from time to time in
connection therewith, including without limitation any supplemental security
agreements, form UCC-1 or UCC-2 financing statements or other instruments and
documents extending or perfecting the security interests of Bank and Trustee in
and to the Personal Property as it may exist from time to time.
10.3 Payment of Taxes, Assessments and Charges. Pay all
taxes, assessments, charges and levies imposed by any public authority or
utility company which are or may become a lien affecting any Property or any
part thereof, including without limitation assessments on any appurtenant water
stock; provided, however, that Guarantor shall not be required to pay and
discharge any such tax, assessment, charge or levy so long as (a) the legality
thereof shall be promptly and actively contested in good faith and by
appropriate proceedings and (b) Guarantor maintains reserves adequate to pay
any liabilities contested pursuant to this Section 10.3.
10.4 Insurance. Provide or cause to be provided the
following policies of insurance:
(a) insurance covering 100% of the replacement
cost of all improvements on each Property in the
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<PAGE> 8
event of fire, lightning, windstorm, vandalism, malicious mischief and
such other hazards, casualties and contingencies as are normally and
usually covered by extended coverage policies in effect in the
locality where each Property is situated (including insurance against
loss by flood if the Property is now or hereafter located in an area
designated as being subject to the danger of flood);
(b) public liability insurance in an amount
deemed necessary from time to time by Bank, but in no event less than
$1,000,000.00 for "single occurrence";
(c) property damage insurance in an amount deemed
necessary from time to time by Bank, but in no event less than
$500,000.00;
(d) such business interruption insurance with
respect to business uses of any Property as Bank may require
(including insurance against rental or income loss during a period of
repair or restoration of damage for a period of at least six months);
and
(e) such other policies of insurance as Bank may
reasonably require from time to time.
All such insurance coverages (i) shall be maintained at Guarantor's sole cost
and expense, as long as any obligation of Company or Guarantor in connection
with the Reimbursement Agreement, the Letter of Credit or any of the other Loan
Documents remains outstanding (ii) shall be with insurers of recognized
responsibility which are approved in writing by Bank, (iii) shall be in form
and substance satisfactory to Bank, (iv) shall include a "lender's loss payable
endorsement" (Form 438 BFU) in form and substance satisfactory to Bank,
assuring Bank that all proceeds are to be payable to Bank and Trustee, as their
interests appear, (v) shall contain a provision to the effect that the insurer
shall not cancel the policy or modify it materially and adversely to the
interests of Bank or Trustee, as their interests appear, without first giving
at least thirty (30) days' prior written notice thereof, and (vi) shall be in
such deductible amounts as Bank and Guarantor shall agree upon (in the absence
of which agreement such policies shall not have deductible amounts).
Certificates of insurance for all of the above insurance policies, showing the
same to be in full force and effect, shall be delivered to Bank upon demand by
Bank therefor at any time while any obligation of Company or Guarantor in
connection with the Reimbursement Agreement,
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<PAGE> 9
the Letter of Credit or any of the Loan Documents remains outstanding. All
policies insuring against damage to the improvements on any Property shall
contain an agreed value clause sufficient to eliminate any risk of
co-insurance.
10.5 Title Insurance Indorsements. Deliver or cause to
be delivered to Bank such indorsements and binders to the ALTA Policies in form
and content satisfactory to Bank, as Bank may from time to time require.
10.6 Governmental Approvals. Deliver to Bank, from time
to time at Bank's request, evidence in form and substance satisfactory to Bank
that Guarantor has complied with all applicable laws, ordinances, regulations
and other requirements relating thereto.
10.7 Compliance with Requirements. Comply with all
conditions, covenants, restrictions, easements, reservations, rights, rights of
way and all applicable laws, ordinances, regulations, use permits, occupancy
permits, building permits and other requirements, including without limitation
those affecting or relating to each Property, the construction of any
improvements thereon or Guarantor's operations thereon.
10.8 Continued Existence. Maintain its existence, and
continue to be a limited partnership in good standing in the State of
California. In connection with the covenants given pursuant to this Section
10.8, Guarantor agrees that it will not dissolve or otherwise dispose of all or
substantially all of its assets.
10.9 Books and Records. Maintain full and complete books
of account and other records reflecting the results of its operations (in
conjunction with any other ventures as well as specifically with respect to the
Properties), including without limitation all contributions of equity
investment capital, and provide to Bank, promptly after request by Bank
therefor, such financial statements and other information pertaining to
Guarantor, and the assets and operations of Guarantor, as Bank may from time to
time request.
10.10 Maintenance and Furnishing of Properties. Maintain
the Properties, and each portion thereof (including without limitation
equipment, machinery and fixed assets) fully furnished and in good condition
and repair; and not permit any waste or damage with respect thereto.
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<PAGE> 10
10.11 Annual Operating Statements. Deliver to Bank the
following:
(a) Promptly and in any event within ninety (90)
days after the end of each fiscal year of Guarantor, balance sheets
and statements of income for Guarantor's operations for such fiscal
year, accompanied with all supporting schedules and certificates of
Guarantor's managing general partner that the statements are true and
correct.
(b) Upon request, copies of all such regular or
periodic financial statements or financial reports as Guarantor shall
send to its partners.
(c) Upon request, copies of all such regular or
periodic reports which are available for public inspection which
Guarantor may be required to file with any federal or state
department, bureau, commission or agency, including without limitation
tax returns.
10.12 Quarterly Operating Statements. Deliver to Bank,
upon Bank's request, within thirty (30) days after the end of each calendar
quarter, an income statement reflecting the operation of the Properties during
such quarter. Such quarterly statement shall contain such information as Bank
may reasonably require.
10.13 List of Personal Property. Deliver to Bank, from
time to time, within thirty (30) days of Bank's request therefor, a list of all
of the Personal Property then in existence.
10.14 Notice of Litigation. Give notice to Bank, within
twenty (20) days of Guarantor's learning thereof, of any of the following:
(a) any litigation materially affecting or
relating to any Property;
(b) any dispute between Guarantor and any
municipal or other governmental authority relating to any
Property the adverse determination of which might materially
affect that Property;
(c) any threat or commencement of proceedings in
condemnation or eminent domain relating to any Property.
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<PAGE> 11
10.15 Security of Properties. Take such measures to
protect the physical security of each Property and the Personal Property as
Bank may reasonably deem advisable.
10.16 Copies of Leases. Upon request by Bank, give
written notice to Bank of the entry by Guarantor into any lease or other
agreement pursuant to which any Person is given any right to occupy or use any
portion of any Property, together with true and correct copies of each such
lease or other agreement.
11. Negative Covenants. For so long as any obligation of
Company or Guarantor in connection with any Loan Document remains outstanding,
Guarantor shall not, unless Bank otherwise consents in writing:
11.1 Liens on Property. Create or cause or suffer to
become effective any mortgage, deed of trust or like lien or encumbrance
affecting any Property or any portion of the same, except for the lien of non-
delinquent real property taxes and those matters listed in Exhibit "E" to the
Reimbursement Agreement.
11.2 Liens on Personal Property. Install in, or
otherwise use in connection with, any Property any Personal Property under any
security agreements or similar agreements however denominated, other than the
Permitted Liens (as defined in the Security Agreement), whereby the right is
reserved or accrues to anyone to remove or repossess any such items or whereby
any Person other than Bank or Trustee reserves or acquires a lien upon such
items. In no event shall any financing of personal property be permitted
pursuant to this Section 11.2 if such financing will result in a "determination
of taxability" (as that term is defined in the Bond Documents) as to interest
on the Bonds.
11.3 Transfers of Property or Obligations. Assign or
delegate any obligations under any Loan Document or sell, assign, convey, lease
as a whole or otherwise transfer any Property, any of the Personal Property, or
any interest therein (except for dispositions of personal property permitted
pursuant to Section 11.4, below, occupancy agreements permitted pursuant to
Section 11.5, below and junior encumbrances permitted pursuant to Sections 11.1
and 11.2, above), without (,a) obtaining the express prior written consent of
Bank, which consent may be granted or withheld in its sole discretion; or (b)
providing Bank and Trustee with substitute collateral acceptable to Bank. In
connection with the restrictions contained in this Section 11.3, Guarantor
acknowledges
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<PAGE> 12
that Bank has entered into the transaction contemplated by the Reimbursement
Agreement in reliance upon the financial strength, creditworthiness, reputation
and management expertise of Guarantor and would not have entered into such
transaction but for such reliance.
11.4 Removal of Personal Property. Remove or permit the
removal from any Property of any items of Personal Property (other than tools
and construction equipment intended for use in connection with the construction
of other improvements) except for worn out, surplus or obsolete items provided
that any such items which are removed are promptly replaced with new items
which are more functional or equally functional and in which Bank and Trustee
shall have liens of the priority contemplated under the Loan Documents.
Guarantor shall keep detailed records of each such removal, substitution, sale
or other disposition and make such records available to Bank upon its request
from time to time, and shall execute and deliver to Bank such instruments and
documents as Bank may require in connection with the attachment and perfection
of the security interests of Bank and Trustee in and to any new or replacement
items of Personal Property on or about any Property.
11.5 Leases. Enter into any leases, management
agreements or other agreements pursuant to which any Person is given any right
to occupy, manage or operate any Property or any portion thereof or space
therein other than (a) leases or agreements which are expressly terminable at
will by Guarantor and its successors and assigns on not more than thirty (30)
days' notice, and (b) other leases and agreements, subject to the express prior
written approval of Bank (which approval shall not be unreasonably withheld).
11.6 Easements. Grant, convey or cause to be effective
any easement, license, right of way, or title restriction or limitation
affecting any Property or any portion of the same without the express prior
written consent of Bank (which consent shall not be unreasonably withheld);
provided, however, that Guarantor may grant routine easements which are
reasonably necessary and required by governmental or quasi-governmental
entities or utility companies for the furnishing of utilities or services
without the requirement of such consent by Bank, so long as such easements,
shall not materially weaken, diminish or impair the security of any Deed of
Trust or interfere with the intended use of any Property.
-12-
<PAGE> 13
12. Continuing Financial Reports. Guarantor shall
deliver to Bank, promptly and in any event within thirty (30) days of filing
the same with the Internal Revenue Service, a copy of each federal income tax
return filed while this Guaranty remains in effect. In addition, Guarantor
shall deliver to Bank, on or before July 1 during each year in which this
Guaranty remains in effect, a balance sheet and statement of profit and loss
for Guarantor prepared by a certified public accountant which fairly presents
the financial position of Guarantor as of the end of its most recent fiscal
year.
13. Condition of Company. Guarantor represents and warrants
to Bank that: (a) this Guaranty is executed at Company's request; (b) Guarantor
has established adequate means of obtaining from Company on a continuing basis
financial and other information pertaining to Company's business; and (c)
Guarantor is now and will be completely familiar with the business, operation
and condition of Company and its assets. Guarantor hereby waives and
relinquishes any duty on the part of Bank to disclose to Guarantor any matter,
fact or thing relating to the business, operation or condition of Company and
its assets now known or hereafter known by Bank during the life of this
Guaranty. With respect to any indebtedness of Company to Bank, Bank need not
inquire into the powers of Company or the partners or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
14. Deeds of Trust on Real Property. In the event that
all or a portion of the present and future indebtedness of Company to Bank is
or may be secured by deeds of trust covering certain interests in real
property, Guarantor authorizes Bank, at its sole option, without notice or
demand and without affecting the liability of Guarantor under this Guaranty, to
foreclose any and all of the deeds of trust by nonjudicial sale. Guarantor
expressly waives any defense to the recovery by Bank against Guarantor of any
deficiency after a nonjudicial sale, even though such a sale may preclude
Guarantor from obtaining reimbursement from Company. Guarantor waives all
suretyship defenses it would otherwise have under California law or under the
laws of any other state. Guarantor waives any right to receive notice of any
judicial or nonjudicial sale or foreclosure of any real property subject to any
of the deeds of trust securing the indebtedness, and Guarantor's failure to
receive any such notice shall not impair or affect Guarantor's liability
hereunder.
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<PAGE> 14
15. Effect of Waivers. Guarantor warrants and agrees
that each of the waivers set forth in this Guaranty is made with Guarantor's
full knowledge of their significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law.
16. Notices. All notices, requests, demands, directions
and other communications provided for in this Guaranty and under any Loan
Document that secures this Guaranty must be in writing and must be mailed,
telegraphed, delivered or sent by Telex or cable to the appropriate party at
its address as follows:
If to Guarantor:
Charles King & Associates
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
Attention: Charles W. King, Jr.
with a copy to:
Gerald Wright, Esq.
General Counsel
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
If to Bank:
Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: George Huxtable Vice President
with a copy to:
Sheppard, Mullin, Richter & Hampton
333 South Hope Street 48th Floor
Los Angeles, California 90071
Attention: Robert E. Williams
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 16. Any
notice, request, demand, direc-
-14-
<PAGE> 15
tion or other communication given by telegram, Telex or cable must be confirmed
within 48 hours by letter mailed or delivered to the appropriate party at its
respective address. If any notice, request, demand, direction or other
communication is given by mail it will be effective upon the earlier of (a) 96
hours after deposit in the U.S. Mail, certified or registered mail, return
receipt requested postage prepaid or (b) actual receipt, as indicated by the
return receipt; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by Telex, when sent; or if given by
personal delivery, when delivered.
17. Successors and Assigns. This Guaranty shall bind the
successors and assigns of Guarantor, and shall inure to Bank's successors and
assigns.
18. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the State of California.
19. Amendments. Neither this Guaranty nor any provision
hereof may be amended, modified, waived, discharged or terminated except by an
instrument in writing duly signed by or on behalf of Bank and Guarantor.
20. Severability. In case any right of Bank herein shall
be held to be invalid, illegal or unenforceable, such invalidity, illegality
and/or unenforceability shall not affect any other right granted hereby.
21. Miscellaneous. All words used herein in the singular
shall be deemed to have been used in the plural, and all words used herein in
the plural shall be deemed to have been used in the singular, where the context
and construction so require. The section headings in this Guaranty are for
convenience of reference only and shall not limit or otherwise affect the
provisions of this Guaranty. This Guaranty may be executed in any number of
counterparts.
22. Rights Cumulative. All of Bank's rights hereunder
are cumulative and not exclusive.
23. Accounting Terms. All accounting terms not
specifically defined in this Guaranty shall be construed in conformity with,
and all financial data required to be submitted by this Guaranty shall be
prepared in conformity with, generally accepted accounting principles applied
on a consistent basis.
-15-
<PAGE> 16
24. Actions. In the event that either Bank or Guarantor
shall bring an action against the other to interpret or enforce the terms or
provisions of this Guaranty or any of the other Loan Documents, the prevailing
party in such action shall be entitled to recover its attorneys' fees and costs
as awarded by a court of competent jurisdiction, whether or not such action is
prosecuted to final judgment.
25. Inconsistency With Security Documents. In the event
that any provision of any Security Document is inconsistent with the provisions
of this Guaranty, the provisions of this Guaranty shall prevail.
26. Real Property Security. This Guaranty is secured by
deeds of trust on real property.
"Guarantor":
CHARLES KING & ASSOCIATES
a California limited partnership
By: /s/ Charles W. King Jr.
---------------------------
Charles W. King Jr.
its sole general partner
-16-
<PAGE> 1
EXHIBIT 10.25
PLEDGE AND SECURITY AGREEMENT
by
RADIATION STERILIZERS, INCORPORATED
in favor of
WELLS FARGO BANK, N.A.
Dated as of December 1, 1984
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1 Defined Terms 1
Section 2 Pledge 2
Section 3 Interest on Bonds 2
Section 4 Collateral 2
Section 5 Release of Drawing Bonds 2
Section 6 Rights of Bank 3
Section 7 Remedies 3
Section 8 Representations, Warranties, and
Covenants of Pledgor 4
Section 9 No Disposition, Etc. 5
Section 10 Sale of Collateral 5
Section 11 Limitation on Disposition 6
Section 12 Further Assurances 7
Section 13 Severability 7
Section 14 No Waiver; Cumulative Remedies 7
Section 15 Waivers; Amendments; Applicable Law 7
</TABLE>
<PAGE> 3
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement, dated as of December 1, 1984, is
made by RADIATION STERILIZERS, INCORPORATED, a California corporation
("Pledgor"), to WELLS FARGO BANK, N.A., a national banking association ("Bank")
pursuant to a Letter of Credit Agreement, dated as of even date herewith,
between Pledgor and Bank (such Letter of Credit Agreement hereafter, as the
same may from time to time be amended or supplemented, called the "Agreement").
WHEREAS, the County of Delaware, Ohio ("Issuer") has agreed with
Pledgor to issue its County of Delaware, Ohio Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project) (the
"Bonds") pursuant to that certain Trust Agreement, dated as of December 1, 1984
(the "Trust Agreement") between Issuer and Bank One Trust Company, N.A., a
national banking association, as Trustee; and
WHEREAS, the Trust Agreement provides for the purchase of certain
Bonds and for their delivery to Bank, or its nominee, in accordance with
Sections 7(l) and 7(m) of the Bond Legislation portion of the Trust Agreement
(defined in the Agreement, and herein, as the "Drawing Bonds" and the "Company
Bonds"); and
WHEREAS, in connection with the issuance of the Bonds, Pledgor has
agreed to enter into the Agreement in order to cause Bank to issue the Letter
of Credit thereunder which may be used, inter alia, to pay the purchase price
of the Drawing Bonds; and
WHEREAS, it is a condition precedent to the obligations of Bank to
enter into the Agreement that Pledgor shall have executed and delivered this
Pledge and Security Agreement to Bank;
NOW, THEREFORE, in consideration of the premises and in order to
induce Bank to enter into the Agreement and issue the Letter of Credit
thereunder and for other good and valuable consideration, receipt of which is
hereby acknowledged, Pledgor hereby agrees with Bank as follows:
1. Defined Terms. Capitalized terms used and not otherwise
defined herein shall have the same meanings as set forth in the Agreement.
-1-
<PAGE> 4
2. Pledge. Pledgor hereby pledges, assigns, hypothecates,
transfers and delivers to Bank all its right, title and interest to the Drawing
Bonds and the Company Bonds (collectively, the "Pledged Bonds") as the same may
from time to time be delivered to the Remarketing Agent or the Trustee by the
owners thereof, and hereby grants to Bank first lien on, and security interest
in, its right, title and interest in and to the Pledged Bonds, including without
limitation all interest thereon and other proceeds thereof and any related
due-bills, as security for the prompt and complete payment and performance by
Pledgor of all obligations and indebtedness to Bank under the Agreement and the
other Loan Documents, whether such obligations and indebtedness (i) are now
existing or owing or are hereafter incurred or (ii) are absolute or contingent
(collectively, the "Obligations").
3. Interest on Bonds. If, while this Pledge and Security
Agreement is in effect, Pledgor shall become entitled to receive or shall
receive any interest payment in respect of the Pledged Bonds, Pledgor agrees to
accept the same as Bank's agent and to hold the same in trust on behalf of Bank
and to deliver the same forthwith to Bank. All interest payments in respect of
the Drawing Bonds which are received by Bank shall be credited against the
obligation of Pledgor to pay interest to Bank set forth in Section 4.1 of the
Agreement.
4. Collateral. All property at any time pledged with Bank
hereunder (whether described herein or not) and all income therefrom and
proceeds thereof, are herein collectively sometimes called the "Collateral." *
5. Release of Drawing Bonds. If Pledgor fulfills its
reimbursement obligation with respect to the principal and interest paid by
Bank under the Letter of Credit (and interest thereon under the Agreement) in
connection with the repurchase of any Bond pursuant to Section 7(i) or 7(j) of
the Bond Legislation (as defined in the Trust Agreement), or if Bank transfers
any Drawing Bond held by Bank to any Person other than Pledgor in consideration
for payment of the principal amount of the Drawing Bond so purchased, then in
either case Bank agrees to release any such Drawing Bond from the lien of this
Pledge and Security Agreement. All Bonds so released shall be delivered,
without recourse, representation or warranty, express or implied, to Pledgor or
the purchaser, as applicable.
*than the Drawing Bonds and the Company Bonds unless Company shall
have afforded to Trustee, for the benefit of the holders of the Bonds, prior to
or simultaneously with the taking by Bank of such security, rights which shall,
at the option of the Bank, be either senior to the rights of Bank or of equal
priority with the rights of Bank in connection with such security.
-2-
<PAGE> 5
6. Rights of Bank. Bank shall not be liable for failure to
collect or realize upon the Obligations or any collateral security (including,
but not limited to the Pledged Bonds) or guaranty therefor, or any part
thereof, or for any delay in so doing, nor shall Bank be under any obligation
to take any action whatsoever with regard thereto. If an Event of Default has
occurred and is continuing, Bank may thereafter, without notice (except the
notice specified in Section 7 below of time and place of public or private
sale), exercise all rights, privileges or options pertaining to any Pledged
Bonds as if it were the absolute owner thereof, upon such terms and conditions
as it may determine, all without liability except to account for property
actually received by it, but Bank shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.
7. Remedies. In the event that any portion of the Obligations
has been declared due and payable, 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 Pledgor 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 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 or any credit risk, with the right to 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 Pledgor,
which right or equity is hereby expressly waived or released. Bank shall pay
over 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 Bank
hereunder, including reasonable attorney's fees and legal expenses, and the
payment in whole or in part of the Obligations in such order as Bank may elect,
Pledgor remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net
-3-
<PAGE> 6
proceeds and after the payment by Bank of any other amount required by any
provision of the law, including, without limitation, Section 9- 504(l)(c) of
the Uniform Commercial Code, need Bank account for the surplus, if any, to
Pledgor. Pledgor agrees that Bank need not give more than 10 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. No notification need be given to
Pledgor 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 Pledge and Security Agreement and
in any other instrument or agreement securing, evidencing or relating to any of
the Obligations, Bank shall have all the rights and remedies of a secured party
under the Uniform Commercial Code of the State of California. Pledgor further
agrees to waive and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Uniform Commercial Code and Pledgor shall be
liable for the deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay all amounts to which Bank is entitled,
and the fees of any attorneys employed by Bank to collect such deficiency.
8. Representations, Warranties and Covenants of Pledgor. Pledgor
represents and warrants that: (a) on the date of delivery to Bank (or the
Trustee on Bank's behalf) of any Pledged Bonds described herein, neither
Issuer, the Remarketing Agent nor the Trustee will have any right, title or
interest in or to the Pledged Bonds; (b) it has, and on the date of delivery to
Bank (or the Trustee on Bank's behalf) of any Pledged Bonds will have, full
power, authority and legal right to pledge all of its right, title and interest
in and to the Pledged Bonds pursuant to this Pledge and Security Agreement; (c)
this Pledge and Security Agreement has been duly authorized, executed and
delivered by Pledgor and constitutes a legal, valid and binding obligation of
Pledgor enforceable in accordance with its terms; (d) no consent of any other
party (including, without limitation, stockholders or creditors of Pledgor) and
no consent, license, permit, approval or authorization of, exemption by, notice
or report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by Pledgor in
connection with the execution, delivery and performance of this Pledge and
Security Agreement; (e) the execution, delivery and performance of this Pledge
and Security Agreement will not violate any provision of any applicable law or
regulation or
-4-
<PAGE> 7
of any order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, or of the certificate of
incorporation or bylaws of Pledgor or of any securities issued by Pledgor or
any company under common ownership with Pledgor, or of any mortgage, indenture,
lease, contract or other agreement, instrument or undertaking to which Pledgor
or any company under common ownership with Pledgor is a party or which purports
to be binding upon Pledgor or any company under common ownership with Pledgor
or upon any of their respective assets and will not result in the creation or
imposition of any lien, charge or encumbrance on or security interest in any of
the assets of Pledgor or any company under common ownership with Pledgor except
as contemplated by this Pledge and Security Agreement; and (f) the pledge,
assignment and delivery of such Pledged Bonds pursuant to this Pledge and
Security Agreement will create a valid first lien on and a first perfected
security interest in, all right, title or interest of Pledgor in or to such
Pledged Bonds, 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 Pledgor which would include the Pledged Bonds. Pledgor
covenants and agrees that it will defend Bank's right, title and security
interest in and to the Pledged Bonds and the proceeds thereof against the
claims and demands of all persons whomsoever; and covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to Bank as Collateral hereunder and will likewise defend
Bank's right thereto and security interest therein.
9. No Dispositions, Etc. Without the prior written consent of
Bank, Pledgor agrees that it will not sell, assign, transfer, exchange or
otherwise dispose of, or grant any option with respect to, the Collateral, nor
will it create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance with
respect to any of the Collateral, or any interest therein, or any proceeds
thereof, except for the lien and security interest provided for by this Pledge
and Security Agreement.
10. Sale of Collateral. (a) Pledgor recognizes that Bank may be
unable to effect a public sale of any or all of the Pledged Bonds by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted
-5-
<PAGE> 8
group of purchasers who may be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that such private sale shall be deemed to have been made in a
commercially reasonable manner. Bank shall be under no obligation to delay a
sale of any of the Pledged Bonds for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under
applicable Federal securities laws, or under applicable state securities laws,
even if the issuer would agree to do so.
(b) Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of any
portion or all of the Pledged Bonds valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees
or awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
Pledgor's expense. Pledgor further agrees that a breach of any of the
covenants contained in this Section 10 will cause irreparable injury to Bank,
that Bank has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section
shall be specifically enforceable against Pledgor and Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants except for a defense that no Event of Default has occurred under
the Agreement. Pledgor further acknowledges the impossibility of ascertaining
the amount of damages which would be suffered by Bank by reason of a breach of
any of such covenants and, consequently, agrees that, if Bank shall sue for
damages for breach, it shall pay, as liquidated damages and not as a penalty,
an amount equal to the par value plus accrued interest on the Pledged Bonds on
the date Bank shall demand compliance with this Section. Upon such payment,
Bank will release its interest in such Pledged Bonds.
11. Limitation on Disposition. Notwithstanding the rights and
remedies given to Bank in Section 7 and otherwise herein to dispose of Pledged
Bonds, Pledgor consents that upon an Event of Default under the Agreement, Bank
may tender any Pledged Bonds to the Trustee for cancellation, and Pledgor
agrees that such tender shall not constitute a disposition of collateral for
purposes of UCC Section 9-504,
-6-
<PAGE> 9
but shall constitute a simple reduction in the contingent obligations of
Pledgor to Bank.
12. Further Assurances. Pledgor agrees that at any time and from
time to time upon the written request of Bank, Pledgor will execute and deliver
such further documents and do such further acts and things as Bank may
reasonably request in order to effect the purposes of this Pledge and Security
Agreement.
13. Severability. Any provision of this Pledge and Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
14. No Waiver; Cumulative Remedies. Bank shall not, by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by
Bank, and then only to the extent therein set forth. A waiver by Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which Bank would otherwise have on any future occasion.
No failure to exercise nor any delay in exercising on the part of Bank, any
right, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights or remedies provided by law.
15. Waivers; Amendments; Applicable Law. None of the terms or
provisions of this Pledge and Security Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by Bank.
This Pledge and Security Agreement and all obligations of Pledgor hereunder
shall be binding upon the successors and assigns of Pledgor, and shall,
together with the rights and remedies of Bank hereunder, inure to the benefit
of Bank and its respective successors and assigns. This Agreement shall be
governed by, and be construed and interpreted in accordance with, the laws of
the State of California.
-7-
<PAGE> 10
IN WITNESS WHEREOF, Pledgor has caused this Pledge and Security
Agreement to be duly executed and delivered by its duly authorized officers as
of the day and year first above written,
RADIATION STERILIZERS, INCORPORATED
a California corporation
By /s/ Allan Chin
-------------------------------------
Its President
---------------------------------
By /s/ Charles W. King Jr.
------------------------------------
Its Secretary
--------------------------------
-8-
<PAGE> 1
EXHIBIT 10.26
$4,900,000
COUNTY OF DELAWARE, OHIO
Variable Rate Demand
Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project)
BOND PURCHASE AGREEMENT
December 24, 1984
On the basis of the representations, warranties and covenants
contained in this Bond Purchase Agreement and upon the terms and conditions
contained in this Bond Purchase Agreement, the undersigned, Prudential-Bache
Securities Inc. (the "Underwriter"), hereby offers to purchase from County of
Delaware, Ohio (the "Issuer") up to $4,900,000 aggregate principal amount its
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project) (the "Bonds"), to be issued under and
pursuant to a trust agreement dated as of December 1, 1984 (the "Indenture")
between the Issuer and Bank One Trust Company, N.A., as trustee (the
"Trustee").
SECTION 1. ISSUER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
By the Issuer's execution, delivery and acceptance hereof the Issuer
hereby represents and warrants to, and agrees with, the Underwriter that:
(a) The Issuer is a county and a political subdivision in
and of the State of Ohio. By, virtue of the authority of the
Constitution and laws of the State of Ohio (the "State"), and
particularly Article VIII, Section 13 of the Constitution and Chapter
165 of the Ohio Revised Code (the "Act"), the Issuer is authorized to
issue the Bonds to finance the project (the "Project") defined in a
loan agreement dated as of December 1, 1984 (the "Agreement") between
the Issuer and Radiation Sterilizers, Incorporated, a California
corporation (the "Company"), and to pledge the payments to be received
pursuant to the Agreement as security for the payment of the principal
of and premium, if any, and interest on the Bonds.
<PAGE> 2
(b) The Issuer has complied with all provisions of the
Constitution and laws of the State, including the Act, and has full
power and authority to consummate all transactions contemplated by
this Bond Purchase Agreement, the Indenture or the Agreement.
(c) The information describing the Issuer in the Official
Statement of even date herewith (the "Official Statement") to be used
in connection with the offering and sale of the Bonds by the
Underwriter under the caption "THE ISSUER" as of the Closing Date, as
hereinafter defined, is true and does not contain any untrue statement
of a material fact.
(d) The Issuer has duly authorized all necessary action
for: (1) the issuance and sale of the Bonds upon the terms set forth
herein; (2) the execution and delivery of the Indenture providing for
the issuance of and security for the Bonds (including the pledge by
the Issuer of the payments to be received pursuant to the Agreement
sufficient to pay the principal of and premium, if any, and interest
on the Bonds); (3) appointing the Trustee as Trustee, Paying Agent and
Registrar under the Indenture; (4) the use of the Official Statement
in connection with the offer and sale of the Bonds (provided, however,
that the Issuer neither has nor will assume any responsibility for the
accuracy or completeness of the information contained in the Official
Statement or in the Appendices attached thereto, except such
information as relates to the Issuer under the caption "THE ISSUER");
(5) the financing of the Project; (6) the execution, delivery, receipt
and due performance of this Bond Purchase Agreement, the Bonds, the
Indenture, the Agreement and any and all such other agreements and
documents as may be required to be executed, delivered and received by
the Issuer in order to carry out, give effect to and consummate the
transactions contemplated hereby or by the Indenture or the Agreement;
and (7) the carrying out, giving effect to and consummation of the
transactions contemplated hereby or by the Indenture or the Agreement.
(e) There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public
board or body pending or, to the knowledge of the Issuer, threatened
against or affecting the Issuer, or any basis therefor, wherein an
unfavorable
-2-
<PAGE> 3
decision, ruling or finding would materially adversely affect the
transactions contemplated hereby or by the Indenture or the Agreement
or the validity of the Bonds, the Indenture, the Agreement, this Bond
Purchase Agreement or any agreement or instrument to which the Issuer
is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or by the
Indenture or the Agreement.
(f) The Issuer's authorization of the use of the Official
Statement, and the execution and delivery of this Bond Purchase
Agreement, the Bonds, the Indenture, the Agreement and the other
agreements contemplated hereby or by the Indenture or the Agreement
will not contravene any law governing the Issuer and will not conflict
with any provision of the Act.
(g) The Issuer has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that
the Issuer is a bond issuer whose arbitrage certifications may not be
relied upon.
SECTION 2. COMPANY'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
To induce the Issuer and the Underwriter to enter into this Bond
Purchase Agreement, and in consideration of the foregoing and the execution and
delivery of this Bond Purchase Agreement, the Company represents, warrants and
covenants to and with the Issuer and the Underwriter as follows:
(a) The financial statements to be incorporated by
reference or contained in Appendix A to the Official Statement, or
provided to the Underwriter in connection with the offer and sale of
the Bonds by the Underwriter, present fairly its financial
position as of the dates indicated therein and the results of
operation for the periods specified therein, and the financial
statements therein have been prepared in conformity with generally
accepted accounting principles consistently applied in all material
respects with respect to the periods involved, except as may otherwise
be disclosed in the Official Statement.
(b) The descriptions and information to be contained in
the Official Statement at the Closing Date, as defined herein, are
true and do not contain any untrue
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<PAGE> 4
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in
this Bond Purchase Agreement shall apply to the information contained
under the caption "THE ISSUER" or in Appendix B thereto (relating to
Wells Fargo Bank, N.A. (the "Bank")
(c) It will not take or omit to take any action which
will in any way result in the proceeds from the sale of the Bonds
being applied in a manner inconsistent with the provisions of the
Agreement and the Indenture, including the provisions with respect to
"arbitrage" therein.
(d) There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any public board or
body pending or threatened against or affecting it or any basis
therefor, wherein an unfavorable decision, ruling or finding would
have a material adverse effect on the transactions contemplated by
this Bond Purchase Agreement, the Indenture or the Agreement or would
adversely affect the validity or enforceability of the Bonds, the
Indenture, the Agreement or the Letter of Credit Agreement dated as of
December 1, 1984 (the "Credit Agreement") between the Company and the
Bank pursuant to which an irrevocable letter of credit (the "Letter of
Credit") will be issued by the Bank.
(e) The Agreement, this Bond Purchase Agreement and the
Credit Agreement, when executed and delivered by the Company, will
constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights
generally.
(f) The execution and delivery of the Agreement, the
Credit Agreement and this Bond Purchase Agreement, and the performance
by the Company of its obligations under the foregoing, (i) have been
duly authorized by all necessary corporate action of the Company and
no approval or other action by any governmental authority or agency
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<PAGE> 5
is required in connection therewith; (ii ) do not and will not violate
the Articles of Incorporation or Bylaws of the Company, or any
existing court order by which the company is bound, and such actions
do not and will not constitute a default under any existing agreement,
indenture, mortgage, lease, note or other obligation or instrument to
which the Company is a party; and (iii) will not be subject to the
lien, pledge or encumbrance of any existing agreement or document to
which the Company is a party (excluding any lien, pledge or
encumbrance arising under the Agreement and the Credit Agreement)
SECTION 3. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless the Issuer and the
Underwriter, and any member, officer, official or employee of the Issuer or the
Underwriter, and each person, if any, who controls the Underwriter, within the
meaning of Section 15 of the Securities Act of 1933, as amended (collectively
the "Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses whatsoever caused by any untrue statement or misleading
statement or allegedly misleading statement of a material fact contained in the
Official Statement or caused by any omission or alleged omission from the
Official Statement of any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any such untrue or misleading statement
or omission or allegedly untrue or misleading statement or omission in the
information contained under the caption "The Issuer" or in Appendix B thereto.
If any action shall be brought against one or more of the Indemnified
Parties based upon the Official Statement and in respect of which indemnity may
be sought against it, the Indemnified Parties shall promptly notify the Company
in writing, and the Company shall promptly assume the defense thereof,
including the employment of counsel, the payment of all expenses and the right
to negotiate and consent to settlement. Any one or more of the Indemnified
Parties shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Indemnified
Parties unless employment of such counsel has been specifically authorized by
the
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<PAGE> 6
Company. The Company shall not be liable for any settlement of any such action
effected without its consent by any of the Indemnified Parties, but if settled
with the consent of the Company or if there be a final judgment for the
plaintiff in any such action against the Company or any of the Indemnified
Parties, with or without the consent of the Company, the Company agrees to
indemnify and hold harmless the Indemnified Parties to the extent provided in
this Bond Purchase Agreement.
SECTION 4. PURCHASE, SALE AND DELIVERY OF THE BONDS.
On the basis of the representations, warranties and covenants of the
Issuer and the Company contained herein, and subject to the terms and
conditions herein set forth, at the Closing Time, as defined herein, the
Underwriter agrees to purchase from the Issuer and the Issuer agrees to sell to
the Underwriter the Bonds at 98.5% of the aggregate principal amount thereof.
The Bonds shall be issued under and secured as provided in the
Indenture. The Bonds will be payable (except to the extent payable from
proceeds of the sale of the Bonds and the earnings from the temporary
investment thereof) solely out of the payments received under the Agreement
(including moneys paid under the Letter of Credit). The Bonds shall be further
secured by the Letter of Credit. The Bonds shall mature on December 1, 2004,
shall bear interest at a variable interest rate (subject to conversion to a
fixed interest rate), provide a tender option to the owners thereof and be
subject to redemption as set forth in the Indenture.
Payment for the Bonds shall be made in immediately available funds by
federal wire transfer or certified or official bank check or draft payable to
the order of the Trustee for the account of the Issuer, at such place, time and
date as shall be mutually agreed upon by the Issuer and the Underwriter. The
date of such delivery and payment is herein called the "Closing Date,"
and the hour and date of such delivery and payment is herein called the
"Closing Time." The delivery of the Bonds shall be made in definitive form and
issued to and registered in the name of the Underwriter, except to the extent
that the Underwriter may request the delivery of certain of the Bonds
registered as to other persons, and in such denominations (of $100,000 or any
multiple thereof) as the Underwriter shall specify in writing at least 24 hours
prior to the Closing Time. The Bonds shall be available for examination and
packaging by the Underwriter at a reasonable time prior to the Closing Time.
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<PAGE> 7
SECTION 5. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS.
The Underwriter's obligations under this Bond Purchase Agreement shall
be subject to the due performance by the Issuer and the Company of their
respective obligations and agreements to be performed hereunder at or prior to
the Closing Time and to the accuracy of and compliance with the Issuer's and
the Company's representations and warranties contained herein, as of the date
hereof and as of the Closing Time, and are also subject to the following
conditions:
(a) The Bonds, the Indenture, the Agreement, the Credit
Agreement and the Letter of Credit shall each have been duly
authorized, executed and delivered in the form mutually agreed upon by
the Issuer, the Underwriter, the Bank and the Company.
(b) At the Closing Time, the Underwriter shall receive:
(1) The opinions dated the Closing Date of (i)
Bricker & Eckler, Bond Counsel, relating to the valid
authorization and issuance of the Bonds, the due
authorization, execution and delivery of the Indenture and the
Agreement, the tax-exempt status of the Bonds and certain
other matters; (ii) Gerald Wright, Esq., counsel to the
Company, relating to the due organization and existence of the
Company, the due authorization, execution and delivery of the
Agreement, the Credit Agreement and this Bond Purchase
Agreement and certain other matters; (iii) Sheppard, Mullin,
Richter & Hampton as counsel to the Bank, relating to the
valid authorization and issuance of the Letter of Credit and
certain other matters; and (iv) Kutak Rock & Campbell, counsel
to the Underwriter relating to certain matters of federal
bankruptcy law and federal securities law;
(2) A certificate, satisfactory to the
Underwriter, of one of the Issuer's County Commissioners,
dated as of the Closing Date, to the effect that: (i) the
Issuer has duly performed all obligations to be performed by
it at or prior to the Closing Time and that each of the
representations and warranties given by the Issuer and
contained herein is true as of the Closing Date; (ii) the
Issuer has authorized, by all necessary action, the
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<PAGE> 8
execution, delivery, receipt and due performance of the Bonds,
the Indenture, the Agreement and any and all such other
agreements and documents as may be required to be executed,
delivered and received by the Issuer to carry out, give effect
to and consummate the transactions contemplated hereby; (iii)
no litigation is pending, or to such Commissioner's knowledge
threatened, to restrain or enjoin the issuance or sale of the
Bonds or in any way affecting any authority for or the
validity of the Bonds, the Indenture, the Agreement, this Bond
Purchase Agreement or the Issuer's existence or powers or the
Issuer's right to use the proceeds of the Bonds to finance the
Project; and (iv) the execution, delivery, receipt and due
performance of the Bonds, the Indenture, the Agreement and the
other agreements contemplated hereby under the circumstances
contemplated hereby or by the Indenture or the Agreement and
the Issuer's compliance with the provisions thereof comply
with the Act;
(3) Certificates, satisfactory in form and
substance to the Underwriter, of the President and the
Secretary of the Company, or such other officers acceptable to
the Underwriter, dated as of the Closing Date, to the effect
that (i) since the date as of which information is given in
Appendix A to the Official Statement (including the documents
to be incorporated by reference therein), if any, or any
financial information described in Section 2(a) of this Bond
Purchase Agreement, there has not been any material adverse
change in the business, properties, financial position or
results of operations of the Company, whether or not arising
from transactions in the ordinary course of business, and
since such date, except in respect of the Bonds and in the
ordinary course of business, the Company has not incurred any
undisclosed material liability; (ii) there is no action, suit,
proceeding or any investigation or inquiry at law or in equity
or before or by any public board or body pending or threatened
against or affecting the Company or its property or any basis
therefor, wherein an unfavorable decision, ruling or finding
would adversely affect the transactions contemplated hereby or
by the Indenture or the Agreement or the validity or
enforceability of the Bonds, the Indenture, the Agreement, the
Credit Agreement, the Pledge and Security Agreement or this
Bond Purchase
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<PAGE> 9
Agreement; (iii) the information contained in the Official
Statement (excluding information contained under the caption
"THE ISSUER" and in Appendix B thereto) is true in all
material respects and does not contain any untrue statement of
a material fact and does not omit to state a material fact
necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading;
and (iv) the Company has duly authorized, by all necessary
corporate action, the execution, delivery and due performance
by the Company of the Agreement, the Credit Agreement and this
Bond Purchase Agreement; and
(4) Such additional certificates, opinions and
other documents as the Underwriter or the Bank may reasonably
request shall have been delivered, including any certificates
or opinions to evidence performance of or compliance with the
provisions hereof and the transactions contemplated hereby,
all such certificates and other documents to be satisfactory
in form and substance to the Underwriter or the Bank.
(c) The Bank shall have delivered its Letter of Credit to
the Trustee.
SECTION 6. CONDITIONS OF ISSUER'S OBLIGATIONS.
The Issuer's obligations under this Bond Purchase Agreement are
subject to the Underwriter's performance of its obligations hereunder and to
the due completion of all proceedings, and the due satisfaction of all
conditions required by the Act for the issuance of the Bonds.
No provision covenant or agreement contained in this Bond Purchase
Agreement shall be deemed to be the covenant or agreement of any member,
officer, attorney, agent or employee of the Issuer in an individual capacity;
and no such provision, covenant or agreement, and no obligation herein imposed
upon the Issuer, or the breach thereof, shall constitute an indebtedness of the
Issuer within the meaning of any provision of the constitution or law of the
State or constitute or give rise to any pecuniary liability of the Issuer or a
charge against its general credit or taxing power. No recourse shall be had
for the payment of the principal of or premium, if any, or interest on the
Bonds, or for any claim based hereon or on any instruments and documents
executed and delivered by the Issuer in connection
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<PAGE> 10
with the Project, against any member, officer, agent, attorney or employee,
past, present or future, of the Issuer or of any successor body, or their
respective heirs, personal representatives, successors as such, either directly
or through the Issuer or any such successor body, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty, or otherwise, all of such liability being hereby
released as a condition of and as a consideration for the execution and
delivery of this Bond Purchase Agreement.
SECTION 7. TERMINATION.
Notwithstanding any other provision of this Bond Purchase Agreement to the
contrary, the Underwriter may terminate this Bond Purchase Agreement by
notification to the Issuer and the Company if at any time prior to the Closing
Date (A) legislation shall be introduced or enacted by the United States
Congress or adopted by either house thereof or a decision by a court of the
United States shall be rendered or a ruling, regulation or official statement
by or on behalf of the Treasury Department of the United States, the Internal
Revenue Service or other government agency shall be made with respect to
federal taxation upon interest received on bonds of the general character of
the Bonds, which would have the effect of changing directly or indirectly the
federal income tax consequences of interest on bonds of the general character
of the Bonds in the hands of the owners thereof; or (B) legislation shall be
enacted or any action shall be taken by the Securities and Exchange Commission
which, in the reasonable judgment of the Underwriter, has the effect of
requiring the contemplated distribution of the Bonds to be registered under the
Securities Act of 1933, as amended, or the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended; or (C) there shall exist any event
which, in the reasonable judgment of the Underwriter, either (1) makes untrue
or incorrect in any material respect any statement or information contained in
the Official Statement or (2) is not reflected in the Official Statement should
be reflected therein or in an attachment thereto in order to make any material
statements or information contained therein not misleading in any material
respect; or (D) there shall have occurred any outbreak of hostilities engaging
the United States in any local, national or international calamity or crisis,
the effect of such outbreak, calamity or crisis on the financial markets of the
United States being such as, in the reasonable judgment of the Underwriter,
would materially affect the marketability of the Bonds; or (E) there shall be
in force a general suspension of trading on the New York Stock Exchange or
minimum or maximum prices for trading shall
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<PAGE> 11
have been fixed and be in force, or maximum ranges for prices for securities
shall have been required and be in force on the New York Stock Exchange,
whether by virtue of a determination by that Exchange or by order of the
Securities and Exchange Commission or any other governmental authority having
jurisdiction; or (F) a general banking moratorium shall have been declared by
either federal, Ohio, California or New York authorities having jurisdiction
and be in force; or (G) there shall have occurred any change, or any
development involving a prospective change, in or affecting the operations of
the Issuer, the Company or the Bank, which, in the reasonable judgment of the
Underwriter, materially impairs the investment quality of the Bonds; or (H) any
legislation, ordinance, rule or regulation shall be introduced in or be enacted
by any governmental body, department or agency in the State of Ohio or a
decision by any court of competent jurisdiction within the State of Ohio shall
be rendered, which materially adversely affects the market price of the Bonds;
or (I) additional material restrictions not in force as of the date hereof
shall have been imposed upon trading in securities generally by any
governmental authority or by any national securities exchange.
If the Issuer or the Company does not, in the exercise of good faith,
satisfy the conditions to the obligations of the Underwriter contained in this
Bond Purchase Agreement, or if the obligations of the Underwriter shall be
terminated for any reason permitted by this Bond Purchase Agreement, this Bond
Purchase Agreement shall terminate and the Underwriter, shall not have any
further obligations hereunder. The Underwriter, however, may in its sole
discretion waive one or more of the conditions imposed by this Bond Purchase
Agreement and proceed herewith.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All of the Issuer's and the Company's representations, warranties and
agreements shall remain operative and in full force and effect, regardless of
any investigations made by the Underwriter on its behalf, and shall survive
delivery of the Bonds to the Underwriter.
SECTION 9. PAYMENT OF EXPENSES.
Whether or not the Bonds are sold by the Issuer to the Underwriter,
the Underwriter shall be under no obligation to pay any expenses incident to
the performance of the obligations of the Issuer hereunder. All expenses and
costs to effect the authorization, preparation, issuance, delivery
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<PAGE> 12
and sale of the Bonds (including, without limitation, the fees and
disbursements of Bond Counsel, Bank counsel, counsel to the Issuer, and the
expenses and costs for the preparation, printing, photocopying, execution and
delivery of the Bonds, the Indenture, the Agreement, the Credit Agreement, this
Bond Purchase Agreement and all other agreements and documents contemplated
hereby) shall be paid out of the proceeds of the sale of the Bonds, or by the
Company. The Company and the Underwriter have agreed that certain expenses in
connection with the offer and sale of the Bonds by the Underwriter will be paid
by the Underwriter, including the fees and disbursements of the Underwriter and
its counsel, expenses and costs for the preparation, printing and delivery of
the Preliminary Official Statement and Official Statement, advertising and
certain miscellaneous fees and expenses, and neither the Company nor the Issuer
shall be liable for the payment thereof.
SECTION 10. NOTICES.
Any notice or other communication to be given to the Issuer under this
Bond Purchase Agreement may be given by mailing or delivering the same in
writing to Delaware County Courthouse, Delaware, Ohio 43015, Attention: Clerk;
and any notice or other communication to be given to the Underwriter under this
Bond Purchase Agreement may be given by delivering the same in writing to
Prudential-Bache Securities Inc., 100 Gold Street, New York, New York 10292,
Attention: Public Finance Department, IDB/Pollution Control Group.
SECTION 11. APPLICABLE LAW NONASSIGNABILITY.
This Bond Purchase Agreement shall be governed by the laws of the
State of Ohio. This Bond Purchase Agreement shall not be assigned by the
Issuer or the Underwriter.
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SECTION 12. AMENDMENTS; EXECUTION OF COUNTERPARTS.
This Bond Purchase Agreement may be executed in several counterparts,
each of which shall be regarded as an original and all of which shall
constitute one and the same document. This Bond Purchase Agreement may not be
amended, except in writing signed by all parties hereto.
COUNTY OF DELAWARE, OHIO
By /s/ Signature Unreadable
-------------------------------------
County Commissioner
PRUDENTIAL-BACHE SECURITIES INC.
By /s/ William B. Jamis
-------------------------------------
Authorized Officer
RADIATION STERILIZERS, INCORPORATED
By /s/ Charles W. King Jr.
-------------------------------------
Chairman and Secretary
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<PAGE> 1
EXHIBIT 10.27
INDENTURE OF TRUST
BETWEEN
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
AND
BANK ONE, COLUMBUS, N.A.,
as Trustee
Dated as of
March 1, 1996
Relating to the Issuance of:
$9,000,000
The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
This instrument has been entered into between The Mecklenburg County
Industrial Facilities and pollution Control Financing Authority and Bank One,
Columbus, N.A., as Trustee, in order to secure The Mecklenburg County Industrial
Facilities and Pollution Control Financing Authority Industrial Development
Revenue Bonds (SteriGenics International Project), Series 1996 issued in the
original aggregate principal amount of $9,000,000, as more fully described
herein.
<PAGE> 2
INDENTURE OF TRUST
TABLE OF CONTENTS
(This Table of Contents is not a part of this Indenture of Trust and is
only for convenience of reference.)
ARTICLE I
DEFINITIONS AND INTERPRETATIONS 3
Section 1.01. Definitions 3
Section 1.02. Interpretations 11
ARTICLE II
AUTHORIZATION, TERMS, ISSUANCE OF BONDS 14
Section 2.01. Authorized Amount of Bonds; Issuance 14
Section 2.02. Details of Bonds; Payment 14
Section 2.03. Interest Rate and Interest Payment Provisions 15
Section 2.04. Failure to Compute Interest Rates;
Ineffective Interest Rates 16
Section 2.05. Conversion of Interest Rate 16
Section 2.06. Issuance of the Bonds 19
Section 2.07. Authentication 19
Section 2.08. Limited Obligation 20
Section 2.09. Delivery of the Bonds 20
Section 2.10. Mutilated, Lost, Stolen, or Destroyed Bonds 20
Section 2.11. Registration of Bonds; Persons Treated
as Owners; Transfer of Bonds 21
Section 2.12. Cancellation of Bonds 22
Section 2.13. Temporary Bonds 22
Section 2.14. Book-Entry System 22
ARTICLE III
PURCHASE AND REMARKETING OF BONDS 24
Section 3.01. Optional Demand Purchase; Mandatory Purchase 24
Section 3.02. Source of Funds for Purchase of Bonds 26
Section 3.03. Delivery of Bonds; Delivery of Proceeds of Sale;
Payments From Credit Facility 26
Section 3.04. Bonds Deemed Tendered for Purchase 27
Section 3.05. Remarketing of Bonds 27
Section 3.06. Limits of Remarketing 28
Section 3.07. Mandatory Tenders in Accordance with Procedures
of Depository 28
ARTICLE IV
REDEMPTI0N OF BONDS 29
Section 4.01. Optional Redemption 29
Section 4.02. Sinking Fund Redemption 30
Section 4.03. Mandatory Redemption 31
Section 4 04. Notice of Redemption 31
Section 4.05. Selection of Bonds to be Redeemed 32
Section 4.06. No Partial Redemption After Default 32
Section 4.07. Payment of Redemption Price 32
Section 4.08. Redemption in Accordance with Procedures
of Depository 33
<PAGE> 3
ARTICLE V
GENERAL COVENANTS 34
Section 5.01. Payment of Principal and Interest, Pledge of
Trust Estate; Limited Liability 34
Section 5.02. Performance of Covenants by Issuer; Authority;
Due Execution 34
Section 5.03. Recording and Filing; Instruments of Further
Assurance 34
Section 5.04. Recording and Filing; Further Instruments 34
Section 5.05. No Disposition of Trust Estate 35
Section 5.06. Access to Books 35
Section 5.07. Arbitrage and Tax Covenants 35
Section 5.08. Rebate Deposits 35
Section 5.09. Notification of Rating Agency 35
ARTICLE VI
DEPOSIT OF BOND PROCEEDS; FUNDS AND ACCOUNTS;
CREDIT FACILITY 37
Section 6.01. Creation of Funds 37
Section 6.02. Deposit of Bond Proceeds 37
Section 6.03. Deposit of Receipts and Revenue 37
Section 6.04. Intentionally Omitted 37
Section 6.05. Rebate Fund 38
Section 6.06. Bond Fund 38
Section 6.07. Project Fund 39
Section 6.08. Credit Facility; Alternate Credit Facility;
Confirmation; Substitute Confirmation 39
Section 6.09. Bonds not Presented for Payment 41
Section 6.10. Refunding of Bonds 41
Section 6.11. Payment to the Company 41
Section 6.12. Bond Purchase Fund 41
Section 6.13. Custody of Funds and Accounts 41
ARTICLE VII
DEFAULTS AND REMEDIES 42
Section 7.01. Events of Default 42
Section 7.02. Remedies on Default 42
Section 7.03. Credit Provider's or Owners' Right to
Direct Proceedings 44
Section 7.04. Rights and Remedies of Owners 44
Section 7.05. Trustee May Enforce Rights Without Bonds 44
Section 7.06. Delay or Omission No Waiver 44
Section 7.07. No Waiver of One Default to Affect Another 45
Section 7.08. Discontinuance of Proceedings on Default;
Position of Parties Restored 45
Section 7.09. Waivers of Events of Default 45
Section 7.10. Application of Moneys 45
Section 7.11. Assignment to Credit Provider 47
Section 7.12. Recognition of Credit Provider or its
Assignee as Company 47
ii
<PAGE> 4
ARTICLE VIII
TRUSTEE; PAYING AGENT; REMARKETING AGENT 48
Section 8.01. Acceptance of Trusts 48
Section 8.02. No Responsibility for Recitals 48
Section 8.03. Limitations on Liability 48
Section 8.04. Compensation, Expenses and Advances 48
Section 8.05. Notice of Events of Default and other
Events or Facts 49
Section 8.06. Action by Trustee 49
Section 8.07. Good-Faith Reliance 49
Section 8.08. Dealings in Bonds and with Issuer 50
Section 8.09. Construction of Indenture 50
Section 8.10. Resignation of Trustee 50
Section 8.11. Removal of Trustee 50
Section 8.12. Appointment of Successor Trustee 50
Section 8.13. Qualifications of Trustee 51
Section 8.14. Judicial Appointment of Successor Trustee 51
Section 8.15. Acceptance of Trusts by Successor Trustee 51
Section 8.16. Successor by Merger or Consolidation 51
Section 8.17. Standard of Care 52
Section 8.18. Intervention in Litigation of Issuer 52
Section 8.19. Reliance on Certificate of Issuer 52
Section 8.20. Paying Agent 52
Section 8.21. Qualifications of Paying Agent;
Resignation; Removal 53
Section 8.22. Remarketing Agent 53
Section 8.23. Qualifications of Remarketing Agent 54
Section 8.24. Several Capacities 54
Section 8.25. Appointment of Co-Trustee 54
Section 8.26. Intentionally Omitted 55
Section 8.27. Intentionally Omitted 55
ARTICLE IX
EXECUTION OF INSTRUMENTS BY OWNERS AND
PROOF OF OWNERSHIP OF BONDS 56
ARTICLE X
INVESTMENTS 57
ARTICLE XI
DEFEASANCE 58
ARTICLE XII
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF
THE LOAN AGREEMENT 60
Section 12.01. Supplemental Indentures Not Requiring
Consent of Owners 60
Section 12.02. Supplemental Indentures Requiring
Consent of Owners 60
Section 12.03. Execution of Supplemental Indenture 61
Section 12.04. Amendments of the Loan Agreement Not
Requiring Consent of Owners 61
Section 12.05. Amendments of the Loan Agreement
Requiring Consent of Owners 61
Section 12.06. Modification of Credit Facility 62
Section 12.07. Notice to Owners 62
iii
<PAGE> 5
ARTICLE XIII
MISCELLANEOUS 63
Section 13.01. Covenants of Issuer 63
Section 13.02. Parties Interested Herein 63
Section 13.03. Titles, Headings, Captions, Etc. 63
Section 13.04. No Personal Liability of Issuer Officials 63
Section 13.05. Bonds Owned by Issuer or Company 63
Section 13.06. Severability 63
Section 13.07. Governing Law 64
Section 13.08. Execution in Counterparts 64
Section 13.09. Notices 64
Section 13.10. Payments Due on Holidays 64
Section 13.11. Issuer, Company and Trustee Representatives 64
EXHIBIT A FORM OF BOND
iv
<PAGE> 6
INDENTURE OF TRUST
THIS INDENTURE OF TRUST dated as of March 1, 1996 (together with any
amendments hereto made in accordance herewith, this "Indenture") by and between
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY (the "Issuer"), a political subdivision and body corporate and politic
duly created and existing under the laws of the State of North Carolina, and
BANK ONE, COLUMBUS, N.A., as trustee (the "Trustee"), having an office and
principal place of business in Columbus, Ohio, duly organized and existing under
the laws of the United States of America, being authorized to accept and execute
trusts of the character herein set out under and by virtue of the laws of the
State of North Carolina;
PREAMBLES
WHEREAS, the Issuer is a political subdivision and body corporate and
politic, duly organized and existing under the laws of the State of North
Carolina pursuant to the Industrial and Pollution Control Facilities Financing
Act, Chapter 159C of the North Carolina General Statutes, as amended (the
"Act");
WHEREAS, under the Act, the Issuer has been given the power to issue its
revenue bonds from time to time and lend the proceeds thereof to a private
corporation as provided in the Act for the purpose of paying for all or any part
of the cost of an industrial or manufacturing facility, including an industrial
development facility such as the Project (as hereinafter defined) authorized
under the Act, and of all other costs incident to or necessary and appropriate
to achieve the foregoing;
WHEREAS, SteriGenics International, a California corporation qualified to
do business in the State of North Carolina (the "Company"), has requested that
the Issuer issue and sell a series of industrial development revenue bonds for
the purpose of financing the cost of (i) the acquisition of an approximately 5.5
acre site at 10811 Withers Cove Park Drive, Charlotte, Mecklenburg County, North
Carolina, (ii) the acquisition, construction and equipping of an approximately
64,000 square foot contract radiation sterilization processing facility thereon
and (iii) the acquisition and installation of machinery, equipment and other
personal property to be used in connection therewith, to be used primarily for
the sterilization of health care, laboratory, pharmaceutical and packaging
products (collectively, the "Project");
WHEREAS, by resolution adopted pursuant to and in accordance with the
provisions of the Act, the Issuer has determined that the financing of the
Project, which constitutes an industrial project under the Act, is in the public
interest;
WHEREAS, the Issuer has authorized the issuance and sale of $9,000,000 in
aggregate principal amount of The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996 (the "Bonds"), the proceeds of
which will be used to finance the cost of the Project;
WHEREAS, the Issuer has entered into a Loan Agreement, dated as of March I
, 1996 (the "Loan Agreement") with the Company under the terms of which the
Issuer has agreed to loan the proceeds from the sale of the Bonds to the Company
and, in consideration thereof, the Company has agreed to pay or to cause to be
paid to the Issuer moneys sufficient to pay the principal of, purchase price of,
premium, if any, and interest on the Bonds as the same become due and payable
and to pay certain administrative expenses in connection with the Bonds;
WHEREAS, as security for the payment of the Bonds, the Issuer has agreed
to assign and pledge to the Trustee all right, tide, and interest of the Issuer
in and to the Trust Estate (as hereinafter defined);
<PAGE> 7
WHEREAS, contemporaneously with the issuance of the Bonds, Comerica
Bank-California (the "Credit Provider") will issue its irrevocable, direct-pay
letter of credit (the "Credit Facility"), in favor of the Trustee, for the
account of the Company, obligating the Credit Provider to pay to the Trustee, in
accordance with the terms thereof upon presentation of drafts and certificates
as required therein, certain amounts specified therein for payment of the
principal, purchase price of and interest on the Bonds;
WHEREAS, in connection with the issuance of the Credit Facility, Comerica
Bank, a state banking association organized under the laws of the State of
Michigan (the "Confirming Bank"), will confirm the Credit Facility by issuing
its confirmation letter (the "Confirmation") and will undertake to honor
conforming drawings under the Credit Facility to the extent that such drawings
are not honored by the Credit Provider in accordance with the terms and
conditions of the Credit Facility;
WHEREAS, the Credit Provider and the Company have entered into the
Reimbursement Agreement dated as of March 1, 1996 (the "Reimbursement
Agreement"), under the terms of which the Company has agreed to reimburse the
Credit Provider for all amounts drawn by the Trustee under the Credit Facility,
together with interest on all such amounts, and to pay to the Credit Provider
certain fees and certain periodic charges and other amounts specified therein
for issuing the Credit Facility; and
WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee (as hereinafter defined) and issued and delivered as provided in this
Indenture, the valid, binding and legal obligations of the Issuer, and to create
a valid assignment and pledge of the securities, property, moneys and rights in
order to secure the payment of the principal, redemption premium, if any, and
interest on the Bonds and a valid assignment of certain of the rights, title and
interest of the Issuer in the Loan Agreement, have been done and performed, and
the execution and delivery of this Indenture and the execution, issuance and
delivery of the Bonds, subject to the terms hereof, have in all respects been
authorized.
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:
That the Issuer, in consideration of the premises and the mutual covenants
herein contained and for the benefit of the owners of the Bonds and the sum of
$1.00 to it duly paid by the Trustee at or before the execution of these
presents, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, in order to secure the payment of the principal of,
premium, if any, and interest on all Bonds at any time outstanding under this
Indenture, according to their tenor and effect, and to secure the performance
and observance of all the covenants and conditions in the Bonds and herein
contained, and, on a subordinate basis, to secure the Company's obligation to
reimburse the Credit Provider amounts due and owing under the Reimbursement
Agreement, and to declare the terms and conditions on and subject to which the
Bonds are issued and secured, has executed and delivered this Indenture and has
granted, warranty remised, released, conveyed, assigned, pledged, set over and
confirmed, and by these presents does grant, warrant, remise, release, convey,
assign, sell. set over and confirm unto Bank One, Columbus, N.A., as the
Trustee, and to its successors and assigns forever, all and singular the
following described property, franchises and income:
(a) All right, title and interest of the Issuer in and to the Loan
Agreement, including any right to delivery of the Credit Facility and the
Confirmation, if any, the receipts and revenues of the Issuer from the
Loan Agreement, the Note (as hereinafter defined), any right to bring
actions and proceedings under the Loan Agreement or the Note or for the
enforcement of the Loan Agreement and the Note and to do all things that
the Issuer is entitled to do under the Loan Agreement or the Note, but
excluding the Unassigned Rights (as hereinafter defined) and the right to
enforce the Unassigned Rights;
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<PAGE> 8
(b) All moneys and securities from time to time held by the Trustee
under this Indenture in any fund or account other than the Rebate Fund and
any and all other personal property of every name and nature from time to
time hereafter by delivery or by writing of any kind, pledged or
hypothecated, as and for additional security hereunder, by the Issuer, or
by anyone on its behalf, in favor of the Trustee, which is hereby
authorized to receive any and all such property at any and all times and
to hold and apply me same subject to me terms hereof.
TO HAVE AND TO HOLD the same with all privileges and appurtenances hereby
conveyed and assigned, or agreed or intended to be, to the Trustee and its
successors in said trust and assigns forever;
IN TRUST, NEVERTHELESS, on the terms herein set forth for the equal and
proportionate benefit, security and protection of all present and future owners
of the Bonds issued under and secured by the Indenture, without privilege,
priority or distinction as to the lien or otherwise of any of the Bonds over any
other of the Bonds and, subject to the prior interest of me holders of the
Bonds, for the benefit, security and protection of the Credit Provider to the
extent of amounts owned to the Credit Provider under the Reimbursement
Agreement;
PROVIDED, HOWEVER, that if the Issuer pays or causes to be paid the
principal of, premium, if any, and interest due and payable on all Outstanding
Bonds, pays or causes to be paid all other sums payable by the Issuer, including
all fees, expenses and other amounts payable to the Trustee, the Paying Agent,
the Credit Provider and the Remarketing Agent, then, and in that case, the
right, title and interest of the Trustee in and to the Trust Estate will then
cease, terminate and become void and this Indenture and the rights hereby
granted shall cease, determine and be void; otherwise this Indenture to be and
remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH and it is expressly declared, that all
Bonds issued and secured hereunder are to be issued, authenticated and delivered
and all said property, rights, interests, revenues and receipts hereby pledged,
assigned and mortgaged am to be dealt with and disposed of under, on and subject
to the terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and
does hereby agree and covenant, with the Trustee for the benefit of the Owners
of the Bonds or any part thereof and the Credit Provider, as follows:
ARTICLE I
DEFINITION AND INTERPRETATIONS
Section 1.01. DEFINITIONS. The terms defined in this Article I have the
meanings provided herein for all purposes of this Indenture, unless the context
or use clearly requires otherwise. All capitalized, undefined terms used herein
have the meanings ascribed to them in the Loan Agreement.
"ACT" means the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the North Carolina General Statutes, as amended.
"ALTERNATE CREDIT FACILITY" means an instrument, such as an irrevocable
letter of credit or guarantee by a financial institution or insurance company,
delivered to the Trustee pursuant to Section 6.08 to replace the Credit Facility
then in effect, which provides for the payment of the principal of, interest on
and Purchase Price of Bonds, is issued for a term of not less than one year and
is for the Coverage Amount.
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<PAGE> 9
"ALTERNATE RATE" means the alternate interest rate set forth in Section
2.05(d).
"AUTHORIZED DENOMINATION" means, (i) with respect to any Bond bearing
interest at a Variable Rate $ 1000.000 or any integral multiple of $5,000 in
excess thereof, (ii) with respect to any Bond bearing interest at a Term Rate
during a Term Rate Period that does not extend to the maturity of the Bonds,
$100,000 or any integral multiple of $5,000 in excess thereof, and (iii) with
respect to any Bond bearing interest at a Term Rate during a Term Rate Period
that extends to the maturity of the Bonds, $5,000 or any integral multiple
thereof.
"AVAILABLE MONEYS" means moneys which are continuously on deposit with the
Trustee, the Paying Agent or the Remarketing Agent in trust for the benefit of
the Owners in a separate and segregated account in which only Available Moneys
are held and which constitute (i) proceeds of the Bonds received
contemporaneously with the initial issuance and sale of the Bonds, (ii) other
moneys held in any fund created under the Indenture that has been continuously
on deposit in trust with the Trustee, the Paying Agent or the Remarketing Agent
for the benefit of the Owners for a period of 366 consecutive days during and
prior to which no petition in bankruptcy under the United States Bankruptcy Code
has been filed by or against the Company or the Issuer and any guarantor of the
Company and no similar proceedings have been instituted under State insolvency
or other laws affecting creditors' rights generally, (iii) funds for which the
Trustee has received a written opinion of counsel nationally recognized in
bankruptcy matters and acceptable to the Trustee to the effect that payment of
such moneys to the Owners would not constitute an avoidable preference under
Section 547 of the United States Bankruptcy Code which is recoverable from the
Owners under Section 550 of the United States Bankruptcy Code or under
applicable State law if the Issuer or the Company or any guarantor of the
Company were to become a debtor under the United States Bankruptcy Code or under
applicable State law, (iv) a drawing under the Credit Facility or the
Confirmation, if applicable, or payments otherwise made under an Alternate
Credit Facility, or (v) the investment of funds qualifying as Available Moneys
under the foregoing clauses.
"BENEFICIAL OWNER" shall have the meaning set forth in Section 2.14.
"BOND COUNSEL" means Parker, Poe, Adams & Bernstein L.L.P. or any firm of
nationally recognized bond counsel familiar with the transactions contemplated
under this Indenture which firm is appointed by the Company, and acceptable to
the Issuer, the Trustee, the Remarketing Agent and the Credit Provider.
"BOND DOCUMENTS" means this Indenture, the Bonds, the Loan Agreement, the
Note, and the Placement and Remarketing Agreement.
"BOND FUND" means me trust fund by that name established pursuant to
Section 6.01.
"BOND PAYMENT DATE" means any Interest Payment Date and any other date on
which the principal of or interest on the Bonds is to be paid to the Owners
thereof, whether on redemption, at maturity or on acceleration of maturity of
the Bonds.
"BOND PURCHASE FUND" means the trust fund by that name established
pursuant to Section 6.01.
"BONDS" means $9,000,000 in aggregate principal amount of The Mecklenburg
Industrial Facilities and Pollution Control Financing Authority Industrial
Development Revenue Bonds (SteriGenics International Project), Series 1996,
issued pursuant to this Indenture.
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<PAGE> 10
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system, as
applicable, under which (i) the Ownership of beneficial interests in the Bonds
may be transferred only through a book entry and (ii) physical bond certificates
in fully registered form are registers only in the name of a Depository or its
nominee as holder, with the physical bond certificates "immobilized" in the
custody of the Depository.
"BUSINESS DAY" means any day other than (i) a day on which banking
institutions in New York, New York or the cities in which the Trustee, the
Paying Agent, the Remarketing Agent, the Credit Provider or the Confirming Bank
have their respective principal offices are authorized to close or (ii) a day on
which the New York Stock Exchange is closed.
"CESSATION OF OPERATIONS" means any time that the Company ceases to
operate the Project as an "industrial project for industry" as defined in the
Act; provided that a "cessation of operation" shall not be deemed to have
occurred until 90 days after written notice has been given to the Company by the
Issuer that operations at the Project have ceased and the Company has not
demonstrated to the satisfaction of the Issuer that (i) the Company has resumed
operations at the Project as an "industrial project for industry" within the
meaning of the Act or (ii) the Company is, in good faith, seeking to arrange
resumption of an economically reasonable operation of the Project by the
Company; provided further that a temporary shutdown due to a strike or other
labor dispute or other similar occurrence will not be deemed to be a cessation
of operation.
"CLOSING DATE" means the date of delivery of the Bonds to the initial
purchaser or purchasers thereof in accordance with this Indenture.
"CODE" means the Internal Revenue Code of 1986, as amended. Each reference
to a section of the Code herein will be deemed to include the United States
Treasury Regulations proposed or in effect with respect thereto and applicable
to the Bonds or the use of the proceeds thereof.
"COMPANY" means SteriGenics International, a California corporation or any
successor or successors to the Company's obligations under the Loan Agreement as
permitted by Section 5.3 of the Loan Agreement.
"COMPANY REPRESENTATIVE" means a person at the time designated to act on
behalf of the Company by a written instrument furnished to the Trustee
containing the specimen signature of such person and signed on behalf of the
Company by its President, any Vice President or the Chairman of the Company's
Board of Directors, or in the case of a Person other than a corporation, the
person or persons having comparable positions or roles.
The certificate may designate an alternate or alternates.
"CONFIRMATION" means the confirmation of the Credit Facility by the
Confirming Bank as evidenced by the Confirmation dated March 8, 1996 pursuant to
which the Confirming Bank will undertake to honor conforming drawings under the
Credit Facility to the extent that such drawings are not honored by the Credit
Provider in accordance with the terms and conditions of the Credit Facility and
any extensions, amendment or supplements thereto, and any Substitute
Confirmation in effect from time to time as provided in this Indenture and any
extensions, amendments, or supplements thereto.
"CONFIRMING BANK" means Comerica Bank, a state banking corporation
organized under the laws of the State of Michigan, and in successors and assigns
and, if a Substitute Confirmation is issued, the issuer thereof.
"CONVERSION" means the conversion of the interest rate on the Bonds from
one interest rate mode to another interest rate mode in accordance with the
provisions hereof.
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<PAGE> 11
"CONVERSION DATE" means the interest Payment Date which is the effective
date of any Conversion.
"COUNSEL" means an attorney, or firm thereof, admitted to practice law
before the highest court of any state in the United States of America or the
District of Columbia.
"COVERAGE AMOUNT" means, as of any given date an amount equal to the
principal amount of Bonds Outstanding plus (i) during any Variable Rate Period,
50 days' interest on the Bonds, computed at a rate per annum equal to the
Maximum Rate and on the basis of the actual number of days elapsed during a 365
day year or a 366 day year, as applicable, or (ii) during any Term Rate Period,
204 days' interest on the Bonds (or, if the Term Rate Period to be established
will consist of fewer than 6 months, the number of days' interest on the Bonds
obtained by adding 20 days to the number of days in such Term Rate Period)
computed at a rate per annum equal to the interest rate on the Bonds to be in
effect during such Term Rate Period (but not exceeding the Maximum Rate) and on
the basis of a 360 day year of twelve 30 day months.
"CREDIT EXPIRATION DATE" means, during any Variable Rate Period and any
Term Rate Period, the date which is 15 calendar days before the Credit Facility
or the Confirmation, if applicable and then in effect, is to terminate,
including any extension of such date, without provision being made at least 60
days prior to such termination date in accordance with Section 6.08 for the
delivery of an Alternate Credit Facility or Substitute Confirmation, as
applicable, which does not result in the ratings, if any, then in effect on the
Bonds being reduced or withdrawn, but not including any early termination
because of the occurrence of any event of default thereunder.
"CREDIT FACILITY" means, initially, the Letter of Credit dated March 8,
1996 issued by the Credit Provider to the Trustee on behalf of the Company, and
all amendments and supplements thereto, or if an Alternate Credit Facility is
delivered pursuant to Section 6.08, such Alternate Credit Facility and all
amendments and supplements thereto.
"CREDIT PROVIDER" means Comerica Bank-California, in its capacity as the
issuer of the Credit Facility, and its successors in such capacity and their
assigns, and if an Alternate Credit Facility is issued, the issuer thereof.
"CREDIT PROVIDER BONDS" means any Bonds purchased pursuant to Section
3.03(c) by the Credit Provider which are purchased with the proceeds of a draw
on the Credit Facility or the Confirmation, if applicable, and are held for the
benefit of the Credit Provider in the name of the Company as provided in the
Reimbursement Agreement until such time as such purchased Bonds are released
from the security interest created by the Reimbursement Agreement in accordance
with the provisions thereof.
"CREDIT PROVIDER RATE" means the rate borne by the Credit Provider Bonds,
as set forth in the Reimbursement Agreement.
"DEFAULT" and "EVENT OF DEFAULT" mean any occurrence or event specified in
Section 7.01.
"DEPOSITORY" means any securities depository that is a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, operating and maintaining, with its
participants or otherwise, a Book-Entry System to record ownership of beneficial
interests in municipal bonds, and to effect transfers of municipal bonds, in
Book-Entry Form, and includes and means initially DTC.
"DETERMINATION OF TAXATION" means a final determination by the Internal
Revenue Service or a court of competent jurisdiction that the interest paid or
to be paid on any Bond (except to a "substantial
6
<PAGE> 12
user" of the Project or a "related person" within the meaning of Section 147(a)
of the Code) is or was includable in the gross income of the Bond's Owner for
federal income tax purposes.
"DTC" means The Depository Trust Company, New York, New York and its
successors.
"FEDERAL SECURITIES" means (a) direct obligations of the United States of
America for the payment of which the full faith and credit of the United States
of America is pledged; (b) obligations issued by any agency controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of and interest on which is fully guaranteed as
full faith and credit obligations of the United States of America (including any
securities described in (a) or (b) issued or held in the name of the Trustee in
book entry form on the books of the Department of Treasury of the United States
of America), which obligations, in either case, are held in the name of the
Trustee and are not subject to redemption or purchase prior to maturity at the
option of anyone other than the holder; (c) any bonds or other obligations of
any state of the United States of America or of any agency, instrumentality or
local governmental unit of any such state which are (i) not callable prior to
maturity or (h) as to which irrevocable instructions have been given to the
trustee or escrow agent of such bonds or other obligations by the obligor to
give due notice of redemption and to call such bonds for redemption on the date
or dates specified, and which are rated by Moody's, if the Bonds are rated by
Moody's, and S&P, if the Bonds are rated by S&P with a rating equal to or
greater than the then current rating on the Bonds and which are secured as to
principal, redemption premium, if any, and interest by a fund consisting only of
cash or bonds or other obligations of the character described in clause (a)
hereof which fund may be applied only to the payment of such principal of and
interest and redemption premium, if any, on such bonds or other obligations on
the maturity date or dates thereof or the specified redemption date or dates
pursuant to such irrevocable instructions, as appropriate; or (d) direct
evidences of ownership Of Proportionate interests in future interest and
principal payments that are part of the United States Treasury program on
specified obligations described in (a) held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest
and has the right to proceed directly and individually against the obligor on
the underlying obligations described in (a), and which underlying obligations
are not available to satisfy any claim of the custodian or any person claiming
through the custodian or to whom the custodian may be obligated.
"INDENTURE" means this Indenture of Trust dated as of March 1, 1996
between the Issuer and the Trustee, as amended or supplemented in accordance
with the terms hereof from time to time.
"INTEREST ACCOUNT" means the trust account by that name established in the
Bond Fund pursuant to Section 6.01.
"INTEREST PAYMENT DATE" means (i) for all Variable Rate Bonds, the first
Wednesday (or if not a Business Day, the next succeeding Business Day) of each
calendar month; (ii) for Term Rate Bonds with a Term Rate Period of six months
or fewer, the calendar day after the last day of each Term Rate Period; and
(iii) for Term Rate Bonds with a Term Rate Period of greater than six months,
the first calendar day of the month that is the sixth month after the month in
which such Term Rate Period begins and each sixth month anniversary of such fast
calendar day described above and the calendar day after the last day of the Term
Rate Period; and (iv) for any Term Rate Period that extends to the maturity of
the Bonds, March I and September I of each year.
"INTEREST PERIOD" means (i) initially, that period beginning on the date
of issuance of the Bonds through and including March 12, 1996, and (ii)
thereafter, (A) with respect to each Variable Rate Bond, the Variable Rate
Period applicable thereto or (B) with respect to each Term Rate Bond, that
period
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<PAGE> 13
beginning on an Interest Payment Date or a Conversion Date through and including
the date preceding the next Interest Payment Date.
"ISSUER" means The Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority, a public body corporate and politic created
pursuant to the Act, and its successors and assigns.
"ISSUER REPRESENTATIVE" memo any of the following: (i) the Chairman or
Vice Chairman of the Issuer; (ii) the Secretary or any Assistant Secretary of
the Issuer; or (iii) any other person or persons at the time designated to act
on behalf of the Issuer for purposes of performing any act on behalf of the
Issuer under the Loan Agreement or this Indenture by a written certificate
furnished to the Company and the Trustee containing the specimen signature of
such person or persons and signed on behalf of the Issuer by the Chairman or
Vice Chairman of the Issuer.
"LOAN AGREEMENT" means the Loan Agreement dated as of March 1, 1996,
between the Issuer and the Company, and any permitted amendments or supplements
thereto.
"LOAN AGREEMENT EXPIRATION DATE" means the effective date of termination
of the Loan Agreement whether at maturity or upon prepayment pursuant to Article
VII of me Wan Agreement or upon defeasance of all of the Bonds pursuant to
Article XI.
"MAIL" means United States mail, by first-class postage.
"MAXIMUM RATE" means We lesser of 12.00% per annum or the maximum interest
rate applicable to the Bonds permitted by the laws of the State.
"MIDPOINT DATE" means, with respect to any Term Rate Period, the first
Interest Payment Date which is at least one-half of the number of days into such
Term Rate Period.
"MOODY'S" means Moody's Investors Service, a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, and, if such corporation for any reason no longer performs the
functions of a securities rating agency, "Moody's" will be deemed to refer to
any nationally recognized rating agency other than S&P designated by the Company
with the approval of the Credit Provider.
"NET PROCEEDS" means, with respect to way condemnation award or insurance
proceeds allocable to the Project (including, without limitation, tide
insurance), the gross proceeds from a condemnation award or insurance proceeds
(including, without limitation, the proceeds of tide insurance) so allocable,
remaining after the payment of all expenses (including attorneys' fees and
expenses) incurred in the collection of such proceeds.
"OPINION OF COUNSEL" means an opinion in writing of legal Counsel, who may
be counsel to me Trustee, the Company, the Paying Agent, the Remarketing Agent,
the Credit Provider or the Issuer.
"OUTSTANDING" or "BONDS OUTSTANDING" means all Bonds which have been
issued under this Indenture, except:
(a) Bonds canceled or which have been surrendered to the Trustee for
cancellation;
(b) Bonds in lieu of which other Bonds have been authenticated under
Section 2.10 or 2.11;
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<PAGE> 14
(c) Bonds which have been redeemed as provided in Article IV
(including Bonds redeemed on a partial payment as provided in Section
4.05); and
(d) Bonds which are deemed to have been paid under Article XI.
"OWNER" means any person in whose name any Bond is registered on the books
maintained by the Paying Agent, as registrar.
"PAYING AGENT" means the Trustee or any other or additional paying agent
designated pursuant to Section 8.21.
"PERMITTED INVESTMENTS" means (i) Federal Securities; (ii) obligations of
the Federal Land Bank; (iii) obligations of the Federal Home Loan Bank; (iv)
obligations of the Federal Intermediate Credit Bank; (v) obligations of the
Central Bank for Cooperatives; (vi) certificates of deposit of national or state
banks located within the State which have deposits insured by the Federal
Deposit Insurance Corporation (including the certificates of deposit of any bank
acting as a depository, custodian or trustee for any proceeds of the Bonds);
provided however, that the portion of such certificates of deposit in excess of
the amount insured by the Federal Deposit Insurance Corporation, if any, shall
be secured by deposit with the Federal Reserve Bank of Charlotte, North
Carolina, or with any national or state bank located within the State, of any of
the obligations included in (i), (ii), (iii), (iv) or (v) above; (vii) any bonds
or other obligations of any state of the United States or of any agency,
instrumentality or local governmental unit of such state which are rated "A" or
better by Moody's, if the Bonds are rated by Moody's, and S&P, if the Bonds are
rated by S&P; (viii) shares of a tax exempt money market fund which is
restricted by its terms to investment in obligations which and which carry the
highest short-term rating of Moody's, if the Bonds are rated by Moody's, and
S&P, if the Bonds are rated by S&P; (ix) the State Treasurer's ShortTerm
Investment Fund; and (x) any other investments permitted under Section 159-30 of
the General Statutes of North Carolina, as amended, for the investment of public
funds which meet the requirements for the "A" rating category of Moody's, if the
Bonds are rated by Moody's, and S&P. if the Bonds are rated by S&P; and (xi)
money market funds, the assets of which are obligations of or guaranteed by the
United States of America or repurchase agreements secured by such obligations
and which funds are rated "AM" or "AM-G" or higher by S&P at the time of
purchase; provided, however, that each of the investments listed in (i) through
(ix) above must be permitted by Section 159-30 of the Act.
"PERSON" or "PERSONS" means natural persons, firms, associations,
corporations and public bodies.
"PLACEMENT AGENT" means Wheat, First Securities, Inc.
"PLACEMENT AND REMARKETING AGREEMENT" means the Placement and Remarketing
Agreement dated as of March 1, 1996, among the Placement Agent, the Remarketing
Agent, the company and the Issue, as amended or supplemented from time to time.
"PRINCIPAL ACCOUNT" means the trust account by that name established in
the Bond Fund pursuant to Section 6.01.
"PROJECTS" means (i) the acquisition of an approximately 5.5 acre site at
10811 Withers Cove Park Drive, Charlotte, Mecklenburg County, North Carolina,
(ii) the acquisition, construction and equipping of an approximately 64,000
square foot contract radiation sterilization processing facility thereon and
(iii) the acquisition and installation of machinery, equipment and other
personal property to be used in connection therewith, to be used primarily for
the sterilization of health care, laboratory, pharmaceutical and packaging
products.
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<PAGE> 15
"PROJECT FUND" means the trust fund by that name established pursuant to
Section 6.01.
"PURCHASE DATE" means, (i) for a Variable Rate Bonds, the Business Day as
set forth in Section 3.01(a)(1) and (ii) for all Bonds, any Business Day on
which Bonds are subject to mandatory purchase pursuant to Section 3.01(b) or
(c).
"PURCHASE PRICE" means an amount equal to the aggregate principal amount
of Bonds tendered for purchase plus, if the Purchase Date is not an Interest
Payment Date accrued interest to the Purchase Date.
"REBATE DEPOSIT" means the amount required to be deposited into the Rebate
Fund as a result of the computation made pursuant to the Tax Regulatory
Agreement and Section 5.08.
"REBATE FUND" means the trust fund by that name established pursuant to
Section 6.01.
"RECORD DATE" means, (i) while the Bonds bear interest at a Variable Rate,
the Business Day preceding each Interest Payment Date applicable to such Bond
and (ii) while the Bonds bear interest at a Term Rate, the 15th calendar day
(whether or not a Business Day) of the month immediately preceding such Interest
Payment Date.
"REGISTRAR" means the entity from time to time serving as Paying Agent
under this Indenture.
"REIMBURSEMENT AGREEMENT" means the agreement between the Company and the
Credit Provider pursuant to which the Credit Facility is issued by the Credit
Provider and delivered to the Trustee, and any and all modifications,
alterations, amendments and supplements thereto, initially the Reimbursement
Agreement dated as of March 1, 1996 between the Company and the Credit Provider,
as amended, supplemented or modified from time to time.
"REMARKETING AGENT" means the Remarketing Agent appointed in accordance
with Section 8.22, initially Wheat, First Securities, Inc.
"REMARKETING PROCEEDS" means proceeds of the remarketing of Bonds tendered
or deemed tendered for purchase pursuant to Section 3.01 other than to the
Issuer or the Company or any guarantor of the Company.
"S&P" means Standard & Poor's Ratings Group, a Division of McGraw Hill,
Inc., a corporation organized and existing under the laws of the State of New
York, its successors and their assigns, and, if such corporation for any reason
no longer performs the function of a securities rating agency, "S&P" will be
deemed to refer to any nationally recognized securities rating agency other than
Moody's designated by the Company with the approval of the Credit Provider.
"STATE" means the State of North Carolina.
"SUBSTITUTE CONFIRMATION" means any subsequent Confirmation delivered to
the Trustee from time to time to replace the Confirmation then in effect.
"TERM RATE" means a fixed, nonvariable rate of interest on the Bonds
established in accordance with Section 2.03(b)(ii).
"TERM RATE BONDS" means Bonds bearing interest at a Term Rate.
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"TERM RATE CONVERSION DATE" means the effective date of a Term Rate
established in accordance with the terms of Section 2.03(b)(ii).
"TERM RATE PERIOD" means the period during which the Bonds bear interest
at the Term Rate.
"TRUSTEE" means Bank One, Columbus, N.A., a national banking association,
organized and existing pursuant to the laws of the United States, as trustee,
and any successor trustee at the time serving as such hereunder.
"TRUSTEE REPRESENTATIVE" means the person or persons at the time
designated to act on behalf of the Trustee for purposes of performing any act on
behalf of the Trustee under the Indenture by a written certificate furnished to
the Company and the Issuer containing the specimen signature of such person or
persons and signed on behalf of the Trustee by any duly authorized officer of
the Trustee.
"TRUST ESTATE" means all property and rights conveyed by the Issuer under
the Granting Clauses of this Indenture.
"UNASSIGNED RIGHTS" means the rights of the Issuer under Section 4.4
(relating to the payment of administrative fees and expenses), Section 5.2
(relating to indemnification), Section 6.4 (relating to the payment of counsel
fees and expenses) and Section 8.13 (relating to the right to amend the Loan
Agreement) of the Loan Agreement and the rights of the Issuer to receive
documentation and notices, to give or withhold consents in connection with this
Indenture and the Loan Agreement and the right to enforce any of the foregoing.
"VARIABLE RATE BONDS" means Bonds bearing interest at the Variable Rate.
"VARIABLE RATE" means the interest determined in accordance with Section
2.03 (b)(i).
"VARIABLE RATE PERIOD" means the period beginning on, and including any
Wednesday (or, if not a Business Day, on the next succeeding Business Day) and
ending on, and including, the then next Tuesday (or the day immediately
preceding the first day of the next Variable Rate Period), except that in the
event of Conversion to Variable Rate Bonds, the first "Variable Rate Period"
means the period beginning on the Conversion Date and ending on, and including,
the second succeeding Tuesday (or the day immediately preceding the first day of
the next Variable Rate Period) unless the Conversion Date is a Tuesday or
Wednesday, in which case it will end on and include the first succeeding
Tuesday.
Section 1.02. INTERPRETATIONS. For purposes of this Indenture:
(a) SUCCESSORS. References to specific persons, positions or
officers include those who or which succeed to or perform their respective
functions, duties or responsibilities.
(b) LAWS. References to the Code or to the laws or Constitution of
the State, or rules or regulations thereunder, or to a section, division,
paragraph or other provision thereof, include those laws and rules and
regulations, and that section, division, paragraph or other provision
thereof as from time to time amended modified, supplemented, revised or
superseded, provided that no such amendment, modification,
supplementation, revision or supersession shall be applied (i) to alter
the obligation to pay the principal, premium, if any, or interest due and
owing on the Bonds Outstanding hi the amount and manner, at the times, and
from the sources provided in this Indenture or (ii) to alter the times at
which of amounts in which the Trustee is to receive payments in respect of
the Credit Facility, except as otherwise herein permitted.
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(c) SINGULAR/PLURAL. Unless the context otherwise indicates, words
importing the singular number include the plural number and words
importing the plural number include the singular number.
(d) COMPUTATIONS. Unless otherwise provided in this Indenture or the
facts are then otherwise, all computations required for the purposes of
this Indenture shall be made on the assumptions that: (i) all payments
required to be made by or on behalf of the Company under the Loan
Agreement shall be paid as and when the same become due; and (ii) all
credits required by this Indenture to be made to any fund or account shall
be made in the amounts and at the times required.
(e) EXCLUSION OF BONDS HELD BY OR FOR THE COMPANY OR THE ISSUER. In
determining whether the registered owners of the requisite principal
amount of Bonds Outstanding have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Bonds owned by the Company
and the Issuer shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Bonds which the Trustee knows to be so owned shall
be disregarded.
(f) BONDS AND OPINIONS. Except as otherwise specifically provided in
this Indenture, each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture includes an
identification of any certificates or opinions relied on in such
certificate or opinion, and a statement: (i) that the person making the
certificate or opinion has read the covenant or condition and the
definitions herein relating thereto; (ii) as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in the certificate or opinion are based; (iii) that in the
opinion of such person, he or she has made such examination and
investigation as is necessary to enable him or her to express an informed
opinion as to whether the covenant or condition has been complied with;
and (iv) as to whether, in the opinion of such person, the condition or
covenant has been complied with.
(g) COUNSEL OPINIONS. Any Opinion of Counsel may be qualified by
reference to the constitutional powers of the United States of America and
the State, the police and sovereign powers of the State, judicial
discretion, and bankruptcy, insolvency, reorganization moratorium and
other laws affecting creditors' rights and similar matters.
(h) CONSOLIDATED CERTIFICATIONS, OPINIONS AND INSTRUMENTS. When
several matters are required to be certified by, or covered by an opinion
of, any specified person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such person, or that
they be so certified or covered by only one document, but one such person
may certify or give an opinion with respect to some matters and one or
more other such persons as to other matters, and any such person may
certify or give an opinion as to such matters in one or several documents.
When any person is required to make, give or execute two or more
applications, requests, consents certificates, statements, opinions or
other instruments under this Indenture, such instruments may, but need
not, be consolidated and form one instrument.
(i) OPINIONS AND CERTIFICATIONS OF THE COMPANY AND THE ISSUER. Any
certificate or opinion of an officer of the Company or the Issuer may be
based, insofar as it relates to legal matters, on a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his or her
certificate or opinion is based are erroneous.
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Any such certificate or opinion may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Issuer or the Company stating that the
information with respect to such factual matters is in the possession of
the Company or the Issuer, unless such officer knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such factual matters are erroneous.
(j) REFERENCES TO INDENTURE. The terms "herein," "hereunder,"
"hereby," "hereto," "hereof" and any similar terms refer to this Indenture
as a whole and not to any particular article, section or subdivision
hereof; and the term "heretofore" means before the date of execution of
this Indenture, the term "now" means at the date of execution of this
Indenture, and the term "hereafter" means after the date of execution of
this Indenture.
(k) SECTION AND ARTICLE REFERENCES. References in this Indenture to
Section or Article numbers, without added references to other documents,
are to the indicated Sections or Articles in this Indenture.
(l) GENDER. Words of the masculine gender include correlative words
of the feminine and neuter genders.
(m) CAPTIONS. The captions or headings of this Indenture and the
table of contents appended to copies hereof are for convenience only and
in no way define, limit or describe the scope or intent of any provisions,
articles or sections of this Indenture.
(n) CONSENT. If one person becomes the registered owner of all of
the Outstanding Bonds and this Indenture requires the consent of the
Trustee for a particular purpose, then the consent of that person will be
required in lieu of the consent of the Trustee for that purpose.
(o) REMEDIES. Nothing expressed or implied in this Indenture is
intended or shall be construed to confer on or to give any Person, other
than the Company, the Trustee, the Paying Agent, the Remarketing Agent,
the Issuer, the Credit Provider, the Confirming Bank, if any, and the
Owners, any right, remedy or claim under or by reason of this Indenture or
any covenant, agreement, condition or stipulation hereof.
[End of Article I]
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ARTICLE II
AUTHORIZATION, TERMS, ISSUANCE OF BONDS
Section 2.01. AUTHORIZED AMOUNT OF BONDS; ISSUANCE. No Bonds may be issued
hereunder except in accordance with this Article II. There is hereby created for
issuance under this Indenture an issue of bonds limited in aggregate principal
amount to $9,000,000, and designated "The Mecklenburg County Industrial
Facilities and Pollution Control Financing Authority Variable Rate Demand/Term
Rate Industrial Development Revenue Bonds (SteriGenics International Project),
Series 1996." The aggregate principal amount of Bonds that may be issued shall
be $9,000,000.
The Bonds shall be delivered in fully registered form without coupons in
Authorized Denominations only, in substantially the form as provided in Exhibit
A to this Indenture. On a Conversion, the Bonds shall be substantially in the
form of Exhibit A hereto with appropriate deletion of information concerning the
interest rate in effect before the Conversion Date and insertion of information
concerning the interest rate to be in effect on and after the Conversion Date,
such form to be provided to the Trustee by Bond Counsel before the Conversion.
The Bonds will be lettered "R-," and will be numbered separately from 1
consecutively upward. The Bonds shall mature (subject to the right to purchase
and of prior redemption as hereinafter set forth) on March 1, 2016.
Section 2.02. DETAILS OF BONDS; PAYMENT.
(a) The Bonds will initially all be dated their date of initial
authentication and delivery, and Bonds issued in exchange for or on the
registration of transfer of Bonds will be dated as of the Interest Payment
Date preceding the day of authentication thereof, unless the date of such
authentication is an Interest Payment Date to which interest on the Bonds
has been paid in full or duly provided for in accordance with the terms of
this Indenture, in which case they will be dated as of such Interest
Payment Date; except that if, as shown by the records of the Paying Agent,
interest on the Bonds is in default, Bonds issued in exchange for or upon
registration of transfer of Bonds will be dated as of the date to which
interest on the Bonds has been paid in full. If no interest has been paid
on the Bonds, Bonds issued in exchange for or upon the registration or
transfer of Bonds will be dated the date of initial authentication and
delivery thereof.
(b) Principal of and premium, if any, on the Bonds will be payable
in lawful currency of the United States at the principal office of the
Paying Agent. Payment of the principal of and premium, if any, on the
Bonds will be made on the presentation and surrender of such Bonds as the
same become due and payable. Payment of the interest on each Bond will be
made by the Paying Agent on each Interest Payment Date to the person
appearing as the Owner thereof as of the close of business on the Record
Date preceding the Interest Payment Date, by check mailed to such Owner at
his address as it appears on the registration books maintained by the
Registrar or at such other address as is furnished in writing by such
Owner to the Registrar; provided, however, if the Bonds are registered in
the name of a Depository or its nominee as registered owner, payment will
be made by wire transfer pursuant to the wire instruction received by the
Paying Agent from such registered owner.
(c) Notwithstanding anything provided above, (i) payment of interest
on the Bonds may (except as otherwise provided for Credit Provider Bonds),
at the option of any Owner of Bonds in an aggregate principal amount of at
least $1.000,000, be transmitted by wire transfer to such Owner, on
written request therefor delivered to the Paying Agent, to the bank
account number on file with the Registrar as of the relevant Record Date
and (ii) all payments of principal
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or redemption price of and interest on Credit Provider Bonds will be by
wire transfer in immediately available funds; provided, however, if the
Bonds are registered in the name of a Depository or its nominee as
registered owner, payment will be made by wire transfer pursuant to the
wire instruction received by the Paying Agent from such registered owner.
Section 2.03. INTEREST RATE AND INTEREST PAYMENT PROVISIONS.
(a) General. Each Bond will evidence the right to receive interest,
at a Variable Rate, determined from time to time, or at a Term Rate,
determined from time to time, from and including the date of such Bond
until conversion to a Variable Rate or a successive Term Rate or until
payment of the principal or redemption price thereof has been made or
provided for in accordance Article provisions of this Indenture, whether
at maturity, on redemption or otherwise. Interest for each Interest Period
will be paid on the next succeeding Interest Payment Date, and (i) while
the Bonds pay interest at a Variable Rate, will be computed on the basis
of a year of 365 or 366 days, as appropriate, for the actual number of
days elapsed, and (ii) while the Bonds pay interest at the Term Rate,
computed on the basis of a year of 360 days and twelve 30-day months,
provided that while any Bonds pay interest at the Credit Provider Rate,
interest on such Bonds will be payable on the dates and will be calculated
on the basis provided in the Reimbursement Agreement. In no event will
interest attributable to any Bond accrue at a rate greater than the
Maximum Rate, except as otherwise provided for Credit Provider Bonds in
subsection (b)(iii) of this Section. The Trustee will calculate the amount
of interest to be paid on each Interest Payment Date, and will confirm the
amount in writing with the Paying Agent.
Initially, the Bonds will bear interest at the Variable Rate,
determined by the Placement Agent on the issuance date and thereafter at
the time and in the manner set forth below.
(b) Certain Interest Rates. Interest rates will be determined as
follows for Variable Rate Bonds, Term Rate Bonds and Credit Provider
Bonds.
(i) For Variable Rate Bonds, the interest rate for any
Variable Rate Period will be the rate established by the Remarketing
Agent on the first day of such Variable Rate Period which is the
minimum rate of interest necessary, in the best professional
judgment of the Remarketing Agent taking into account prevailing
market conditions, to enable the Remarketing Agent to remarket all
of the Variable Rate Bonds in the secondary market on the date such
rate is set at a price equal to 100% of the principal amount
thereof, plus accrued interest, if any.
(ii) For Term Rate Bonds, the interest rate for any Term Rate
Period will be the rate established by the Remarketing Agent on or
before the first day of such Term Rate Period which is the minimum
fixed interest rate necessary, in the best professional judgment of
the Remarketing Agent, taking into account prevailing market
conditions, to enable the Remarketing Agent to remarket all of the
Term Rate Bonds in the secondary market on the date such rate is set
at a price equal to 100% of the principal amount thereof, plus
accrued interest, if any.
(iii) Only Credit Provider Bonds wii bear team interest at the
Credit Provider Rate The Credit Provider will calculate the Credit
Provider Rate in accordance with the Reimbursement Agreement and
notify the Trustee and the Paying Agent of the Credit Provider Rate.
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(c) Notification of Interest Rate. The Remarketing Agent will
promptly advise by facsimile the Trustee, the Paying Agent and the Company
of all interest rates determined by it pursuant to Section 2.03(b)(i) and
(ii). Any determination of an interest rate is conclusive and binding on
the Company, the Issuer, the Trustee, the Paying Agent, the Remarketing
Agent, the Credit Provider and the Owners. In determining the interest
rate that the Bonds shall bear, the Remarketing Agent shall have no
liability to the Company, the Issuer, the Trustee, the Paying Agent, the
Credit Provider or the Owners, except for its gross negligence or willful
misconduct.
(d) Credit Facility In Effect at All Times. A Credit Facility must
be in effect at all times with respect to the Bonds.
Section 2.04. FAILURE TO COMPUTE INTEREST RATES; INEFFECTIVE INTEREST
RATES. If the Remarketing Agent no longer determines, or fails to determine,
when required, an interest rate pursuant to Section 2.03(b)(i) or (ii), or if
for any reason such manner of determination is held to be invalid or
unenforceable by a court of law, the interest rates for the next Interest Period
will be determined by the Trustee as follows:
(a) For Variable Rate Bonds, (1) if the Remarketing Agent does not
determine an interest rate pursuant to Section 2.03(b)(i) for one Variable
Rate Period, the interest rate shall be that interest rate borne by such
Bonds during the immediately preceding Variable Rate Period or (2) if the
Remarketing Agent does not determine an interest rate pursuant to Section
2.03(b)(i) for two or more consecutive Variable Rate Periods, that
interest rate shall be determined in the manner provided by Section
2.05(d).
(b) For Term Rate Bonds. (1) if the Remarketing Agent does not
determine an interest rate pursuant to Section 2.03(b)(ii) for one Term
Rate Period, the interest rate shall be that interest rate borne by such
Bonds during the immediately preceding Term Rate Period if the duration of
the new Term Rate Period is equal to the immediately preceding Term Rate
Period; or (2) if the Remarketing Agent does not determine an interest
rate pursuant to Section 2.03(b)(ii) for two or more consecutive Term Rate
Periods or if the duration of the new Term Rate Period is not equal to the
duration of the immediately preceding Term Rate Period, the interest rate
shall be that interest rate determined in the manner provided by Section
2.05(d).
Section 2.05. CONVERSION OF INTEREST RATE.
(a) The interest rate on the Bonds is subject to Conversion from one
interest rate mode to another or from a Term Rate to one or more
successive Term Rates, in whole and not in part, at the option of the
Company, by mailing a notice thereof to the Trustee, the Credit Provider,
the Paying Agent and the Remarketing Agent at least 30 days before the
proposed Conversion Date, accompanied by a preliminary opinion of Bond
Counsel stating that such Conversion is authorized and in accordance with
this Indenture and will not adversely affect the exclusion of the interest
on any of the Bonds from the gross income of the recipient thereof for
federal and state income tax purposes. A Conversion may occur only (i)
when the Conversion Date is a date on which the Bonds are subject to
optional redemption under Section 4.01(a) or (b), (ii) if the Conversion
Date would otherwise be an Interest Payment Date or if not, then it is a
Business Day and (iii) if the Credit Facility is in the applicable
Coverage Amount. At least ten days prior to the proposed Conversion Date,
as a necessary condition to such Conversion, the Company must deliver to
the Trustee:
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(1) a written notice which specifies the proposed change on
the Conversion Date, the change to be made on the proposed
Conversion Date, and, if one or more Term Rate Periods will be
established, the length for each such Term Rate Period and the last
day of each such Term Rate Period;
(2) an opinion of Bond Counsel dated the Conversion Date
confirming the preliminary opinion as of such Conversion Date;
provided, however, that the portion of such opinion relating to the
tax-exempt status of interest on the Bonds shall not be required if
(a) a Term Rate of one year or less is to be established
following a period in which the Bonds bear interest at the
Variable Rate,
(b) a period in which the Bonds bear interest at the
Variable Rate is to be established following a Term Rate
Period of one year or less, or
(c) a Term Rate Period of one year or less is to be
established following a Term Rate Period of one year or less.
(3) As long as the Credit Facility remains in effect during a
Term Rate Period:
(a) evidence satisfactory to the Trustee, including an
amendment to the existing Credit Facility and Confirmation (if
applicable), if necessary, that the amount which can be
realized under the Credit Facility and the Confirmation, if
applicable, for the payment of interest on the Bonds is equal
to at least 204 days' interest on the Bonds (or, if the Term
Rate Period to be established will consists of fewer than 6
months, the number of days' interest on the Bonds obtained by
adding 20 days to the number of days in such Term Rate Period)
calculated at the Term Rate to be in effect during such period
and on the basis of a 360 day year of twelve 30-day months,
and
(b) written evidence from Moody's (if the Bonds are then
rated by Moody's) and S&P (if the Bonds are then rated by S&P)
that the ratings, if any, borne by the Bonds will not be
reduced or withdrawn as a result of the establishment of the
Term Rate Period;
(4) either
(a) evidence satisfactory to the Trustee that the
principal of and interest on the Bonds during such Term. Rate
Period can be realized in full under the Credit Facility and
the Confirmation, if applicable, then in effect, or
(b) an opinion of Bond Counsel to the effect that, if
the principal of and interest on the Bonds during such Term
Rate Period cannot be realized in full under the Credit
Facility and the Confirmation, if any, then in effect, the
exemption of the Bonds and any Credit Facility and any
Confirmation, if any, then in effect from the registration
requirements of the Securities Act of 1933, as amended, and
the exemption of the Indenture from qualification under the
Trust Indenture Act of 1939, as amended, will not be impaired
as a result of the establishment of such Term Rate Period; and
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(5) in connection with the establishment of a Term Rate Period
of more than one year following a period in which the Bonds accrue
interest at the Variable Rate or a Term Rate Period of one year or
less, at the request of, and in form and content satisfactory to,
the Company, as agent for the Issuer, or the Remarketing Agent,
additional disclosure on the Company, the Project and any other
matter deemed appropriate by the Company and/or the Remarketing
Agent for inclusion in an offering document for the Bonds;
Notwithstanding any provision in this Indenture to the contrary, no
conversion to a Term Rate with a Term Rate Period exceeding nine months in
duration shall be permitted unless the Trustee and the Remarketing Agent
receive, at least two business days prior to the proposed Conversion Date,
an executed copy of a continuing disclosure agreement imposing obligations
upon the Company or the Issuer, as applicable, to comply with the
requirements of Rule 15c2-12 promulgated by the Securities and Exchange
Commission, as amended or supplemented from time to time, with respect to
the Bonds, and such other documents as the Remarketing Agent may require
in order to comply with such Rule; provided that upon such Conversion the
Bonds are subject to the requirements of such Rule.
The Trustee shall promptly deliver copies of such notices and
opinions to the Registrar, the Paying Agent, the Remarketing Agent and the
Credit Provider.
Term Rate Periods established in accordance with this Section 2.05
may be of the same or different periods, but each such Term Rate Period
shall commence on the first calendar day of a month or, if the Variable
Rate is then in effect, the first Wednesday of a month, or if such
Wednesday is not a Business Day, the immediately succeeding Business Day,
and shall end on the last calendar day of a month or, if the Bonds may
bear interest at the Variable Rate following the expiration of any Term
Rate Period, the day immediately preceding the first Wednesday of a month
or if such Wednesday is not a Business Day, the day immediately preceding
the Business Day that immediately succeeds such Wednesday. Any Term Rate
Period (a) shall be for a period of at least 2 months in duration and (b)
may extend to the maturity of the Bonds; provided that no Term Rate Period
may extend beyond the maturity of the Bonds.
(b) If the confirming opinion of Bond Counsel referred to in
subsection (a) of this Section is not delivered on or before the proposed
Conversion Date or if any other condition to Conversion referred to above
is not satisfied on or before the proposed Conversion Date at least ten
days prior to the proposed Conversion Date, the proposed Conversion will
not take place and (1) if the Bonds were bearing interest at a Variable
Rate immediately prior to the proposed Conversion Date, then the Bonds
shall continue to bear interest at the Variable Rate, and (2) if the Bonds
were bearing interest at a Term Rate prior to the proposed Conversion
Date, then the Bonds shall bear interest at a Term Rate determined for a
new Term Rate Period of equal duration to the immediately preceding Term
Rate Period. The Trustee shall give notice of a failure of conversion to
the Remarketing Agent not later than seven days prior to the proposed
Conversion Date.
(c)(1) The Trustee will give notice by Mail to the Owners not less
than 25 days before the Conversion Date. Such notice will state (A) that
such Bonds are being converted, as set forth in the notice from the
Company; (B) the Conversion Date; (C) the date and intended method by
which the interest rate will be determined and the procedure, which may
include the furnishing of a telephone number which Owners can call for
information; (D) the intended Interest Payment Dates and the Purchase
Dates, if any, after the Conversion Date; (E) that, for a Conversion from
a Variable Rate to one or more successive Term Rates, the last day of each
Term Rate Period; (F) that every Bond (with an appropriate transfer of
registration executed in blank. in form satisfactory
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<PAGE> 24
to the Trustee) must be delivered to the Trustee (at its designated
office) not later than the Conversion Date or the next Business Day if the
Conversion Date is not a Business Day and, in the absence of such
delivery, will be deemed to have been delivered and purchased; (G) the
anticipated ratings to be in effect on the Conversion Date; (H) the
Purchase Price; (I) that no interest will accrue to the benefit of such
Owners after the Purchase Date; and (J) that every Outstanding Bond will
be purchased by the Remarketing Agent on the Purchase Date.
(2) A copy of the notice of Conversion given to Owners by the
Trustee will be given by Mail to Moody's, if the Bonds are then rated by
Moody's and to S&P, if the Bonds are then rated by S&P.
(3) If the proposed Conversion will not take place because of the
failure to satisfy any necessary condition to Conversion at least ten days
prior to the proposed Conversion Date, the Trustee will within a
reasonable time, but not more than 5 days before the proposed Conversion
Date, give notice, in the manner in which notice of Conversion was given,
that such Conversion did not take place. In any event, the Trustee will
give written notice to the Credit Provider of a Conversion or a failure of
Conversion on or before the proposed Conversion Date.
(d) Notwithstanding the foregoing provisions of this Section, (i) if
any payment of the principal of or premium (if any) or interest on, or the
purchase price of, any Bond shall not be made when due, the Bonds shall
continue to bear interest at the last interest rate borne by the Bonds
prior to the due date for such payment until such payment is made or
provided for in accordance with this Indenture, and (ii) if the Trustee is
required to determine the applicable Variable Rate or Term Rate pursuant
to Section 2.04, or a court of competent jurisdiction holds that a rate
determined by the Remarketing Agent is invalid or unenforceable, the Bonds
shall bear interest as follows: (A) the Variable Rate for such Variable
Rate Period shall be equal to 65% of the per annum bond equivalent yield
applicable to 13-week United States Treasury securities, and (B) the Term
Rate for such Term Rate Period shall be equal to 75% of the per annum bond
equivalent yield applicable to United States Treasury securities having
the same number of months to maturity as the number of months in the
applicable Term Rate Period (determined by linear interpolation between
the yields for instruments having the next shorter and next longer number
of months to maturity if no yield is announced for United States Treasury
securities having the number of months to maturity prescribed herein), in
each case as published by the Federal Reserve Bank of New York on the most
recent date prior to the applicable effective date. The Trustee shall not
incur any liability for any errors in the computation of the rates
required to be determined in accordance with this Section.
Section 2.06. ISSUANCE OF THE BONDS. The manual or facsimile signature of
a duly authorized officer of the Issuer shall appear on each Bond. Any Bond
shall be deemed to have been issued by a duly authorized officer of die Issuer
if signed by a Issuer Representative, but it shall not be necessary tat the same
officer sign all of the Bonds issued hereunder. In addition, each Bond shall be
authenticated by the manual or facsimile signature of an authorized officer of
the Trustee and shall have a facsimile of the seal of the Trustee affixed
thereto. If any official of the Trustee whose signature appears on the Bonds
ceases to be such official before delivery of the Bonds, such signature is
nevertheless valid and sufficient for all purposes, the same as if he had
remained in office until delivery.
Section 2.07. AUTHENTICATION. No Bond is valid or obligatory for any
purpose or entitled to any security or benefit hereunder unless and until issued
and authenticated in the manner prescribed by Section 2.06, and such issuance
and authentication of any Bond are conclusive evidence that such Bond has been
properly issued hereunder.
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Section 2.08. LIMITED OBLIGATION. THE ISSUER COVENANTS THAT IT WELL
PROMPTLY PAY THE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST ON EVERY BOND ISSUED
UNDER THIS INDENTURE AT THE PLACE, ON TEE DATE AND DI THE MANNER PROVIDED HEREIN
AND IN THE BONDS ACCORDING TO THE TRUE INTENT AND MEANING THEREOF, BUT SOLELY
FROM THE AMOUNTS PLEDGED THEREFOR WHICH ARE TO BE PAID UNDER THE LOAN AGREEMENT
AND OTHERWISE AS PROVIDED HEREIN AND) IN THE LOAN AGREEMENT, WHICH AMOUNT HEREBY
SPECIFICALLY PLEDGED TO THE PAYMENT THEREOF IN THE MANNER AND TO THE EXTENT
HEREIN SPECIFIED, AND NOTHING IN THE BONDS OR IN THIS INDENTURE SHALL BE
CONSTRUED AS PLEDGING ANY OTHER FUNDS OR ASSETS OF THE ISSUER. NEITHER THE
STATE, THE COUNTY, THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE STATE
SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE
OF, REDEMPTION OR PURCHASE PREMIUM, IF ANY, OR INTEREST ON ANY OF THE BONDS OR
FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT UNDERTAKEN BY THE
ISSUER EXCEPT TO THE EXTENT THAT MONEYS PLEDGED HEREIN ARE SUFFICIENT THEREFOR.
Section 2.09. DELIVERY OF THE BONDS. On the execution and delivery of this
Indenture, the Trustee shall deliver the Bonds in the aggregate principal amount
of $9,000,000. Before the delivery by the Trustee of any of the Bonds, there
shall be filed with the Trustee:
(a) An originally executed counterpart of the Loan Agreement, this
Indenture, the Placement and Remarketing Agreement, the Note and the
Reimbursement Agreement;
(b) A certified copy of the Resolution of the Issuer authorizing
issuance of the Bonds, and the execution of the Loan Agreement, the
Indenture and any other instruments and documents executed in connection
with the issuance of the Bonds;
(c) The original, executed Credit Facility;
(d) The original, executed Confirmation;
(e) A request and authorization signed by a duly authorized officer
of the Issuer requesting and authorizing the Trustee to authenticate and
to deliver the Bonds to the initial purchasers thereof upon payment to the
Trustee for the account of the Issuer of the amount of the initial
purchase price for the Bonds specified in such request and authorization;
(f) Evidence reasonably satisfactory to the Trustee of the
perfection of a security interest in favor of the Trustee in the Trust
Estate;
(g) An original, executed approving opinion of Bond Counsel;
(h) An Opinion of Counsel to the Credit Provider addressed to the
Trustee, or upon which the Trustee may rely, to the effect that the Letter
of Credit is a valid and binding obligation of the Credit Provider and is
not subject to registration under the Securities Act of 1933, as amended;
and
(i) A certificate from the Credit Provider indicating that all
documents and preconditions as set form in Section 3.1 of the
Reimbursement Agreement have been received and accepted or satisfactorily
met as the may be.
Section 2.10. MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. If any Bond is
mutilated, lost, stolen, or destroyed, a new Bond may be issued on behalf of the
Issuer, of like date and denomination as that mutilated, lost, stolen, or
destroyed; provided that the Trustee has received indemnity from the Owner of me
Bond satisfactory to it and provided-further, An any mutilated Bond, that such
mutilated Bond if first
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surrendered to the Trustee, and for any lost, stolen or destroyed Bond, that
there if first furnished to the Trustee evidence of such loss, theft, or
destruction satisfactory to the Trustee. If any such Bond has become subject to
the redemption, instead of delivering a duplicate Bond, the Trustee may pay the
same without surrender thereof. The Trustee may charge the Owner of the Bond
with its reasonable fees and expenses in this connection.
Section 2.11. REGISTRATION OF BONDS; PERSONS TREATED AS OWNERS; TRANSFER
OF BONDS. Books for the registration of Bonds shall be kept by the Paying Agent
which is hereby appointed the Registrar. On surrender for registration of
transfer of a Bond at the principal corporate trust office of the Paying Agent,
duly endorsed for transfer or accompanied by an assignment dully, executed by
the Owner or its attorney duly authorized in writing in such form as is
satisfactory to the Paying Agent, the Trustee shall authenticate and deliver in
the name of the transferee or transferees a new fully registered Bond or Bonds.
All Bonds shall be exchangeable an the presentation and surrender thereof
at the principal corporate trust office of the Trustee for a Bond or Bonds in
other Authorized Denominations.
As to any Bond, the person in whose name the same is registered shall be
deemed and regarded as the absolute owner thereof for all purposes, and payment
of either principal or interest on such Bond shall be made only to or on the
written order of the Owner thereof or its legal representative, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effectual to satisfy and discharge such Bond to the extent of the sum
or sums paid.
The Paying Agent shall require the payment, by any Owner requesting
registration of transfer or exchange of Bonds, of any tax, fee or other
governmental charge required to be paid with respect to such registration of
transfer or exchange. The Paying Agent is not required to register the transfer
of or exchange any Bonds selected, called or being called for redemption in
whole or in part.
The Issuer and the Paying Agent shall not be required to issue, exchange
or register the transfer of any Bond or any portion thereof (A) for a period of
15 days prior to the date on which Bonds are selected for redemption, or (B)
after such Bond or portion thereof is called for redemption, unless the
transferee of such Bond or portion thereof delivers to the Trustee and to the
Paying Agent a written acknowledgment of such call for redemption and agrees in
writing to be bound by such call for redemption. In addition, the Issuer and
Paying Agent shall not be required to issue, exchange or register the transfer
of any Bond or any portion thereof prior to the purchase of any Bond or any
portion thereof being purchased pursuant to an optional tender with respect to
which a notice of tender has been received by the Trustee or prior to a
mandatory tender of Bonds after a notice of mandatory tender notice has been
mailed; unless, in each such case, the transferee of such Bond or portion
thereof delivers to the Trustee and to the Paying Agent a written acknowledgment
of such optional tender notice or mandatory tender notice and agrees in writing
to be bound by such optional tender notice or mandatory tender notice and if
notice of election to retain any Bonds to be tendered has been received by the
Trustee with respect to such Bond or portion thereof, the transferee delivers to
the Trustee a written acknowledgment of such notice to retain and agrees in
writing to be bound by such notice.
The Paying Agent shall not register the transfer of any Credit Provider
Bonds unless the Paying Agent shall have received written notice from the Credit
Facility Provider that the Principal Portion of the Credit Facility has been
reinstated, the proceeds of which were used to purchase such Credit Provider
Bonds from the former Owner thereof.
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Section 2.12. CANCELLATION OF BONDS. Whenever any outstanding Bonds are
delivered to the Paying Agent for cancellation pursuant to this Indenture, on
payment thereof or for or after replacement pursuant to Section 2.10 or 2.11,
such Bonds shall be promptly canceled and burned or otherwise destroyed by the
Paying Agent, and counterparts of a certificate of destruction evidencing such
burning or other destruction shall be furnished by the Paying Agent to the
Trustee.
Section 2.13. TEMPORARY BONDS. Pending preparation of definitive Bonds,
there may be issued, and on request of the Issuer, the Trustee shall deliver, in
lieu of definitive Bonds and subject to the same limitations and conditions as
such definitive Bonds, temporary typewritten, printed, engraved or lithographed
Bonds, in the form of registered Bonds without coupons in Authorized
Denominations, substantially in the form of Exhibit A hereto, with such
appropriate omissions, insertions and variations as may be required with respect
to such temporary Bonds.
If temporary Bonds are issued, the Issuer shall cause the definitive Bonds
to be prepared and to be issued, and the Trustee, on presentation to it at its
principal corporate trust office of any temporary Bonds, shall cancel such Bonds
and authenticate and deliver in exchange therefor at the place designated by the
owner, without charge to the owner thereof, a definitive Bond or Bonds of an
equal aggregate principal amount. Until so exchanged, the temporary Bonds shall
in all respects be entitled to the same benefit and security of this Indenture
as the definitive Bonds to be issued and authenticated hereunder.
Section 2.14. BOOK-ENTRY SYSTEM. The Bonds will initially be issued by
means of a book-entry system with no physical distribution of Bonds made to the
public, unless the book-entry system is discontinued as described below. One
certificate for each maturity will be issued to The Depository Trust Company,
New York, New York ("DTC"), and immobilized in its custody. A Book-Entry System
will be employed, evidencing ownership of the Bonds in Authorized Denominations,
with transfers of beneficial ownership effected on the records of DTC, and its
participants (the "DTC Participants") and its indirect participants (the
"Indirect Participants") pursuant to rules and procedures established by DTC.
Payments of principal and interest with respect to the Bonds, so long as
DTC is the only owner of the Bonds, will be paid by the Paying Agent directly to
DTC or its nominee, Cede & Co as provided in the Blanket Letter of
Representation dated March 8, 1996 from the Issuer and the Trustee to DTC (the
"Letter of Representation"). Transfer of principal, interest and any premium
payments or notices to DTC Participants and DTC Indirect Participants will be
the responsibility of DTC, and transfer of principal, interest and any premium
payment or notice to beneficial owners of the Bonds (the "Beneficial Owners")
will be the responsibility of DTC Participants and DTC Indirect Participants. No
other party will be responsible or liable for such transfers of payments or
notices or for maintaining, supervising or reviewing such records maintained by
DTC, DTC Participants or DTC Indirect Participants. Payments will be made by
wire transfer in immediately available funds to the account of Cede & Co. as
specified in the register maintained by the Registrar or by such other method of
payment as the Paying Agent may determine to be necessary or advisable with the
concurrence of DTC.
In the event that (a) DTC determines not to continue to act as securities
depository for the Bonds or (b) the Trustee or the Company determines that the
continuation of the book-entry system of evidence and transfer of ownership of
the Bonds would adversely affect their interests or the interests of the
Beneficial Owners of the Bonds, the Company may cause the Issuer to discontinue
the book-entry system with DTC. If the Company fails to identify another
qualified securities depository to replace DTC, the Issuer will cause the
Trustee, at the expense of the Company, to authenticate and deliver replacement
Bonds in the form of fully registered Bonds to each Beneficial Owner. DTC may be
removed at any time at the election of the Remarketing Agent, with the consent
of the Trustee and notice to the Company and the Issuer, and a new securities
depository may then be appointed by the Issuer, subject to the approval of the
Trustee and the Remarketing Agent.
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Unless a Bond is presented by an authorized representative of DTC to the
County or its agent for registration of transfer, exchange or payment and such
Bond is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), any transfer, pledge, or other use of such Bond for
value or otherwise by or to any person is wrongful inasmuch as the registered
owner thereof, Cede & Co., has an interest in such Bond.
THE ISSUER, THE COMPANY, THE REMARKETING AGENT, THE PAYING AGENT, THE
REGISTRAR AND THE TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO
ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT 10 (I) THE BONDS; (II)
THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (III) THE
PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER
IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS; (TV)
THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY
NOTICE DUE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
TERMS OF THIS INDENTURE TO BE GIVEN TO BENEFICIAL OWNERS; (V) THE SELECTION OF
BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN THE EVENT OF ANY PARTIAL REDEMPTION OF
THE BONDS; OR (VI) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC, OR ITS
NOMINEE, CEDE & CO., AS OWNER.
SO LONG AS A BOOK-ENTRY SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF ALL
THE BONDS IS MAINTAINED IN ACCORDANCE HEREWITH, THE PROVISIONS OF THIS INDENTURE
RELATING TO THE DELIVERY OF PHYSICAL BOND CERTIFICATES SHALL BE DEEMED TO GIVE
FULL EFFECT TO SUCH BOOK-ENTRY SYSTEM.
[End of Article II]
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ARTICLE III
PURCHASE AND REMARKETING OF BONDS
Section 3.01. OPTIONAL DEMAND PURCHASE; MANDATORY PURCHASE.
(a) OPTIONAL DEMAND PURCHASE FOR VARIABLE RATE BONDS.
Any Variable Rate Bond (but solely from the Pledged Revenues
and proceeds of the remarketing of such Bond by the Remarketing
Agent and amounts realized from a drawing under the Credit Facility
or the Confirmation, other than a Credit Provider Bond (or portion
thereof in a denomination of $5,000 or integral multiple thereof
provided such tender does not result in a Bond in a denomination of
less than $100,000), will be purchased, on the demand of the Owner
thereof, on any Business Day designated by the Owner thereof (a
"Purchase Date") which is not less than seven days after the date
notice of such demand is delivered telephonically to the Remarketing
Agent. Any such purchase will be at the Purchase Price. To effect
such purchase, telephonic notice of such optional tender demand and
purchase must be delivered to the Remarketing Agent and such notice
shall (A) state the number and principal amount (or portion thereof
in an Authorized Denomination) of such Variable Rate Bond to be
purchased, (B) state the Purchase Date on which such Variable Rate
Bond will be purchased pursuant to this subsection, and (C)
irrevocably request such purchase.
The Remarketing Agent will promptly provide the Paying Agent
and the Trustee with telephonic notice of the receipt of the notice
referred to in the preceding paragraphs, confirmed promptly in
writing or by facsimile.
Any Variable Rate Bond with regard to which demand is made as
set forth in this subsection will be deemed to have been tendered
for purchase on any Purchase Date with respect thereto. Delivery of
such Variable Rate Bond (with an appropriate transfer of
registration executed in blank in form satisfactory to the
Remarketing Agent) at the designated office of Remarketing Agent at
or prior to 10:00 a.m. (New York City time) on the Purchase Date
will be required for payment in same-day funds of the Purchase Price
due on such Purchase Date. No Owner will be entitled to payment of
the Purchase Price due on such Purchase Date except on surrender of
such Variable Rate Bonds as set forth herein.
Notwithstanding anything to the contrary herein contained, no
optional tender and purchase of Bonds made pursuant to this Section
shall result in a Bond in a denomination of less than $100,000.
If the Bonds are held in a Book Entry System, a purchase
notice described in this Section 3.01(a) may be delivered by a
Beneficial Owner. Such purchase notice must be delivered as set
forth above and must state that such Beneficial Owner will cause its
beneficial interest (or portion thereof in Authorized Denominations)
to be tendered, the amount of such beneficial interest to be
tendered, the optional tender date on which such beneficial interest
will be tendered and the identity of the Participant through which
the Beneficial Owner maintains its beneficial interest. Upon
delivery of such notice, the Beneficial Owner must make arrangements
to have its beneficial ownership interest in be Bonds being tendered
transferred to the Trustee at or prior to 11:00 a.m., on the
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applicable optional tender date, but need not otherwise comply with
the other provisions described above.
(b) MANDATORY PURCHASE ON CONVERSION DATES. On any Conversion Date
with respect to any Bonds (but solely from, the Pledged Revenues and
proceeds of the remarketing of such Bond by the Remarketing Agent and
amounts realized from a drawing under the Credit Facility or the
Confirmation, other than a Credit Provider Bond (or portion thereof in a
denomination of $5,000 or integral multiple thereof provided such tender
does not result in a Bond in a denomination of less than $100,000), (or in
each case the next Business Day, if not a Business Day) (a "Purchase
Date"), such Bonds must be tendered and delivered to the Trustee for
purchase (with all necessary endorsements) at the Purchase Price.
All Bonds will be deemed to have been tendered for purchase on any
Purchase Date with respect thereto. Delivery of such Bonds (with an
appropriate transfer of registration executed in blank in form
satisfactory to the Trustee) at the designated office of the Trustee at or
prior to 10:00 a.m., New York City Time, on the Purchase Date will be
required for payment in same-day funds of the Purchase Price due on such
Purchase Date. No Owner will be entitled to payment of the Purchase Price
due on such Purchase Date except upon surrender of such -Bonds as set
forth herein.
Except as set forth in the following paragraph, the Owner of any
Bond may elect to retain such Bond or any portion thereof on a Conversion
Date (if such Bond or such portion thereof is in a denomination which will
be an Authorized Denomination after the applicable Conversion Date) by
delivering a notice of such Owner's election to retain such Bonds (a
"Notice of Retention") to the Trustee within 15 days prior to such
Conversion Date (or, if such day is not a Business Day, the immediately
preceding Business Day), which irrevocable written notice shall (a)
affirmatively acknowledge such matters as shall be specified in the notice
of tender and purchase delivered to such Owner in connection with such
Conversion Date including an acknowledgment that the rating on the Bonds
may be reduced or withdrawn on the Conversion Date, (b) contain the
irrevocable agreement by such Owner to retain such Bond and not to tender
such Bond for purchase on the Conversion Date and (c) contain the
irrevocable agreement by such Owner not to deliver a notice of optional
purchase or tender such Bond for purchase on an optional tender date
pursuant to Section 3.01(a) of this Indenture on or before such Conversion
Date.
Notwithstanding anything to the contrary contained herein, in the
event the Bonds are subject to mandatory tender and purchase as a result
of a Credit Expiration Date, and the Trustee has not received evidence
satisfactory to it that following the Conversion Date an Alternate Credit
Facility will be in place with respect to the Bonds, then the Bonds so
purchased shall be held in the name of the Company and pledged to the
Credit Provider in accordance with the terms hereof and of the
Reimbursement Agreement. Unless and until a Credit Facility has been
provided, the Owners of such Bonds shall not have the right to retain the
Bonds following the Conversion Date, and such Bonds shall not be
remarketed. Such Bonds shall be deemed tendered in accordance with Section
3.04 hereof.
(c) MANDATORY PURCHASE ON CREDIT EXPIRATION DATE. Before the Credit
Expiration Date, the Trustee will give notice not Ins than 15 days before
the Purchase Date described below to all Owners and the Remarketing Agent
of the Bonds that the Bonds will be subject to mandatory tender to the
Trustee for purchase at the Purchase Price on the Credit Expiration Date.
After such notice is given, the Bonds will thereafter be subject to
mandatory tender for purchase at the Purchase Price on the date set forth
in the notice (a "Purchase Date").
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All Bonds will be deemed to have been tendered for purchase on any
Purchase Date with respect thereto. Delivery of such Bonds (with an
appropriate transfer of registration executed in blank in form
satisfactory to the Trustee) at the designated office of the Trustee at or
prior to 10:00 a.m., New York City time, on the Purchase Date will be
required for payment in same-day funds of the Purchase Price due on such
Purchase Date. No Owner will be entitled to payment of the Purchase Price
due on such Purchase Date except upon surrender of such Bonds as set forth
herein. Purchase of all Bonds by the Remarketing Agent pursuant to this
Section 3.01(c) will be effected only with funds described in Sections
3.02(b), (c) and (d).
Section 3.02. SOURCE OF FUNDS FOR PURCHASE OF BONDS. On the date on which
Bonds are to be purchased pursuant to Section 3.01, the Trustee will purchase
such Bonds from the Owners thereof at the Purchase Price. Funds for the payment
of such Purchase Price will be derived solely from the following sources in the
order of priority indicated and neither the Issuer, the Company, the Trustee,
the Paying Agent nor the Remarketing Agent will be obligated to provide funds
from any other source:
(a) Remarketing Proceeds;
(b) Available Moneys (other than a draw under the Credit Facility or
the Confirmation, if applicable) held by the Trustee, the Paying Agent or
the Remarketing Agent and available for such purpose;
(c) proceeds derived from a drawing under the Credit Facility or
payments otherwise made under an Alternate Credit Facility; and
(d) proceeds derived from a drawing under the Confirmation.
In the event funds from the sources described in subsections (a) and (b)
above are not sufficient to provide for the Purchase Price of all Bonds to be
purchased pursuant to Section 3.01, the Trustee, no later than 1:00 p.m. New
York City time on the Business Day prior to each Purchase Date (whether such
tender was optional or mandatory), shall draw on the Credit Facility or in
accordance with the terms of an Alternate Credit Facility to purchase the Bonds
required to be purchased pursuant to Section 3.01.
In the event that the Credit Provider refuses to honor a draw on the
Credit Facility made in accordance with the provisions of this Indenture by 3:00
p.m. New York City time on the day in which such draw is made by the Trustee,
the Trustee shall draw on the Conformation, if any, then in effect by 10:00 a.m.
New York City time, on the applicable Purchase Date.
Section 3.03. DELIVERY OF BONDS; DELIVERY OF PROCEEDS OF SALE; PAYMENTS
FROM CREDIT FACILITY.
(a) Bonds purchased with funds described in Section 3.02(a) will be
registered in the name of and delivered to the purchasers thereof.
(b) Bonds purchased with funds described in Section 3.02(b) will be
registered in the name of the Company and delivered as directed by the
Company.
(c) Bonds purchased with funds described in Sections 3.02(c) and (d)
win be registered hi me name of de Company, subject to the pledge of such
Bonds to the Credit Provider, and delivered as directed by the
Reimbursement Agreement and will constitute Credit Provider Bonds. All
Credit Provider Bonds shall be held by the Trustee pursuant to the
Reimbursement Agreement An the benefit of the Credit Provider. Upon
receipt of Remarketing Proceeds in respect of the sale of Credit Provider
Bonds, the Trustee shall notify the Credit Provider and the Company of
such
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<PAGE> 32
receipt. Upon receipt of notice by the Trustee from the Credit Provider by
telephone, telecopy or telex, promptly confirmed in writing, that the
Bonds have ceased to be Credit Provider Bonds and that the amount of the
Credit Facility has been reinstated as provided therein, the Trustee shall
remit the Remarketing Proceeds to the Credit Provider or as otherwise
directed by the Credit Provider and release the Credit Provider Bonds and
deliver them to the purchasers thereof in accordance with (a) above. The
Trustee shall hold such Remarketing Proceeds in a segregated account in
trust for the benefit of the Credit Provider except that if the Credit
Facility is not reinstated as provided in the Credit Facility, then the
Trustee shall hold such funds for the benefit of the purchasers which
provided such Remarketing Proceeds.
Section 3.04. BONDS DEEMED TENDERED FOR PURCHASE. If Bonds have been
deemed to have been delivered for purchase as provided in Section 3.01, the
Trustee will authenticate (and the Issuer will issue, if necessary) a new Bond
as provided in Section 2.11. The Trustee will promptly give notice by Mail to
each Owner whose Bonds are deemed to have been purchased pursuant to Section
3.01, which notice will state that interest on such Bonds ceased to accrue on
the applicable Purchase Date and that moneys representing the Purchase Price of
such Bonds are available against delivery thereof at the Principal Office of the
Trustee. The Trustee will hold moneys for the purchase of Bonds in trust and
uninvested, without liability for interest thereon, for the benefit of the
former Owner of the Bond on such Purchase Date, who will thereafter be
restricted exclusively to such moneys, for any claim of whatever nature on his
part under this Indenture or on, or with respect to, such Bond. Any moneys
deposited with the Trustee or then held by the Trustee or the Remarketing Agent
for the payment of the principal of or interest on the Bonds and remaining
unclaimed for the period set forth in North Carolina General Statutes Section
116B-18, or any successor escheat provision, shall be paid to the appropriate
officer or body as provided in Chapter 1 16B of the North Carolina General
Statutes or any successor escheat statute. Thereafter, the Owners shall look
only to such officer or body for payment and then only to the extent of the
amount so received, without any interest thereon, and the Trustee and the
Remarketing Agent shall have no responsibility with respect to such moneys.
Section 3.05. REMARKETING OF BONDS.
(a) The Remarketing Agent will use its best efforts to remarket
Bonds to be purchased on a Purchase Date pursuant to Section 3.01(a), (b)
or (c); provided, however, that with respect to any Bonds which have been
called for redemption, such Bonds must be accompanied by a copy of the
notice of redemption and will only be remarketed to a purchaser who
acknowledges that such Bonds have been called for redemption and will be
redeemed on me date stated hi me notice.
(b) On the Business Day prior to each Purchase Date (whether
optional or mandatory), the Remarketing Agent will give notice to the
Trustee and the Credit Provider by telephone at or before 1 1:00 a.m.. New
York City time, followed by telecopy or telex, of the aggregate amount of
Bonds to be purchased pursuant to Section 3.01 that have not been
successfully remarketed by the Remarketing Agent. The Trustee will draw on
the Credit Facility under Section 3.02.
(c) At or before 3:00 p.m., New York City time, on the Business Day
prior to each Purchase Date, the Purchase Price of such Bonds will be
immediately deposited by the Trustee in the Credit Facility Account or the
General Account of the Bond Purchase Fund, as appropriate.
(d) Under no circumstances shall Bonds be remarketed unless a Credit
Facility is then in effect at the time of any such remarketing securing
the payment of the Bonds.
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Section 3.06. LIMITS OF REMARKETING. Bonds purchased by the Remarketing
Agent pursuant to Section 3.01(a) from the date of notice of a conversion is
given through the Conversion Date will not be remarketed except to a buyer who
agrees at the time of such purchase (i) to retain the Bond at the new rate on
the Conversion Date or (ii) to require repurchase pursuant to Section 3.01(a) on
or prior to the Conversion Date. The Remarketing Agent will not remarket Credit
Provider Bonds unless the Remarketing Agent has received notice from the Trustee
that the Trustee has received written notice of reinstatement of the Credit
Facility to the Coverage Amount from the Credit Provider. Under no circumstances
shall Bonds be remarketed unless a Credit Facility is then in effect at the time
of any such remarketing securing the payment of the Bonds.
Section 3.07. MANDATORY TENDERS IN ACCORDANCE WITH PROCEDURES OF
DEPOSITORY. Notwithstanding any provisions contained herein, during any period
in which Bonds are maintained pursuant to a Book-Entry System, mandatory tenders
and purchases of Bonds and the procedures for transmittals of any Notice of
Retention shall occur in accordance with the Depository's standard procedures
for mandatory tenders, purchases and waivers of mandatory tenders of obligations
such as the Bonds. Notwithstanding anything herein to the contrary, so long as
the Bonds are held under the Book-Entry System, Credit Provider Bonds shall not
be delivered to and held by the Trustee; rather transfers of beneficial
ownership of Bonds to the persons indicated above will be effected pursuant to
the rules and procedures established by the Depository;
[End of Article III]
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. OPTIONAL REDEMPTION.
(a) OPTIONAL REDEMPTION DURING VARIABLE RATE PERIOD. During any
period in which the Bonds bear interest at the Variable Rate, the Bonds
are subject to redemption by the Issuer (solely from the Trust Estate), at
the written direction of the Company to the Trustee (such direction to be
given by the Company at least 45 days prior to the date fixed for
redemption), in whole at any time, or in part on any Interest Payment
Date, at a redemption price equal to the principal amount thereof plus
accrued interest, if any, to the redemption date.
(b) OPTIONAL REDEMPTION DURING TERM RATE PERIOD. The Bonds shall be
subject to optional redemption by the Issuer (solely from the Trust
Estate), at the written direction of the Company to the Trustee (such
direction to be given by the Company at least 45 days prior to the date
fixed for redemption), during any Term Rate Period that (i) extends to the
maturity of the Bonds, and (ii) is 6 years or longer, on or after the
Interest Payment Date next succeeding the date that is the later of (A)
the sixth anniversary of the Term Rate Conversion Date for such Term Rate
Period, and (B) the earlier of (1) the tenth anniversary of the Term Rate
Conversion Date for such Term Rate Period, and (2) the anniversary of such
Term Rate Conversion Date that approximates, more closely than any other
such anniversary date, the date which occurs at the midpoint of such Term
Rate Period, in whole at any time, or in part on any Interest Payment Date
at a redemption price equal to the principal amount thereof, plus a
premium (expressed as a percentage of the principal amount of Bonds
redeemed) that for the first permissible redemption date is equal to the
lesser of (i) three percent of the principal amount of the Bonds to be
redeemed and (ii) one-half of one percent times the number of years
between the calendar year of such first redemption date and the calendar
year during which such Term Rate Period ends (including, for purposes of
computation, the calendar year of such first redemption date but excluding
the calendar year during which such Term Rate Period ends), and declining
by one-half of one percent annually thereafter, such premium calculation
to be made by the Trustee, upon consultation with the Remarketing Agent,
prior to such redemption date.
(c) OPTIONAL REDEMPTION UPON EXTRAORDINARY REDEMPTION EVENT.
Notwithstanding any other provisions of this Section, during any Term Rate
Period and during any period in which the Bonds bear interest at the
Variable Rate, the Bonds shall be subject to optional redemption by the
Issuer (solely from the Trust Estate), at the written direction of the
Company to the Trustee (such direction to be given by the Company at least
45 days prior to the date fixed for redemption), in whole at any time,
without premium or penalty, if any of the following events shall have
occurred, as evidenced to the Trustee by a certificate of the Company
Representative delivered together with such direction:
(i) The Project is damaged or destroyed by fire or other casualty to
such extent that in the opinion of both the Company Representative and an
Independent Engineer or an Independent Architect (A) it cannot be
repaired, rebuilt or restored within a period of six months to the
condition thereof immediately preceding such damage or destruction, or (B)
the Company is thereby prevented, in its reasonable judgment, from
carrying on its normal operations for a period of six months, or (C) the
cost of restoration would exceed the Net Proceeds of insurance carried
thereon;
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<PAGE> 35
(ii) Title to, or the temporary use of all or substantially all of
the Project or any part thereof is taken under the exercise of the power
of eminent domain by any governmental body or by any person acting under
governmental authority which, in the opinion of both the Company
Representative and an Independent Engineer or an Independent Architect,
both filed with the Trustee, prevents or is likely to prevent the Company
from carrying on its normal operations for a period of six months, or
(iii) A change in the Constitution of the State or the Constitution
of the United States of America, or a legislative or administrative action
(whether local, state or federal), or a final decree, judgment or order of
any court or administrative body (whether local, state or federal), and
not contested by the Company in good faith causes the Loan Agreement to
become void or unenforceable or impossible of performance in accordance
with the intent and purpose of the parties as expressed in the Bond
Documents.
(d) OPTIONAL REDEMPTION OF CREDIT PROVIDER BONDS. Bonds owned by the
Credit Provider as a result of a purchase under the Reimbursement Agreement are
subject to redemption at the option of the Company, on at least two Business
Days' notice by the Company to the Credit Provider.
Section 4.02. SINKING FUND REDEMPTION. The Bonds are subject to mandatory
redemption at 100% of the principal amount thereof on the Interest Payment Date
on or immediately following March 1 in the years and in the principal amounts
indicated below, until such time as the principal amounts indicated below are
redeemed pursuant to the operation of this provision:
<TABLE>
<CAPTION>
PRINCIPLE PRINCIPLE
YEAR AMOUNT YEAR AMOUNT
---- --------- ---- ---------
<S> <C> <C> <C> <C>
1999 $5O0,000 2008 $500,000
2000 500,000 2009 500,000
2001 500,000 2010 500,000
2002 500,000 2011 500,000
2003 500,000 2012 500,000
2004 500,000 2013 500,000
2005 500,000 2014 500,000
2006 500,000 2015 500,000
2007 500,000 2016* 500,000
</TABLE>
- --------------
*Final Maturity
At its option, to be exercised by written notice delivered to the Trustee
on or before the 45th day preceding any sinking fund redemption date, the
Company may (a) deliver to the Paying Agent for cancellation Bonds in any
aggregate principal amount desired, or (b) receive a credit in respect of its
sinking fund redemption obligation for any Bonds which before said date have
been redeemed (otherwise than through the operation of the sinking fund) and
canceled by the Paying Agent and not theretofore applied as a credit against any
sinking fund redemption obligation. Each Bond so delivered or previously
redeemed shall be credited by the Trustee ratably at 100%) of the principal
amount thereof against the obligations of the Issuer on sinking fund redemption
dates, and the principal amount of Bonds to be redeemed by operation of me
sinking hind shall be accordingly reduced.
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<PAGE> 36
Section 4.03 MANDATORY REDEMPTION.
(a) MANDATORY REDEMPTION UPON CESSATION OF OPERATIONS. The Bonds
must be delivered to the Remarketing Agent for purchase (with all
necessary endorsements) at the Purchase Price in the event that the
Company ceases to operate the Project as an "industrial project for
industry" within the meaning of the Act. A cessation of operation shall
not be deemed to have occurred until 90 days after written notice has been
given to the Company by the Issuer that operations at the Project have
ceased and the Company has not demonstrated to the satisfaction of the
Issuer that (i) the Company has resumed operations at the Project as an
"industrial project for industry" within the meaning of the Act or (ii)
the Company is, in good faith, seeking to arrange resumption of an
economically reasonable operation of the Project by the Company; provided
that a temporary shutdown due to a strike or other labor dispute or other
similar occurrence will not be deemed to be a cessation of operation.
(b) MANDATORY REDEMPTION UPON DETERMINATION OF TAXABILITY. The Bonds
are also subject to mandatory redemption at a redemption price equal to
100% of the principal amount thereof with interest to but not including
the redemption date in whole (or in part as provided below), without
premium (except as provided below with respect to Bonds which bear
interest at a Term Rate), on the first day of a month within 180 days
after the Company receives written notice from an Owner or former Owner or
the Trustee of a Determination of Taxability, or if such date is not a
Business Day, on the next succeeding Business Day; provided that with
respect to any Bonds which bear interest at a Term Rate, a premium equal
to 3 % of the principal amount of such Bonds shall be paid in the event of
a redemption pursuant to this Section. No such determination will be
considered final unless the Owner or former Owner involved in the
determination gives the Company, the Trustee, the Remarketing Agent, the
Credit Provider and the Paying Agent prompt written notice of the
commencement of the proceedings resulting in the determination and offers
the Company, subject to the Company's agreeing to pay all expenses of the
proceeding and to indemnify the Owner against all liabilities that might
result from it, the opportunity to control the defense of the proceeding
and either the Company does not agree within 30 days to pay the expenses,
indemnify the Owner and control the defense or the Company exhausts or
chooses not to exhaust available procedures to contest or obtain review of
the result of the proceedings. Fewer than all the Bonds may be redeemed if
redemption of fewer than all the Bonds would result in the interest
payable on the Bonds remaining Outstanding being not includable in the
gross income for federal income tax purposes of any holder. If fewer than
all Bonds are redeemed, the Paying Agent will select the Bonds to be
redeemed by lot as provided in Section 4.05 or by such other method
acceptable to the Trustee as may be approved in an opinion of Bond
Counsel. Only holders of Bonds on the date of redemption shall be entitled
to the redemption premium, if applicable. No premium shall be due to
former Owners or with respect to any Bonds which were not Outstanding as
of the date of the Determination of Taxability. If Bonds mature after a
Determination of Taxability, but before redemption pursuant to this
paragraph, the applicable premium for such Bonds, if any, shall be paid at
their maturity.
Section 4.04. NOTICE OF REDEMPTION. Notice of redemption will be given by
the Paying Agent by Mail, not less than 30 days nor more than 60 days before the
redemption date to each Owner of the Bonds or portions thereof to be redeemed at
the but address shown on the registration books kept by the Paying Agent. Such
notice must (i) specify the Bonds to be redeemed, the redemption date, the
redemption price and the place or places where amounts due on such redemption
must be payable (which must be the principle office of the Paying Agent) and if
less than all of the Bonds are to be redeemed, the numbers of the Bonds and the
portions of Bonds to be redeemed, and (ii) state that on the redemption date,
the Bonds to be redeemed will cease to bear interest.
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<PAGE> 37
If moneys are on deposit in the Bond Fund to pay the principal amount of
the Bonds called for redemption and premium and accrued interest thereon on a
redemption date, Bonds or portions thereof thus called and provided for as
hereinabove specified will not bear interest after such redemption date and will
not be considered to be Outstanding or to have any other rights under the
Indenture other than the right to receive payment. No payment of principal will
be made by the Paying Agent on any Bonds or portions thereof called for
redemption until such Bonds or portions thereof have been delivered for payment
or cancellation or the Paying Agent has received the items required by Section
2.10 with respect to any mutilated, lost, stolen or destroyed Bonds.
Section 4.05. SECTION OF BONDS TO BE REDEEMED. If the Bonds are redeemed
in part, DTC will select the Bands to be redeemed pursuant to its rules and
procedures or, if the book-entry system with DTC or any other securities
depository has been discontinued, the Paying Agent will select the Bonds to be
redeemed by lot in such manner as the Paying Agent in its discretion may deem
proper, but Bonds held by the Credit Provider pursuant to the Reimbursement
Agreement will be selected first for redemption. Each Authorized Denomination of
principal amount represented by any Bond will be considered a separate Bond for
purposes of selecting the Bonds to be redeemed.
If a Bond subject to redemption is in a denomination larger than the
minimum Authorized Denomination, a portion of such Bond may be redeemed, but
only in a principal amount such that the unredeemed portion of such Bond is
equal to an Authorized Denomination. For any Bond in a denomination of more than
the minimum Authorized Denomination, the Paying Agent shall treat each such Bond
as representing a single Bond in the minimum Authorized Denomination plus that
number of Bonds that is obtained by dividing the remaining principal amount of
such Bond by the Minimum Authorized Denomination.
If it is determined that one or more, but not all, of the Authorized
Denominations of principal amount represented by any Bond is to be called for
redemption, then, on notice of intention to redeem such Authorized Denominations
of principal amount of such Bond, the Owner of such Bond, on surrender of such
Bond to the Paying Agent for payment of the principal amount of such Bond called
for redemption, will be entitled to receive a new Bond or Bonds in the aggregate
principal amount of the unredeemed balance of the principal amount of such Bond.
New Bonds representing the unredeemed balance of the principal amount of such
Bonds will be issued to the Owner thereof without charge therefor.
If the Owner of any Bond of a denomination greater than the amount being
redeemed fails to present such Bond to the Paying Agent for payment and exchange
as aforesaid, such Bond will, nevertheless, become due and payable on the date
fixed for redemption to the extent of the denomination being redeemed and to
that extent only.
Section 4.06. NO PARTIAL REDEMPTION AFTER DEFAULT. Anything in this
Indenture to the contrary notwithstanding, if an Event of Default occurs and is
continuing hereunder there will be no redemption of less than all of the Bonds
Outstanding.
Section 4.07. PAYMENT OF REDEMPTION PRICE. in the Issuer will cause to be
deposited in the Bond Fund an amount sufficient to pay the principal of Bonds to
be redeemed, premium, if any, and interest to become due on the date fixed for
such redemption, and such Bonds are deemed to be paid within the meaning of
Article XI.
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<PAGE> 38
Section 4.08. REDEMPTION IN ACCORDANCE WITH PROCEDURES OF DEPOSITORY.
Notwithstanding any provisions contained herein, during any period in which the
Bonds are maintained pursuant to a Book-Entry System, redemption of the Bonds
shall occur in accordance with the Depository's standard procedures for
redemption of obligations such as the Bonds.
[End of Article IV]
33
<PAGE> 39
ARTICLE V
GENERAL COVENANTS
Section 5.01. PAYMENT OF PRINCIPLE AND INTEREST PLEDGE OF TRUST ESTATE,
LIMITED LIABILITY. The Issuer covenants that it will promptly pay to the Owners
the principal, premium, if any, and interest represented by every Bond issued
under this Indenture and cause to be paid, solely from the sources described in
Article III the Purchase Price of Bonds tendered or deemed tendered for purchase
as set forth in Article III, at the place, on the dates and in the manner
provided herein and in the Bonds, provided that the principal, premium, if any,
and interest are payable by the Issuer solely from the Trust Estate, and nothing
in the Bonds or this Indenture will be considered as assigning or pledging any
other funds or assets of the Issuer or the Company other than the Trust Estate.
The Trust Estate is hereby pledged and assigned as security for the equal and
ratable payment of the Bonds and will be used for no other purpose than to pay
the principal of, premium, if any, and interest on the Bonds, except as may be
otherwise expressly authorized in this Indenture or the Loan Agreement.
Subordinate to such pledge, the Trust Estate is hereby pledged to the Credit
Provider as security for the payment of all amounts owed the Credit Provider by
the Company pursuant to draws on the Credit Facility under the Reimbursement
Agreement.
No recourse will be had for the payment of the principal of, premium, if
any or interest represented by any of the Bonds or for any claim based thereon
or on any obligation, representation, covenant, agreement or warranty contained
in this Indenture, against any past, present or future officer, employee or
agent of the Issuer, or any successor corporation, as such, either directly or
through the Issuer or any successor corporation, under any rule of law or
equity, statute or constitution or by the enforcement of any assessment or
penalty or otherwise, and all such liability of any such officer, employee or
agent as such is hereby expressly waived and released as a condition of and in
consideration of execution of this Indenture and the issuance of the Bonds.
Section 5.02. PERFORMANCE OF COVENANTS BY ISSUER; AUTHORITY; DUE
EXECUTION. The Issuer covenants that it will faithfully perform at all times any
and all covenants, undertakings, stipulations and provisions contained in this
Indenture, in any and every Bond issued, authenticated and delivered hereunder
and in all of its proceedings pertaining hereto. The Issuer covenants that it is
duly authorized under the constitution and laws of the State, including
particularly the Act, to cause the Bonds to be issued and to execute this
Indenture. The Issuer further covenants that all action on its part for the
execution and delivery of this Indenture and the issuance of the Bonds has been
duly and effectively taken, and that the Bonds in the hands of the Owners
thereof are and will be valid and enforceable according to the terms thereof and
hereof.
Section 5.03. RECORDING AND FILING, INSTRUMENTS OF FURTHER ASSURANCE. The
Issuer covenants that it will do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, such indentures supplemental
hereto and such further acts, instruments and transfers as may reasonably be
required for the better assuring, transferring, pledging, assigning and
confirming to the Trustee all and singular the rights assigned hereby and the
amounts pledged hereby to the payment of the principal and premium, if any, and
interest evidenced by the Bonds and the payment of amounts due to the Credit
Provider under the Reimbursement Agreement.
Section 5.04. RECORDING AND FILING; FURTHER INSTRUMENTS. The Trustee, at
the expense of be Company, will cause to be filed all financing statements
related to this Indenture and all supplements hereto, and such other documents
as may be, in the opinion of counsel acceptable to the Trustee, necessary to be
kept and filed in such manner and in such places as may be required by law in
order to preserve and protect fully the security of the Owners of the Bonds and
the rights of the Trustee hereunder. The Issuer
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<PAGE> 40
will, on the reasonable request of the Trustee, execute and deliver such further
instruments and take such further action as may be reasonable and as may be
required to effectuate the purposes of this Indenture.
Section 5.05. NO DISPOSITION OF TRUST ESTATE. Except as permitted by this
Indenture, the Issuer will not sell, lease, pledge, assign or otherwise encumber
or dispose of its interest in the Trust Estate and will promptly pay or cause to
be discharged, or make adequate provision in the judgment of the Trustee to
discharge, any hen or charge on any part thereof not permitted hereby.
Section 5.06. ACCESS TO BOOKS. All books and documents in the possession
of the Issuer, the Trustee or the Company relating to the Project, and the
receipts and revenues of the Issuer from the Loan Agreement and the Trust Estate
will at all reasonable times be open to inspection by such accountants or other
agencies as the Issuer, the Trustee or the Company may from time to time
designate.
Section 5.07. ARBITRAGE AND TAX COVENANTS. The Issuer will not take or
permit, or omit to take or cause to be taken, any action that would adversely
affect the exclusion from gross income for federal income tax purposes of the
interest evidenced by or paid on the Bonds and, if it should take or permit, or
omit to take or cause to be taken, any such action, the Issuer will take or
cause to be taken all lawful actions within its power necessary to rescind or
correct such actions or omissions promptly on having knowledge thereof. The
Issuer acknowledges that the continued exclusion of interest evidenced by or
paid on the Bonds from an Owner's gross income for federal income tax purposes
depends, in part, on compliance with the arbitrage limitations imposed by
Section 148 of the Code. The Issuer covenants herein that it will comply with
all the requirements of Section 148 of the Code, including the rebate
requirements, and that it will not permit at any time any of the proceeds of the
Bonds or other funds under its control be used, directly or indirectly, to
acquire any asset or obligation, the acquisition of which would cause the Bonds
to be "arbitrage bonds" for purposes of Section 148 of the Code. The Trustee and
the Issuer covenant that they will comply with the Tax Regulatory Agreement.
Section 5.08. REBATE DEPOSITS. Moneys held in the Rebate Fund are hereby
pledged to secure payments to the United States of America as provided in
paragraph (c) below, and neither the Issuer nor the Owner of any Bonds shall
have any right in or claim to such moneys.
(a) There shall be deposited to the Rebate Fund from investment
earnings on amounts held in the Bond Fund and/or other available moneys of
the Company all amounts described in the Tax Regulatory Agreement.
(b) The Company, on behalf of the Issuer shall direct the investment
of all amounts held hi the Rebate Fund in Permitted Investments. All
earnings on investments in the Rebate Fund shall be retained in the Rebate
Fund except as provided in paragraph (c) below.
(c) Upon preparation of the rebate calculations required to be
prepared in accordance with the Tax Regulatory Agreement, the Issuer shall
remit or cause to be remitted part or all of the balance in the Rebate
Fund to the United States of America as so directed by the Rebate
Instructions. In addition, if the Rebate Instructions so indicate, the
Issuer will deposit moneys into or transfer moneys out of the Rebate Fund
from or into such accounts or funds as the Rebate Instructions may
specify.
Section 5.09. NOTIFICATION OF RATING AGENCY. The Trustee hereby agrees to
promptly notify Moody's, if the Bonds are rated by Moody's, and S&P, if the
Bonds are rated by S&P, at the address set forth in Section 13.07, of (i) any
appointment of a successor Trustee, (ii) any amendment or supplement to the
Indenture, the Loan Agreement, the Credit Facility or the Confirmation, if then
in effect, (iii) any
35
<PAGE> 41
provision for payment of the Bonds in accordance with Article XI, (iv) 30 days
prior to the issuance of an Alternate Credit Facility or a Substitute
Confirmation, (v) any notification that the Credit Facility and the Confirmation
related thereto, if applicable, is scheduled to expire as a result of receipt of
a notice of nonextension or similar notice under the Credit Facility or the
Confirmation or any Alternate Credit Facility, (vi) a change in the Remarketing
Agent, (vii) any change in the method by which the interest rate is determined,
(viii) a mandatory tender or acceleration resulting from a failure to reimburse
a drawing under the Credit Facility or the Confirmation, if applicable, to pay
interest on the Bonds and (ix) the giving of notice of the call for redemption
of any Bonds pursuant to Section 4.04.
[End of Article V]
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<PAGE> 42
ARTICLE VI
DEPOSIT OF BOND PROCEEDS;
FUNDS AND ACCOUNTS;
CREDIT FACILITY
Section 6.01. CREATION OF FUNDS. There are hereby created and ordered
established the following trust funds and trust accounts to be held by the
Trustee:
(a) A Rebate Fund;
(b) A Bond Fund and therein a Principal Account, an Interest Account
and a Credit Facility Account;
(c) A Bond Purchase Fund and therein a Credit Facility Account and a
General Account; and
(d) A Project Fund.
The Trustee and the Remarketing Agent are hereby authorized to establish
any other funds or accounts hereunder, temporarily or otherwise, necessary or
desirable in the administration of this Indenture.
Section 6.02. DEPOSIT OF BOND PROCEEDS. The proceeds of Me sale of the
Bonds will be deposited by the Trustee in the Project Fund.
Section 6.03. DEPOSIT OF RECEIPTS AND REVENUES. All receipts and revenues
of the Issuer from the Loan Agreement, all moneys received from a draw under :he
Credit Facility or the Confirmation, if applicable, and any other amounts
deposited with the Trustee will be applied by the Trustee on receipt thereof in
the following order of priority:
(a) to the Credit Facility Account of the Bond Fund, all amounts
drawn under the Credit Facility or the Confirmation in an amount
sufficient to pay interest and principal due on the Bonds on the next
applicable Interest Payment Date and Bond Payment Date;
(b) to the Interest Account of the Bond Fund, an amount sufficient,
together with other amounts on deposit therein, to pay interest due on the
Bonds on the next Interest Payment Date;
(c) to the Principal Account of the Bond Fund, an amount sufficient,
together with other amounts on deposit therein, to pay principal due on the
Bonds on the next Bond Payment Date;
(d) From time to time, to or as directed by the Company, on receipt
from the Company by the Trustee of a written statement, the amount of
administrative fees or other fees, expenses and obligations due to the
Trustee, the Paying Agent and the Remarketing Agent; and
(e) to the Credit Facility Account of the Bond Purchase Fund, an
amount sufficient to pay the Purchase Price of Bonds tendered or deemed
tendered under Article III, less any remarketing proceeds.
Section 6.04. [INTENTIONALLY OMITTED]
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<PAGE> 43
Section 6.05. REBATE FUND. Amounts transferred as provided in Section 6.07
and any other amounts deposited with the Trustee with instructions to deposit
the same in the Rebate Fund will be deposited in the Rebate Fund. The Trustee
will pay to the United States all required rebate installments and a final
rebate payment as may be required, and in accordance with directions received
from the Company. Each payment equipped to be paid to the United States pursuant
to this Section will be filed with the Internal Revenue Service Center,
Philadelphia, Pennsylvania 19255 or such other place as may be designated in the
Code. Each payment will be accompanied by a copy of the Form 8038-T.
Section 6.06. BOND FUND. Amounts deposited as provided in Section 6.02,
amounts transferred as provided in Section 6.03 and any other amounts deposited
with the Trustee with instructions to deposit the same in the Principal Account
or the Interest Account of the Bond Fund will be deposited in the appropriate
Account of the Bond Fund. Amounts received by the Trustee from draws on the
Credit Facility or the Confirmation, if applicable, as provided in Section
6.08(a) will be deposited in the Credit Facility Account of the Bond Fund. The
Trustee will disburse or cause the Paying Agent to disburse moneys in the Bond
Fund in the following priority:
(a) moneys on deposit in the Credit Facility Account will be applied
to pay interest due on the Bonds on each Interest Payment Date and
principal of the Bonds due on each Bond Payment Date;
(b) moneys on deposit in the Interest Account of the Bond Fund which
do not constitute Available Moneys will be segregated in a separated
subaccount therein until such moneys become Available Moneys, at which
time such Available Moneys will be held in the Interest Account of the
Bond Fund, and moneys on deposit in the Interest Account of the bond Fund
which constitute Available Moneys will be applied to pay interest due on
the Bonds on each Interest Payment Date to the extent that the amounts in
the Credit Facility Account are insufficient therefor or to reimburse the
Credit Provider to the extent of draws therefor which have not previously
been reimbursed; and
(c) moneys on deposit in the Principal Account of the Bond Fund
which do not constitute Available Moneys will be segregated in a separate
subaccount therein until such moneys become Available Moneys, at which
time such Available Moneys will be held in the Principal Account of the
Bond Fund, and moneys on deposit in the Principal Account of the Bond Fund
which constitute Available Moneys will be applied to pay principal of the
Bonds due on each Bond Payment Date to the extent that the amounts in the
Credit Facility Account are insufficient therefor or to reimburse the
Credit Provider to the extent of draws therefor which have not previously
been reimbursed.
provided, however, that to the extent such principal or interest is paid
with proceeds of a drawing under the Credit Facility and the Company does
not reimburse the Credit Provider directly, the Trustee shall promptly
reimburse the Credit Provider join funds on deposit in the Interest
Account or die Principal Account of the Bond Fund (other proceeds from a
drawing on the Credit Facility) in accordance with written instructions
given from time to time to the Trustee by the Credit Provider.
To the extent that the moneys deposited in the Bond Fund would not
constitute Available Moneys at the time of such deposit, the Trustee shall
create separate subaccounts in the Bond Fund in which such moneys will be held
until they constitute Available Moneys.
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<PAGE> 44
Section 6.07. PROJECT FUND. Amounts deposited as provided in Section 6.02
and any other amounts deposited with the Trustee with instructions to deposit
the same in the Project Fund will be deposited in the Project Fund. The Trustee
is hereby authorized and directed to disburse the amounts deposited in the
Project Funds to the Company on the date of issuance and delivery of the Bonds
to reimburse the Company for the Costs of the Project incurred after October 13,
1992, and before September 9, 1994 which constitute capital expenditures
pursuant to Section 150-2 of the Treasury Regulations as required by the
provisions of the Loan Agreement. The Trustee shall keep and maintain adequate
records pertaining to the Project Fund and all disbursements therefrom.
Section 6.08. CREDIT FACILITY, ALTERNATE CREDIT FACILITY, CONFIRMATION;
SUBSTITUTE CONFIRMATION.
(a) The Trustee will make timely draws on the Business Day prior to
any Purchase Date in accordance with the Credit Facility such that timely
payment under Section 6.06 and Section 6.12 is made without resort to the
other sources of payment described therein (except for remarketing
proceeds available under Section 6.12). Such draws will be in amounts
equal to the total principal and interest due on the Bonds, including on
the redemption or acceleration thereof, or the Purchase Price payable with
respect to the Bonds (excluding Credit Provider Bonds which are not
entitled to the benefit of the Credit Facility). If the draws are made as
a result of a mandatory tender on a Credit Expiration Date under Section
3.01(c) and an Alternate Credit Facility has been delivered to the Trustee
as described below, such draws are to be made under the Credit Facility or
the Confirmation, if applicable, and not under the Alternate Credit
Facility or Substitute Confirmation. The Trustee will make such draws in
accordance with the Credit Facility so as to be able to obtain and
transfer funds one Business Day prior to the applicable payment date.
Proceeds of draws under the Credit Facility and the Confirmation, if any,
will be segregated from other moneys held by the Trustee. Notwithstanding
any other provisions of this Indenture, moneys received by the Trustee
from a drawing under the Credit Facility and the Confirmation, if
applicable, will not be applied to the payment of the principal or
interest on any Bonds held of record by, or to the knowledge of the
Trustee, for the account of the Company or the Issuer. In the event the
Credit Provider fails to honor a draw on the Credit Facility or in the
event the Credit Facility has been repudiated, the Trustee shall draw on
the Confirmation in accordance with is terms so as to pay me principal,
interest and purchase price on the Bonds when due hereunder.
(b) With the prior written consent of the Remarketing Agent, the
Company may, at any time, deliver an Alternate Credit Facility to the
Trustee in substitution for the Credit Facility then in effect or a
Substitute Confirmation for the Confirmation then in effect. In connection
with the delivery of an Alternate Credit Facility or Substitute
Confirmation, as applicable, there must be delivered to the Remarketing
Agent and the Trustee the following:
(1) an opinion of Bond Counsel to the effect that the delivery
of such Alternate Credit Facility or such Substitute Confirmation,
where applicable, is permitted hereunder and will not adversely
affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds;
(2) an Opinion of Counsel to the obligor of such Alternate
Credit Facility or Substitute Confirmation, as applicable, addressed
to the Issuer, the Trustee and the Remarketing Agent to the effect
that such Alternate Credit Facility or Substitute Confirmation, as
applicable, constitutes a legal, valid and enforceable obligation of
such obligor (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws for the relief of debars and by general principles of
equity that permit the exercise of judicial discretion);
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<PAGE> 45
(3) an Opinion of Counsel acceptable to the Trustee and die
Issuer, addressed to the Trustee and the Issuer, stating that the
substitution of such Alternate Credit Facility or Substitute
Confirmation, as applicable, will not subject the Bonds or such
Alternate Credit Facility or Substitute Confirmation, to the
registration requirements of the Securities Act of 1933, as amended,
or the Indenture to qualification under the Trust Indenture Act of
1939, as amended, or, in the alternative, the Alternate Credit
Facility or Substitute Confirmation has been registered pursuant to
the Securities Act of 1933, as amended;
(4) an amount sufficient to pay all costs incurred by the
Trustee, the Remarketing Agent and the Issuer in connection with the
substitution, if any, of such Alternate Credit Facility or
Substitute Confirmation; and
(5) the written consent to the delivery of the Alternate
Credit Facility or the Substitute Confirmation from the Remarketing
Agent.
(c) If at any time an Alternate Credit Facility has been delivered
to the Trustee in substitution for the Credit Facility then in effect or a
Substitute Confirmation has been delivered to the Trustee to replace the
Confirmation then in effect, each meeting the criteria set forth in
subsection (b) of this Section and if the Trustee and the Remarketing
Agent receive (i) written evidence from Moody's, if the Bonds are rated by
Moody's, and S&P, if the Bonds are rated by S&P, in each case to the
effect that such rating agency has reviewed the proposed Alternate Credit
Facility or Substitute Confirmation, as applicable, and that the
substitution of the proposed Alternate Credit Facility for the Credit
Facility then in effect or the substitution of the Substitute Confirmation
for the Confirmation then in effect will not, of itself, result in a
reduction or withdrawal of its rating of the Bonds from that which then
prevails, or (ii) in the event that the Bonds are not then rated, evidence
satisfactory to the Trustee and the Remarketing Agent that the issuer of
the Alternate Credit Facility or Substitute Confirmation, as the case may
be, has (A) senior debt or long-term bank deposits that are rated by
Moody's or S&P at a rating at least equal to the rating then assigned to
the senior debt or long-term bank deposits of the Credit Provider or the
Confirming Bank, as the case may be, or (B) outstanding letters of credit
or other similar instruments supporting debt obligations that are rated by
Moody's or S&P at a rating at least equal to the rating assigned to debt
obligations supported with letters of credit or similar instruments issued
by the Credit Provider, the Trustee will accept such Alternate Credit
Facility and promptly cause the Credit Facility then in effect to be
canceled in accordance with its terms for cancellation or will accept such
Substitute Confirmation and promptly cause the Confirmation then in effect
to be canceled in accordance with its terms for cancellation. If the
Trustee and the Remarketing Agent do not receive the written evidence from
Moody's or S&P described in the preceding sentence, the Trustee will not
cancel the Credit Facility or Confirmation then in effect, as applicable,
until the mandatory tender required by Section 3.01(c) has occurred. The
Trustee will give notice to all Owners as soon as practicable (but not
more than 10 days thereafter) of its acceptance of an Alternate Credit
Facility or a Substitute Confirmation.
(d) If an Alternate Credit Facility is delivered, a Substitute
Confirmation will not be required so long as the rating on the Bonds as a
result of such Alternate Credit Facility will be equal to or higher than
"A".
(e) Notwithstanding anything to the contrary contained herein, there
shall at all times be a Credit Facility in effect with respect to the
Bonds.
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Section 6.09. BONDS NOT PRESENTED FOR PAYMENT. If any Bonds are not
presented for payment when the principal thereof becomes due, either at
maturity, or at the date fixed for redemption thereof, or otherwise, or if any
interest check is not cashed, if funds sufficient to pay such Bond have been
made available by the Issuer to the Trustee or any Paying Agent for the benefit
of the Owner thereof, all liability of the Issuer to the Owner thereof for the
payment of such Bond will forthwith cease, terminate and be completely
discharged, and it will then be the duty of the Trustee and any Paying Agent to
hold such funds in trust, uninvested and without liability for interest thereon,
for the benefit of the Owner of such Bond who will thereafter be restricted
exclusively to such funds for any claim of whatever nature on his part under
this Indenture or on, or with respect to, said Bond. Any money that is so set
aside or transferred and that remains unclaimed by the Owners for a period of
five years after such payment has become due and payable will be treated as
abandoned property under N.C.G.S. Section 116B-18, and the Trustee or Paying
Agent will report and remit this property to the Escheat Rand according to the
requirements of N.C.G.S. Section II 6529 et seq. Thereafter, the Owners may look
only to the Escheat Fund for payment and then only to the extent of the amounts
so received without any interest thereon, and the Issuer and the Trustee or
Paying Agent will have no responsibility with respect to such money.
Section 6.10. REFUNDING OF BONDS. If all Outstanding Bonds are paid,
redeemed or deemed to have been paid within the meaning of Article XI by reason
of the application of the proceeds of the sale of any obligations under an
indenture other than this Indenture, the Trustee will, without further
authorization, withdraw all amounts remaining in all funds and accounts and
deposit such amounts into corresponding funds or accounts created under the
indenture under which such obligations are executed and delivered, such
withdrawals and deposits to be made, in accordance with the provisions of such
indenture, on the date on which the Bonds are so paid, redeemed or deemed to
have been paid. The foregoing is subject to the condition that arrangements
satisfactory to the Credit Provider are made with regard to amounts due or to
become due to the Credit Provider under the Reimbursement Agreement.
Section 6.11. PAYMENT TO THE COMPANY. After the right, title and interest
of the Trustee in and to the Trust Estate and all covenants, agreements and
other obligations of the Issuer to the Owners has ceased, terminated and become
void and has been satisfied and discharged in accordance with Article XI, and
all fees, expenses and other amounts payable to the Credit Provider, the Issuer,
the Paying Agent, the Trustee and the Remarketing Agent, pursuant to any
provisions hereof, of the Placement and Remarketing Agreement, or of the
Reimbursement Agreement, have been paid in full, any moneys remaining in any
fund or account hereunder will be paid as directed by the Company.
Section 6.12. BOND PURCHASE FUND. Amounts derived from the sources
described in Section 3.02(a) and (b) to pay the Purchase Price of Bonds and,
except amounts derived from the source described in Section 3.02(c) and (d), any
other amounts deposited with the Trustee to be applied to pay the Purchase Price
of Bonds will be deposited into the General Account of the Bond Purchase Fund.
Amounts derived from the source described in Section 3.02(c) and (d) will be
deposited into the Credit Facility Account of the Bond Purchase Fund. The
Trustee will disburse moneys in the Bond Purchase Fund (all disbursements to be
made first from the General Account until it is depleted and thereafter from the
Credit Facility Account) to pay the Purchase Price of Bonds tendered or deemed
tendered pursuant to Section 3.01.
Section 6.13. CUSTODY OF FUNDS AND ACCOUNTS. Except as otherwise expressly
provided herein, all funds and accounts created pursuant to this Indenture and
held by the Trustee shall be held in trust, in the name of the Issuer, for the
benefit of the Owners and, to the extent of amounts owed by the Company to the
Credit Provider under the Reimbursement Agreement, the Credit Provider.
[End of Article VI]
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ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01. EVENTS OF DEFAULT. If my of the following event occur it is
hereby defined as and shall be deemed an "Event of Default" under this
Indenture:
(a) A failure to pay the principal of or premium, if any, on any
Bond when the same becomes due and payable, whether at the stated maturity
thereof for on proceedings for redemption;
(b) A failure to pay any installment of interest on any Bond when
the same becomes due and payable;
(c) A failure to pay any amount due with respect to the Purchase
Price of Bonds delivered or deemed delivered pursuant to Section 3.01
after such payment becomes due and payable;
(d) Receipt by the Trustee of written notice from the Credit
Provider of nonreinstatement of the Credit Facility to the Coverage Amount
on or before the sixth day after a draw on the Credit Facility or the
Confirmation, if then in effect, to pay interest on the Bonds;
(e) The Trustee's receipt of written notice from the Credit Facility
Provider that an "Event of Default" (as that term is defined in the
Reimbursement Agreement) has occurred under the Reimbursement Agreement
and written request that the Bond and all accrued and unpaid interest
thereon become immediately due and payable;
(f) The occurrence of an "Event of Default" as provided in the Loan
Agreement; and
(g) A failure by the Issuer to observe and perform any covenant,
condition, agreement or provisions (other than as described in subsections
(a), (b), (c), (d) or (e) of this Section) contained in the Bonds or in
this Indenture on the part of the Issuer to be observed or performed,
which failure continues for a period of 90 days after written notice,
specifying such failure and requesting that it be remedied, has been given
to the Issuer by the Trustee, which may give such notice in its discretion
and will give such notice at the written request of Owners of not less
than 25% of principal amount of the Bonds Outstanding, unless the Trustee,
or the Trustee and Owners of a principal amount of Bonds not less than the
principal amount of Bonds the Owners of which requested such notice, as
the case may be, agrees in writing to an extension of such period prior to
its expiration; provided, however, that the Trustee, or the Trustee and
the Owners of such principal amount of Bonds, as the case may be, will be
deemed to have agreed to an extension of such period if corrective action
is initiated by the Issuer within such period and is being diligently
pursued.
Section 7.02. REMEDIES ON DEFAULT.
(a) (i) On the occurrence and continuance of an Event of Default
under Sections 7.01 (a)-(c) or 7.01(f) or (g) the Trustee may, or if
required by be Credit Provider or the Owners of a majority of the
principal amount of the Bonds Outstanding, shall, declare all obligations
due under the Loan Agreement, the Note and the Bonds to be immediately due
and payable, whereupon they shall, without further action, become due and
payable, anything in this Indenture, the Note or in the Bonds to the
contrary notwithstanding or (ii) on the occurrence and continuance of an
Event of Default under Section 7.01(d) or (e), the Trustee shall declare
all obligations due under
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<PAGE> 48
the Loan Agreement, the Note and the Bonds to be due and payable within
five days thereafter, whereupon they shall, without further action, become
due and payable on such date, anything in this Indenture, the Note or in
the Bonds to the contrary notwithstanding In the event of such
acceleration, the Trustee shall immediately notify the Issuer, the Credit
Provider, the Remarketing Agent and the Local Government Commission, and
the Trustee shall draw on the Credit Facility in accordance with Section
6.08(a). Upon such declaration of acceleration, interest on the Bonds
shall cease to accrue.
(b) The provisions of the preceding paragraph are subject to the
condition that if, after the principal of any of the Bonds have been so
declared to be due and payable, and before any judgment or decree for the
payment of the moneys due has been obtained or entered as hereinafter
provided, the defaulting party (the "Defaulting Party") shall cause to be
deposited with the Trustee a sum sufficient to pay all matured
installments of the principal of and interest on all Bonds which have
become due otherwise than by reason of such declaration (with interest
upon such overdue installments of interest, at the rate per annum borne by
the Bonds) and such amount as shall be sufficient to cover reasonable
compensation and reimbursement of expenses payable to the Trustee, and all
Events of Default hereunder other than nonpayment of the principal of the
Bonds which has become due by said declaration has been remedied, then, in
every such case, such Event of Default shall be deemed waived and such
declaration and its consequences rescinded and annulled, and the Trustee
shall promptly give written notice of such waiver, rescission or annulment
to the Issuer, the Company, the Paying Agent and the Remarketing Agent and
shall give notice thereof by Mail to all Owners; but no such waiver,
rescission and annulment shall extend to or affect any subsequent Event of
Default or impair any right or remedy consequent thereon.
The provisions of paragraph (a) are further subject to the condition
that any waiver of any event of default under the Loan Agreement and a
rescission and annulment of its consequences shall constitute a waiver of
the corresponding Event of Default under this Indenture and a rescission
and annulment of the consequences thereof. If notice of such event of
default under the Loan Agreement shall have been given as provided herein
and if the Trustee thereafter has received notice that such event of
default has been waived, the Trustee shall promptly give written notice of
such waiver, rescission or annulment to the Defaulting Party and shall
give notice thereof by Mail to all Owners; but no such waiver, rescission
and annulment shall extend to or affect any subsequent Event of Default or
impair any right or remedy consequent thereon.
(c) On the occurrence and continuance of any Event of Default then
and in every such case the Trustee in its discretion may, and on the
written direction of Owners of not less than majority in principal amount
of the Bonds Outstanding and receipt of indemnity to its satisfaction,
shall, in its own name and as the trustee of an express trust:
(i) by mandamus, or other suit, action or proceeding at law or
in equity, enforce all rights of the Owners, and require the
Defaulting Party to carry out any agreements with or for the benefit
of the Owners and the Credit Provider and to perform its or their
duties under the Loan Agreement and this Indenture, provided that
any such remedy may be taken only to the extent permitted under the
applicable provisions of the Loan Agreement or this Indenture, as
the case may be;
(ii) take whatever action at law or in equity may appear
necessary or desirable to enforce its rights against the Defaulting
Party.
No right or remedy is intended to be exclusive of any other rights
or remedies, but each and event such right or remedy is cumulative and in
addition to any other remedy given hereunder or now
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or hereafter existing at law or in equity or by statute. If any Event of Default
has occurred and if requested by (i) the Credit Provider or (ii) the Owners of a
majority in aggregate principal amount of Bonds then Outstanding and the Trustee
is indemnified as provided in Section 8.06, the Trustee shall be obligated to
exercise such one or more of the rights and powers conferred by this Section as
the Trustee, being advised by counsel, shall deem most expedient in the
interests of the Owners and the Credit Provider.
Section 7.03. CREDIT PROVIDER'S OR OWNERS' RIGHT TO DIRECT PROCEEDINGS.
Anything in this Indenture to the contrary notwithstanding, (i) the Credit
Provider or (ii) if the Credit Provider is in default with respect to its
obligations under the Credit Facility, the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding have the right, at any time, to
the extent permitted by law, by an instrument or instruments in writing executed
and delivered to the Trustee, to direct the time, method and place of conducting
all proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or for the appointment of a receiver, and any
other proceedings hereunder; provided that such direction shall not be otherwise
than in accordance with the provisions hereof. The Trustee is not required to
act on any direction given to it pursuant to this Section until the indemnity
described in Section 8.06 is furnished to it by the Credit Provider or by such
Owners, as appropriate.
Section 7.04. RIGHTS AND REMEDIES OF OWNERS. Neither the Credit Provider
nor an Owner has any right to institute any suit, action or proceeding in equity
or at law for the enforcement of this Indenture or for the execution of any
trust hereof or for the appointment of a receiver or any other remedy hereunder,
unless a Default has occurred of which the Trustee has been notified as provided
in Section 8.05, or of which by said Section it is deemed to have notice, nor
unless (i) the Credit Provider or (ii) the Owners of not less than a majority in
aggregate principal amount of Bonds then Outstanding shall have made written
request to the Trustee and have offered reasonable opportunity either to proceed
to exercise the powers granted therein or to institute such action, suit or
proceedings in its own name, nor unless they have also offered to the Trustee
indemnity as provided in Section 8.06 nor unless the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its own name; and such notification, request and
offer of indemnity are hereby declared in every case at the option of the
Trustee to be conditions precedent to the execution of the powers and trusts of
this Indenture, and to any action or cause of action for the enforcement of this
Indenture, or for the appointment of a receiver or for any other remedy
hereunder; it being understood and intended that neither the Credit Provider nor
any Owner has any right in any manner whatsoever to affect, disturb or prejudice
the lien of this Indenture by its or lei action or to enforce any right
hereunder except in the manner herein provided and that all proceedings at law
or in equity shall be instituted, had and maintained in the manner herein
provided and for the equal benefit of the Owners of all Bonds then Outstanding.
Nothing contained in this Indenture shall, however, affect or impair the right
of any Owner to enforce the payment of the principal of, premium, if any, and
interest on any Bond at and after the maturity thereof.
Section 7.05. TRUSTEE MAY ENFORCE RIGHTS WITHOUT BONDS. All rights of
action and claims under this Indenture or any of the Bonds outstanding hereunder
may be enforced by the Trustee without the possession of any of the Bonds or the
production thereof in any trial or proceedings relative thereto; and any suit or
proceeding instituted by the Trustee shall be brought in its name as the
Trustee, without the necessity of joining as plaintiffs or defendants any Owners
of the Bonds, and any recovery of judgment shall be for the ratable benefit of
the Owners of the Bonds and thereafter the Credit Provider, subject to the
provisions of this Indenture.
Section 7.06. DELAY OR OMISSION NO WAIVER. No delay or omission of the
Trustee or of any Owner to exercise any right or power accruing upon any Default
shall exhaust or impair any such right or power or shall be construed to be a
waiver of any such Default, or acquiescence therein; and every power and remedy
given by this Indenture may be exercised from time to time and as often as may
be deemed expedient.
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Section 7.07. NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver of any
Default hereunder, whether by the Trustee or the Owners, shall extend to or
affect any subsequent or any other then existing Default or shall impair any
rights or remedies consequent thereon.
Section 7.08. DISCONTINUANCE OF PROCEEDINGS ON DEFAULT; POSITION OF
PARTIES RESTORED. If the Trustee has proceeded to enforce any right under this
Indenture and such proceedings have been discontinued or abandoned for any
reason, or have been determined adversely to the Trustee, then and in every such
case the Issuer, the Company, the Trustee and the Owners shall be restored to
their former positions and rights hereunder with respect to the Trust Estate,
and all rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken .
Section 7.09. WAIVERS OF EVENTS OF DEFAULT. The Trustee may in its
discretion waive any Event of Default hereunder and its consequences, and
notwithstanding anything else to the contrary contained in this Indenture shall
do so on the written request of the Owners of a majority in aggregate principal
amount of all the Bonds then Outstanding; provided, however, that there shall
not be waived without the consent of the Owners of 100% of the Bonds then
Outstanding as to which the Event of Default exists (a) any Event of Default in
the payment of the principal of or premium on any Outstanding Bonds at the date
of maturity specified therein or (b) any default in the payment when due of the
interest on any such Bonds, unless before such waiver or rescission, all arrears
of interest and all arrears of payments of principal and premium, if any, then
due, as the case may be (both with interest on all overdue installments at the
rate borne by the Bonds), and all expenses of the Trustee in connection with
such default shall have been paid or provided for. In case of any such waiver,
or in case any proceedings taken by the Trustee on account of any such Default
have been discontinued or abandoned or determined adversely to the Trustee, then
and in every such case the Issuer, the Company, the Trustee and the Owners shall
be restored to their former positions and rights hereunder respectively, but no
such waiver or rescission shall extend to any subsequent or other Default, or
impair any right consequent thereon. Notwithstanding anything in the foregoing
to the contrary, (a) an Event of Default under Section 7.01(d) may be waived
only if the Trustee receives written notice from the Credit Provider that the
Credit Facility has been restored to the Coverage Amount and (b) an Event of
Default under Section 7.01(e) may not be waived without the consent of the
Credit Provider.
Section 7.10. APPLICATION OF MONEYS. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
or held by the Trustee hereunder shall, after payment of the costs and expenses
of the proceedings resulting in the collection of such moneys and of the
expenses, liabilities and advances incurred or made by the Trustee, be deposited
in the Bond Fund and applied as follows:
(a) Unless the principal of all the Bonds has become or has been
declared due and payable, all such moneys shall be applied:
FIRST - To the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, in the order of the
maturity of the installments of such interest beginning with the
earliest such maturity and, if the amount available is not
sufficient, to pay in full any particular installment, then to the
payment ratably, according to the amounts due on such installment,
to the persons entitled thereto, without any discrimination or
privilege; and
SECOND - To the payment to the persons entitled thereto of the
unpaid principal of and premium, if any, on any of the Bonds which
have become due (other than Bonds matured or called for redemption
for the payment of which moneys are held pursuant to the provisions
of this Indenture), in the order of their due dates and beginning
with the
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<PAGE> 51
earliest due date and, if the amount available is not sufficient to
pay in full Bonds due on any particular date, then to the payment
ratably, according to the amount of principal due on such date, to
the persons entitled thereto without any discrimination or
privilege; and
THIRD- The payment to the persons entitled thereto of all
installments of interest on overdue installments of interest and to
the payment to the persons entitled thereto of all installments of
interest on overdue installments of principal and premium, if any,
to the extent permitted by law and if the amount available is not
sufficient to pay in full any particular installment, then to the
payment ratably, according to the amounts due on such particular
installment, to the persons entitled thereto, without any
discrimination or privilege;
FOURTH- To be held for the payment to the persons entitled
thereto as the same shall become due of the principal of, premium,
if any, and interest on the Bonds which may thereafter become due
either at maturity or on call for redemption before maturity and, if
the amount available is not sufficient to pay in full Bonds due on
any particular date, together with interest and premium, if any,
then due and owing thereon, payment shall be made ratably according
to the amount of principal, and premium, if any, and interest due on
such date to the persons entitled thereto without any discrimination
or privilege; and
FIFTH - To the payment of all sums due the Credit Provider
pursuant to the Reimbursement Agreement.
(b) If the principal of all the Bonds has become due or has been
declared due and payable, all such moneys shall be applied to the payment
of the principal and interest then due and unpaid on the Bonds, without
preference or priority of principal over interest or of interest over
principal, or of any installment of interest over any other installment of
interest, or of any Bond over any other Bond, ratably, according to the
amounts due, respectively, for principal and interest, to the persons
entitled thereto without any discrimination or privilege, with interest on
overdue installments of interest or principal. Subsequent to making such
payment remaining moneys shall be applied to the payment of all sums due
the Credit Provider pursuant to the Reimbursement Agreement.
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied at such times, and from time to time, as
the Trustee shall determine, having due regard to the amount of such moneys
available for application and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee shall apply
such funds, it shall fix the date (which shall be an Interest Payment Date
unless it shall deem another date more suitable) on which such application is to
be made and upon such date interest on the amounts of principal to be paid on
such dates shall cease to accrue. The Trustee shall give such notice as it may
deem appropriate of the deposit with it of any such moneys and of the fixing of
any such date, and shall not be required to make payment to the Owner of any
Bond until such Bond is presented to the Trustee for appropriate endorsement or
for cancellation if fully paid.
Whenever the principal of, premium, if any, and interest on all of the
Bonds have been paid under the provisions of this Section 7.10 and all expenses
and charges of the Trustee and amounts owing to the Credit Provider and the
Issuer have been paid, any balance remaining in the Funds created hereunder
shall, subject to the provisions of the Reimbursement Agreement, be paid to the
Company.
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Section 7.11. ASSIGNMENT TO CREDIT PROVIDER. It is expressly understood
and agreed by the Trustee that the Issuer does hereby pledge and assign to the
Credit Provider, in consideration of the Credit Provider's issuance of the
Credit Facility, all of the Trust Estate herein assigned to the Trustee as
security for the payment of the Bonds, which assignment to the Credit Provider
is subordinate to the simultaneous assignment thereof to the Trustee Pursuant to
this Indenture.
Section 7.12. RECOGNITION OF CREDIT PROVIDER OR ITS ASSIGNEE AS COMPANY.
The Trustee hereby acknowledges that following receipt of notice from the Credit
Provider of the Credit Provider's election to exercise its right to cure an
"Event of Default" under the Loan Agreement, the Trustee shall recognize that so
long as the conditions of the Loan Agreement have been satisfied, the Credit
Provider, or its respective assignees, as the case may be, constitutes the
Company, and possesses all the rights, and owes all the obligations of the
Company, in accordance with the Loan Agreement; provided, however, that the
Trustee shall not recognize any assignee's assumption of the Company's rights
and obligations unless the Trustee has received (a) evidence in writing from an
Authorized Issuer Representative that such assignee has been approved by the
Issuer, (b) an instrument or instruments evidencing the assignee's assumption of
the Company's rights and obligations, and (c) an opinion of Bond Counsel to the
effect that such assumption will not adversely affect (i) the exclusion of the
interest payable on the Bonds from the gross income of the Owners of the Bonds
for purposes of federal income taxation pursuant to Section 103 of the Code, and
(ii) the exemption of the Bonds from state, county, and municipal taxation in
the State.
[End of Article VII]
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ARTICLE VIII
TRUSTEE; PAYING AGENT; REMARKETING AGENT
Section 8.01. ACCEPTANCE OF TRUSTS. The Trustee hereby accepts and agrees
to execute the trusts hereby created, but on, on the additional terms set forth
in this Article, to all of which the respective Owners of Bonds agree by their
acceptance of delivery of any of the Bonds. The Trustee will not be required to
give any bond or surety in respect of the execution of the trusts and powers or
otherwise in respect of the premises herein.
Section 8.02. NO RESPONSIBILITY FOR RECITALS. The recitals, statements and
representations contained in this Indenture or in the Bonds, save only the
Trustee's or Paying Agent's authentication on the Bonds, will be taken and
construed as made by and on the part of the Issuer, and not by the Trustee, and
the Trustee does not assume, and will not have, any responsibility or obligation
for the correctness of any thereof.
Section 8.03. LIMITATIONS ON LIABILITY. The Trustee, before the occurrence
of any Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. The Trustee may execute any of the
trusts or powers hereof and perform the duties required of it hereunder by or
through attorneys, agents, receivers or employees, and will be entitled to
advice of counsel concerning all matters of trust and its duties hereunder, and
the Trustee will not be answerable for the default or misconduct of any such
attorney, agent or employee selected by it with reasonable care. Without
limitation, the Trustee will be entitled to the benefit of the foregoing
sentence with respect to the delegation to the Paying Agent of any or all of the
Trustee duties hereunder, including its duties with respect to payment of
principal of, premium, if any, or interest on, or redemption or purchase of the
Bonds, conversion of the interest rate on any Bonds, the authentication and
delivery of Bonds, and exchange and transfer thereof. The Trustee will not be
answerable for the exercise of any discretion or power under this Indenture or
for anything whatsoever in connection with the trust created hereby, except only
for its own gross negligence or willful misconduct.
No provision of this Indenture will require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers.
The Trustee will not be answerable for the exercise of any discretion or power
under this Indenture or for anything whatsoever in connection with the trust
created hereby, except only for its own gross negligence or willful misconduct.
Section 8.04. COMPENSATION, EXPENSES AND ADVANCES. The Trustee, the Paying
Agent and the Remarketing Agent are entitled to reasonable compensation for
their services rendered hereunder (not limited by any provision of law in regard
a) the compensator of the trustee of an express trust) and to reimbursement for
their actual out-of-pocket expenses (including counsel fees) reasonably incurred
in connection therewith except as a result of their negligence or misconduct. If
the Issuer fails to perform any of the covenants or agreements contained in this
Indenture, other than the covenants or agreements in respect of the payment of
the principal of and interest on the Bonds, the Trustee may, in its uncontrolled
discretion and without notice to the Owners of Bonds, at any time and from time
to time, make advances to effect performance of the same on behalf of the
Issuer, but the Trustee will be under no obligation to do so; and any and all
such advances may bear interest at a rate per annum not exceeding the rate of
interest then in effect and as announced by the Trustee or any bank controlling,
controlled by or in common control with the Trustee as its prime lending rate
for domestic commercial loans in the Company in which the principal office of
the Trustee is located; but no such advance will operate to provide relief from
any Default hereunder. If the Issuer has failed to make any payment to the
Trustee hereunder and
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such failure has resulted in an Event of Default hereunder, the Trustee, the
Paying Agent and the Remarketing Agent each will have, in addition to any other
rights hereunder, a claim, before the claim of the Owners of Bonds, for the
payment of its compensation and the reimbursement of its expenses and any
advances made by it, as provided in this Section, on the moneys and obligations
in au Funds and Accounts (other than the Rebate Fund) created hereunder, except
for moneys received under the Credit Facility, except for moneys on deposit in a
special subaccount of die Principal Account of the Bond Fund to pay redemption
premium, except for moneys or obligations deposited with or paid to the Trustee
for the redemption or payment of Bonds which are deemed to have been paid in
accordance with Article XI, except for funds held pursuant to Section 6. 10, and
except for Remarketing Proceeds.
Section 8.05. NOTICE OF EVENTS OF DEFAULT AND OTHER EVENTS OR FACTS. The
Trustee will not be required to take notice, or be deemed to have notice or
knowledge, of the existence or occurrence of any event or fact (other than an
Event of Default described under Section 7.01 , except for paragraphs (f) and
(g) thereof), unless an officer, agent or employee of the Trustee who has
specifically been designated as being responsible for matters relating to the
Bonds has actual knowledge of such Event of Default, event or fact or the
Trustee has been specifically notified in writing of such Event of Default,
event or fact by Owners of at least 25 % of principal amount of the Bonds
Outstanding, by the Paying Agent, the Remarketing Agent or the Credit Provider.
The Trustee may, however, at any time, in its discretion, require of the Issuer
full information and advice as to the performance of any of the covenants,
conditions and agreements contained herein.
Section 8.06. ACTION BY TRUSTEE. Unless requested in writing to do so by
Owners of at least a majority in principal amount of the Bonds Outstanding or
the Credit Provider, the Trustee will be under no obligation to take any action
in respect of any Event of Default hereunder or toward the execution or
enforcement of any of the trusts hereby created, or to institute, appear in or
defend any suit or other proceeding in connection therewith. Before taking any
action hereunder, the Trustee, if in its opinion such action may tend to involve
it in expense or liability, may require that it be provided security and
indemnity satisfactory to it; but the foregoing provisions are intended only for
the protection of the Trustee, and will not affect any discretion or power given
by any provisions of this Indenture to the Trustee to take action in respect of
any Event of Default, including any drawing under the Credit Facility or
Confirmation, if applicable, without such notice or request from the Owners of
Bonds, or without such security or indemnity. Any action taken by the Trustee
pursuant to this Indenture on the request, authority or consent of any person
who at the time of making such request or giving such authority or consent is
the Owner of any Bond, will be conclusive and binding on all future Owners of
the same Bond and upon Bonds issued in exchange therefor or in place thereof.
Notwithstanding anything contained elsewhere in this Indenture, the Trustee has
the right, but is not required, to demand, in respect of the authentication of
any Bonds, the withdrawal of any cash, the release of any property, or any
reasonable action whatsoever within the purview of this Indenture, any showings,
certificates, opinions, appraisals or other information, or corporate action or
evidence thereof, in addition to that required by the terms hereof as a
condition of such action by the Trustee deemed desirable for the purpose of
establishing the right of the Issuer to the authentication of any Bonds, the
withdrawal of any cash, the release of any property, or the taking of any other
action by the Trustee.
Section 8.07. GOOD-FAITH RELIANCE. The Trustee, the Paying Agent, the
Remarketing Agent and the Credit Provider will be protected and will incur no
liability in acting or proceeding in good faith on any resolution, notice,
telegram, telex or facsimile transmission, request, consent, waiver,
certificate, statement, affidavit, voucher, bond, requisition or other paper or
document which it in good faith believes to be genuine and to have been passed
or signed by the proper board, body or person or to have been prepared and
furnished pursuant to any of the provisions of this Indenture, the Reimbursement
Agreement, or on the written opinion of any attorney, engineer, accountant or
other expert believed by the Trustee, the Paying Agent, the Remarketing Agent or
the Credit Provider, as the case may be, to be qualified in
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relation to the subject matter, and neither the Trustee, the Paying Agent, the
Remarketing Agent nor the Credit Provider will be under any duty to make any
investigation or inquiry as to any statements contained or matters referred to
in any such instrument, but may accept and rely on the same as conclusive
evidence of the truth and accuracy of such statements.
Section 8.08. DEALINGS IN BONDS AND WITH ISSUER. The Trustee will not be
accountable for the use of any of the Bonds. The Trustee, the Paying Agent, the
Remarketing Agent and the Credit Provider, each in its individual capacity, may
in good faith buy, sell, own, hold and deal in any of the Bonds, and may join in
any action which any Owner may be entitled to take with like effect as if it did
not act in any capacity hereunder. The Trustee, the Paying Agent, the
Remarketing Agent and the Credit Provider, each in its individual capacity,
either as principal or agent, may also engage in or be interested in any
financial or other transaction with the Issuer and may act as depositary,
trustee or agent for any committee or body of Owners of Bonds or other
obligations of the Issuer as freely as if it did not act in any capacity
hereunder. The Trustee will not be responsible for determining whether interest
payable under the Bonds, the Indenture or the Reimbursement Agreement exceeds
the maximum amount permitted under the laws of the State.
Section 8.09. CONSTRUCTION OF INDENTURE. The Trustee shall construe any of
the provisions of this Indenture insofar as the same may appear to be ambiguous
or inconsistent with any other provision hereof, and any construction of any
such provisions hereof by the Trustee in good faith will be binding on the
Owners of the Bonds and any other persons affected thereby.
Section 8.10. RESIGNATION OF TRUSTEE. The Trustee may resign and be
discharged of the trusts created by this Indenture by executing an instrument in
writing resigning such trusts and specifying the date when such resignation will
take effect, and filing the same with the Issuer, the Company, the Paying Agent,
the Remarketing Agent and the Credit Provider not less than 45 days before the
date specified in such instrument when such resignation will take effect, and by
giving notice of such resignation by Mail, not less than three weeks before such
resignation date, to all Owners of Bonds. Such resignation will take effect on
the day specified in such instrument and notice unless (i) no successor Trustee
has been appointed as hereinafter provided and accepted such appointment or (ii)
previously a successor Trustee has been appointed as hereinafter provided and
accepted such appointment, in which event such resignation will take effect
immediately upon the appointment of such successor Trustee. Notwithstanding
anything herein to the contrary, no resignation will be effective until the
successor trustee has assumed the rights of the Trustee, if any, under the
Credit Facility and the Confirmation, if then in effect.
Section 8.11. REMOVAL OF TRUSTEE. The Trustee may be removed at any time
by the Company or by the Owners of not less dun a majority in principal amount
of Bonds Outstanding by filing with the Trustee so removed, and with the Issuer,
the Paying Agent, the Remarketing Agent and the Credit Provider an instrument or
instruments in writing, appointing a successor, executed by the Company if the
Trustee has been removed by the Company, or executed by the Owners of not less
than a majority in principal amount of Bonds Outstanding if the Trustee has teen
removed by said Owners; provided that the Company may not remove the Trustee if
an Event of Default has occurred and is continuing hereunder and provided
further that no such removal will be effective until it successor Trustee has
been appointed and until such appointment has been accepted.
Section 8.12. APPOINTMENT OF SUCCESSOR TRUSTEE. If the Trustee is removed,
resigns or is dissolved, or if its property or affairs are taken under the
control of any state or federal court or administrative body because of
insolvency or bankruptcy, or for any other reason, then a vacancy will forthwith
and ipso facto exist in the office of Trustee and a successor may be appointed
by filing with the Issuer, the Company, the Paying Agent, the Remarketing Agent
and the Credit Provider an instrument in writing executed by Owners of Bonds of
not less that a majority in principal amount of Bonds Outstanding.
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Copies of such instrument will be promptly delivered by the Issuer to the
predecessor Trustee and to the Trustee so appointed.
Until a successor Trustee is appointed by the Owners of Bonds as
authorized by this Section, the Company, by an instrument authorized by
resolution of the Board of Directors of the Company, will appoint a successor
Trustee. After any appointment by the Company, it will cause notice of such
appointment to be given to the Issuer, the Paying Agent, the Remarketing Agent
and the Credit Provider and by Mail to all Owners of Bonds. Any new Trustee so
appointed by the Company will immediately and without farther act be superseded
by a Trustee appointed by the Owners of the Bonds in the manner above provided.
Section 8.13. QUALIFICATIONS OF TRUSTEE. The Trustee and every successor
Trustee (a) will be a bank with trust powers or a trust company (other than the
Credit Provider) duly organized under the laws under the United States or any
state or territory thereof, subject to examination by such authorizing party,
and authorized by law to perform all the duties imposed upon it by this
Indenture, (b) will (i) have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition or (ii) be controlled directly or indirectly through one or more
subsidiaries by a bank holding company that has a combined capital and surplus
of at least $100,000,000 as set forth in its most recent published annual report
of condition, have at least $100,000,000 of trust assets under management and
have a combined capital and surplus of at least $20,000,000 as set forth in its
most recent published report of condition, (c) will be qualified under the laws
of the State to perform the duties of trustee and (d) will be sued to the prior
approval of the Credit Provider.
Section 8.14. JUDICIAL APPOINTMENT OF SUCCESSOR TRUSTEE. If the Trustee
resigns and no appointment of a successor Trustee is made pursuant to the
foregoing provisions of this Article before the date specified in the notice of
resignation as the date when such resignation is to take effect, the resigning
Trustee may forthwith apply to a court of competent jurisdiction for the
appointment of a successor Trustee. If no appointment of a successor Trustee is
made pursuant to the foregoing provisions of this Article within six months
after a vacancy has occurred in the office of the Trustee, any Owner may apply
to any court of competent jurisdiction to appoint a successor Trustee. Such
court may then, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
Section 8.15. ACCEPTANCE OF TRUSTS BY SUCCESSOR TRUSTEE. Any successor
Trustee appointed hereunder must execute, acknowledge and deliver to the Issuer
an instrument accepting such appointment hereunder, and then such successor
Trustee, without any further act, deed or conveyance, will become duly vested
with all the estates, property, rights, powers, trusts, dudes and obligations of
its predecessor in the trust hereunder, with like effect as if originally named
Trustee herein. On request of such Trustee, such predecessor Trustee and the
Issuer must execute and deliver an instrument transferring to such successor
Trustee all the estates, property, rights, powers and trusts hereunder of such
predecessor Trustee and, subject to the provisions of Section 8.04, such
predecessor Trustee will pay over to the successor Trustee all moneys and other
assets at the time held by it hereunder.
Section 8.16. SUCCESSOR BY MERGER OR CONSOLIDATION. Any corporation into
which any Trustee hereunder may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which any Trustee hereunder is a party or to which the corporate trust business
of the Trustee is transferred substantially as a whole and which otherwise
qualifies as a successor Trustee hereunder, will be the successor Trustee under
this Indenture, without the execution or filing of any paper or any further act
on the part of the parties hereto, anything in this Indenture to the contrary
notwithstanding.
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Section 8.17. STANDARD OF CARE. Notwithstanding any other provisions of
this Article, the Trustee will, during the existence of an Event of Default of
which the Trustee has notice or is deemed to have notice pursuant to Section
8.05, exercise such of the rights and powers vested in it by this Indenture and
use the same degree of skill and care in their exercise as a prudent person
would use and exercise under the circumstances in the conduct of the affairs of
others.
Section 8.18. INTERVENTION IN LITIGATION OF ISSUER. In any judicial
proceeding to which the Issuer is a party and which in the opinion of the
Trustee and its counsel has a substantial bearing on the interests of the Owners
of Bonds, the Trustee may and will, at the written request of the Credit
Provider or the Owners of Bonds of at least 25% in principal amount of the Bonds
Outstanding, on receipt of indemnity satisfactory to it, intervene in such
litigation for and on behalf of the Owners of Bonds, if permitted by the court
having jurisdiction in the premises.
Section 8.19. RELIANCE OF CERTIFICATE OF ISSUER. As to the existence or
non-existence of any fact or as to the sufficiency validity of any instrument,
paper or proceeding, the Trustee will be entitled to rely on a certificate
signed on behalf of the Issuer by the Chairman or Vice Chairman of the Issuer
and attested by the Secretary or an Assistant Secretary of the Issuer as
sufficient evidence of the facts therein contained and prior to the occurrence
of a Default of which the Trustee is deemed to have knowledge as provided in
Section 8.05, shall also be at liberty to accept a similar certificate to the
effect that any particular dealing, transaction or action is necessary or
expedient, but may at its discretion secure such further evidence reasonably
deemed necessary or advisable, but shall in no case be bound to secure the same.
The Trustee may accept a certificate of the Secretary or an Assistant Secretary
of the Issuer under its seal to the effect that a resolution in the form therein
set forth has been adopted by the Issuer as conclusive evidence that such
resolution has been duly adopted, and is in full force and effect. The
resolutions, orders, opinions, certificates and other instruments provided for
in this Indenture may be accepted by the Trustee as conclusive evidence of the
facts and conclusions stated therein and shall be full warrant, protection and
authority to the Trustee for the withdrawal of cash and the taking or omitting
of any other action hereunder.
Section 8.20. PAYING AGENT. The Trustee will be the initial Paying Agent
under this Indenture. The Company may, with the approval of the Remarketing
Agent and the Credit Provider, appoint a successor Paying Agent for the Bonds.
Any Paying Agent will designate to the Issuer, the Company, the Trustee, the
Remarketing Agent and the Credit Provider its principal office and signify its
acceptance of the duties and obligations imposed on it hereunder by a written
instrument of acceptance delivered to the Issuer under which such Paying Agent
will agree, particularly:
(a) to hold all sums held by it for the payment of the Purchase
Price of Bonds in trust for the benefit of the Owners of Bonds until such
sums are paid to such Owners of Bonds or otherwise disposed of as herein
provided;
(b) to hold all Bonds delivered to it hereunder in trust for the
benefit of the respective Owners of Bonds who have delivered such Bonds
until moneys representing the Purchase Price of such Bonds have been
delivered to or for the account of or to the order of such Owners of
Bonds;
(c) to keep such books and records as are consistent with prudent
industry practice and to make such books and records available for
inspection by the Issuer, the Company, the Trustee and the Credit Provider
at all reasonable times;
(d) on the request of the Trustee, to forthwith deliver to the
Trustee all sums so held in trust by the Paying Agent;
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(e) to authenticate Bonds;
(f) to forward to the Trustee monthly a journal of transactions with
respect to the Bonds for the previous month; and
(g) notify the Trustee of all amounts of principal of, premium, if
any, and interest on the Bonds as and when the same become due and
payable.
The Issuer will cooperate with the Paying Agent, the Trustee and the
Credit Provider to cause the necessary arrangements to be made and to be
thereafter continued whereby funds derived from the sources specified herein
will be made available to the Paying Agent for the payment when due of the
principal of, premium, if any, and interest on the Bonds.
Section 8.21. QUALIFICATIONS OF PAYING AGENT; RESIGNATION; REMOVAL. Any
Paying Agent or any successor Paying Agent appointed hereunder, other than the
Trustee, will be a national banking association duly organized under the laws of
the United States of America, or a commercial bank or trust company, having a
combined capital stock, surplus and undivided profits of at least $50,000,000,
authorized by law to perform all the duties imposed on it by this Indenture and
in all events will be subject to the prior written approval of the Credit
Provider. The Paying Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least 60 days'
notice to the Trustee, the Remarketing Agent and the Credit Provider. The Paying
Agent may be removed at any time, at the direction of the Trustee or the Company
with the consent of or at the direction of the Remarketing Agent by an
instrument, signed by the Trustee or the Company and the Remarketing Agent,
filed with the Paying Agent and the Credit Provider.
If the Paying Agent resigns or is removed, the Paying Agent will pay over,
assign and deliver any moneys held by it in such capacity to its successor or,
if there be no successor, to the Trustee.
If the Company fails to appoint a Paying Agent hereunder, or if the Paying
Agent resigns or is removed or is dissolved, or if the property or affairs of
the Paying Agent are taken under the control of state or federal court or
administrative body because of bankruptcy or insolvency, or for any other
reason, and the Trustee has not appointed its successor as Paying Agent, the
Trustee will ipso facto be deemed to be the Paying Agent for all purposes of
this Indenture until the appointment by the Trustee of the Paying Agent or
successor Paying Agent, as the case may be and will during such period receive
additional compensation for performing the duties thereof.
Section 8.22. REMARKETING AGENT. The Issuer hereby appoints Wheat, First
Securities, Inc., as the initial Remarketing Agent for the Bonds. Any subsequent
Remarketing Agent will designate its principal office to the Issuer, the
Company, the Trustee, the Paying Agent and the Credit Provider and signify its
acceptance of the dudes and obligations imposed upon it hereunder by a written
instrument of acceptance delivered to the Issuer and the Trustee under which the
Remarketing Agent will agree, particularly:
(a) to hold all Bonds delivered to it hereunder in trust for the
benefit of the respective Owners of Bonds which delivered such Bonds until
moneys representing the Purchase Price of such Bonds are delivered to or
for the account of or to the order of such Owners of Bonds sufficient to
enable it to pay the full Purchase Price for all such Bonds so tendered or
deemed tendered;
(b) to hold all moneys delivered to it hereunder for the purchase of
Bonds in trust for the benefit of the person or entity which has delivered
such moneys until the Bonds purchased with such moneys are delivered to or
for the account of such person or entity;
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(c) to keep such books and records as are consistent with prudent
industry practice and to make such books and records available for
inspection by the Issuer, the Company, the Trustee, me Credit Provider and
the Paying Agent at all reasonable times;
(d) on the request of the Trustee, to forthwith deliver to the
Trustee all sums so held in trust by it; and
(e) to perform all duties contemplated to be performed by it under
this Indenture.
Section 8.23. QUALIFICATIONS OF REMARKETING AGENT. The Remarketing Agent
and any successor Remarketing Agent will be either a national banking
association, a commercial bank or a trust company, an investment banking
company, or any other corporation acceptable to Moody's if the Bonds are rated
by Moody's or any other corporation acceptable to S&P if the Bonds are rated by
S&P, and authorized by law to perform all the duties imposed upon it by this
Indenture. The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least 30 days'
notice to the Issuer, the Company, the Paying Agent and the Trustee. The
Remarketing Agent may be removed on 30 days' prior written notice, at the
direction of the Company, by an instrument, signed by the Company and filed with
the Remarketing Agent and the Trustee. If the Remarketing Agent resigns or is
removed, the Remarketing Agent will pay over, assign and deliver any moneys and
Bonds held by it in such capacity to its successor or, if no successor is
appointed under the paragraph below, to the Trustee until such time as a
successor is appointed. If the Remarketing Agent fails to remarket the Bonds or
resigns or is removed pursuant to the provisions of this Indenture during any
period for which the remarketing and operations fee has been prepaid, an
appropriate pro-rata adjustment to the remarketing and operations fee shall be
nude pursuant to the provisions of me Placement and Remarketing Agreement.
On the resignation or removal of the Remarketing Agent, the Issuer, at the
direction of the Company and with the approval of the Credit Provider, shall
appoint a successor Remarketing Agent, which must satisfy the qualifications set
forth above. If the Issuer fails to appoint a Remarketing Agent hereunder, or if
the Remarketing Agent resigns or is removed or is dissolved, or if the property
or affairs of the Remarketing Agent are taken under the control of any state or
federal court or administrative body because of bankruptcy or insolvency, or for
any other reason, and the Issuer has not appointed its successor as Remarketing
Agent, the Trustee, with the approval of the Credit Provider, will appoint a
successor Remarketing Agent. The Issuer and the Trustee will incur no liability
as a result of any appointment or failure to appoint the Remarketing Agent or a
successor Remarketing Agent except for the appointment of a Remarketing Agent
which does not conform to the requirements of this Section 8.23. Notwithstanding
anything herein to the contrary, no resignation or removal will be effective
until the successor Remarketing Agent has assumed the rights of the Remarketing
Agent, if any, under the Placement and Remarketing Agreement.
Section 8.24. SEVERAL CAPACITIES. Anything in this Indenture to the
company notwithstanding, the same entity may serve hereunder as the Trustee, the
Paying Agent, the Remarketing Agent and in any other combination of such
capacities, to the extent permitted by law; provided, however, that the Trustee
may not serve as the provider of any financial guaranty instrument under this
Indenture.
Section 8.25. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture that there will be no violation of any law of any jurisdiction
(including particularly the law of the State) denying or restricting the right
of banking corporations or associations to transact business as Trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture,
and in particular in case of the enforcement of either upon an Events of
Default, or in case the Trustee deems that by reason of any present or future
law of any jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee or hold tide to the properties, in trust,
as herein granted, or take any other action which may be desirable or necessary
in connection therewith, the Trustee may appoint an additional individual or
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institution as a separate or Co-Trustee, in which event each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be exercised by or vested in
or conveyed to the Trustee with respect thereto will be exercisable by and vest
in such separate or Co-Trustee, but only to the extent necessary to enable such
separate or Co-Trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate or
Co-Trustee will run to and be enforceable by either of them.
Should any conveyance or instrument in writing from the Issuer be required
by the separate or Co-Trustee so appointed by the Trustee for more fully and
certainly vesting in and confirming to it such properties, right, powers,
trusts, dudes and obligations, any and all such deeds, conveyances and
instruments in writing will, on request, be executed, acknowledged and delivered
by the Issuer. If any separate or Co-Trustee, or a successor to either, dies,
becomes incapable of acting, resigns or is removed, all the estates, properties,
rights, powers, trusts, dudes and obligations of such separate or Co-Trustee, so
far as permitted by law, will vest in and be exercised by the Trustee until the
appointment of a new Trustee or successor to such separate or Co-Trustee.
Section 8.26. [INTENTIONALLY OMITTED]
Section 8.27. [INTENTIONALLY OMITTED]
[End of Article VIII]
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ARTICLE IX
EXECUTION OF INSTRUMENTS BY OWNERS
AND PROOF OF OWNERSHIP OF BONDS
Any request, direction, consent or other instrument in writing required or
permitted by this Indenture to be signed or executed by Owners of Bonds or on
their behalf by an attorney-in-fact may be in any number of concurrent
instruments of similar tenor and may be signed or executed by such Owners in
person or by an agent or attorney-in-fact appointed by an instrument in writing
or as provided in the Bonds. Proof of the execution of any such instrument and
of the ownership of Bonds will be sufficient for any purpose of this Indenture
and will be conclusive in favor of the Trustee with regard to any action taken
by it under such instrument if made in the following manner:
(a) The fact and date of the execution by any person of any such
instrument may be proved by the certificate of any officer in any
jurisdiction who, by the laws thereof, has power to take acknowledgments
within such jurisdiction, to the effect that the person signing such
instrument acknowledged before him the execution thereof, or by an
affidavit of a witness to such execution.
(b) The ownership of Bonds will be proved by the registration books
kept under the provisions of Section 2.11.
Nothing contained in this Article will be construed as limiting the
Trustee to such proof, it being intended that the Trustee may accept any other
evidence of matters herein stated which it may deem sufficient. Any request,
consent of, or assignment by any Owner of Bonds will bind every future Owner of
the same Bond or any Bonds or Bonds issued in lieu thereof in respect of
anything done by the Trustee or the Issuer in pursuance of such request or
consent.
[End of Article IX]
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ARTICLE X
INVESTMENTS
The Trustee or the Paying Agent will invest moneys held in the Project
Fund, the Rebate Fund, the Bond Fund and the Bond Purchase Fund at the written
direction of the Company in Permitted Investments. Moneys in the Credit Facility
Account of the Bond Fund and in the Bond Purchase Fund will be held uninvested
or will be invested in Federal Securities, under clauses (a) or (b) of the
definition thereof, maturing not later than the earlier of 30 days or the date
needed for payment. The Trustee and the Paying Agent will invest all moneys held
hereunder pursuant to the Tax Regulatory Agreement.
As and when any amounts thus invested may be needed for disbursement, the
Trustee or the Paying Agent will cause a sufficient amount of such investments
to be sold or otherwise converted into cash to the credit of such fund at the
best price reasonably obtainable. All earnings from the investment of moneys
held in any other fund and account hereunder will be credited to the fund and
account from which moneys were obtained for such investment.
[End of Article X]
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ARTICLE XI
DEFEASANCE
If the Issuer pays or causes to be paid to the Owner of any Bond the
principal of and interest due and payable, and thereafter to become due and
payable on such Bond, or any portion of such Bond in any integral multiple of
the Authorized Denomination thereof, such Bond or portion thereof will cease to
be entitled to any lien, benefit or security under this Indenture. All Bonds
will be deemed paid for all purposes of this Indenture when (i) payment of the
greater of the principal of and the maximum amount of interest that may become
due on the Bonds to the due date of such principal and interest (whether at
maturity, upon redemption, acceleration or otherwise) and the payment of the
purchase price of any Bond that may be optionally tendered by the owner either
(a) has been made in accordance with the terms of Section 3.01 or (b) has been
provided for by depositing with the Trustee (1) moneys sufficient to make such
payment, which moneys must constitute Available Moneys, (2) noncallable Federal
Securities maturing as to principal and interest in such amounts and at such
times as will insure the availability of sufficient moneys to make such payment
without regard to the reinvestment thereof, provided that (A) such Federal
Securities must be purchased from Available Moneys and (B) unless the Bonds bear
interest at a Term Rate, the Trustee shall have received (x) written evidence
from each rating agency that provides a rating for the Bonds that as a result of
such action, their rating on the Bonds will not be lowered or eliminated; and
(y) if the applicable interest rate on the Bonds is not fixed through the
redemption date, evidence that moneys or non-callable Federal Securities have
been provided which will pay the principal of the Bonds to be received, plus
interest thereon to the redemption date at the Maximum Rate; (3) a verification
report by an independent public accounting firm verifying that the moneys and
non-callable Federal Securities maturing as to principal of and interest are
sufficient to make the payments of principal, premium, if any, and interest on
the Bonds coming due and payable through and including the redemption date;
provided that if the interest rate is not fixed through the redemption date,
such verification will assume that the Bonds bear interest at the Maximum Rate
for such purposes, with a copy to the Local Government Commission or the Issuer
if requested by such party and (4) an Opinion of Bond Counsel to the effect that
the provision of such moneys and non-callable Federal Securities will legally
defease the Bonds and not adversely affect the tax-exempt status of interest on
the Bonds with a copy to the Local Government Commission or the Issuer if
requested by such party; and (ii) all compensation and expenses of the Trustee,
the Paying Agent, the Issuer, the Credit Provider and the Remarketing Agent (as
well as the fees and expenses of their counsel) pertaining to each Bond in
respect of which such payment or deposit is made have been paid or provided for
to the respective satisfaction of the Trustee, the Paying Agent, the Issuer, the
Credit Provider and the Remarketing Agent. When a Bond is deemed paid, it will
no longer be secured by or entitled to the benefits of this Indenture, except
for payment from moneys or Federal Securities under (i)(b) above and except that
it may be optionally tendered if and as provided in Section 3.01(a) and it may
be transferred, exchanged, registered, discharged from registration or replaced
as provided in Article II.
Notwithstanding the foregoing, no deposit under (i)(b) above made for the
purpose of paying the redemption price of a Bond (as opposed to the final
payment thereof upon maturity) will be deemed a payment of a Bond as aforesaid
until (i) notice of redemption of the Bond is given in accordance with Article
IV or, if the Bond is not to be redeemed within the next 60 days, until the
Company has given the Trustee and the Paying Agent, in form satisfactory to the
Trustee, irrevocable instructions to notify, as soon as practicable, the holder
of the Bond, in accordance with Article III, that the deposit required by (i)(b)
above has been made with the Trustee and that the Bond is deemed to be paid
under this Article and stating the redemption date upon which moneys are to be
available for the payment of the principal of the Bond or (ii) the maturity of
the Bond. Additionally, and while the deposit under clause (i)(b) above made for
the purpose of paying the final payment of a Bond upon its maturity will be
deemed a payment of such Bond as aforesaid, the Trustee will mail notice to the
Owner of such Bond, as soon as practicable stating
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that the deposit required by (i)(b) above has been made with the Trustee and
that the Bond is deemed to be paid under this Article.
When all Outstanding Bonds are deemed paid under the foregoing provisions
of this Section and other sums due hereunder, under the Reimbursement Agreement
and the Placement and Remarketing Agreement are paid, the Trustee will, upon
request, acknowledge the discharge of the Issuer's obligations under this
Indenture except for obligations relating to optional tender as provided in
Section 3.01(a), obligations under Article II in respect of the transfer,
exchange, registration, discharge from registration and replacement of Bonds,
and obligations under Section 9.06 with respect to the Trustee's compensation
and indemnification, and the Trustee without further direction will surrender
the Credit Facility to the Credit Provider, in accordance with the terms of the
Credit Facility, and will surrender the Confirmation to the Confirming Bank.
Bonds delivered to the Paying Agent for payment shall be canceled by the Paying
Agent pursuant to Section 2.07.
A Company Representative shall direct the deposit, investment and use of
the moneys and securities described in this Article such that no deposit will be
made and no use made of any such deposit which would cause any Bonds to be
treated as "arbitrage bonds" within the meaning of Section 148 of the Code.
Before accepting or using any such deposit, the Trustee may request an Opinion
of Bond Counsel as to whether such use or acceptance would cause the Bonds to be
so treated and, that all conditions hereunder have been satisfied, and may
conclusively rely on such Opinion with regard thereto.
The Trustee may request and shall be fully protected in relying upon a
certificate of an independent certified public accountant to the effect that a
deposit will be sufficient to defease the Bonds as provided in this Article VII.
Upon receipt of any amount pursuant to this Article VII, the Trustee shall
give written notice to the Owners thereof, which notice shall include, without
limitation, the amount of such deposit and any instructions given to the Trustee
pursuant thereto and to the Remarketing Agent by first-class mail, postage
prepaid. If such a defeasance occurs while the Bonds bear interest at a Variable
Rate, the Trustee must receive as a condition therefor written evidence from
Moody's, if the Bonds are rated by Moody's, and S&P, if the Bonds are rated by
S&P, in each case to the effect that such rating agency has reviewed the
proposed defeasance and that the defeasance will not, of itself, result in a
reduction or withdrawal of its rating of the Bonds from that which then
prevails.
[End of Article XI]
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ARTICLE XII
SUPPLEMENTAL INDENTURES AND
AMENDMENTS OF THE LOAN AGREEMENT
Section 12.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF OWNERS.
The Trustee and the Issuer may, with the written consent of the Company and the
Credit Provider, but without the consent of, or notice to, the Owners, enter
into such indentures or agreements supplemental hereto for any one or more or
all of the following purposes:
(a) To add to the covenants and agreements of the Issuer contained
in this Indenture other covenants and agreements to be thereafter observed
by the Issuer;
(b) To cure any ambiguity or to cure, correct or supplement any
defect or omission or inconsistent provision contained in this Indenture,
or to make any provisions with respect to matters arising under this
Indenture or for any other purpose if such provisions do not adversely
affect the interests of the Owners;
(c) To implement the delivery of an Alternate Credit Facility
hereunder; or
(d) To implement the delivery of a Substitute Confirmation
hereunder.
Notwithstanding the foregoing provisions of this Section 12.01, the
following provisions of this Indenture may not be amended or supplemented
without the prior written consent of the Local Government Commission:
(i) the definition of "Authorized Denominations" set forth in
Article I;
(ii) the provisions of Section 2.03(d); and
(iii) the provisions of Section 6.08 that require a Credit
Facility or Alternate Credit Facility to be in effect so long as
Bonds remain Outstanding.
In addition to the foregoing, any provisions contained in this Indenture
or any supplement hereto relating to any notice to, approval of or other action
by the Local Government Commission may not be amended or supplemented without
the prior written consent of the Local Government Commission.
Section 12.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF OWNERS.
Exclusive of supplemental indentures covered by Section 12.01, the written
consent of the Company, the Credit Provider and the consent of the Owners of not
less than a majority in aggregate principal amount of the Bonds then Outstanding
shall be required for the execution by he Issuer and the Trustee of any
indenture or indentures supplemental hereto provided, however, that without the
consent of the Owners of all the Bonds at the time Outstanding nothing herein
contained shall permit, or be construed as permitting:
(a) A change in the terms of redemption or maturity of the principal
amount of or the interest on any outstanding Bond, a change in the
Purchase Price or the terms of a purchase under Article III, or a
reduction in the principal amount of or premium payable upon any
redemption of any outstanding Bond or the rate of interest thereon:
(b) The deprivation of the Owner of any Bond then Outstanding of the
lien created by this Indenture (other than as originally permitted
hereby);
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<PAGE> 66
(c) A privilege or priority of any Bond or Bonds over any other Bond
or Bonds; or
(d) A reduction in the aggregate principal amount of the Bonds
required for consent to such supplemental indenture.
If at any time the Company or the Issuer shall request the Trustee to
enter into such supplemental indenture for any of me purposes of this Section,
the Trustee shall, upon being satisfactorily indemnified with respect to
expenses, cause notice of the proposed execution of such supplemental indenture
to be mailed by Mail to the Owners of be Bonds then Outstanding at the address
shown on the registration books maintained by the Trustee. Such notice shall
briefly set forth the nature of the proposed supplemental indenture and shall
state that copies thereof are on file at the principal corporate trust office of
the Trustee for inspection by all Owners. If, within 60 days or such longer
period as shall be prescribed by the Company following the giving of such
notice, the Owners of not less than a majority in aggregate principal amount of
the Bonds then Outstanding at the time of the execution of any such supplemental
indenture shall have consented to and approved the execution thereof as herein
provided, no Owner shall have any right to object to any of the terms and
provisions contained therein, or in the operation thereof, or in any manner to
question the propriety of the execution thereof, or to enjoin or restrain the
Trustee or the Issuer from executing the same or from taking any action pursuant
to the provisions thereof.
Section 12.03. EXECUTION OF SUPPLEMENTAL INDENTURE. The Trustee is
authorized to join with the Issuer in the execution of any such supplemental
indenture and to make further agreements and stipulations which may be contained
therein, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects its rights, duties or immunities under this
Indenture. Any supplemental indenture executed in accordance with the provisions
of this Article shall thereafter form a part of this Indenture; and all the
terms and conditions contained in any such supplemental indenture as to any
provision authorized to be contained therein shall be deemed to be part of this
Indenture for any and all purposes. In case of the execution and delivery of any
supplemental indenture, express reference may be made thereto in the text of the
Bonds issued thereafter, if any, if deemed necessary or desirable by the
Trustee.
Section 12.04. AMENDMENTS OF THE LOAN AGREEMENT NOT REQUIRING CONSENT OF
OWNERS. The Issuer and the Trustee may, with the written consent of the Company
and the Credit Provider, but without the consent of or notice to the Owners,
consent to any amendment, change or modification of the Loan Agreement as may be
required (a) by the provisions of the Loan Agreement or this Indenture; (b) for
the purpose of curing any ambiguity or formal defect or omission in the Loan
Agreement; or (c) in connection with any other change therein which, in the
judgment of the Trustee, is not to the prejudice of the Owners.
Section 12.05. AMENDMENTS OF THE LOAN AGREEMENT REQUIRING CONSENT OF
OWNERS. Except for the amendments, changes or modifications permitted by Section
12.04, the Trustee shall not consent to any other amendment, change or
modification of the Loan Agreement without the giving of notice and the written
approval or consent of the Credit Provider and the Owners of not less than a
majority in aggregate principal amount of the Bonds at the time Outstanding
given and procured as provided in Section 12.02. If at any time the Company and
the Issuer shall request the consent of the Trustee to any such proposed
amendment, change or modification of the Loan Agreement, the Trustee shall, upon
being satisfactorily indemnified with respect to expenses, cause notice of such
proposed amendment, change or modification to be given in the same manner as
provided in Section 12.02. Such notice shall briefly set forth the nature of
such proposed amendment, change or modification and shall state that copies of
the instrument embodying the same are on file at the principal corporate trust
office of the Trustee for inspection by all Owners.
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<PAGE> 67
Section 12.06. MODIFICATION OF CREDIT FACILITY. No Credit Facility may be
modified without the prior written consent of 100% of the Owners, except to (a)
correct any formal defects therein, (b) effect transfers thereof, (c) effect
extensions thereof, (d) effect reductions and reinstatements thereof in
accordance with the terms of the Credit Facility, (e) increase the stated amount
thereof, or (f) effect any change which does not have a material adverse effect
upon the interests of the Owners. Pursuant to this Indenture, however, the
Company has the right to obtain an Alternate Credit Facility, subject to the
requirements set forth therein without the consent of the Owners.
Section 12.07. NOTICE TO OWNERS. The Trustee will cause notice of the
execution of a supplemental indenture or of the execution of an amendment or
supplement to the Loan Agreement to be mailed promptly by first-class Mail to
each Owner at the Owner's registered address. The notice shall state briefly the
nature of the supplemental indenture or the amendment or supplement to the Loan
Agreement and that copies thereof are on file with the Trustee for inspection by
all Owners.
[End of Article XII]
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ARTICLE XIII
MISCELLANEOUS
Section 13.01. COVENANTS OF ISSUER. The Issuer agrees that wherever in the
Loan Agreement it is stated that the Issuer will notify the Trustee, or whenever
the Loan Agreement gives the Trustee some right or privilege, that such part of
the Loan Agreement shall be as if it were set forth in full in this Indenture.
The Issuer agrees that the Trustee as assignee of the Issuer under the Loan
Agreement may enforce, in its name or in the name of the Issuer, all rights of
the Issuer and all obligations of the Company under the Loan Agreement, for and
on behalf of the Owners, whether or not the Issuer is in Default under this
Indenture.
Section 13.02. PARTIES INTERESTED HEREIN. Nothing in this Indenture
expressed or implied is intended or shall be construed to confer on, or to give
to any person other than the Company, the Issuer, the Trustee, the Credit
Provider and the Owners, any right, remedy or claim under or by reason of this
Indenture or any covenant, condition or stipulation hereof; and all the
covenants, stipulations, promises and agreements in this Indenture contained by
and on behalf of the Issuer or the Trustee shall be for the sole and exclusive
benefit of the Company, the Issuer, the Trustee, the Credit Provider and the
Owners.
Section 13.03. TITLES, HEADINGS, CAPTIONS, ETC. The titles, captions and
headings of the articles, sections and subdivisions of this Indenture have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 13.04. NO PERSONAL LIABILITY OF ISSUER OFFICIALS. No covenant or
agreement contained in the Bonds or in this Indenture shall be deemed to be the
covenant or agreement of any member, official, officer, agent or employee of the
Issuer, the Local Government Commission or the State in his or her individual
capacity, and neither the members, officers or employees of the Issuer, the
Local Government Commission or the State nor any official executing the Bonds
shall be liable personally on the Bonds or be subject to any personal liability
or accountability by reason of the issuance thereof.
Section 13.05. BONDS OWNED BY ISSUER OR COMPANY. In determining whether
Owners of the requisite aggregate principal amount of the Bonds have concurred
in any direction, consent or waiver under this Indenture, Bonds which are owned
by the Issuer or the Company or by any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company
(unless the Issuer, the Company or such person own all Bonds which are then
Outstanding, determined without regard to this Section 13.05) shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Bonds which the Trustee knows are so owned shall be so disregarded. Bonds so
owned which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Bonds and that the pledgee is not the Issuer or
the Company or any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer or the Company. For
purposes of this Section 13.05, Bonds purchased with a drawing under the Credit
Facility or the Confirmation, if applicable, and registered in the name of the
Company and pledged to the Credit Provider or otherwise at die direction of the
Credit Provider, shall be regarded as Outstanding. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.
Section 13.06. SEVERABILITY. If any provision of this Indenture shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
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Section 13.07. GOVERNING LAW. This Indenture is governed and construed in
accordance with the hot of the State.
Section 13.08. EXECUTION IN COUNTERPARTS. This Indenture 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 13.09. NOTICES. All notices, certificates or other communications
shall be sufficiently given and shall be deemed given when delivered or mailed
by certified or registered mail, postage prepaid, as follows: if to the Company,
to SteriGenics International, 4020 Clipper Court, Fremont, California 94538,
Attention: President; if to the Issuer, to The Mecklenburg County Industrial
Facilities and Pollution Control Financing Authority, P.O. Box 34486, Charlotte,
North Carolina 28234, Attention: Chairman; if to the Credit Provider, Comerica
Bank-California, 333 W. Santa Clara Street, San Jose, California 95113,
Attention: Michael Archer; if to Comerica Bank, 500 Woodward Avenue, Detroit,
Michigan 48226, Attention: Standby Letter of Credit Department; if to the
Trustee, to Bank One, Columbus, N.A., in care of Bank One Trust Company, N.A.,
100 East Broad Street, Columbus, Ohio 43271-0181, Attention: Corporate Trust
Department; if to the Remarketing Agent, to Wheat, First Securities, Inc., 901
East Byrd Street, Richmond, Virginia 23219, Attention: Money Market Trading; if
to the Paying Agent, to Bank One, Columbus, N.A., in care of Bank One Trust
Company, N.A., 100 East Broad Street, Columbus, Ohio 43271-0181, Attention:
Corporate Trust Department; if to S&P, Standard & Poor's, a Division of The
McGraw Hill Companies, Inc., 25 Broadway, New York, New York 10004; if to the
Local Government Commission, Albemarle Building, 325 North Salisbury Street,
Raleigh, North Carolina 27603-1385, Attention: Secretary. Any party listed in
this Section may, by written notice, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
Section 13.10. PAYMENTS DUE ON HOLIDAYS. If the date for making any
payment or the last day for performance of any act or the exercising of any
right, as provided in this Indenture, is not a Business Day, such payment may be
made or act performed or right exercised on the next succeeding day which is a
Business Day with the same force and effect as if done on the nominal date
provided in this Indenture.
Section 13.11. ISSUER COMPANY AND TRUSTEE REPRESENTATIVES. Whenever under
the provisions hereof the approval of the Issuer, the Company or the Trustee is
required, or the Company, the Issuer or the Trustee is required to take some
action at the request of the other, unless otherwise provided. such approval or
such request shall be given for the Issuer by an Issuer Representative, for the
Company by the Company's Representative, and for the Trustee by the Trustee
Representative, and the Issuer, the Company and the Trustee are authorized to
act on any such approval or request.
[SIGNATURE PAGE CONTINUES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture
to be executed in their respective names and their respective seals to be hereto
affixed and attested by their duly authorized officials or officers, all as of
the date first above written.
THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
[SEAL]
ATTEST: By: /s/ signature not readable
-------------------------------
Chairman
By: /s/ signature not readable
--------------------------------
Secretary
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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<PAGE> 71
[COUNTERPART SIGNATURE PAGE TO THE INDENTURE]
BANK ONE, COLUMBUS, N.A.,
as Trustee
[SEAL]
ATTEST: By: /s/ signature not readable
-------------------------------
Authorized Officer
By: /s/ signature not readable
--------------------------------
Corporate Trust Officer
66
<PAGE> 72
EXHIBIT A
FORM OF BOND
REGISTERED REGISTERED
No. R-1 $9,000,000
UNITED STATES OF AMERICA
STATE OF NORTH CAROLINA
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(STERIGENICS INTERNATIONAL PROJECT),
SERIES 1996
<TABLE>
<CAPTION>
INTEREST RATE MATURITY DATE ORIGINAL ISSUE DATE CUSIP
- ------------- ------------- ------------------- -----
<S> <C> <C> <C>
VARIABLE RATE MARCH 1, 2016 MARCH.___, 1996 583896AA3
</TABLE>
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: NINE MILLION DOLLARS ($9,000,000)
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY (the "Issuer"), a political subdivision and body corporate
and politic of the State of North Carolina (the "State"), for value received,
hereby promises to pay, solely from the source and as hereinafter provided, to
the registered owner, or registered assigns or legal representative, upon
presentation and surrender hereof at the principal corporate trust office of
Bank One, Columbus, N.A., Columbus, Ohio, or its successor in trust, as paying
agent (the "Paying Agent"), or by wire transfer, as provided in the Indenture
(as hereinafter defined), the principal amount set forth above on the Maturity
Date set forth above, subject to the prior mandatory or optional redemption of
this Bond as hereinafter provided, and to pay solely from such source interest
hereon at the Interest Rate (as hereinafter defined), payable in arrears on the
Interest Payment Date (as hereinafter defined), until payment in full; except
that it as down by the records of the Paying Agent, interest on the Bonds is in
default, Bonds issued in exchange for or upon registration of transfer of Bonds
will be dated as of the date to which interest on the Bonds has been paid in
full. If no interest has been paid on the Bonds, Bonds issued in exchange for or
upon the registration or transfer of Bonds will be dated the date of initial
authentication and delivery thereof.
Principal of and premium, if any, and interest on or the purchase price of
the Bonds will be payable in lawful currency of the United States of America.
Payment of the principal of and premium, if any, on this Bond will be made on
the presentation and surrender of this Bond as the same becomes due and payable.
Except as provided in the Indenture, payment of the interest on this Bond will
be made by the Paying Agent on each Interest Payment Date to the person
appearing as the registered owner hereof as of the close of business on the
Record Date preceding the Interest Payment Date, by check mailed to
A-1
<PAGE> 73
such owner at his address as it appears on the registration books maintained by
the Registrar (as hereinafter defined), or at such other address as is furnished
in writing by such owner to the Registrar; provided, however, that (i) payment
of interest on this Bond may (except as otherwise provided for Credit Provider
Bonds), at the option of such owner of this Bond in an aggregate principal
amount of at least $1,000,000, be transmitted by wire transfer to such owner, on
written request therefor delivered to the Paying Agent, to the bank account
number on file with the Registrar as of the relevant Record Date and (ii) all
payments of principal or redemption price of and interest on Credit Provider
Bonds will be by wire transfer in immediately available funds; provided further,
however, that if this Bond is registered in the name of a securities depository
or its nominee as registered owner, payment will be made by wire transfer
pursuant to the wire instruction received by the Paying Agent from such
registered owner. If any payment hereon is due on a day which is not a Business
Day, payment shall be made on the next succeeding Business Day with the same
force and effect as if made on the day such payment was due and, in the case of
such payment, no interest shall accrue for the intervening period if the Bonds
bear interest at a Term Rate.
This Bond is one of an issue of $9,000,000 in aggregate principal amount
of The Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds (SteriGenics International
Project), Series 1996 (the "Bonds"), of like date and tenor, except as to number
and principal amount, authorized and issued pursuant to the Industrial and
Pollution Control Facilities Financing Act, Chapter 159C of the General Statutes
of North Carolina, as amended (the "Act"), to finance the costs of (i) the
acquisition of an approximately 5.5 acre site at 10811 Withers Cove Park Drive,
Charlotte, Mecklenburg County, North Carolina, (ii) the acquisition,
construction and equipping of an approximately 64,000 square foot contract
radiation sterilization processing facility thereon and (iii) the acquisition
and installation of machinery, equipment and other personal property to be used
in connection therewith, to be used primarily for the sterilization of health
care, laboratory, pharmaceutical and packaging products (the "Project"). The
proceeds received by the Issuer from the sale of the Bonds will be loaned to
SteriGenics International, a California corporation (the "Company"), pursuant to
a Loan Agreement dated as of March 1, 1996 (the "Loan Agreement, between the
Issuer and the Company. The Loan Agreement provides for the Company to make
payments sufficient to pay the principal of, premium, if any, and interest on
and purchase price of the Bonds as the same become due and payable and to pay
certain administrative expenses in connection with the Bonds.
The Bonds are issued under and are equally and ratably secured by an
Indenture of Trust, dated as of March 1, 1996 (the "Indenture"), between the
Issuer and Bank One, Columbus, N.A., as trustee (the "Trustee"), which assigns
to the Trustee, as security for the Bonds, the Issuer's rights under the Loan
Agreement (except for certain unassigned rights, including the right of the
Issuer to indemnification and payment of costs and expenses and notices and
consents) and the Company's promissory note in the aggregate principal amount of
$9,000,000, dated as of March 8, 1996 (the "Note"), issued and delivered
pursuant to the Loan Agreement and evidencing the Company's obligation to repay
the loan of the proceeds of the Bonds. Pursuant to the Loan Agreement, the
Company has caused Comerica Bank-California (the "Credit Provider") to issue its
irrevocable, direct-pay letter of credit dated the date of the issuance of the
Bonds (the "Credit Facility") in favor of the Trustee, in an amount sufficient
to pay the outstanding principal amount of and unpaid interest on or purchase
price of the Bonds, but not to exceed $9,148,000, pursuant to a Reimbursement
Agreement dated as of March 1, 1996 (the "Reimbursement Agreement"), between the
Credit Provider and the Company, which Credit Facility has been issued in favor
of the Trustee and which initially expires (subject to extension as provided in
the Reimbursement Agreement and the Indenture) on March 15, 2001. The initial
Credit Facility will be confirmed by Comerica Bank which will undertake to honor
drawings under the Credit Facility conforming with the terms thereof to the
extent that such drawings are not honored by the Credit Provider in accordance
with the terms and conditions of the Credit Facility.
A-2
<PAGE> 74
The Indenture provides that for so long as Bonds remain Outstanding, a
Credit Facility will at all times be in effect with respect to such Bonds and
any such Credit Facility will be in such form and contain such terms and
conditions as more fully described in the Indenture. Substitute letters of
credit may be delivered in accordance with the Indenture, but there is no
requirement in the Indenture that such substitute letters of credit be
confirmed. The Trustee will draw on the Credit Facility from time to time to pay
the principal of, interest on and purchase price of the Bonds. Reference is
hereby made to the Indenture, the Loan Agreement, the Credit Facility, the
Confirmation and the Reimbursement Agreement and to all amendments thereof and
supplements thereto for a description of the provisions, among others, with
respect to the nature and extent of the security, the default provisions, the
rights, duties and obligations of the Issuer, the Company, the Trustee or the
rights of the owners of the Bonds and the terms upon which the Bonds are issued
and secured. Unless the context indicates otherwise, all capitalized, undefined
terms used in this Bond shall have the meanings ascribed to them in the
Indenture.
IN CERTAIN CIRCUMSTANCES THIS BOND MAY RE DEEMED T0 HAVE BEEN TENDERED AND
PURCHASED OR PAID PRIOR TO THE MATURITY DATE HEREOF, AS DESCRIBED HEREIN.
This Bond shall not be entitled to any right or benefit under the
Indenture, or be valid or become obligatory for any purpose, until this Bond
shall have been authenticated by the Trustee or a duly authorized authenticating
agent, by execution of the certificate of authentication inscribed hereon.
THIS BOND IS A LIMITED OBLIGATION OF THE ISSUER PAYABLE SOLELY FROM THE
REVENUES AND RECEIPTS DERIVED FROM THE LOAN AGREEMENT, WHICH REVENUES AN
RECEIPTS HAVE BEEN PLEDGED AND ASSIGNED TO THE TRUSTEE FOR THE BENEFIT OF; THE
OWNERS TO SECURE PAYMENT OF THIS BOND. THE BOND AND THE ISSUES OF WHICH IT IS A
PART AND THE PREMIUM, IF ANY, AND INTEREST THEREON ARE LIMITED OBLIGATIONS OF
THE ISSUER PAYABLE SOLELY FROM THE REVENUES AND RECEIPTS DERIVED FROM THE LOAN
AGREEMENT, INCLUDING PAYMENTS RECEIVED UNDER THE NOTE, WHICH REVENUES AND
RECEIPTS HAVE BEEN PLEDGED AND ASSIGNED TO THE TRUSTEE TO SECURE PAYMENT OF THE
BONDS. THE BOND, THE PREMIUM IF ANY, AND THE INTEREST THEREON SHALL NOT BE
DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF
NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER.
NEITHER THE STATE OF NORTH CAROLINA NOR ANY POLITICAL SUBDIVISION THEREOF
INCLUDING THE ISSUER, SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM. IF
ANY, OTHER INTEREST ON THE BONDS OR OTHER COST INCIDENT THERETO EXCEPT FROM THE
REVENUES AND RECEIPTS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE
TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF
INCLUDING THE ISSUER, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF
ANY, OR INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO.
The Bonds are issuable as fully registered Bonds in denominations of (i)
with respect to any Bond bearing interest at a Variable Rate, $100,000 or any
integral multiple of $5,000 in excess thereof, (ii) with respect to any Bond
bearing interest at a Term Rate during a Term Rate Period that does not extend
to the maturity of the Bonds, $100,000 or any integral multiple of $5,000 in
excess thereof, and (iii) with respect to any Bond bearing interest at a Term
Rate during a Term Rate Period that extends to the maturity of the Bonds, $5,000
or any integral multiple thereof (the "Authorized Denominations"). This Bond,
upon surrender hereof at do: principal office of the Plying Agent with a written
instrument of transfer satisfactory to the Paying Agent executed by the holder
hereof or his attorney duly authorized in writing, may, at the option of the
holder hereof, be exchanged for an equal aggregate principal amount of Bonds of
the same aggregate principal amount and tenor as the Bonds being exchanged and
of any Authorized Denomination. This Bond is transferable as provided in the
Indenture, subject to certain limitations therein contained, only upon the
register of the Paying Agent, as registrar (the "Registrar"), and only upon
surrender of this Bond for transfer to the Paying Agent accompanied by a written
instrument of transfer (in substantially the form of the assignment attached
hereto) duly executed by the holder hereof or his duly
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authorized attorney. Thereupon, one or more new Bonds of any Authorized
Denomination or Denominations and in the same aggregate principal amount and
tenor as the Bond surrendered will be issued to the designated transferee or
transferees.
The Bonds will initially be issued by means of a book-entry system with no
physical distribution of Bonds made to the public, unless the book-entry system
is discontinued as described below. One certificate for each maturity will be
issued to The Depository Trust Company, New York, New York ("DTC"), and
immobilized in its custody. A book-entry system will be employed, evidencing
ownership of the Bonds in Authorized Denominations, with transfers of beneficial
ownership effected on the records of DTC, and its participants (the "DTC
Participants") and its indirect participants (the "Indirect Participants"
pursuant to ruts and procedures established by DTC. References in the remainder
of this paragraph and in the next five succeeding paragraphs to a Bond or the
Bonds shall be construed to mean the Bond or Bonds held under the book-entry
system. In such event, one Bond for each maturity will be issued to DTC, and
immobilized in its custody. A book-entry system will be employed, evidencing
ownership of the Bonds in Authorized Denominations, with transfers of beneficial
ownership effected on the records of DTC and the DTC Participants pursuant to
rules and procedures established by DTC.
Payments of principal and interest with respect to the Bonds, so long as
DTC is the only registered owner of the Bonds, will be paid by the Paying Agent
directly to DTC or its nominee, Cede & Co as provided in the Blanket Letter of
Representation dated March 8, 1996 from the Issuer to DTC (the "Letter of
Representation"). Transfer of principal, interest and any premium payments or
notices to DTC Participants and DTC Indirect Participants will be the
responsibility of DTC, and transfer of principal, interest and any premium
payment or notice to beneficial owners of the Bonds (the "Beneficial Owners")
will be the responsibility of DTC Participants and DTC Indirect Participants. No
other party will be responsible or liable for such transfers of payments or
notices or for maintaining, supervising or reviewing such records maintained by
DTC, DTC Participants or DTC Indirect Participants. Payments will be made by
wire transfer in immediately available funds to the account of Cede & Co. as
specified in the register maintained by the Registrar or by such other method of
payment as the Paying Agent may determine to be necessary or advisable with the
concurrence of DTC.
In the event that (a) DTC determines not to continue to act as securities
depository for the Bonds or (b) the Trustee or the Company determines that the
continuation of the book-entry system of evidence and transfer of ownership of
the Bonds would adversely affect their interests or the interests of the
Beneficial Owners of the Bonds, the Company may cause the Issuer to discontinue
the book-entry system with DTC. If the Company fails to identify another
qualified securities depository to replace DTC, the Issuer will cause the
Trustee, at the expense of the Company, to authenticate and deliver replacement
Bonds in the form of fully registered Bonds to each Beneficial Owner. DTC may be
removed at any time at the election of the Remarketing Agent, with the consent
of the Trustee and notice to the Company and the Issuer, and a new securities
depository may then be appointed by the Issuer, subject to the approval of the
Trustee and the Remarketing Agent.
Unless this Bond is presented by an authorized representative of DTC to
the Trustee or is agent for registration of transfer, exchange or payment and
this Bond is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC, any transfer, pledge, or other use of this Bond for value
or otherwise by or to any person is wrongful inasmuch as the registered owner
thereof, Cede & Co., has an interest in this Bond.
THE ISSUER, THE COMPANY, THE REMARKETING AGENT THE PAYING AGENT, THE
REGISTRATION AND TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO ANY
DTC PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT, TO: (I) THE BONDS; (II)
THE ACCURACY OF ANY RECORDS MAINTAINED
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BY DTC OR ANY DTC PARTICIPANT; (III) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT
OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF,
PREMIUM, IF ANY, AND INTEREST ON THE BONDS; (IV) THE DELIVERY OR TIMELINESS OF
DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY NOTICE DUE TO ANY BENEFICIAL OWNER
WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO
BENEFICIAL OWNERS; (V) THE SELECTION OF BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN
THE EVENT OF ANY PARTIAL REDEMPTI0N OF THE BONDS; OR (VI) ANY CONSENT GIVEN OR
OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE & CO., AS OWNER.
SO LONG AS A BOOK-ENTRY SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF ALL
THE BONDS IS MAINTAINED IN ACCORDANCE WITH THE INDENTURE, THE PROVISIONS OF THE
INDENTURE RELATING TO THE DELIVERY OF PHYSICAL BOND CERTIFICATES WILL BE DEEMED
TO GIVE FULL EFFECT TO SUCH BOOK-ENTRY SYSTEM.
In the event that a book-entry system of evidence and transfer of
ownership of the Bonds is discontinued pursuant to the provisions of the
Indenture, the Bonds shall be delivered solely as fully registered bonds without
coupons in the Authorized Denominations, shall be lettered "R" and numbered
separately from "I" upward, and shall be payable, executed, authenticated,
registered, exchanged and canceled pursuant to the provisions hereof and of the
Indenture.
Books for the registration of Bonds will be kept by the Paying Agent which
is appointed the Registrar under the Indenture. On surrender for registration of
transfer of a Bond at the principal corporate trust office of the Paying Agent,
duly endorsed for transfer or accompanied by an assignment duly executed by the
Owner or its attorney duly authorized in writing in such form as is satisfactory
to the Paying Agent, the Trustee will authenticate and deliver in the name of
the transferee or transferees a new fully registered Bond or Bonds.
All Bonds will be exchangeable on the presentation and surrender thereof
at the principal corporate trust office of the Trustee for a Bond or Bonds in
other Authorized Denominations.
As to any Bond, the person in whose name the same is registered will be
deemed and regarded as the absolute owner thereof for all purposes, and payment
of either principal or interest on such Bond will be made only to or on the
written order of the Owner thereof or its legal representative, but such
registration may be changed as hereinabove provided. All such payments will be
valid and effectual to satisfy and discharge such Bond to the extent of the sum
or sums paid.
The Issuer and the Paying Agent will not be required to issue, exchange or
register the transfer of any Bond or any portion thereof (A) for a period of 15
days prior to the date on which Bonds are selected for redemption, or (B) after
such Bond or portion thereof is called for redemption, unless the transferee of
such Bond or portion thereof delivers to the Trustee and to me Paying Agent a
written acknowledgment of such call for redemption and agrees in writing to be
bound by such call for redemption. In addition, me Issuer and Paying Agent will
not be required to issue, exchange or register the transfer of any Bond or any
portion thereof prior to the purchase of any Bond or any portion thereof being
purchased pursuant to an optional tender with respect to which a notice of
tender has been received by the Trustee or prior to a mandatory tender of Bonds
after a notice of mandatory tender notice has been mailed; unless, in each such
case, the transferee of such Bond or portion thereof delivers to the Trustee and
to the Paying Agent a written acknowledgment of such optional tender notice or
mandatory tender notice and agrees in writing to be bound by such optional
tender notice or mandatory tender notice, and, if notice of election to retain
any Bonds to be tendered has been received by the Trustee with respect to such
Bond or portion thereof, the transferee delivers to the Trustee a written
acknowledgment of such notice to retain and agrees in writing to be bound by
such notice.
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1. INTEREST RATES
(a) CERTAIN DEFINITIONS
"INTEREST PAYMENT DATE" means (i) for all Variable Rate Bonds, the
first Wednesday (or if not a Business Day, the next succeeding Business
Day) of each calendar month; (ii) for Term Rate Bonds with a Term Rate
Period of six months or fewer, the calendar day after the last day of each
Term Rate Period; and (iii) for Term Rate Bonds with a Term Rate Period of
greater than six months, the first calendar day of the month that is the
sixth month after the month in which such Term Rate Period begins and each
sixth month anniversary of such first calendar day described above and the
calendar day after the last day of the Term Rate Period; and (iv) for any
Term Rate Period that extends to the maturity of the Bonds, March 1 and
September 1 of each year.
"INTEREST PERIOD" means (i) initially, that period beginning on the
date of issuance of the Bonds through and including March 12, 1996, and
(ii) thereafter, (A) with respect to each Variable Rate Bond, the Variable
Rate Period applicable thereto or (B) with respect to each Term Rate Bond,
that period beginning on an Interest Payment Date or a Conversion Date
through and including the date preceding the next Interest Payment Date.
"INTEREST RATE" means either the Variable Rate or the term Rate as
in effect from time to time in accordance with the Indenture.
"RECORD DATE" means, (i) while the Bonds bear interest at a Variable
Rate, the Business Day preceding each Interest Payment Date applicable to
such Bond and (ii) while the Bonds bear interest at a Term Rate, the 15th
calendar day (whether or not a Business Day) of the month immediately
preceding such Interest Payment Date.
"TERM RATE" means the interest rate for any Term Rate Period
established by the Remarketing Agent on or before the first day of such
Term Rate Period which is the minimum fixed interest rate necessary, in
the best professional judgment of the Remarketing Agent, taking into
account prevailing market conditions, to enable the Remarketing Agent to
remarket all of the Term Rate Bonds in the secondary market on the date
such rate is set at a price equal to 100% of the principal amount thereof,
plus accrued interest, if any.
"TERM RATE PERIOD" means the period during which the Bonds bear
interest at the Term Rate.
"VARIABLE RATE" means the interest rate for any Variable Rate Period
established by the Remarketing Agent on the first day of such Variable
Rate Period which is the minimum rate of interest necessary, in the best
professional judgment of the Remarketing Agent taking into account
prevailing market conditions, to enable the Remarketing Agent to remarket
all of the Variable Rate Bonds in the secondary market on the date such
raw is se at a price equal to 100% of the principal amount thereof, plus
accrued interest, if any.
"VARIABLE RATE PERIOD" means the period beginning on, and including
any Wednesday (or, if not a Business Day, on the next succeeding Business
Day) and ending on, and including, the then next Tuesday (or the day
immediately preceding the first day of the next Variable Rate Period),
except that in the event of Conversion to Variable Rate Bonds, the first
"Variable Rate Period" means the period beginning on the Conversion Date
and ending on, and including, the second succeeding Tuesday (or the day
immediately preceding the first day of the next Variable
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Rate Period) unless the Conversion Date is a Tuesday or Wednesday, in
which case it will end on and include the first succeeding Tuesday.
(b) GENERAL PROVISIONS.
The Bonds will bear interest at the Variable Rate from the Original
Issue Date set forth above until the date, if any, upon which the interest
rate is converted to a Term Rate or Term Rates with respect to some or all
of the Bonds, as described in the Indenture. The initial Variable Rate
will be determined by the Placement Agent on the Original Issue Date.
After the initial determination of the Variable Rate, the applicable
Interest Rate shall be determined by the Remarketing Agent at me time and
in the manner specified in the Indenture. The Remarketing Agent's
determination of the Interest Rate shall be conclusive and binding on the
Owners, the Remarketing Agent, the Trustee, the Paying Agent, the Credit
Provider, the Company, and the Issuer. The Remarketing Agent shall notify
the Company, the Trustee and the Paying Agent (and upon request, any
holder) of each change in the Interest Rate; provided failure to deliver
any such notice shall not affect the change in the Interest Rate.
The Indenture provides that the Company may change the interest rate
mode for the Bonds, subject to the terms and conditions set forth in the
Indenture.
Interest for each Interest Period will be paid on the next
succeeding Interest Payment Date, and (i) while the Bonds pay interest at
a Variable Rate, will be computed on the basis of a year of 365 or 366
days, as appropriate, for the actual number of days elapsed, and (ii)
while the Bonds pay interest at the Term Rate, computed on the basis of a
year of 360 days and twelve 30-day months, provided that while any Bonds
pay interest at the Credit Provider Rate, interest on such Bonds will be
payable on the dates and will be calculated on the basis provided in the
Reimbursement Agreement. In no event will interest attributable to any
Bond accrue at a rate greater than the Maximum Rate, except as otherwise
provided for Credit Provider Bonds in the Indenture. The Trustee will
calculate the amount of interest to be paid on each Interest Payment Date,
and will confirm the amount in writing with the Paying Agent.
The interest rate on the Bonds is subject to conversion from one
interest rate mode to another or from a Term Rate to one or more
successive Term Rates, in whole and not in part, at the option of the
Company, by mailing a notice thereof to the Trustee, the Credit Provider,
the Paying Agent and the Remarketing Agent at least 30 days before the
proposed Conversion Date, accompanied by a preliminary opinion of Bond
Counsel stating that such Conversion is authorized and in accordance with
the Indenture and will not adversely affect the exclusion of the interest
on any of the Bonds from the gross income of the recipient thereof for
federal and state income tax purposes. A Conversion may occur only (i)
when the Conversion Date is a date on which the Bonds are subject to
optional redemption, (ii) if the Conversion Date would otherwise be an
Interest Payment Date or if not, then it is a Business Day and (iii) if
the Credit Facility is in the applicable Coverage Amount.
Notwithstanding the foregoing provisions (of this Section 1, (i) if
any payment of the principal of or premium (if any) or interest on, or the
purchase price of, any Bond shall not be made when due, the Bonds shall
continue to bear interest at the last interest rate borne by the Bonds
prior to the due date for such payment until such payment is made or
provided for hi accordance with this Indenture, and (ii) if the
Remarketing Agent does not determine the applicable Variable Raw or Term
Rate in accordance with the Indenture, or a court of competent
jurisdiction holds that a rate determined by the Remarketing Agent is
invalid or unenforceable the Bonds shall bear interest as follows: (A) the
Variable Rate for such Variable Rate Period shall be equal to 65%
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of the per annum bond equivalent yield applicable to 13-week United States
Treasury securities, and (B) the Term Rate for such Term rate Period shall
be equal to 75% of the per annum bond equivalent yield applicable to
United States Treasury securities having the same number of months to
maturity as the number of months in the applicable Term Rate Period
(determined by linear interpolation between the yields for instruments
having the next shorter and next longer number of months to maturity if no
yield is announced for United States Treasury securities having the number
of months to maturity prescribed herein), in each case as published by the
Federal Reserve Bank of New York on the most recent date prior to the
applicable effective date. The Trustee shall not incur any liability for
any errors in the computation of the rates required to be determined in
accordance with this Section 1.
2. PURCHASE AND REMARKETING OF BONDS
(a) OPTIONAL DEMAND PURCHASE FOR VARIABLE RATE BONDS.
Any Variable Rate Bond will be purchased, on the demand of the Owner
thereof, on any Business Day designated by the Owner thereof (a "Purchase
Date") which is not less than seven days after the date notice of such
demand is delivered telephonically to the Remarketing Agent. Any such
purchase will be at the Purchase Price. To effect such purchase,
telephonic notice must be delivered to the Remarketing Agent and such
notice will (A) state the number and principal amount (or portion thereof
in an Authorized Denomination) of such Variable Rate Bond to be purchased,
(B) state the Purchase Date on which such Variable Rate Bond will be
purchased, and (C) irrevocably request such purchase.
The Remarketing Agent will promptly provide the Paying Agent and the
Trustee with telephonic notice of the receipt of the notice referred to in
the preceding paragraphs, confirmed promptly in writing or by facsimile.
Any Variable Rate Bond with regard to which demand is made will be
deemed to have been tendered for purchase on any Purchase Date with
respect thereto. Delivery of such Variable Rate Bond (with an appropriate
transfer of registration executed in blank in form satisfactory to the
Remarketing Agent) at the designated office of Remarketing Agent at or
prior to 10:00 a.m. (New York City Time) on the Purchase Date will be
required for payment in same-day funds of the Purchase Price due on such
Purchase Date. No Owner will be entitled to payment of the Purchase Price
due on such Purchase Date except on surrender of such Variable Rate Bonds
as set forth in the Indenture.
Notwithstanding anything to the contrary contained in the Indenture,
no optional tender of Bonds node pursuant to this pan may result in a Bond
in a denomination of less than $ 100,000.
If the Bonds are held in a Book Entry System, a purchase notice
described above may be delivered by a Beneficial Owner. Such purchase
notice must be delivered as set forth above and must state that such
Beneficial Owner will cause its beneficial interest (or portion thereof in
Authorized Denominations) to be tendered, the amount of such beneficial
interest to be tendered, the optional tender date on which such beneficial
interest will be tendered and the identity of the Participant through
which the Beneficial Owner maintains its beneficial interest. Upon
delivery of such notice, the Beneficial Owner must make arrangements to
have its beneficial ownership interest in the Bonds being tendered
transferred to the Trustee at or prior to 11:00 a.m., on the applicable
optional tender date, but need not otherwise comply with the other
provisions described above.
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(b) MANDATORY PURCHASE ON CONVERSION DATE.
On any Conversion Date with respect to any Bonds other than a Credit
Provider Bond (or portion thereof in a denomination of $5,000 or integral
multiple thereof provided such tender does not result in a Bond in a
denomination of less than $100,000), (or in each case the next Business
Day, if not a Business Day) (a "Purchase Date"), such Bonds must be
delivered to the Remarketing Agent for purchase (with all necessary
endorsements) at the Purchase Price.
All Bonds will be deemed to have been tendered for purchase on any
Purchase Date with respect thereto. Delivery of such Bonds (with an
appropriate transfer of registration executed in blank in form
satisfactory to the Trustee) at the designated office of the Trustee at or
prior to 10:00 a.m., New York City Time, on the Purchase Date will be
required for payment in same-day funds of the Purchase Price due on such
Purchase Date. No Owner will be entitled to payment of the Purchase Price
due on such Purchase Date except upon surrender of such Bonds as set forth
in the Indenture.
Except as set forth in the following paragraph, the Owner of any
Bond may elect to retain such Bond or any portion thereof on a Conversion
Date (if such Bond or such portion thereof is in a denomination which will
be an Authorized Denomination after the applicable Conversion Date) by
delivering a notice of such Owner's election to retain such Bonds (a
"Notice of Retention") to the Trustee within 15 days prior to such
Conversion Date (or, if such day is not a Business Day, the immediately
preceding Business Day), which irrevocable written notice will (a)
affirmatively acknowledge such matters as will be specified in the Notice
of Retention delivered to such Owner in connection with such Conversion
Date, including an acknowledgment that the rating on the Bonds may be
reduced or withdrawn on such Conversion Date, (b) contain the irrevocable
agreement by such Owner to retain such Bond and not to tender such Bond
for purchase on the Conversion Date and (c) contain the irrevocable
agreement by such Owner not to deliver a notice of optional purchase or
tender such Bond for purchase on an optional tender date pursuant to the
Indenture on or before such Conversion Date.
Notwithstanding anything to the contrary contained in the Indenture,
in the event the Bonds are subject to mandatory tender and purchase as a
result of a Credit Expiration Date, and the Trustee has not received
evidence satisfactory to it that following the Conversion Date an
Alternate Credit Facility will be in place with respect to the Bonds, then
the Bonds so purchased will be held hi the name of me Company and pledged
to the Credit Facility Provider in accordance with the terms of the
Indenture and of the Reimbursement Agreement. Unless and until a Credit
Facility has been provided, the Owners of such Bonds will not have the
right to retain the Bonds following the Conversion Date, and such Bonds
will not be remarketed. Such Bonds will be deemed tendered as described in
Section 2(d) below.
(c) MANDATORY PURCHASE ON CREDIT EXPIRATION DATE.
Before the Credit Expiration Date, me Trustee will give notice not
less than 15 days before the Purchase Date described below to all Owners
and the Remarketing Agent of the Bonds that the Bonds will be subject to
mandatory tender to the Remarketing Agent for purchase at the Purchase
Price on the Credit Expiration Date. After such notice is given, the Bonds
will thereafter be subject to mandatory tender for purchase at the
Purchase Price on the date set forth in the notice (a "Purchase Date").
All Bonds will be deemed to have been tendered for purchase on any
Purchase Date with respect thereto. Delivery of such Bonds (with an
appropriate transfer of registration executed in
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<PAGE> 81
blank in form satisfactory to the Remarketing Agent) at the designated
office of the Remarketing Agent at or prior to 10:00 a.m., New York City
time, on the Purchase Date will be required for payment in same-day funds
of the Purchase Price due on such Purchase Date. No Owner will be entitled
to payment of the Purchase Price due on such Purchase Date except upon
surrender of such Bonds as set forth in the Indenture. Purchase of all
Bonds by the Remarketing Agent pursuant to this part will be effected only
with Available Moneys and funds derived from a draw on the Credit
Facility, the Alternate Credit Facility, if any, and the Confirmation, if
any.
(d) BONDS DEEMED TENDERED FOR PURCHASE.
If Bonds have been deemed to have been delivered for purchase, the
Trustee will authenticate (and the Issuer will issue, if necessary) a new
Bond. The Trustee will promptly give notice by Mail to each Owner whose
Bonds are deemed to have been purchased, which notice will state that
interest on such Bonds ceased to accrue on the applicable Purchase Date
and that moneys representing the Purchase Price of such Bonds are
available against delivery thereof at the Principal Office of the Trustee.
The Trustee will hold moneys for the purchase of Bonds in trust and
uninvested, without liability for interest thereon, for the benefit of the
former Owner of the Bond on such Purchase Date, who will thereafter be
restricted exclusively to such moneys, for any claim of whatever nature on
his part under the Indenture or on, or with respect to, such Bond. Any
moneys deposited with the Trustee or then held by the Trustee or the
Remarketing Agent for the payment of the principal of or interest on the
Bonds and remaining unclaimed for the period set forth in North Carolina
General Statutes Section 1 16B- 18 , or any successor escheat provision,
will be paid to the appropriate officer or body as provided in Chapter
116B of the North Carolina General Statutes or any successor escheat
statute. Thereafter, the Owners will look only to such officer or body for
payment and then only to the extent of the amount so received, without any
interest thereon, and the Trustee and the Remarketing Agent have no
responsibility with respect to such moneys.
3. REDEMPTION PROVISIONS
(a) OPTIONAL REDEMPTION DURING VARIABLE RATE PERIOD.
During any period in which the Bonds bear interest at the Variable
Rate, the Bonds are subject to redemption by the Issuer (solely from the
Trust Estate), at the written direction of the Company to the Trustee
(such direction to be given by the Company at least 45 days prior to the
date fixed for redemption), in whole at any time, or in part on any
Interest Payment Date (but only with respect to Bonds having such Interest
Payment Date), at a redemption price equal to the principal amount thereof
plus accrued interest, if any, to the redemption date.
(b) OPTIONAL REDEMPTION DURING TERM RATE PERIOD.
The Bonds will be subject to optional redemption by the Issuer
(solely from the Trust Estate), at the written direction of the Company to
the Trustee (such direction to be given by the Company at least 45 days
prior to the date fixed for redemption), during any Term Rate Period that
(i) extends to de maturity of the Bonds, and (ii) is 6 years or longer, on
or after the Interest Payment Date next succeeding the date that is the
later of (A) the sixth anniversary of the Term Rate Conversion Date for
such Term Rate Period, and (B) the earlier of (1) the tenth anniversary of
the Term Rate Conversion Date for such Term Rate Period, and (2) the
anniversary of such Term Rate Conversion Date that approximates, more
closely than any other such anniversary date, the date which occurs at the
midpoint of such Term Rate Period, in whole at any time, or in part on any
Interest Payment Date at a redemption price equal to the principal amount
thereof, plus a
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premium (expressed as a percentage of the principal amount of Bonds
redeemed) that for the first permissible redemption date is equal to the
lesser of (i) three percent of the principal amount of the Bonds to be
redeemed and (ii) one-half of one percent times the number of years
between the calendar year of such first redemption date and the calendar
year during which such Term Rate Period ends (including, for purposes of
computation, the calendar year of such first redemption date but excluding
the calendar year during which such Term Rate Period ends), and declining
by one-half of one percent annually thereafter, such premium calculation
to be made by the Trustee, upon consultation with the Remarketing Agent,
prior to such redemption date.
(c) OPTIONAL REDEMPTION UPON EXTRAORDINARY REDEMPTION EVENT.
Notwithstanding the above provisions regarding optional redemption,
during any Term Rate Period and during any period in which the Bonds bear
interest at the Variable Rate, the Bonds are subject to optional
redemption by the Issuer (solely from the Trust Estate), at the written
direction of the Company to the Trustee (such direction to be given by the
Company at least 45 days prior to the date fixed for redemption), in whole
at any time, without premium or penalty, if any of the following events
have occurred, as evidenced to the Trustee by a certificate of the Company
Representative delivered together with such direction:
(i) The Project is damaged or destroyed by fire or other
casualty to such extent that in the opinion of both the Company
Representative and an Independent Engineer or an Independent
Architect (A) it cannot be repaired, rebuilt or restored within a
period of six months to the condition thereof immediately preceding
such damage or destruction, or (B) the Company is thereby prevented,
in its reasonable judgment, from carrying on its normal operations
for a period of six months, or (C) the cost of restoration would
exceed the Net Proceeds of insurance carried thereon;
(ii) Title to, or the temporary use of all or substantially
all of the Project or any part thereof is taken under the exercise
of the power of eminent domain by any governmental body or by any
person acting under governmental authority which, in the opinion of
both the Company Representative and an Independent Engineer or an
Independent Architect, both filed with the Trustee, prevents or is
likely to prevent the Company from carrying on its normal operations
for a period of six months, or
(iii) A change in the Constitution of the State or the
Constitution of the United States of America, or a legislative or
administrative action (whether local, state or federal), or a final
decree, judgment Or order of any court or administrative body
(whether local, state or federal), and not contested by the Company
in good faith causes the Loan Agreement to become void or
unenforceable or impossible of performance in accordance with the
intent and purpose of the parties as expressed in the Bond
Documents.
(d) MANDATORY SINKING FUND REDEMPTION.
The Bonds are subject to mandatory redemption at 100% of the
principal amount thereof on the Interest Payment Date or Dates on or
immediately following March I in the years and in the principal amounts
indicated below until such time as the principal amounts indicated below
are redeemed pursuant to the Indenture:
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<PAGE> 83
<TABLE>
<CAPTION>
PRINCIPLE PRINCIPLE
YEAR AMOUNT YEAR AMOUNT
---- --------- ---- ---------
<S> <C> <C> <C> <C>
1999 $500,000 2008 $500,000
2000 500,000 2009 500,000
2001 500,000 2010 500,000
2002 500,000 2011 500,000
2003 500,000 2012 500,000
2004 500,000 2013 500,000
2005 500,000 2014 500,000
2006 500,000 2015 500,000
2007 500,000 2016* 500,000
</TABLE>
- -----------------
*Final Maturity
At its option, to be exercised (but only with the consent of the
Company) by written notice delivered to the Trustee on or before the 45th
day preceding any sinking fund redemption date, the Issuer may (a) deliver
to the Paying Agent for cancellation Bonds in any aggregate principal
amount desired, or (b) receive a credit in respect of its sinking fund
redemption obligation for any Bonds which before said date have been
redeemed (otherwise than through the operation of the sinking fund) and
canceled by the Paying Agent and not theretofore applied as a credit
against any sinking fund redemption obligation. Each Bond so delivered or
previously redeemed will be credited by the Trustee ratably at 100% of the
principal amount thereof against the obligations of the Issuer on sinking
fund redemption dates, and the principal amount of Bonds to be redeemed by
operation of the sinking fund will be accordingly reduced.
(e) MANDATORY REDEMPTION UPON CESSATION OF OPERATIONS.
The Bonds must be delivered to the Remarketing Agent for purchase
(with all necessary endorsements) at the Purchase Price in the event that
the Company ceases to operate the Project as an "industrial project for
industry" within the meaning of the Act. A cessation of operation will not
be deemed to have occurred until 90 days after written notice has been
given to the Company by the Issuer that operations at the Project have
ceased and the Company has not demonstrated to the satisfaction of the
Issuer that (i) the Company has resumed operations at the Project as an
"industrial project for industry" within the meaning of the Act or (ii)
the Company is, in good faith, seeking to arrange resumption of an
economically reasonable operation of the Project by the Company; provided
that a temporary shutdown due to a strike or other labor dispute or other
similar occurrence will not be deemed to be a cessation of operation.
(f) Mandatory Redemption Upon Determination of Taxability.
The Bonds are also subject to mandatory redemption at a redemption
price equal to 100% of the principal amount thereof with interest to but
not including the redemption date in whole (or in part as provided below),
without premium (except as provided below with respect to Bonds which bear
interest at a Term Rate), on the first day of a month within 180 days
after the Company receives written notice from an Owner or former Owner or
the Trustee of a Determination of Taxability, or if such date is not a
Business Day, on the next succeeding Business Day; provided that with
respect to any Bonds which bear interest at a Term Rate, a premium equal
to 3% of the principal amount of such Bonds will be paid in the event of a
redemption pursuant to this paragraph. No such determination will be
considered final unless the Owner or former Owner.
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<PAGE> 84
involved in the determination gives the Company, the Trustee, the
Remarketing Agent, the Credit Provider and the Paying Agent prompt written
notice of the commencement of the proceedings resulting in the
determination and offers the Company, subject to the Company's agreeing to
pay all expenses of the proceeding and to indemnify the Owner against all
liabilities that might result from it, the opportunity to control the
defense of the proceeding and either the Company does not agree within 30
days to pay the expenses, indemnify the Owner and control the defense or
the Company exhausts or chooses not to exhaust available procedures to
contest or obtain review of the result of the proceedings. Fewer than all
the Bonds may be redeemed if redemption of fewer than all the Bonds would
result in the interest payable on the Bonds remaining Outstanding being
not includable in the gross income for federal income tax purposes of any
holder. If fewer than all Bonds are redeemed, the Trustee will select the
Bonds to be redeemed by lot or by such other method acceptable to the
Trustee as may be approved in an Opinion of Bond Counsel. Only holders of
Bonds on the date of redemption will be entitled to the redemption
premium, if applicable. No premium will be due to former Owners or with
respect to any Bonds which were not Outstanding as of the date of the
Determination of Taxability. If Bonds mature after a Determination of
Taxability, but before redemption pursuant to this paragraph, the
applicable premium for such Bonds, if any, will be paid at their maturity.
(g) NOTICE OF REDEMPTION.
Notice of redemption will be given by the Paying Agent by Mail, not
less than 30 days nor more than 60 days before the redemption date to each
Owner of the Bonds or portions thereof to be redeemed at the last address
shown on the registration books kept by the Paying Agent. Such notice must
(i) specify the Bonds to be redeemed, the redemption date, the redemption
price and the place or places where amounts due on such redemption must be
payable (which must be the principal office of the Paying Agent) and if
less than all of the Bonds are to be redeemed, the numbers of the Bonds
and the portions of Bonds to be redeemed, and (ii) state that on the
redemption date, the Bonds to be redeemed will cease to bear interest.
If moneys are on deposit in the Bond Fund to pay the principal
amount of the Bonds called for redemption and premium and accrued interest
thereon on a redemption date, Bonds or portions thereof thus called and
provided for as hereinabove specified will not bear interest after such
redemption date and will not be considered to be Outstanding or to have
any other rights under the Indenture other than the right to receive
payment. No payment of principal will be made by the Paying Agent on any
Bonds or portions thereof called for redemption until such Bonds or
portions thereof have been delivered for payment or cancellation or the
Paying Agent has received the items required by the Indenture with respect
to any mutilated, lost, stolen or destroyed Bonds.
(h) SECTION OF BONDS TO BE REDEEMED.
If the Bonds are redeemed in part, DTC will select the Bonds to be
redeemed pursuant to its rules and procedures or, if the book-entry system
with DTC or any other securities depository has been discontinued, the
Paying Agent will select the Bonds to be redeemed by lot in such manner as
the Paying Agent in its discretion may deem proper, but Bonds held by the
Credit Provider pursuant to the Reimbursement Agreement will be selected
first for redemption. Each Authorized Denomination of principal amount
represented by any Bond will be considered a separate Bond for purposes of
selecting the Bonds to be redeemed.
If a Bond subject to redemption is in a denomination larger than the
minimum Authorized Denomination, a portion of such Bond may be redeemed,
but only in a principal amount such that the unredeemed portion of such
Bond is equal to an Authorized Denomination. For any Bond in
A-13
<PAGE> 85
a denomination of more than the minimum Authorized Denomination, the
Paying Agent will treat each such Bond as representing a single Bond in
the minimum Authorized Denomination plus that number of Bonds that is
obtained by dividing the remaining principal amount of such Bond by the
Minimum Authorized Denomination.
If it is determined that one or more, but not all, of the Authorized
Denominations of principal amount represented by any Bond is to be called
for redemption, then, on notice of intention to redeem such Authorized
Denominations of principal amount of such Bond, the Owner of such Bond, on
surrender of such Bond to the Paying Agent for payment of the principal
amount of such Bond called for redemption, will be entitled to receive a
new Bond or Bonds in the aggregate principal amount of the unredeemed
balance of the principal amount of such Bond. New Bonds representing the
unredeemed balance of the principal amount of such Bonds will be issued to
the Owner thereof without charge therefor.
If the Owner of any Bond of a denomination greater man me amount
being redeemed fails to present such Bond to the Paying Agent for payment
and exchange as aforesaid, such Bond will, nevertheless, become due and
payable on the date fixed for redemption to the extent of the denomination
being redeemed and to that extent only.
4. MISCELLANEOUS
Upon the occurrence of certain events, and on the conditions, in the
manner and with the effect set forth in the Indenture, the principal of all
Bonds then outstanding under the Indenture may become or may be declared due and
payable before the stated maturity thereof, together with interest accrued
thereon. The Trustee may, or if required by the Credit Provider or the Owners of
a majority of the Bonds Outstanding, shall declare all obligations due under the
Loan Agreement and the Bonds to be immediately due and payable, whereupon they
shall, without further action, become due and payable, anything in the Indenture
or in the Bonds to the contrary notwithstanding or (ii) upon receipt by the
Trustee of written notice from the Credit Provider of non-reinstatement of the
Credit Facility to the Coverage Amount on or before the sixth day after a draw
on the Credit Facility or the Confirmation, if then in effect, to pay interest
on the Bonds, the Trustee shall declare all obligations due under the Loan
Agreement and the Bonds to be due and payable within 5 days thereafter,
whereupon they shall, without further action, become due and payable on such
date, anything in the Indenture or in the Bonds to the contrary notwithstanding.
If provision is made for the payment and redemption of this Bond in accordance
with the Indenture, this Bond will thereupon cease to be entitled to the lien of
the Indenture and all other rights granted thereby and this Bond will cease to
bear interest from and after the date fixed for redemption.
Neither the Credit Provider nor the Owner of this Bond have any right to
institute any suit, action or proceeding in equity or at law for the enforcement
of the Indenture or for the execution of any trust under the Indenture or for
the appointment of a receiver or any other remedy under the Indenture, except as
expressly provided in the Indenture.
Modifications or alterations of the Indenture or any indenture of trust
supplemental thereto, or the Loan Agreement or any agreement supplemental
thereto, may be made only to the extent and in the circumstances permitted by
the Indenture and the Loan Agreement.
Executed counterparts of the Indenture and the Loan Agreement are on file
at the principal corporate trust office of the Trustee. The holder of this Bond,
by acceptance hereof, consents to all of the terms and provisions of the
Indenture and the Loan Agreement.
A-14
<PAGE> 86
It is hereby certified that all acts, conditions and things required to
happen, exist and be performed under the laws of the State of North Carolina,
and under the Indenture precedent to and in the issuance of this Bond have
happened, exist and have been performed as so required, and that the issuance,
authentication and delivery of this Bond have been duly authorized by the
Issuer.
Unless the Certificate of Authentication hereon has been executed by the
Trustee by manual signature of one of its authorized signers, this Bond shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF this Bond has been executed with the manual or
facsimile signature of the Chairman of the Issuer and attested with the manual
or facsimile signature of the Secretary of the Issuer and has been authenticated
by the manual signature of an authorized representative of the Trustee, all as
of the date set forth below.
THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
[SEAL]
ATTEST: By:______________________________
Chairman
By:____________________
Secretary
A-15
<PAGE> 87
CERTIFICATE OF AUTHENTICATION
This is one of The Mecklenburg County Industrial Facilities and Pollution
Control Financing Authority Industrial Development Revenue Bonds (SteriGenics
International Project), Series 1996 issued and delivered pursuant to the
within-mentioned Indenture.
[SEAL] BANK ONE, COLUMBUS, N.A.,
as Trustee
Dated:__________________ By:________________________
Authorized Representative
A-16
<PAGE> 88
[FORM OF ASSIGNMENT]
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
------------------------------------------------------------------
(Please print or typewrite Name and Address,
including Zip Code, and Federal Taxpayer Identification or
Social Security Number of Assignee)
------------------------------------------------------------------
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints
------------------------------------------------------------------
Attorney to register the transfer of the within Bond on the books kept
for registration thereof, with full power of substitution in the
premises.
Dated:________________
Signature guaranteed by:
- --------------------------- -----------------------------------------
NOTICE: Signature must be NOTICE: The signature to this assignment
guaranteed by a Participant must correspond with the name as it
in the Securities Transfer appears on the face of the within Bond
Agent Medallion Program in every particular, without alteration,
("Stamp") or similar program. enlargement or any changewhatever.
TRANSFER FEE MAY BE REQUIRED
A-17
<PAGE> 1
EXHIBIT 10.28
-----------------------------------------------
LOAN AGREEMENT
BETWEEN
THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
AND
STERIGENICS INTERNATIONAL
Dated as of
March 1, 1996
-----------------------------------------------
Relating to the Issuance of:
$9,000,000
The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
-----------------------------------------------
Certain rights of The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority (the "Issuer") under this Loan Agreement
have been assigned and pledged to, and are subject to a security interest in
favor of Bank One, Columbus, N.A. Columbus, Ohio, as trustee (the "Trustee")
under the Indenture of Trust, dated as of even date herewith, as amended or
supplemented from time to time, between the Issuer and the Trustee, which
secures $9,000,000 in aggregate principal amount of the Issuer's Industrial
Development Revenue Bonds (SteriGenics International Project), Series 1996.
<PAGE> 2
LOAN AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Loan Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Loan Agreement.)
<TABLE>
ARTICLE I
<S> <C>
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION 2
Section 1.1. Definitions 2
Section 1.2. Certain Rules of Interpretation 4
Section 1.3. Other Defined Terms 4
ARTICLE II
REPRESENTATIONS 5
Section 2.1. Representations by the Issuer 5
Section 2.2. No Representation or Warranty by Issuer as to Project 6
Section 2.3. Representations by the Company 6
Section 2.4. Modification and Termination of Special Tax Covenants 8
Section 2.5. Purchase of Bonds by Issuer and Company 8
Section 2.6. Further Assurances 8
ARTICLE III
ISSUANCE OF THE BONDS; ACQUISITION, CONSTRUCTION,
INSTALLATION AND FINANCING OF PROJECT 9
Section 3.1. Acquisition, Construction and Equipping of the Project 9
Section 3.2. Agreement to Issue Bonds; Application of Proceeds; Project Fund
9
Section 3.3. [INTENTIONALLY OMITTED] 9
Section 3.4. [INTENTIONALLY OMITTED] 9
Section 3.5. Limitation of Issuer's Liability 9
Section 3.6. Disclaimer of Warranties 9
Section 3.7. Cost of Project 10
Section 3.8. [INTENTIONALLY OMITTED] 10
Section 3.9. Investment of Funds 10
Section 3.10. Special Arbitrage Certifications 10
Section 3.11. Depositories of Moneys and Security for Deposit 10
ARTICLE IV
PROVISIONS FOR PAYMENT 11
Section 4.1. Title to the Project 11
Section 4.2. Payment Obligations of the Company 11
Section 4.3. Credit Facility; Alternate Credit Facility; Confirmation;
Substitute Confirmation 12
Section 4.4. Administrative Expenses 13
Section 4.5. Obligations of the Company Absolute and Unconditional 13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.6. Company Consent to Assignment of Loan Agreement
and Execution of Indenture 14
Section 4.7. Company's Performance Under Indenture 14
ARTICLE V
PARTICULAR AGREEMENTS 15
Section 5.1. Maintenance, Operation and Insuring of Project; Taxes;
No Operation of Project by Issuer 15
Section 5.2. Local Government Commission's, Issuer's, Trustee's and
Paying Agent's Expenses; Release and Indemnification
Provisions 15
Section 5.3. Maintenance of Existence 16
Section 5.4. [INTENTIONALLY OMITTED] 16
Section 5.5. Agreement of Issuer Not to Assign or Pledge 16
Section 5.6. Redemption of Bonds 16
Section 5.7. Reference to Bonds Ineffective After Bonds Paid 17
Section 5.8. Assignment, Sale or Lease of Project 17
Section 5.9. Non-Arbitrage Covenant 17
Section 5.10. Notice of Bonds Outstanding and Owners of Bonds 17
Section 5.11. Financing Statements 17
Section 5.12. Arbitrage Rebate 18
Section 5.13. Use of Proceeds; Tax Covenants and Other Matters 18
Section 5.14. Compliance with Reimbursement Agreement 21
Section 5.15. Inspection of Project 21
Section 5.16. Project List 21
Section 5.17. No Warranty of Condition or Suitability by Issuer 21
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES 22
Section 6.1. Events of Default Defined 22
Section 6.2. Remedies 23
Section 6.3. No Remedy Exclusive 24
Section 6.4. Agreement to Pay Counsel Fees and Expenses 24
Section 6.5. Waiver of Events of Default and Rescission of Acceleration 24
ARTICLE VII
PREPAYMENT UNDER LOAN AGREEMENT 25
Section 7.1. Option to Prepay in Full 25
Section 7.2. Mandatory Prepayment 25
Section 7.3. Option to Prepay in Part 25
Section 7.4. Relation of Options to Indenture 25
Section 7.5. Obligations After Payment of Note and Termination
of Loan Agreement 25
ARTICLE VIII
MISCELLANEOUS 26
Section 8.1. Term of Loan Agreement 26
Section 8.2. Notices 26
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8.3. Binding Effect 27
Section 8.4. Severability 27
Section 8.5. Amounts Remaining in Bond Fund 27
Section 8.6. Reliance by Issuer 27
Section 8.7. Issuer's Obligations Limited 27
Section 8.8. Immunity of Directors, Officers and Employees of Issuer and
the Local Government Commission 28
Section 8.9. Payments by Credit Provider; Confirming Bank 28
Section 8.10. Amendments, Changes and Modifications 28
Section 8.11. Counterparts 28
Section 8.12. Captions 29
Section 8.13. Amendment of Loan Agreement 29
Section 8.14. Law Governing Construction of Loan Agreement 29
Section 8.15. No Third Party Beneficiary 29
</TABLE>
EXHIBIT A DESCRIPTION OF PROJECT
EXHIBIT B FORM OF NOTE
<PAGE> 5
LOAN AGREEMENT
This LOAN AGREEMENT (the "Loan Agreement") is entered into as of March 1,
1996, between THE MECKLENBURG COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY (the "Issuer"), a political subdivision and body corporate
and politic, duly organized and existing under the laws of the State of North
Carolina, and STERIGENICS INTERNATIONAL, a California corporation (the
"Company");
PREAMBLES
WHEREAS, the Issuer is a political subdivision and body corporate and
politic, duly organized and existing under the State of North Carolina pursuant
to the Industrial and Pollution Control Facilities Financing Act, Chapter 159C
of the North Carolina General Statutes, as amended (the "Act"), with full lawful
power and authority to enter into this Loan Agreement by and through its
governing body;
WHEREAS, the Issuer is authorized by the provisions of the Act to issue
its revenue bonds from time to time and lend the proceeds thereof to a private
corporation as provided in the Act for the purpose of paying for all or any part
of an industrial or manufacturing facility, including an industrial development
facility such as the Project (as hereinafter defined) authorized under the Act;
WHEREAS, the Issuer is further authorized by the provisions of the Act to
mortgage and pledge any or all of such facilities, whether then owned or
thereafter acquired, as security for the payment of the principal of, premium,
if any, and interest on any such revenue bonds issued thereunder and any
agreements made in connection therewith and to pledge or assign the revenues and
receipts from such facilities or loan or from any other source to the payment of
such bonds;
WHEREAS, by resolution adopted pursuant to and in accordance with the
provisions of the Act, the Issuer has determined that the financing of (i) the
acquisition of an approximately 5.5 acre site at 10811 Withers Cove Park Drive,
Charlotte, Mecklenburg County, North Carolina, (ii) the acquisition,
construction and equipping of an approximately 64,000 square foot contract
radiation sterilization processing facility thereon and (iii) the acquisition
and installation of machinery, equipment and other personal property to be used
in connection therewith, to be used primarily for the sterilization of health
care, laboratory, pharmaceutical and packaging products (collectively, the
"Project"), which constitutes an industrial project under the Act, is in the
public interest and has authorized and undertaken to finance the Project and to
obtain the funds therefor by the issuance of its $9,000,000 Industrial
Development Revenue Bonds (SteriGenics International Project), Series 1996 (the
"Bonds") under an Indenture of Trust securing such Bonds, between the Issuer and
Bank One, Columbus, N.A., as trustee (the "Trustee"), dated as of the date
hereof (the "Indenture");
WHEREAS, the Issuer proposes to loan the proceeds for the sale of the
Bonds to the Company to finance the costs of the Project upon the terms and
conditions hereinafter set forth;
WHEREAS, the Company has agreed under this Loan Agreement to make, or
cause to be made, payments sufficient to pay when due (whether at stated
maturity, upon redemption, by acceleration, upon purchase or otherwise) the
principal of, premium, if any, and interest on the Bonds; and
WHEREAS, in order to further secure the Company's obligation to make the
payments due under this Loan Agreement and to provide for the purchase of Bonds,
the Company and Comerica Bank California (the "Credit Provider") have entered
into the Reimbursement Agreement (as defined below) pursuant to which the Credit
Provider will issue its irrevocable, direct pay letter of credit in an amount
not
<PAGE> 6
to exceed $9,148,000 in favor of the Trustee at the request and for the account
of the Company upon the terms set forth in the Reimbursement Agreement, and
which will be confirmed by Comerica Bank, a Michigan state banking corporation
(the "Confirming Bank"), through the issuance of its confirmation letter (the
"Confirmation") providing for the Confirming Bank to honor conforming drawings
under the Credit Facility to the extent that such drawings are not honored by
the Credit Provider in accordance with the terms and conditions of the Credit
Facility.
NOW THEREFORE, for and in consideration of the premises and the respective
representations and agreements and mutual covenants contained in this Loan
Agreement, the Issuer and the Company covenant and agree as follows:
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1. DEFINITIONS. In addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:
"CHAIRMAN" means the Chairman or the Vice Chairman of the Issuer.
"COMPANY DOCUMENTS" means this Loan Agreement, the Note, the Placement and
Remarketing Agreement and the Credit Provider Documents.
"COST OF PROJECT" with respect to the Project shall be deemed to include
the cost of all items permitted to be financed under the provisions of the Act,
including those items set forth in Section 3.7.
"COUNTY " means the County of Mecklenburg, North Carolina, a political
subdivision of the State.
"CREDIT PROVIDER DOCUMENTS" means the Reimbursement Agreement, the
Environmental Indemnity, the Deed of Trust and the Security Agreement.
"CREDIT PROVIDER REPRESENTATIVE" means each person at the time designated
to act on behalf of the Credit Provider by written certificate furnished to the
Company and the Trustee containing the specimen signature of each such person
and signed on behalf of the Credit Provider by a Vice President or its
President. Such Certificate may designate an alternate or alternates.
"DEED OF TRUST" means the Deed of Trust dated as of March 1, 1996,
executed and delivered by the Company to the deed of trust trustee named therein
for the benefit of the Credit Provider, as amended, modified or supplemented
from time to time.
"DEFAULT" means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default
hereunder.
"EVENT OF DEFAULT" means one of the events so denominated and described in
Section 6.1 hereof.
"ENVIRONMENTAL INDEMNITY" means the unsecured environmental indemnity
agreement dated as of March 1, 1996 by and between the Company and the Credit
Provider.
2
<PAGE> 7
"INDENTURE" means the Indenture of Trust, of even date herewith, between
the Issuer and the Trustee, pursuant to which the Bonds are to be issued and
secured, including any amendments, supplements, alterations or modifications
thereto from time to time.
"INDEPENDENT ARCHITECT" means an architect, engineer or firm of architects
or engineers selected by the Company, which architect, engineer or firm of
architects or engineers must have no specific interest, direct or indirect, in
the Company, and, in the case of individual, must not be a director, officer or
employee of the Company and, in the case of a firm, must not have a partner,
director, officer or employee who is a director, officer or employee of the
Company.
"INDEPENDENT COUNSEL" means an attorney, or firm thereof, admitted to
practice law before the highest court of any state in the United States of
America or the District of Columbia and not an employee on a full-time basis of
either the Issuer, the Trustee, the Credit Provider or the Company (but who or
which may be regularly retained by any one or more of them).
"INDEPENDENT ENGINEER" means an engineer or engineering firm registered
and qualified to practice the profession of engineering under the laws of the
State and not an employee on a full-time basis of either the Issuer or the
Company (but who or which may be regularly retained by either).
"LOAN AGREEMENT" means this Loan Agreement as it now exists and as it may
hereafter be amended, modified or supplemented from time to time pursuant to
Article XII of the Indenture.
"LOCAL GOVERNMENT COMMISSION" or "LGC" means the Local Government
Commission of North Carolina, a division of the Department of State Treasurer,
and any successor or successors thereto.
"NET PROCEEDS OF SALE OF THE BONDS" means those proceeds of the sale of
the Bonds remaining after payment of all expenses in connection with the
issuance of the Bonds and the deposit of all accrued interest (if any) received
from the sale of the Bonds in the Bond Fund.
"NOTE" means the promissory note of the Company in the principal amount of
$9,000,000, dated as of March 8, 1996, in the form attached hereto as Exhibit B,
issued pursuant hereto and delivered to the Issuer as consideration for the loan
of the proceeds of the Bonds for the acquisition, construction and equipping of
the Project, and any amendment or supplement thereto or substitution therefor.
"OWNER" or "OWNERS" means the registered owner of any Bond shown on the
bond registration books kept by the Paying Agent as Registrar.
"PAYMENT IN FULL OF THE BONDS" specifically encompasses the situations
referred to in Article XI of the Indenture.
"PLEDGED REVENUES" means and shall include:
(a) the payments required to be made by or on behalf of the Company
under this Loan Agreement except payments to (i) the Trustee and the
Paying Agent for services rendered as Trustee under the Indenture and as
Paying Agent for the Bonds and payments to be made to any Co-Trustee for
services rendered under the Indenture and (ii) expenses, indemnification
and other payments required to be made pursuant to Sections 5.2 and 6.4
hereof;
(b) all moneys and securities from time to time held by the Trustee
under the Indenture in any fund or account (other than the Rebate Fund)
and any proceeds which arise with respect to 3
3
<PAGE> 8
any disposition of any of the property, money, securities and interests
granted by the Issuer to the Trustee under the Granting Clause of the
Indenture; and
(C) all moneys received by the Trustee from time to time as a result
of a draw under the Credit Facility or the Confirmation, if applicable.
"PROJECT" means (i) the acquisition of an approximately 5.5 acre site at
10811 Withers Cove Park Drive, Charlotte, Mecklenburg County, North Carolina,
(ii) the acquisition, construction and equipping of an approximately 64,000
square foot contract radiation sterilization processing facility thereon and
(iii) the acquisition and installation of machinery, equipment and other
personal property to be used in connection therewith, to be used primarily for
the sterilization of health care, laboratory, pharmaceutical and packaging
products, as more fully described on Exhibit A hereto.
"SECRETARY" means the Secretary or Assistant Secretary of the Issuer.
"SECURITY AGREEMENT" means the Security Agreement dated as of March 1,
1996, between the Company and the Credit Provider, as amended, modified or
supplemented from time to time.
"TAX REGULATORY AGREEMENT" means the Arbitrage and Tax Regulatory
Agreement dated as of March 1, 1996 executed among the Issuer, the Company and
the Trustee.
TRUSTEE FEES" means the periodic fees and expenses charged by the Trustee
in order to serve as Trustee under the Indenture.
"U.C.C." means the Uniform Commercial Code of the State, as now or
hereafter amended.
Section 1.2. CERTAIN RULES OF INTERPRETATION. The definitions set forth in
Section 1. I shall be equally applicable to both the singular and plural forms
of the terms therein defined and shall cover all genders.
"HEREIN," "HEREBY," "HEREUNDER," "HEREOF," "HEREINBEFORE," "HEREINAFTER"
and other equivalent words refer to this Loan Agreement and not solely to the
particular Article, Section or subdivision hereof in which such word is used.
Reference herein to an Article number (eg., Article IV) or a Section
number (eg., Section 6.2) shall be construed to be a reference to the designated
Article number or Section in this Loan Agreement unless the context or use
clearly indicates another or different meaning or intent.
Section 1.3. OTHER DEFINED TERMS. Capitalized terms used herein and not
otherwise defined in this Loan Agreement shall have the meanings given such
terms in the Indenture.
[End of Article I
4
<PAGE> 9
ARTICLE II
REPRESENTATIONS
Section 2.1. REPRESENTATIONS BY THE ISSUER. The Issuer makes the following
representations as the basis for the undertakings on its part herein contained:
(a) ORGANIZATION AND AUTHORITY. The Issuer is a political
subdivision and body corporate and politic, duly organized and validly existing
pursuant to the provisions of the Act. The Issuer has all requisite power and
authority under the Act to (i) issue the Bonds, (ii) lend the proceeds thereof
to the Company to reimburse the Company for certain costs incurred in acquiring,
constructing and equipping the Project, and (iii) enter into, and perform its
obligations under this Loan Agreement, the Placement and Remarketing Agreement
and the Indenture.
(b) PENDING LITIGATION. To the knowledge of the Issuer, there are no
actions, suits, proceedings, inquiries or investigations pending, or to the
knowledge of the Issuer threatened, against or affecting the Issuer in any court
or before any governmental authority or arbitration board or tribunal, which
involve the possibility of materially and adversely affecting the transactions
contemplated by this Loan Agreement, the Placement and Remarketing Agreement or
the Indenture or which, in any way, would materially and adversely affect the
validity or enforceability of the Bonds, the Indenture, the Placement and
Remarketing Agreement, this Loan Agreement or any agreement or instrument to
which the Issuer is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) ISSUE, SALE AND OTHER TRANSACTIONS ARE LEGAL AND AUTHORIZED. The
issuance and sale of the Bonds and the execution and delivery by the Issuer of
this Loan Agreement, the Placement and Remarketing Agreement and the Indenture,
and the compliance by the Issuer with all of the provisions of each thereof and
of the Bonds (i) are within the purposes, powers and authority of the Issuer,
(ii) have been done in full compliance with the provisions of the Act, are legal
and will not conflict with or constitute an THE part of the Issuer a violation
of or a breach of or default under, or result in the creation of any lien,
charge or encumbrance upon any property of the Issuer (other than as
contemplated in the Indenture) under the provisions of, any activating
resolution, by-law, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which the Issuer is a party or by which the Issuer is
bound, or to the best of Issuer's knowledge any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or properties, and
(iii) have been duly authorized by all necessary corporate action on the part of
the Issuer.
(d) GOVERNMENTAL CONSENTS; COMPLIANCE WITH LAWS. No further
approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any regulatory or governmental body,
federal, State or local, is required in connection with (1) the execution,
issuance, sale and delivery of the Bonds by the Issuer, (2) the execution or
delivery of or compliance by the Issuer with the terms and conditions of this
Loan Agreement, the Placement and Remarketing Agreement and the Indenture, or
(3) the assignment by the Issuer of its rights under the Loan Agreement and the
Note. The consummation by the Issuer of the transactions set forth in the manner
and under the terms and conditions as provided herein will comply with all
applicable State, local and federal laws and any rules and regulations
promulgated thereunder by any regulatory authority or agency.
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<PAGE> 10
(e) NO DEFAULTS; NO CONFLICTS. To the best of the Issuer's
knowledge, no event has occurred and no condition exists with respect to the
Issuer which would constitute an "event of default" as defined in this Loan
Agreement, the Placement and Remarketing Agreement or the Indenture or which,
with the lapse of time or with the giving of notice or both, would become such
an "event of default." To the best of the Issuer's knowledge, the Issuer is not
in default in the payment of principal of or interest on any of its indebtedness
for borrowed money and, to the best of the Issuer's knowledge, is not in default
under any instrument under or subject to which any indebtedness for borrowed
money has been incurred, and no event has occurred and is continuing under the
provisions of any such instrument that with the lapse of time or the giving of
notice, or both, would constitute an event of default thereunder. The Issuer is
not (1) in violation of the resolution creating it or any existing law, rule or
regulation applicable to it or (2) to the best of the Issuer's knowledge, in
default under any indenture, mortgage, deed of trust, lien, lease, contract,
note, order, judgment, decree or other agreement, instrument or restriction of
any kind by which it or any of its assets are or may be bound or affected. The
execution and delivery by the Issuer of this Loan Agreement, the Indenture and
the issuance of the Bonds and compliance with the terms and conditions hereof
and thereof will not conflict with or result in the breach of or constitute a
default under any of the above described instruments or other restrictions,
(f) NO PRIOR PLEDGE. Neither this Loan Agreement nor any of the
Pledged Revenues have been pledged or hypothecated in any manner or for any
purpose other than as provided in the Indenture as security for the payment of
the Bonds.
(g) NATURE AND LOCATION OF PROJECT. The financing of the Cost of
Project is authorized under the Act and is in furtherance of the public purpose
for which the Issuer was created. The Issuer authorizes the Company, subject to
the terms and conditions set forth in this Loan Agreement, which terms and
conditions the Issuer determines to be necessary, desirable and proper, to
provide for the acquisition, construction and equipping of the Project by such
means as shall be available to the Company and in the manner determined by the
Company.
Section 2.2. NO REPRESENTATION OR WARRANTY BY ISSUER AS TO PROJECT. The
Issuer makes no representation or warranty concerning the suitability of the
Project for the purpose for which it is being undertaken by the Company. The
Issuer has not made any independent investigation as to the feasibility or
creditworthiness of the Company, and any bond purchaser, assignee of the Loan
Agreement or any other party with any interest in this transaction, shall make
its own independent investigation as to the creditworthiness and feasibility of
the Project, independent of any representation or warranties of the Issuer.
Section 2.3 REPRESENTATIONS BY THE COMPANY. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) ORGANIZATION AND POWER. The Company (a) is a corporation (i)
duly organized, validly existing and in good standing under the laws of the
State of California and (ii) duly qualified as a foreign corporation, validly
existing and in good standing under the laws of the State of North Carolina and
(b) has all requisite power and authority and all necessary licenses and permits
to own and operate its properties and to carry on its business as now being
conducted and as presently proposed a) be conducted except where failure to
obtain or retain a license or permit would not have a materially adverse effect
on the Company's business.
(b) PENDING LITIGATION. There are no proceedings pending, or to the
knowledge of the Company threatened, against or affecting the Company in any
court or before any
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<PAGE> 11
governmental authority, arbitration board or tribunal which if adversely
determined, would materially and adversely affect the transactions contemplated
by this Loan Agreement, the Placement and Remarketing Agreement or the Indenture
or which, in any way, would materially and adversely affect the properties,
business, prospects, profits or condition (financial or otherwise) of the
Company, or the ability of the Company to perform its obligations under the
Company Documents. The Company is not in default with respect to an order of any
court, governmental authority, arbitration board or tribunal.
(c) AGREEMENTS ARE LEGAL AND AUTHORIZED. The execution and delivery
by the Company of each of the Company Documents and the compliance by the
Company with all of the provisions hereof and thereof (i) are within the
corporate power of the Company, (ii) will not conflict with or result in any
breach of any of the provisions of, or constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any property of the Company
under the provisions of, any agreement, articles of incorporation, by-laws or
other instrument to which the Company is a party or by which it may be bound, or
any license, judgment, decree, law, statute, order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its activities or properties, (iii) will not result in a violation of any
constitutional or statutory provision or order, rule, regulation, decree or
ordinance of any court, government or governmental authority having jurisdiction
over the Company or its property, and (iv) have been duly authorized by all
necessary corporate action on the part of the Company.
(d) GOVERNMENTAL CONSENT. Neither the Company nor any of its
businesses or properties, nor any relationship between the Company and any other
person, nor any circumstances in connection with the execution, delivery and
performance by the Company of the Company Documents or the offer, issue, sale or
delivery by the Issuer of the Bonds, is such as to require the consent, approval
or authorization of, or the filing, registration or qualification with, any
governmental authority on the part of the Company other than those already
obtained; provided, however, that no representation is made as to any consents,
approvals or authorizations required in connection with the construction or
occupancy of the Project.
(e) NO DEFAULTS. No event has occurred and no condition exists with
respect to the Company that would constitute an "event of default"under any of
the Company Documents or which, with the lapse of time or with the giving of
notice or both, would become such an "event of default." The Company is not in
violation in any material respect of any agreement, articles of incorporation,
by-laws or other instrument to which it is a party or by which it may be bound.
The Company is not in default in the payment of principal of or interest on any
of its indebtedness for borrowed money and is not in default under any
instrument under and subject to which any indebtedness has been incurred, and no
event has occurred and is continuing under the provisions of any such instrument
that with the lapse of time or the giving of notice, or both, would constitute
an event of default thereunder.
(f) COMPLIANCE WITH LAW. The Company is not in violation in any
material way of any laws, ordinances, governmental rules or regulations to which
it is subject and has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its properties
or to the conduct of its business, which violation or failure to obtain might
materially and adversely affect the properties, business, prospects, profits or
conditions (financial or otherwise) of the Company.
(g) RESTRICTIONS ON THE COMPANY. The Company is not a party to any
contract or agreement that materially and adversely affects the business of the
Company.
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(h) INDUCEMENT. The issuance of the Bonds by the Issuer and the
lending of the proceeds thereof to the Company to reimburse the 'Company for
certain costs incurred in acquiring, constructing and equipping the Project have
(i) induced the Company to locate the Project in the County and (ii) will assist
the Company in providing continued employment and industry in the County.
(i) COMPLETION OF THE PROJECT. The Project was completed and placed
into service on September 9, 1994.
(i) LOCATION OF THE PROJECT. The Project is located entirely within
the geographical boundaries of the County of Mecklenburg, North Carolina.
(k) OPERATION OF THE PROJECT. The Company will own and operate the
Project, or cause it to be operated, as an "industrial project"within the
meaning of the Act until the Bonds are no longer outstanding.
Section 2.4. MODIFICATION AND TERMINATION OF SPECIAL TAX CONVENANTS.
Subsequent to the issuance of the Bonds and prior to their payment in full (or
provision for the payment thereof having been made in accordance with the
provisions of the Indenture), neither this Loan Agreement nor the Note may be
amended, changed, modified, altered or terminated except as permitted herein and
by the Indenture and with the written consent of the Company, the Trustee and
the Credit Provider. Subject to Article XII of the Indenture, the Issuer, the
Trustee, and the Company hereby agree to amend this Loan Agreement to the extent
required or permitted, in the opinion of Bond Counsel, in order for interest on
the Bonds to be excluded from gross income of the Owners thereof for federal
income tax purposes under Section 103(a) of the Code. The party requesting such
amendment shall notify the other party to this Loan Agreement and the Trustee of
the proposed amendment, with a copy of such requested amendment to Bond Counsel.
After review of such proposed amendment, Bond Counsel shall render to the
Trustee an opinion as to the effect of such proposed amendment upon the
includability of interest on the Bonds in the gross income of the recipient
thereof for federal income tax purposes.
Section 2.5. PURPOSE OF BONDS BY ISSUER AND COMPANY. Except for purchases
to pay the Purchase Price of Bonds tendered or deemed tendered under the
Indenture or to retire Bonds, the Issuer and the Company agree that they shall
not purchase any Bonds, directly or indirectly.
Section 2.6. FURTHER ASSURANCES. The Company will execute and deliver such
other documents, instruments, agreements and certificates, and do such further
acts, as the Trustee under the Indenture may reasonably require for the better
assuring, assigning and confirming to the Trustee the amounts assigned under the
Indenture for the payment of the Bonds.
[End of Article II]
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ARTICLE III
ISSUANCE OF FREE BONDS; ACQUISITION, CONSTRUCTION,
INSTALLATION AND FINANCING OF PROJECT
Section 3.1. ACQUISITION, CONSTRUCTION AND EQUIPPING OF THE PROJECT. The
Company has completed the Project as described in Exhibit A and the Company has
obtained all licenses, permits and consents required for the acquisition,
construction and installation of the Project, and the Issuer shall have no
responsibility therefor. The Company will not take any action or fail to take
any action which would adversely affect the qualification of the Project under
the Act or the exclusion of the interest on the Bonds from gross income of the
Owners thereof for federal income tax purposes.
Section 3.2. AGREEMENT TO ISSUE BONDS; APPLICATION OF PROCEEDS; PROJECT
FUND. In order to provide funds to make a loan to the Company for the payment of
a portion of the cost of acquiring, constructing and equipping the Project, the
Issuer agrees that as soon as possible it will authorize, validate, sell and
cause to be delivered to the initial purchaser or purchasers thereof, the Bonds,
bearing interest and maturing as set forth in Article II of the Indenture, at a
price to be approved by the Company and Credit Provider, and it will thereupon
make the loan of the proceeds of the Bonds received from the sale thereof by
depositing the sale proceeds in the Project Fund created under the Indenture.
the moneys in the Project Fund shall be used to reimburse the Company for
certain costs incurred in acquiring, constructing and equipping the Project and
for paying certain of the costs of issuing the Bonds.
Section 3.3. [INTENTIONALLY OMITTED].
Section 3.4. [INTENTIONALLY OMITTED].
Section 3.5. LIMITATION OF ISSUER'S LIABILITY. ANYTHING CONTAINED IN THIS
LOAN AGREEMENT TO THE CONTRARY NOTWITHSTANDING, ANY OBLIGATION THE ISSUER MAY
INCUR IN CONNECTION WITH THE UNDERTAKING OF THE PROJECT FOR THE PAYMENT OF MONEY
SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR GENERAL OBLIGATION OF THE ISSUER,
THE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF, BUT SHALL BE PAYABLE
SOLELY FROM THE REVENUES AND RECEIPTS DERIVED BY IT FROM THIS LOAN AGREEMENT AND
THE NOTE, INCLUDING PAYMENTS RECEIVED UNDER THE NOTE, AND FROM PAYMENTS MADE
PURSUANT TO THE CREDIT FACILITY. NO PROVISION IN THIS LOAN AGREEMENT OR ANY
OBLIGATION HEREIN IMPOSED UPON THE ISSUER, OR THE BREACH THEREOF, SHALL
CONSTITUTE OR GIVE RISE TO OR IMPOSE UPON THE ISSUER, THE COUNTY, THE STATE OR
ANY POLITICAL SUBDIVISION THEREOF A PECUNIARY LIABILITY OR A CHARGE UPON ITS
GENERAL CREDIT OR TAXING POWERS. NO OFFICER OR MEMBER OF THE ISSUER, THE COUNTY,
THE STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE PERSONALLY LIABLE ON
THIS LOAN AGREEMENT.
Section 3.6 DISCLAIMER OF WARRANTIES. The Company recognizes that since
the Project has been acquired, constructed and equipped by the Company and by
contractors and suppliers selected by the Company, NEITHER THE ISSUER NOR THE
TRUSTEE MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT
TO THE MERCHANTABILITY, CONDITION OR WORKMANSHIP OF ANY PART OF THE PROJECT OR
ITS SUITABILITY FOR THE PURPOSES OF THE COMPANY OR THE EXTENT TO WHICH PROCEEDS
DERIVED FROM THE SALE OF THE BONDS WILL PAY THE COST TO BE INCURRED IN
CONNECTION THEREWITH.
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Section 3.7 COST OF PROJECT. Anything herein notwithstanding, no item of
cost which exceeds with all other such items (a) five percent (5 %) of the net
proceeds (including investment proceeds) of the Bonds which is not a qualified
cost under the Code, including but not limited to (i) costs paid or incurred
prior to October 13, 1992, (ii) interest on the Bonds following completion of
the acquisition, construction and equipping of the Project, or (iii) (a) the
costs of issuance of the Bonds, or (b) two percent (2%) of the principal amount
of the Bonds which is an issuance cost, shall be considered a Cost of Project
that is eligible to be paid or reimbursed from the proceeds of the Bonds. To the
extent permitted by law without affecting the exclusion of the interest on the
Bonds from gross income of the Owners thereof for federal income tax purposes,
if the Company determines that it has exceeded the foregoing limitation, it
shall immediately repay to the Project Fund sufficient monies to bring it into
compliance with such limitation.
Section 3.8. [INTENTIONALLY OMITTED].
Section 3.9. INVESTMENT OF FUNDS. Except for amounts on deposit in the
Rebate Fund, any moneys held in the Bond Fund or the Project Fund or any other
fund created under the Indenture shall be invested or reinvested by the Trustee
as set forth in Article X of the Indenture, to the extent permitted by law, in
the Permitted Investments (as defined in the Indenture), at the telephonic or
oral direction (confirmed in writing) of the Company Representative. Amounts on
deposit in the Rebate Fund shall be invested pursuant to Section 5.12. All such
investments shall at all times be a part of the fund (the Project Fund, the Bond
Fund or such other fund created under the Indenture, as the case may be) from
where the moneys used to acquire such investments shall have come, and all
income and profits on such investments shall be credited to, and losses thereon
shall be charged against, such fund.
Section 3.10. SPECIAL ARBITRAGE CERTIFICATIONS. The Company covenants with
the Issuer, the Trustee and the Owners from time to time of the Bonds that so
long as any Bond remains Outstanding, moneys on deposit in any fund or account
in connection with the Bonds, whether or not such moneys were derived from the
proceeds of the sale of the Bonds or from any other sources, will not be used in
a manner which will cause the Bonds to be "arbitrage bonds," within the meaning
of Section 148 of the Code and any lawful regulations promulgated or proposed
thereunder. The Issuer and the Company each covenant and agree on their own
behalf that they shall not take any action, cause any action to be taken, omit
to take any action or cause any omission to occur which would cause the interest
on the Bonds to become includible in the gross income of the Owners thereof for
federal income tax purposes.
Section 3.11. DEPOSITORIES OF MONEYS AND SECURITY FOR DEPOSIT. All moneys
received by the Issuer in connection with the issuance of the Bonds (other than
for its fees and expenses) shall be deposited in accordance with the Indenture
in the Project Fund created under the Indenture. All such moneys deposited shall
be applied in accordance with the terms and for the purposes herein set forth
and shall not be subject to lien or attachment by any creditor of the Issuer.
The Issuer and the Company agree for the benefit of each other and for the
benefit of the Trustee and the Owners of the Bonds that the Net Proceeds of the
sale of the Bonds will not be used in any manner which would affect the
exclusion from gross income for federal income tax purposes of the interest on
the Bonds.
[End of Article III]
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ARTICLE IV
PROVISIONS FOR PAYMENT
Section 4.1. TITLE TO THE PROJECT. The Issuer acknowledges that (i) the
Issuer will not be vested with any interest in the Project as a result of its
authorization, validation, sale, or issuance of the Bonds to finance the cost of
the acquisition, construction and equipping thereof, and (ii) that the only
security for the Bonds will be the Credit Facility or the Confirmation, if
applicable, the moneys deposited in the funds and accounts (other than the
Rebate Fund) created under the Indenture and the other property and rights
constituting the Trust Estate.
Section 4.2. PAYMENT OBLIGATIONS OF THE COMPANY.
(a) As consideration for the issuance of the Bonds and the lending
of the Bond proceeds to the Company by the Issuer in accordance with the
provisions of this Loan Agreement, the Company agrees to execute and
deliver the Note to the Issuer. In addition, the Company agrees (i) except
as provided in subsection (b) of this Section, to make prompt payment to
the Trustee, as assignee and pledgee of the Issuer, for deposit in the
Bond Fund, of all payments on the Note as and when the same shall be due
and payable, and (ii) to pay pursuant hereto and the Note sums sufficient
to pay the principal and purchase price of, premium, if any, and interest
on the Bonds (whether at maturity, upon redemption or acceleration, upon
any Purchase Date or otherwise) when and as the same shall be due and
payable. All such payments shall be made to the Trustee at its Principal
Office in lawful money of the United States of America, except as may be
otherwise agreed to by the Trustee.
(B) In order to provide for the payments required in subsection (a)
of this Section, the Company shall cause the Credit Provider to deliver
the Credit Facility and the Confirming Bank to deliver the Confirmation to
the Trustee simultaneously with the original issuance and delivery of the
Bonds, and hereby authorizes and directs the Trustee to draw moneys under
the Credit Facility and the Confirmation in accordance with the provisions
of the Indenture to the extent necessary to make any payments of principal
and purchase price of, and interest on the Bonds as and when the same
become due. The Company shall receive as a credit against its obligations
to make the payments described in subsection (a) of this Section all
payments made by the Credit Provider under the Credit Facility and the
Confirmation and all other amounts described in Section 3.02 or 6.06 of
the Indenture.
(c) If the Company should fail to make any of the payments required
in subsection (a) and (b) above, the item or installment which the Company
has failed to make shall continue as an obligation of the Company until
the same shall have been fully paid, and the Company agrees to pay the
same with interest thereon at the rate per annum borne by the Bonds until
paid in full.
(d) In addition, the Company agrees to pay the costs of issuing the
Bonds which are not being paid with the proceeds from the sale of the
Bonds by depositing the same with the Trustee. Such moneys shall be
disbursed by the Trustee in accordance with written instructions from the
Company.
(e) Anything herein, in the Indenture or in the Bonds to the
contrary notwithstanding, the obligations of the Company hereunder shall
be subject to the limitation that payments constituting interest under
this Section shall not be required to the extent that the receipt of such
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payment by the Owner of any Bond would be contrary to the provisions of
law applicable to such Owner which limit the maximum rate of interest
which may be charged or collected by such Owner.
Section 4.3. CREDIT FACILITY; ALTERNATE CREDIT FACILITY; CONFIRMATION;
SUBSTITUTE CONFIRMATION.
(a) The Credit Facility delivered to the Trustee simultaneously with
the original issuance and delivery of the Bonds constitutes an irrevocable
obligation of the Credit Provider to pay to the Trustee, upon request and
in accordance with the terms thereof, up to an amount equal to the
principal amount of Bonds Outstanding plus (i) if the Bonds initially bear
interest at a Variable Rate, during any Variable Rate Period, 50 days'
interest on the Bonds, computed at a rate per annum equal to the Maximum
Rate and on the basis of the actual number of days elapsed during a 365
day or 366 day year, as appropriate, or (ii) if the Bonds initially bear
interest at a Term Rate, during any Term Rate Period, 204 days' interest
on the Bonds (or, if the Term Rate Period to be established will consist
of fewer than 6 months, the number of days' interest on the Bonds obtained
by adding 20 days to the number of days in such Term Rate Period) computed
at a rate per annum equal to the Maximum Rate and on the basis of a 360
day year of twelve 30 day months.
(b) The Company shall have the option from time to time to provide
the Trustee with an Alternate Credit Facility in accordance with the
provisions of Section 6.08 of the Indenture. If at any time there shall
have been delivered to the Trustee an Alternate Credit Facility, together
with the other documents and opinions required by Section 6.08 of the
Indenture, then the Trustee shall accept such Alternate Credit Facility
and promptly surrender the previously held Credit Facility to the issuer
thereof for cancellation, in accordance with the terms of such Credit
Facility. If at any time there shall cease to be any Bonds Outstanding
under the Indenture, the Trustee shall promptly surrender the Credit
Facility to the Credit Provider, in accordance with the terms of such
Credit Facility, for cancellation. The Trustee shall comply with the
procedures set forth in the Credit Facility relating to the termination
thereof.
(c) The Confirmation delivered to the Trustee simultaneously with
the original issuance and delivery of the Bonds constitutes an irrevocable
obligation of the Confirming Bank to pay to the Trustee, upon request and
in accordance with the terms thereof, up to an amount equal to the
principal amount of Bonds Outstanding plus (i) if the Bonds initially bear
interest at a Variable Rate during any Variable Rate Period, 50 days'
interest on the Bonds, computed at a rate per annum equal to the Maximum
Rate and on the basis of the actual number of days elapsed during a 365
day or 366 day year, as appropriate, or (ii) if the Bonds initially bear
interest at a Term Rate, during any Term Rate Period, 204 days' interest
on the Bonds (or, if the Term Rate Period to be established will consist
of fewer than 6 months, the number of days' interest on the Bonds obtained
by adding 20 days to the number of days in such Term Rate Period) computed
at a rate per annum equal to the Maximum Rate and on the basis of a 360
day year of twelve 30 day months.
(d) The Company shall have the option from time to time to provide
the Trustee with a Substitute Confirmation in accordance with the
provisions of Section 6.08 of the Indenture. If at any time there shall
have been delivered to the Trustee a Substitute Confirmation, together
with the other documents and opinions required by Section 6.08 of the
Indenture, then the Trustee shall accept such Substitute Confirmation and
promptly surrender the previously held Confirmation to the issuer thereof
for cancellation, in accordance with the terms of such Confirmation. If at
any time there shall cease to be any Bonds outstanding under the
Indenture, the Trustee shall promptly surrender the Confirmation to the
Confirming Bank, in accordance with the terms of such
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Confirmation, for cancellation. The Trustee shall comply with the procedures set
forth in the Confirmation relating to the termination thereof.
Section 4.4. ADMINISTRATIVE EXPENSES. The Company shall pay, or cause to
be paid, an amount equal to (i) the fees and charges of the Trustee incurred in
connection with the rendering of its ordinary and extraordinary services as
Trustee under the Indenture, as and when the same become due, including the
reasonable fees of its Counsel, (ii) the fees and charges of the Paying Agent
for acting as Paying Agent for the Bonds, including the fees and expenses of its
Counsel, (iii) the fees and expenses of the Placement Agent for serving as
Placement Agent for the Bonds, including the fees and expenses of its Counsel,
and any other amounts due and payable to the Placement Agent under the Placement
and Remarketing Agreement, (iv) the fees and expenses of the Remarketing Agent
for serving as Remarketing Agent for the Bonds, including the fees and expenses
of its Counsel, and any other amounts due and payable to the Remarketing Agent
under the Placement and Remarketing Agreement, (v) the fees and expenses of the
Rating Agency for issuing and maintaining its securities rating on the Bonds and
(vi) the out-of-pocket expenses, administrative expenses and Counsel fees of the
Issuer. The Company may, without constituting grounds for an Event of Default
hereunder, withhold payment of any such fees and charges of the Trustee or the
Paying Agent, to contest in good faith the necessity for any extraordinary
services of the Trustee and the reasonableness of any extraordinary expenses of
the Trustee, or to contest in good faith the necessity for any services
performed and expenses paid or incurred by, and the reasonableness of any fees,
charges or expenses of, the Paying Agent. If the Company should fail to make any
of the payments required in this Section, the item or installment which the
Company has failed to make shall continue as an obligation of the Company until
the same shall have been fully paid, with interest thereon at the rate per annum
borne by the Bonds until paid in full.
Section 4.5. OBLIGATIONS OF THE COMPANY ABSOLUTE AND UNCONDITIONAL.
Subject to the provisions of Section 6.5 hereof, the obligations of the Company
to make or to cause (pursuant to the Credit Facility) to be made the payments
required in Sections 4.2 and 4.4 and to perform and observe the other agreements
on its part contained herein shall be absolute and unconditional and shall not
be subject to diminution by set-off, counterclaim, abatement or otherwise by
reason of any action or inaction of the Trustee, the Issuer or any third party.
Until such time as the principal of, and the interest on, the Bonds shall have
been paid in full, the Company (a) will not suspend or discontinue any payments
provided for in Sections 4.2 and 4.4 except to the extent the same have been
prepaid, (b) will perform and observe all its other agreements contained herein,
and (c) except as provided in Article VII hereof, will not terminate this Loan
Agreement for any cause, including, without limiting the generality of the
foregoing, any acts or circumstances that may constitute failure of
consideration, sale, loss, eviction or constructive eviction, destruction of or
damage to the Project, condemnation, commercial frustration of purpose, any
change in the tax or other laws of the United States of America or of the State
or any political subdivision of either, or any failure of the Issuer to perform
and observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection herewith or with the Indenture.
Notwithstanding the foregoing, the obligation of the Company to make payments
hereunder shall be satisfied and discharged to the extent moneys are received by
the Trustee pursuant to the Credit Facility or the Confirmation, if applicable,
remarketing proceeds (with respect to the Purchase Price) or other available
sources under the Indenture. Nothing contained hi this Section shall be
construed to release the Issuer from the performance of any of the agreements on
its part herein contained; and if the Issuer should fail to perform any such
agreement, the Company may institute such action against the Issuer as the
Company may deem necessary to compel performance so long as such action shall
not impair the agreements on the part of the Company hereunder.
Nothing contained herein shall be construed as a waiver of any rights
which Company may have against the Issuer under this Loan Agreement, or against
any person under this Loan Agreement, the Indenture or otherwise, or under any
provision of law; provided, however, that the Company shall pursue any rights or
remedies against the Issuer, the Trustee, any Owner or any third party in
connection
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herewith, or in connection with the Indenture, the Company Documents or
otherwise relating to the Bonds and security therefor only in a separate action,
and not by way of any set-off, counterclaim, cross-claim or third party action
in any suit brought to enforce the rights of the Owners, the Trustee or the
Issuer under this Loan Agreement, the Indenture, the Company Documents or
otherwise in connection herewith; and provided further, that in order to
preserve the right of the Company to raise such issues in any separate suit, any
claim of the Company which, but for this Section 4.5 would be a compulsory
counterclaim, shall be identified as such in the first responsive pleading filed
by the Company to any action brought by the Issuer, Trustee, any Owner or any
person.
Section 4.6. COMPANY CONSENT TO ASSIGNMENT OF LOAN AGREEMENT AND EXECUTION
OF INDENTURE. The Company understands that the Issuer will, pursuant to the
Indenture and as security for the payment of the principal of, premium, if any,
and the interest on the Bonds, assign and pledge to the Trustee, and create a
security interest in favor of the Trustee in certain of its rights, title and
interest in and to this Loan Agreement (including all Pledged Revenues)
reserving, however, the Unassigned Rights; and the Company hereby agrees and
consents to such assignment and pledge. The Company acknowledges that it has
received a copy of the Indenture and consents to the execution of the same by
the Issuer; provided, however, such consent does not constitute a representation
as to the accuracy of any representations or warranties made thereunder.
Section 4.7. COMPANY'S PERFORMANCE UNDER INDENTURE. The Company agrees,
for the benefit of the Owners, to do and perform all acts and things
contemplated in the Indenture to be done or performed by it.
[End of Article IV]
14
<PAGE> 19
ARTICLE V
PARTICULAR AGREEMENTS
Section 5.1. MAINTENANCE, OPERATION AND INSURING OF PROJECT; TAXES; NO
OPERATION OF PROJECT BY ISSUER. The Company hereby agrees that it will at its
own expense maintain and operate all portions of the Project during their useful
lives or until they are replaced with facilities necessary to the operation of
the Project. This Loan Agreement does not prevent the Company from merging or
consolidating with another entity as permitted by Section 5.3. The Company
further agrees that, except for taxes contested in good faith, it will pay all
taxes levied with respect to the Project and the income therefrom and that it
will at its own expense keep the Project properly insured against loss or damage
from such perils usually insured against by businesses operating or owning like
properties and maintain public liability insurance and all such worker's
compensation or other similar insurance as may be required by law. Evidence of
such insurance will be furnished to the Trustee, the Issuer and the Credit
Provider upon request. Nothing contained in this Loan Agreement shall be deemed
to authorize or require the Issuer to operate the Project or to conduct any
business enterprise in connection therewith.
Section 5.2. LOCAL GOVERNMENT COMMISSION'S, ISSUER'S, TRUSTEE'S AND PAYING
AGENT'S EXPENSES; RELEASE AND INDEMNIFICATION PROVISIONS. The Company agrees,
whether or not the transactions contemplated by the Company Documents and the
Indenture shall be consummated, to indemnify and hold harmless (i) the Local
Government Commission and (ii) the Issuer and its officers, commissioners,
directors, officials, employees and agents, including the Trustee, the Paying
Agent and Counsel to the Issuer (any and all of the foregoing being hereinafter
referred to as the "Indemnified Persons"), from and against any and all claims,
actions, suits, proceedings, expenses, judgments, damages, penalties, fines,
assessments, liabilities, charges or other costs (including, without limitation,
all attorneys' fees and expenses incurred in connection with enforcing this Loan
Agreement or collecting any sums due hereunder and any claim or proceeding or
any investigation in connection therewith) relating to, resulting from or in
connection with (a) any cause whatsoever in connection with the Project,
including, without limitation, the acquisition, design, construction,
installation, equipping, operation, maintenance or use thereof or the financing
thereof including any expenses arising from the failure to make payment of
principal and interest on the Bonds; (b) any act or omission of the Company or
any of its agents, contractors, servants, employees or licensees, in connection
with the Project; (c) the issuance and sale of the Bonds; and (d) a
misrepresentation or breach of warranty by the Company hereunder or under any of
the Company Documents, or any violation by the Company of any of its covenants
hereunder or under any of the other Company Documents. In addition, the Trustee
shall be indemnified for (i) any actions taken or omitted by the Trustee in
accordance with the terms of this Loan Agreement, the Bonds, the Placement and
Remarketing Agreement, the Credit Facility, the Note or the Indenture and (ii)
any actions taken at the request of or with the consent of the Company. The
foregoing indemnities are effective only with respect to any loss incurred by
the Indemnified Persons not due to willful misconduct, gross negligence, or bad
faith on the part of such Indemnified Persons. In case any action or proceeding
shall be brought against one or more of the Indemnified Persons and in respect
of which indemnity may be sought, as provided herein, such Indemnified Person or
Indemnified Persons shall promptly notify the Company in writing and the Company
shall promptly assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Person or Indemnified Persons,
payment of all expenses and the right to negotiate and consent to settlement;
but the failure to notify the Company as provided herein shall not relieve the
Company from any liability that it may have (i) under this Section, so long as
the Company is given the reasonable opportunity to defend such claim, and (ii)
otherwise than under this Section. Any one or more of the Indemnified Persons
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the reasonable fees and expenses of such
counsel shall be at the
15
<PAGE> 20
expense of such Indemnified Persons or Indemnified Persons unless (1) the
employment of such counsel has been specifically authorized in writing by the
Company, (2) the named parties to any such action (including any impleaded
parties) include both the Company and such Indemnified Person or Indemnified
Persons and representation of both the Company and such Indemnified Person or
Indemnified Persons by the same counsel would be inappropriate due to actual or
potential differing interests between them, or (3) the Indemnified Person or
Indemnified Persons have been advised that one or more legal defenses may be
available to any or all of them which may not be available to the Company in
which case the Company shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
The Company shall not be liable for any settlement of any such action effected
without its consent, but if settled with such consent or if there is a final
judgment in any such action with or without consent, the Company agrees to
indemnify and hold harmless the Indemnified Person or Indemnified Persons from
and against any loss by reason of such settlement or judgment.
The provisions of this Section shall survive the termination of this Loan
Agreement.
Section 5.3. MAINTENANCE OF EXISTENCE. The Company agrees that so long as
any Bonds remain outstanding it shall maintain its existence as a corporation
organized under the laws of the State of California and shall not merge or
consolidate with any other entity and shall not transfer or convey all or
substantially all of its property, assets and licenses; provided, however, the
Company may, without violating any provision hereof, consolidate with or merge
into another domestic entity (ie., an entity existing under the laws of one of
the states of the United States of America or the District of Columbia) or
permit one or more other domestic entities to consolidate with or merge into it,
or transfer all or substantially all of its assets to another domestic entity,
but only on the condition that:
(a) the assignee entity or the entity resulting from or surviving
such merger (if other than the Company) or consolidation or the entity to
which such transfer is made expressly assumes in writing and agrees to
perform all of the Company's obligations hereunder and under the other
Company Documents;
(b) in connection with any such consolidation, merger or transfer,
the Credit Provider shall expressly ratify and affirm that the Credit
Facility remains in full force and effect;
(c) the surviving entity shall preserve and keep in full force and
effect all licenses and permits necessary to the proper conduct of its
business; and
(d) the Company obtains and delivers to the Issuer, the Trustee, and
the Credit Provider an opinion of Bond Counsel to the effect that the
proposed transaction will not adversely affect the exclusion from gross
income of interest on the Bonds of the Owners thereof for federal income
tax purposes.
Section 5.4. [INTENTIONALLY OMITTED]
Section 5.5. AGREEMENT OF ISSUER NOT TO ASSIGN OR PLEDGE. Except for the
assignment and pledge of the Trust Estate in the Indenture, the Issuer agrees
that it will not attempt to further assign, pledge, transfer or convey its
interest in or create any assignment, pledge, lien, charge or encumbrance of any
form or nature with respect to any of the property, moneys, securities and
rights granted by the Issuer to the Trustee under the Granting Clauses of the
Indenture.
Section 5.6. REDEMPTION OF BONDS. The Issuer or the Trustee, at the
request at any time of the Company and if the same are then redeemable, shall
forthwith take all steps that may be necessary under the applicable redemption
provisions of the Indenture to effect redemption of all or any portion of the 16
16
<PAGE> 21
Bonds, as may be specified by the Company, on the earliest redemption date on
which such redemption may be made under such applicable provisions or upon the
date set for the redemption by the Company pursuant to Article VD hereof. As
long as no Event of Default on behalf of the Company exists hereunder and the
Issuer is not obligated to call Bonds pursuant to the terms of the Indenture,
neither the Issuer nor the Trustee shall redeem any Bond prior to its stated
maturity unless requested to do so in writing by the Company.
Section 5.7. REFERENCE TO BONDS INEFFECTIVE AFTER BONDS PAID. Upon Payment
in Full of the Bonds and all fees and charges of the Issuer, the Trustee and the
Paying Agent, all references herein to the Bonds, the Paying Agent and the
Trustee shall be ineffective and neither the Issuer, the Paying Agent, the
Trustee nor the Owners of any of the Bonds shall thereafter have any rights
hereunder and the Company shall have no further obligation hereunder, saving and
excepting those that shall have theretofore vested and any right of any
Indemnified Person (as defined in Section 5.2) to indemnification under Section
5.2, which right shall survive the payment of the Bonds and the termination of
this Loan Agreement. Reference is hereby made to Article XI of the Indenture
which sets forth the conditions upon the existence or occurrence of which
Payment in Full of the Bonds shall be deemed to have been made.
Section 5.8. ASSIGNMENT, SALE OR LEASE OF PROJECT. The Company may assign
its interest in this Loan Agreement and may sell, lease or otherwise dispose of
the Project, in whole or in part, provided that (i) the purchaser, lessee or
transferee in such transaction shall be bound by the terms and provisions of
this Loan Agreement, (ii) such transaction shall not affect the liability of the
Credit Provider under the Credit Facility, and (iii) an opinion of Bond Counsel
is provided to the Issuer, the Trustee, and the Credit Provider to the effect
that such transaction will not adversely affect the exclusion of the interest on
the Bonds from gross income of the Owners thereof for federal income tax
purposes. Notwithstanding the foregoing, the Company will remain primarily
liable for its obligations hereunder until provision has been made for Payment
in Full of the Bonds.
Section 5.9. NON-ARBITRAGE COVENANT. The Company hereby covenants and
agrees with the Issuer and the Trustee for the benefit of the Owners of any
Bonds, present and future, that it will not make, or permit, any use of the
proceeds of the Bonds which will cause the Bonds to be "arbitrage bonds" within
the meaning of Section 148 of the Code. The Company shall deliver to the Issuer
its certificate, evidencing the reasonable expectations of the Company, in such
reasonable form as the Issuer shall specify and upon which the Issuer may rely
in furnishing its own certificate. The covenants contained in this Section are
in addition to, and not in limitation of, the covenants contained in Sections
2.4 and 3.10 hereof.
Section 5.10. NOTICE OF BONDS OUTSTANDING AND OWNERS OF BONDS. The Company
agrees that on or prior to July 15 of each year it will deliver or cause to be
delivered to the Issuer and the Local Government Commission a certificate
stating the principal amount of the Bonds Outstanding as of the close of
business on June 30 of such year, and, upon request of the Local Government
Commission, a list of the registered Owners of the Bonds as of such June 30.
Section 5.11. FINANCING STATEMENTS. The Company hereby covenants and
agrees with the Issuer and the Trustee that it shall furnish to the Credit
Provider and the Trustee, quinquennially on or before the 1st day of March of
each fifth year (commencing March 1, 2001), an Opinion of Counsel in a form
acceptable to the Credit Provider, to the effect that all financing or
continuation statements have been filed, and all other action has been taken, to
perfect and validate continuously from the date hereof the security interests
granted by the Indenture. The cost of preparing and filing all such financing
statements and continuation statements shall be paid by the Company.
17
<PAGE> 22
Section 5.12. ARBITRAGE REBATE.
(a) The Company acknowledges having read Sections 5.07 and 5.08 of
the Indenture and agrees to perform all duties expressly or implicitly
imposed upon it by such Sections and by the Tax Regulatory Agreement
referred to therein. Insofar as Sections 5.07 and 5.08 of the Indenture
and the Tax Regulatory Agreement expressly or implicitly impose duties and
responsibilities on the Company, they are specifically incorporated herein
by reference.
(b) Nothing contained in this Loan Agreement or in the Indenture
shall be interpreted or construed to require the Issuer to pay the Rebate
Amount, such obligations being the sole responsibility of the Company.
Section 5.13. USE OF PROCEEDS; TAX COVENANTS AND OTHER MATTERS.
(a) USE OF PROCEEDS; PROHIBITED USE OF PROJECT, ETC. Neither the
Issuer nor the Company shall cause any proceeds of the Bonds to be expended,
except pursuant to the Indenture and this Loan Agreement. The Company shall not
(i) requisition or otherwise allow payment out of proceeds of the Bonds (A) if
such payment is to be used for the acquisition of any property (or an interest
therein) unless the first use of such property is pursuant to such acquisition,
provided that this clause (A) shall not apply (1) to any building (and the
equipment purchased as a part thereof, if any) if the "rehabilitation
expenditures," as defined in Section 147(d) of the Code, with respect to the
building equal or exceed 15% of the portion of the cost of acquiring the
building (including such equipment) financed with the proceeds of the Bonds, or
(2) to any other property if the rehabilitation expenditures with respect
thereto equal 100% of the cost of acquiring such property financed with the
proceeds of the Bonds; (B) if as a result of such payment, 25 % or more of the
proceeds of the Bonds would be considered as having been used directly or
indirectly for the acquisition of land (or an interest therein); (C) if, as a
result of such payment, less than 95 % of the net proceeds of the Bonds,
expended at the time of such acquisition would be considered as having been used
for costs of the acquisition, construction, or reconstruction or improvement of
land or property of a character subject to the allowance for depreciation,
within the meaning of Section 144(a)(1)(A) of the Code ("Qualifying Costs"); or
(D) if such payment is used to pay issuance costs (including counsel fees and
placement fees) of the Bonds in excess of an amount equal to 2% of the principal
amount of the Bonds; (ii) take or omit, or permit to be taken or omitted, any
other action with respect to the use of such proceeds the taking or omission of
which has or would result in the loss of the exclusion of interest on the Bonds
from gross income of the Owners thereof for federal income tax purposes; or
(iii) take or omit, or permit to be taken or omitted, any other action the
taking or omission of which has or would cause the loss of such exclusion.
Without limiting the generality of the foregoing, the Issuer and the Company
will not used the proceeds of the Bonds, or permit such proceeds to be used
directly or indirectly, for the acquisition of land (or an interest therein) to
be used for farming purposes, or to provide (x) any facility the primary purpose
of which is retail food and beverage services, automobile sales or service or
the provision of recreation or entertainment, (y) any airplane, skybox or other
private luxury box, any health club facility, any facility primarily used for
gambling, any store the principal business of which is the sale of alcoholic
beverages for consumption off premises, any private or commercial golf course,
country club, massage parlor, tennis club, skating facility (including roller
skating, skateboard and ice skating), racquet spots facility (including any hand
ball or racquetball court), hot tub facility, suntan facility, or race track, or
(z) single or multifamily residences. The Company shall not permit the use of
the Project by any person to whom any part of the aggregate authorized face
amount of the Bonds would be allocated pursuant to Section 144(a)(10) of the
Code if the amount so allocated when increased as provided in Section 144(a)(10)
of the Code would exceed $40,000,000.
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<PAGE> 23
(b) COMMENCEMENT OF CONSTRUCTION; FIRST USERS. The Company hereby
represents that (i) neither "construction" nor "acquisition" or "installation"
of the Project "commenced" prior to October 13, 1992 within the meaning of the
Treasury Regulations promulgated under the Code; (ii) no person, firm or
corporation who was a "substantial user" of the Project (within the meaning
described in such term under the Code) before the date of issuance of the Bonds
and was or will be a "substantial user" of the Project following its being
placed in service, has received or will receive, directly or indirectly, any
proceeds from the issuance and sale of the Bonds; and (iii) the Project was not
first used prior to the date 18 months prior to die issuance of the Bonds.
(c) ECONOMIC LIFE OF PROJECT. The Company hereby represents that the
weighted average maturity of the Bonds does not exceed 120% of the "average
reasonably expected economic life" of the components comprising the Project,
determined pursuant to Section 147(b) of the Code. The Company agrees that it
will not make any changes in the Project which would, at the time made, cause
120% of the "average reasonably expected economic life" of the components of the
Project, determined pursuant to Section 147(b) of the Code, to be less than the
"weighted average maturity" of the Bonds.
(d) CERTIFICATE OF INFORMATION; INTERNAL REVENUE SERVICE FORM 8038.
(Internal Revenue Service Form 8038.) The Company hereby represents that the
information contained herein and in the Tax Regulatory Agreement delivered in
connection with the issuance of the Bonds with respect to the compliance with
the requirements of Section 103 and Sections 141 through 150 of the Code,
including the information in Internal Revenue Service Form 8038 (excluding the
issue number and the employer identification number of the Issuer) filed by the
Issuer with respect to the Bonds and the Project, is true and correct in all
material respects.
(e) ARBITRAGE AND REBATE. Neither the Company nor the Issuer shall
(i) take or omit to take any action, or approve, the making by the Company of
any investment or use of any proceeds of the Bonds or any other moneys within
their respective control (including, without limitation, the proceeds of any
insurance or any condemnation award with respect to the Project), or the taking
or omission of any other action, which would cause the Bonds to be "arbitrage
bonds" within the meaning of Section 148 of the Code, or (ii) approve the use of
any proceeds from the sale of the Bonds otherwise than in accordance with this
Loan Agreement or the Tax Regulatory Agreement, barring any unforeseen
circumstances, in which event, the Company and the Issuer shall use such
proceeds with due diligence and shall otherwise comply with this Loan Agreement.
Without limiting the generality of the foregoing, the Company shall at its sole
expense take all action required under Section 148 of the Code and Treasury
Regulations thereunder to prevent loss of the exclusion of the interest on the
Bonds from gross income of the Owners thereof for federal income tax purposes
under such Section, including, but not limited to, paying on behalf of the
Issuer the "rebatable arbitrage amount" to the United States of America in
accordance with the requirements set forth in the related Treasury Regulations
and complying with the requirements of Section 5.08 of the Indenture, including
making the annual calculations and deposits required therein. The Company shall
also comply with any similar requirements contained in any Treasury Regulations
adopted in place of the existing Treasury Regulations and all other requirements
of any such Treasury Regulations, to the extent applicable to the Bonds. The
Company shall, upon request of the Issuer, provide the Issuer a copy of all
calculations, compliance reports and all other documents prepared in compliance
with Section 148 of the Code, the Tax Regulatory Agreement, this Section 5.13(e)
and Section 5.08 of the Indenture. All costs and expenses incurred in connection
with the satisfaction of such requirements shall be paid by the Company.
19
<PAGE> 24
(f) USE BY UNITED STATES OF AMERICA OR ITS AGENCIES. The Company has
not permitted and shall not permit the Project to be used or occupied
other than as a member of the general public in any manner for
compensation by the United States of America or an agency or
instrumentality thereof, including any entity with statutory authority to
borrow from the United States of America (in any case within the meaning
of Section 149(b) of the Code) unless, with respect to any future use of
the Project, the Company shall deliver to the Trustee an Opinion of Bond
Counsel in form and substance satisfactory to the Trustee to the effect
that such will not impair the exclusion of interest on the Bonds from
gross income of the Owners thereof for federal income tax purposes.
(g) OTHER BONDS TO BE ISSUED. Neither the Company nor any related
person (or group of related persons which includes the Company) has
guaranteed, arranged, participated in, assisted with, borrowed the
proceeds of, or leased facilities financed by, private activity bonds
within the meaning of Section 141 of the Code which are sold at
substantially the same time as the Bonds, sold pursuant to the same plan
of financing as the Bonds and are reasonably expected to be paid from
substantially the same source of funds as the Bonds.
(h) LIMIT ON AMOUNT OF BONDS, REPORTS. The Company represents that
on the date of the issuance of the Bonds (i) obligations were not assumed,
expenditures were not made and outstanding obligations did not exist that
will cause the "aggregate face amount" of the Bonds as computed under the
provisions of Section 144(a) and related sections of the Code to exceed
$10,000,000, and (ii) outstanding obligations did not exist that would
cause the "aggregate face amount" of the Bonds allocated to any
"test-period beneficiary," as defined in Section 144(a)(10) of the Code,
when increased by such obligations as provided in Section 144(a)(10) of
the Code, to exceed $40,000,000. During the three-year period beginning on
the date of the issuance of the Bonds (or, in the case of clause (B)
below, the date the Project is placed in service, unless the Company
provides to the Trustee an Opinion of Bond Counsel that such restriction
is no longer applicable), the Company shall not make any expenditure,
assume any obligation, permit the use of the Project by any person or take
or permit other action that would cause the "aggregate face amount" of the
Bonds as computed under the provisions of Section 144(a) and related
sections of the Code (A) to exceed $10,000,000 or such other maximum
dollar amount then permitted by the Code, or (B) allocated to any
"test-period beneficiary", when increased by such obligations as provided
in Section 144(a)(10) of the Code, to exceed $40,000,000, and shall on the
anniversary date of the issuance of the Bonds until the third anniversary
date of the issuance of the Bonds or the date on which the Project is
placed into service, whichever is later, file a report with the Trustee
setting forth all capital expenditures and bond issues used in calculating
such limits under Section 144(a) of the Code since the last report
received by the Trustee, accompanied by a certificate of the Company
Representative certifying compliance with the requirements of this
Section.
The Company and the Issuer shall file any reports or statements and
take any other action as may be required from time to time with respect to the
qualification of the Bonds as qualified small issue bonds within the meaning of
Section 144(a) of the Code.
(i) ELECTION. The Issuer hereby elects to have the provisions of
Section 144(a)(4) of the Code apply to the Bonds.
( j) COVENANT TO MAINTAIN TAX EXEMPTION. The Issuer and the Company
hereby covenant and agree on their own behalf that they shall not take any
action, cause any action to be taken, omit to taken any action or cause
any omission to occur which would cause the interest on
<PAGE> 25
the Bonds to become includible in the gross income of the Owners thereof
for federal income tax purposes.
Section 5.14. COMPLIANCE WITH REIMBURSEMENT AGREEMENT. The Company hereby
covenants and agrees that it will comply with all covenants and obligations
applicable to it in the Reimbursement Agreement from time to time in effect or,
if the Reimbursement Agreement is terminated prior to the termination of this
Loan Agreement, the Company agrees to comply with all covenants and obligations
applicable to it in the Reimbursement Agreement as in effect immediately prior
to the termination thereof until the termination of this Loan Agreement and the
payment of the Company's obligation hereunder.
Section 5.15. INSPECTION OF PROJECT. The Issuer, the Trustee and their
duly authorized agents shall have the right at all reasonable times to enter
upon any part of the premises of the Company at which the Project is located and
examine and inspect the same as may be reasonably necessary for the purpose of
determining whether the Company is in compliance with its obligations under
Section 5.1 or in the event of failure of the Company to perform its obligations
under Section 5. 1, and the Issuer, the Trustee and their duly authorized agents
shall also have the right at all reasonable times to examine the books and
records of the Company insofar as such books and records relate to the
acquisition, construction, installation and maintenance of the Project.
Section 5.16. PROJECT LIST. The Company shall maintain at the Project site
a list setting forth in reasonable detail all items constituting the Project,
and, to the extent applicable, all plans and specifications relating to the
Project.
Section 5.17. NO WARRANTY OF CONDITION OR SUITABILITY BY ISSUER. The
Company recognizes that the Issuer does not deal in goods of the kind comprising
components of the Project or otherwise hold itself out as having knowledge or
skill peculiar to the practices or goods involved in the Project, and that the
Issuer is not one to whom such knowledge or skill may be attributed by its
employment of an agent or broker or other intermediary who by his occupation
holds himself out as having such knowledge or skill. The Company further
recognizes that since the components of the Project have been designated and
selected by the Company, THE ISSUER HAS NOT MADE AN INSPECTION OF THE PROJECT OR
OF ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, AND, EXCEPT AS
OTHERWISE PROVIDED HEREIN, THE ISSUER MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR TO THE LOCATION,
USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR
PURPOSE, CONDITION OR DURABILITY THEREOF, TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE
BORNE BY THE COMPANY, IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN
THE PROTECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER
PATENT OR LATENT, THE ISSUER SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH
RESPECT THERETO. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED AND ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES OR
REPRESENTATIONS BY THE ISSUER, EXPRESS OR IMPLIED (TO THE EXTENT PERMITTED BY
APPLICABLE LAW), WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE U.C.C. OR
ANOTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
[End of Article V]
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<PAGE> 26
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. EVENTS OF DEFAULT DEFINED. The following shall be "Events of
Default" hereunder and the term "Event of Default" shall mean, whenever it is
used herein, any one or more of the following events:
(a) failure by the Company to make any payment required to be made
under the Note or Section 4.2(a) when the same becomes due and payable.
(b) failure by the Company to comply with the provisions of Section
` 7.2;
(c) failure by the Company to observe or perform any agreement
hereunder or on its part to be observed or performed, other than as
referred to in subsection (a) or (b) of this Section, for a period of
thirty (30) days after written notice, specifying such failure and
requesting that it be remedied, given to the Company and to the Credit
Provider by the Issuer or the Trustee, unless the Issuer and the Trustee
shall agree in writing to an extension of such time prior to its
expiration; provided, however, if the failure stated in the notice cannot
be corrected within the applicable period, the Issuer and the Trustee will
not unreasonably withhold their consent to an extension of such time if it
is possible to correct such failure and corrective action is instituted by
the Company or the Credit Provider within the applicable period and
diligently pursued until the failure is corrected; or in the case of any
such default which can be cured with due diligence but not within such
thirty-day period, the Company's or Credit Provider's failure to proceed
promptly to cure such default and thereafter prosecute the curing of such
default with due diligence;
(d) any representation by or on behalf of the Company contained in
this Loan Agreement or in any instrument furnished in compliance with or
in reference to this Loan Agreement, the Indenture or the Reimbursement
Agreement proves false or misleading in any material respect as of the
date of the making or furnishing thereof;
(e) an "Event of Default" occurs and is continuing under the
Indenture;
(f) an "Event of Default" occurs and is continuing under the
Reimbursement Agreement;
provided, however, that the occurrence of an event described in Section 6.1(d)
shall not constitute an "Event of Default" hereunder, without the prior written
consent of the Credit Provider.
Upon the occurrence of an Event of Default hereunder, the Trustee shall
promptly notify in writing the Issuer, the Paying Agent, the Remarketing Agent
the Credit Provider and the Local Government Commission of such occurrence.
The Company and the Issuer hereby authorize the Credit Provider to do any
and all things necessary to correct any Event of Default described in subsection
(c) above on behalf of the Company.
The foregoing provisions of subsection (c) of this Section are subject to
the following limitations: If by reason of force majeure, the Company is unable
in whole or in part to carry out the agreements on its part therein referred to,
the failure to perform such agreements due to such inability shall not
constitute
22
<PAGE> 27
an Event of Default nor shall it become an Event of Default upon appropriate
notification to the Company or the passage of the stated period of time. The
term "force majeure" as used herein shall mean, without limitation, the
following: acts of God; strikes, lockouts or other industrial disturbances; acts
of public enemies; orders of any kind of the government of the United States of
America or of the State or any of their departments, agencies, political
subdivisions or officials, or any civil or military authority; insurrections;
riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes;
tornadoes; storms; floods; washouts; droughts; arrests; restraint of government
and people; civil disturbances; explosions; breakage or accident to machinery,
transmission pipes or canals; partial or entire failure of utilities; or any
other cause or event not reasonably within the control of the Company. The
Company agrees, however, to remedy with all reasonable dispatch the cause or
causes preventing the Company from carrying out its agreements; provided, that
the settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Company, unfavorable to the Company.
Section 6.2. REMEDIES. Whenever an Event of Default has occurred and is
continuing, the Trustee, as the assignee and pledgee of the Issuer under the
Indenture, shall take any one or more of the following remedial steps:
(a) The Trustee may declare all payments of principal and accrued
interest required to be made under Section 4.2(a) and the Note to be
immediately due and payable, whereupon the same shall become immediately
due and payable. If the Trustee elects to exercise the remedy afforded in
this subsection (a) and accelerates all payments required to be made under
Section 4.2(a) and the Note, the Trustee must accelerate the payment of
the Bonds under Section 7.02 of the Indenture and amount then due and
payable by the Company as accelerated payments hereunder shall be the sum
of (i) the aggregate principal amount of the outstanding Bonds, (ii) all
interest on the Bonds then due and to become due to the date of payment of
the principal of the Bonds, and (iii) all other amounts due and payable to
the Issuer, if any, to the Owners or to the Trustee with respect to the
payment of the Bonds, including Counsel fees actually incurred; or
(b) Subject to the provisions of Section 6.5 hereof, the Trustee may
take whatever action at law or in equity may appear necessary or desirable
to collect any sums then due and thereafter to become due hereunder or to
enforce performance and the observance of any agreement of the Company
hereunder or under the Note; or
(c) The Trustee may exercise any remedies provided in the Indenture.
Any amounts collected pursuant to any action taken under this
Section shall be paid into the Bond Fund and applied in accordance with
the provisions of the Indenture and after Payment in Full of the Bonds and
the payment of any costs occasioned by an Event of Default hereunder, any
excess moneys in the Bond Fund shall be returned to the Company.
The Company hereby authorizes the Trustee to draw moneys under the Credit
Facility in accordance with the Indenture upon a declaration of acceleration of
payment of the Bonds in an amount equal to (i) the aggregate principal amount of
all outstanding Bonds, (ii) redemption premium thereon, if any (if the Credit
Facility provides for the payment of such redemption premium) and (ii) all
interest on the Bonds due and to become due to the date of payment. The
obligation of the Company to accelerate payment of all payments required to be
made by the Company pursuant to Section 4.2 upon a declaration of acceleration
of payment of the Bonds shall be deemed satisfied and discharged by a
corresponding drawing and payment under the Credit Facility.
23
<PAGE> 28
Section 6.3. NO REMEDY EXCLUSIVE. Subject to the provisions of Section
6.5, no remedy herein conferred upon or reserved to the Trustee is intended to
be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy hereunder or now or
hereafter existing at law, in equity or by statute. No delay or omission to
exercise any right or power accruing upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. The Trustee and the Owners of the Bonds,
subject to the provisions of the Indenture, shall be entitled to the benefit of
all agreements herein contained.
Section 6.4. AGREEMENT TO PAY COUNSEL FEES AND EXPENSES. If there should
occur a default or an event of default hereunder and the Trustee or the Issuer
should employ Counsel or incur other expenses for the collection of sums due
hereunder or the enforcement of performance or observance of any agreement on
the part of the Company herein contained, the Company agrees that it will on
demand therefor pay to the Trustee or the Issuer the reasonable fee of such
Counsel and such other reasonable expenses so incurred by the Trustee or the
Issuer.
If the Company should fail to make any payments required in this Section,
such item shall continue as an obligation of the Company until the same shall
have been paid in full, with interest thereon from the date such payment was due
at the rate per annum borne by the Bonds until paid in full.
Section 6.5. WAIVER OF EVENTS OF DEFAULT AND RESCISSION OF ACCELERATION.
If, in compliance with the requirements of Section 7.09 of the Indenture, the
Trustee waives any event of default as therein defined with the written consent
of the Credit Provider (if such consent is required by the Indenture) and its
consequences or rescind any declaration of acceleration of payments of the
principal of, premium, if any, and interest on the Bonds, such waiver shall also
waive any event of default hereunder and its consequences and such rescission of
a declaration of acceleration of the principal of, premium, if any, and interest
on the Bonds shall also rescind any declaration of any acceleration of all
payments required to be made under Section 4.2. In case of any such waiver or
rescission, or in case any proceeding taken by the Trustee on account of any
such event of default shall have been discontinued or abandoned or determined
adversely, then and in every such case the Issuer, the Company, the Trustee, the
Credit Provider and the Owners of the Bonds shall be restored to their former
positions and rights hereunder, but no such waiver or rescission shall extend to
any subsequent or other event of default or impair any right consequent thereon.
[End of Article VI]
24
<PAGE> 29
ARTICLE VII
PREPAYMENT UNDER LOAN AGREEMENT
Section 7.1. OPTION TO PREPAY IN FULL. Unless there has been a
determination which could result in a Determination of Taxability described in
Section 7.2, and subject to requirements under the Indenture for Available
Moneys in certain instances, the Company shall have the option to prepay in full
the Note and terminate this Loan Agreement prior to Payment in Full of the Bonds
by (a) paying to the Trustee an amount of cash or Federal Securities which,
together with existing investments in the Bond Fund, will provide the Bond Fund
with cash or Federal Securities, the principal of and interest on which will be
sufficient, in the opinion of the Trustee, (1) to redeem in accordance with the
relevant section of the Indenture all Bonds then outstanding and to pay all
amounts, if any, required by Section 4.01 of the Indenture on the date on which
the Bonds are to be redeemed, (2) to pay at maturity all Bonds maturing prior to
or simultaneously with such redemption, (3) to pay interest on all Bonds
outstanding prior to their redemption or payment at maturity, and (4) to pay the
reasonable fees and expenses of the Trustee and any other expenses for which the
Company may be responsible under this Loan Agreement, the Note or the Indenture,
and (b) by making arrangements satisfactory to the Trustee for giving the
required notice of redemption.
Section 7.2. MANDATORY PREPAYMENT. The Company shall be obligated to
prepay the Note in full (a) upon the occurrence of a Determination of Taxability
or the Cessation of Operations as defined in the Indenture, or (b) as otherwise
provided in Section 3.01 of the Indenture.
Section 7.3. OPTION TO PREPAY IN PART. The Company shall have the option
to prepay the Note in part, and the Issuer agrees that the Trustee may accept
such payments to be paid to the Trustee for deposit in the Bond Fund and used
for redemption or, at the election of the Company, purchase of Outstanding Bonds
in the manner and to the extent provided in the Indenture. The principal amount
of each Bond so purchased, delivered or credited shall be appropriately credited
by the Trustee against the obligation of the Company to make future payments on
the Note.
Section 7.4. RELATION OF OPTIONS TO INDENTURE. The options granted to the
Company in this Article shall be prior and superior to the Indenture and may be
exercised whether or not the Company is in default under this Loan Agreement,
provided that any such default will not result in the non-fulfillment of any
condition to the exercise of any such option.
Section 7.5. OBLIGATIONS AFTER PAYMENT OF NOTE AND TERMINATION OF LOAN
AGREEMENT. Anything contained herein to the contrary notwithstanding, the
obligations of the Company contained in Sections 4.2(c),4.4,5.2 and 6.4 shall
continue after payment of the Note and termination of this Loan Agreement.
[End of Article VII]
25
<PAGE> 30
ARTICLE VIII
MISCELLANEOUS
Section 8.1. TERM OF LOAN AGREEMENT. Except as provided in Section 7.5,
this Loan Agreement shall terminate when Payment in Full of the Bonds shall have
been made.
Section 8.2. NOTICES. All notices, approvals, consents, requests and other
communications hereunder shall be in writing and shall be deemed to have been
given when delivered by hand or mailed by first class registered or certified
mail, return receipt requested, postage prepaid, and addressed as follows or
(unless specifically prohibited) when telexed or telecopied to the telex or
telecopy numbers as follows:
(a) If to the Issuer: The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority
P.O. Box 34486
Charlotte, North Carolina 28234
Attention: Chairman
(b) If to the Company: SteriGenics International
4020 Clipper Court
Fremont, California 94538
Attention: President
Facsimile Transmission Number: (510) 770-1499
(c) If to the Trustee: Bank One, Columbus, N.A.,
in care of Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Department
Facsimile Transmission Number: (614) 248-5195
(d) If to the
Credit Provider: Comerica Bank-California
333 W. Santa Clara Street
San Jose, CA 95113
Attention: Michael J. Archer
Facsimile Transmission Number: (408) 556-5396
(e) If to the
Remarketing Agent: Wheat, First Securities, Inc.
901 East Byrd Street
Richmond, Virginia 23219
Attention: Money Market Trading
Facsimile Transmission Number: (804) 782-3440
26
<PAGE> 31
(f) If to the
Paying Agent: Bank One, Columbus, N.A.,
in care of Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Department
Facsimile Transmission Number: (614) 248-5195
A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by the Issuer, the Company, the Trustee, the
Remarketing Agent or the Credit Provider to any one of the others shall also be
given to all of the others. The Issuer, the Company, the Trustee, the Credit
Provider, the Remarketing Agent and the Paying Agent may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, approvals, consents, requests or other communications shall be sent or
persons to whose attention the same shall be directed.
Section 8.3. BINDING EFFECT. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Company and their
respective successors and assigns.
Section 8.4. SEVERABILITY. If any provision hereof shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 8.5. AMOUNTS REMAINING IN BOND FUND. It is agreed by the parties
hereto that any amounts remaining in the Bond Fund and Project Fund upon
expiration or sooner termination of this Loan Agreement, after Payment in Full
of the Bonds, payment of the fees, charges and expenses of the Trustee, the
Remarketing Agent, the Paying Agent and the Credit Provider (including, without
limitation, the fees and expenses of their respective Counsel), and payment of
all other amounts required to be paid under the Indenture and under the
Reimbursement Agreement, including payment of rebatable arbitrage, shall be paid
immediately to the Company by the Trustee.
Section 8.6. RELIANCE BY ISSUER. The Issuer shall have the right at all
times to act in reliance upon the authorization, representation or certification
of the Company Representative or the Trustee.
Section 8.7. ISSUER'S OBLIGATIONS LIMITED. Except as otherwise expressly
herein provided, no recourse under or upon any obligation or agreement contained
in this Loan Agreement or in any Bond or under any judgment obtained against the
Issuer, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise or under any
circumstances, under or independent of the Indenture, shall be had against the
Issuer.
Anything in this Loan Agreement to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that (a) the Issuer may
rely conclusively on the truth and accuracy of any certificate, opinion, notice
or other instrument furnished to the Issuer by the Trustee or the Company as to
the existence of any fact or state of affairs required hereunder to be noticed
by the Issuer; (b) the Issuer shall not be under any obligation hereunder to
perform any record-keeping or to provide any legal services, it being understood
that such services shall be performed either by the Trustee or the Company; and
(c) none of the provisions of this Loan Agreement shall require the Issuer to
expend or risk its own funds or to otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers hereunder, unless it shall first have been adequately indemnified to its
satisfaction against the cost, expenses and liability which may be incurred
thereby.
27
<PAGE> 32
Notwithstanding anything herein contained to the contrary, any obligation
which the Issuer may incur under this Loan Agreement or under any instrument
executed in connection herewith which shall entail the expenditure of money
shall not be a general obligation of the Issuer but shall be a limited
obligation payable solely from the Pledged Revenues.
Section 8.8. IMMUNITY OF DIRECTORS, OFFICERS AND EMPLOYEES OF ISSUER AND
THE LOCAL GOVERNMENT COMMISSION. No recourse shall be had for the enforcement of
any obligation, promise or agreement of the Issuer contained in the Indenture,
this Loan Agreement or in any Bond issued under the Indenture for any claim
based thereon or otherwise in respect thereof, against any director, officer,
employee or agent, as such, in his individual capacity, past, present or future,
of the Issuer or the Local Government Commission, either directly or through the
Issuer or the Local Government Commission, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assignment or penalty or otherwise; it being expressly agreed and understood
that the Bonds, the Indenture and this Loan Agreement are solely corporate
obligations, and that no personal liability whatsoever shall attach to, or be
incurred by, any director, officer, employee or agent, as such, past, present or
future, of the Issuer or the Local Government Commission, either directly or
through the Issuer or the Local Government Commission, under or by reason of any
of the obligations, promises or agreements entered into between the Issuer and
the Company whether contained in this Loan Agreement or to be implied therefrom
as being supplemental hereto or thereto, and that all personal liability of that
character against every such director, officer, employee or agent is, by the
execution of this Loan Agreement and the Indenture, and as a condition of, and
as part of the consideration for, the execution of this Loan Agreement and the
Indenture, expressly waived and released.
Section 8.9. PAYMENTS BY CREDIT PROVIDER; CONFIRMING BANK. The Credit
Provider and the Confirming Bank shall, to the extent of any payments made by it
or the Confirming Bank pursuant to the Credit Facility or the Confirmation, if
applicable, be subrogated to all rights of the Issuer or its assigns (including,
without limitation, the Trustee) as to all obligations of the Company with
respect to which such payments shall be made by the Credit Provider or the
Confirming Bank, but, so long as any of the Bonds remain outstanding under the
terms of the Indenture, such right of subrogation on the part of the Credit
Provider shall be in all respects subordinate to all rights and claims of the
Issuer for all payments which are then due and payable under the Indenture or
otherwise arising under this Loan Agreement, the Indenture or the Bonds. The
Trustee will, upon request, execute and deliver any instrument reasonably
requested by the Credit Provider or the Confirming Bank, if applicable, to
evidence such subrogation and the Trustee shall assign to the Credit Provider or
the Confirming Bank, if applicable, its rights in any obligations of the Company
with respect to which payment of the entire principal balance and accrued
interest thereon shall be made by the Credit Provider or the Confirming Bank, if
applicable.
Section 8.10. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as otherwise
provided herein or in the Indenture, subsequent to me date of issuance and
delivery of the Bonds and prior to their payment in full, this Loan Agreement
and the Note may not be effectively amended or terminated without the written
consent of the Company, the Trustee and the Credit Provider. In addition to the
foregoing, any provisions contained in this Loan Agreement or any supplement
hereto relating to any notice to, approval of, indemnification of, or action by
the Local Government Commission may not be amended or supplemented without me
prior consent of the Local Government Commission.
Section 8.11. COUNTER PARTS. This Loan Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
28
<PAGE> 33
Section 8.12. CAPTIONS. The captions and headings herein are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions hereof.
Section 8.13. AMENDMENT OF LOAN AGREEMENT. The Board of Commissioners of
the Issuer must approve all amendments of this Loan Agreement. This Loan
Agreement may not be effectively modified, altered, amended or supplemented
without the prior written consent of the Company, the Trustee and the Credit
Provider and in accordance with the provisions of the Indenture.
Section 8.14. LAW GOVERNING CONSTRUCTION OF LOAN AGREEMENT. This Loan
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State.
Section 8.15. NO THIRD PARTY BENEFICIARY. It is specifically agreed
between the parties executing this Loan Agreement that neither this Loan
Agreement nor any of the provisions hereof are intended to establish in favor of
the public or any member thereof, other than as expressly provided herein,
including the assignment of the Issuer's rights under this Loan Agreement to the
Trustee pursuant to the Indenture, the rights of a third party beneficiary
hereunder, as to authorize any one not a party to this Loan Agreement to
maintain a suit for personal injuries or property damage pursuant to the terms
or provisions of this Loan Agreement. The duties, obligations and
responsibilities of the parties to this Loan Agreement with respect to third
parties shall remain as imposed by law.
[End of Article VIII]
29
<PAGE> 34
IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan
Agreement to be executed in their respective corporate names and their
respective corporate seals to be affixed hereto and attested by their authorized
officers, all as of the date first above written.
THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
By: [SIG]
------------------------------
Chairman
(SEAL)
Attest:
By: [SIG]
-------------------------------
Secretary
[SIGNATURE PAGES CONTINUED ON THE FOLLOWING PAGE.]
30
<PAGE> 35
[COUNTERPART SIGNATURE PAGE TO LOAN AGREEMENT]
STERIGENICS INTERNATIONAL
By: [SIG]
-----------------------------
Title: Vice President Finance
--------------------------
(CORPORATE SEAL)
Attest:
By:
--------------------------
Title:
-----------------------
31
<PAGE> 36
EXHIBIT A
to
LOAN AGREEMENT
DESCRIPTION OF PROJECT
The Project consists of the acquisition of an approximately 5.5 acre site
at 10811 Withers Cove Park Drive, Charlotte, Mecklenburg County, North Carolina,
and the acquisition, construction and equipping of an approximately 64,000
square foot contract radiation sterilization processing facility thereon, and
the acquisition and installation of machinery, equipment and other personal
property to be used in connection therewith, to be owned and operated by the
Company for the sterilization of health care, laboratory, pharmaceutical and
packaging products.
<PAGE> 37
EXHIBIT B
FORM OF NOTE
PROMISSORY NOTE
STERIGENICS INTERNATIONAL
$9,000,000 March____, 1996
SteriGenics International, a California corporation (the "Company"), for
value received, hereby promises to pay to The Mecklenburg County Industrial
Facilities and Pollution Control Financing Authority (the "Issuer"), or assigns,
on March 1, 2016, the principal sum of Nine Million Dollars ($9,000,000),
subject to prior payment, with interest on the unpaid principal sum, from
March___, 1996, until said principal sum shall be paid, and to the extent
permitted by law, interest on overdue installments of such interest, at the then
interest rate provided in the Bonds, as hereinafter defined. Interest shall be
payable at the interest rates payable on the Bonds, and the principal of,
premium, if any, and interest on this Note shall be payable at the times as set
forth in more detail in the Loan Agreement and the Indenture (as such terms are
defined below).
Payments shall be made in lawful money of the United States of America in
immediately available funds on the date payment is due, at the principal
corporate trust office of Bank One, Columbus, N.A., as Paying Agent (the "Paying
Agent"), in Columbus, Ohio, or at such other place as the Trustee may direct in
writing.
Anything herein to the contrary notwithstanding, any amount held by Bank
One, Columbus, N.A., as trustee (the "Trustee"), in the Bond Fund referred to in
the Indenture, which is available to be used to pay the principal of, premium,
if any or interest on the Bonds, shall, at the request of the Company, be
credited against the next succeeding payment hereunder and shall reduce the
payment to be made by the Company, provided that at any time during which a
Credit Facility, as defined in the Indenture, is in effect, such amounts shall
be in Available Moneys, as defined in the Indenture, before such credit shall be
made. If the amount held by the Trustee in the Bond Fund should be sufficient to
pay at the times required the principal of, premium, if any, and interest on the
Bonds then remaining unpaid and to pay all fees and expenses of the Trustee, the
Issuer and the Paying Agent accrued and to accrue through final payment of the
Bonds (provided that at any time during which a Credit Facility is in effect
such amounts constitute Available Moneys), then the Company shall not be
obligated to make any further payments hereunder, except to the extent losses
may be incurred in connection with investment of moneys in the Bond Fund.
The Issuer, by the execution of the Indenture, as hereinafter defined, and
the assignment form attached to this Note, is assigning this Note and the
payments thereon to the Trustee acting pursuant to the Indenture of Trust, dated
as of March 1, 1996 (the "Indenture"), between the Issuer and the Trustee as
security for the Issuer's $9,000,000 in aggregate principal amount of The
Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds (SteriGenics
<PAGE> 38
International Project), Series 1996 (the "Bonds"), as issued pursuant to the
Indenture. Payments of principal of, premium, if any, and interest on this Note
shall be made directly to the Trustee for the account of the Issuer pursuant to
such assignment and applied only to the principal of, premium, if any, and
interest on the Bonds. All obligations of the Company hereunder shall terminate
when all sums due and to become due pursuant to the Indenture, this Note, the
Loan Agreement, as hereinafter defined, and the Bonds have been paid.
In addition to the payments of principal, premium, if any, and interest
specified in the first paragraph hereof, the Company shall also pay such
additional amounts, if any, which, together with other moneys available therefor
pursuant to the Indenture, may be necessary to provide for payment when due
(whether at maturity, by acceleration or call for redemption, mandatory
purchase, purchase upon optional tenders, sinking fund redemption or otherwise)
of principal and purchase price of, premium, if any, and interest on the Bonds.
The Company shall have the option or may be required to prepay this Note
in whole or in part upon the terms and conditions and in the manner specified in
the Loan Agreement, dated as of March 1, 1996 (the "Loan Agreement"), between
the Issuer and the Company.
This Note is issued pursuant to the Loan Agreement in satisfaction of the
Company's payment obligation in Section 4.2(a) thereof and is entitled to the
benefits and subject to the conditions thereof, including the provisions of
Section 4.5 thereof that the Company's obligations thereunder and hereunder
shall be unconditional as provided in such Section 4.5 All the terms, conditions
and provisions of the Loan Agreement and the applicable provisions of the Bonds
and the Indenture are, by this reference thereto, incorporated herein as a part
of this Note, including, without limitation, the provisions of Section 8.8 of
the Loan Agreement entitled "Immunity of Directors, Officers and Employees of
Issuer and the Local Government Commission. "
In case an Event of Default, as defined in the Loan Agreement, shall
occur, the principal of, premium, if any, and interest on this Note may be
declared immediately due and payable as provided in the Loan Agreement. Ibis
Note shall be governed by, and construed in accordance with, the laws of the
State of North Carolina.
[SIGNATURE PAGE CONTINUED ON THE FOLLOWING PAGE]
2
<PAGE> 39
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its
corporate name and its seal to be hereunto affixed and attested by its duly
authorized officers, all as of the date first above written.
STERIGENICS INTERNATIONAL
By:
-----------------------------
Title:
--------------------------
(CORPORATE SEAL)
Attest:
By:
---------------------------
Title:
------------------------
3
<PAGE> 40
ASSIGNMENT
The Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority (the "Issuer"), hereby irrevocably assigns, without
recourse, the foregoing Note to Bank One, Columbus, N.A., as trustee (the
'Trustee"), under the Indenture of Trust, dated as of March 1, 1996 (the
"Indenture"), between the Issuer and the Trustee and hereby directs SteriGenics
International, a California corporation, as the maker of the Note to make all
payments of principal of, premium, if any, and interest thereon directly to the
Trustee at its principal corporate trust office in Columbus, Ohio, or at such
other place as the Trustee may direct in writing. Such assignment is made as
security for the payment of $9,000,000 in aggregate principal amount of the
Issuer's Industrial Development Revenue Bonds (SteriGenics International
Project), Series 1996, issued pursuant to the Indenture.
THE MECKLENBURG COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
By:
-------------------------------
Chairman
<PAGE> 1
$9,148,000
REIMBURSEMENT AGREEMENT
By and Between
STERIGENICS INTERNATIONAL,
a California corporation
and
COMERICA BANK-CALIFORNIA
Dated as of March 1, 1996
Relating to:
The Mecklenburg County Industrial Facilities
and Pollution Control Financing Authority
Industrial Development Revenue Bonds (SteriGenics International Project),
Series 1996
<PAGE> 2
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT dated as of March 1, 1996 (this
"Agreement"), by and between STERIGENICS INTERNATIONAL, a California corporation
duly organized and existing under the laws of the State of California
("Company"), and COMERICA BANK-CALIFORNIA, a California banking corporation (the
"Credit Bank").
WITNESSETH
WHEREAS, Company proposes to finance the acquisition of an
approximately 5.5 acre site at 10811 Withers Cove Park Drive, Charlotte, North
Carolina, the acquisition, construction and equipping of an approximately 64,000
square foot contract radiation sterilization processing facility and the
acquisition and installation of machinery, equipment and other personal property
to be used in connection therewith, to be used primarily for the sterilization
of health care, laboratory, pharmaceutical and packaging products located in
Mecklenburg County, North Carolina (collectively, the "Project");
WHEREAS, in order to finance the Project, Company has requested the
assistance of The Mecklenburg County Industrial Facilities and Pollution Control
Financing Authority, a public body organized and existing under laws of the
State of North Carolina (the "Authority"), to issue The Mecklenburg County
Industrial Facilities and Pollution Control Financing Authority Industrial
Development Revenue Bonds (SteriGenics International Project), Series 1996 (the
"Bonds"), in the principal amount of $9,000,000;
WHEREAS, in order to provide for the authentication and delivery of
the Bonds, to establish and declare the terms and conditions upon which the
Bonds are to be issued and secured and to secure the payment of the principal
thereof and of the interest and premium, if any, thereon, the Authority has
entered into an Indenture of Trust (the "Indenture"), dated as of March 1, 1996,
by and between the Authority and Bank One, Columbus, N.A. as trustee (the
"Trustee");
WHEREAS, pursuant to the Indenture, Trustee will make certain
disbursements for the acquisition, construction and equipping of the Project
according to the terms more specifically set forth in the Indenture and the Loan
Agreement (the "Loan Agreement"), by and between the Authority and the Company;
WHEREAS, the Company has requested that the Credit Bank issue in
favor of the Trustee, for the account of the Company, a direct-pay letter of
credit ("Letter of Credit") in an initial stated amount of $9,148,000, which
Letter of Credit is to be available to be drawn upon to provide funds for the
payment of principal and interest on the Bonds when due and payable; and
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WHEREAS, any Bonds purchased by the Credit Bank by application of
amounts drawn under the Letter of Credit pursuant to a Principal Drawing or
Interest Drawing (as defined herein) shall be transferred to and registered in
the name of the Company and held by the Tender Agent until the Credit Bank shall
have been reimbursed for the amount so drawn and interest accrued thereon in
accordance with this Agreement, which reimbursement may be satisfied by the
payment of the principal and interest represented by the Bonds so held by or for
the account of the Credit Bank, as provided herein and in such Bonds, or the
payment to the Credit Bank pursuant to the terms of that certain Placement and
Remarketing Agreement dated as of March 1, 1996 (the "Remarketing Agreement"),
among the Authority, Company and Wheat, First Securities, Inc. following the
remarketing of the Bonds;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS.
For purposes of this Agreement, capitalized terms used herein which
are not defined herein shall have the meanings set forth in the Indenture. In
addition, the following terms shall have the following meanings:
"Authority" shall mean The Mecklenburg County Industrial Facilities
and Pollution Control Financing Authority.
"Agreement" shall mean this Reimbursement Agreement, including any
Exhibits hereto, as the same may be supplemented and amended in accordance with
its terms.
"Base Rate" shall mean the rate of interest publicly announced from
time to time by the Credit Bank as its "reference rate" or "prime rate."
"Bonds" shall mean The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996.
"Bond Documents" shall mean, at any time, each of the following as
in effect or as outstanding, as the case may be, at such time: (i) the Bonds;
(ii) the Indenture; (iii) the Loan Agreement; (iv) the Remarketing Agreement;
(v) the Security Agreement; (vi) the Deed of Trust; (vii) the Guaranty; (viii)
the Environmental Indemnity; (ix) this Agreement; and (x) any other agreements,
instruments, certificates or other documents executed in connection with the
foregoing.
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"Business Day" shall mean a day other than (i) a day on which the
banking institutions in (a) New York, New York or (b) the City of San Jose,
California or (c) Detroit, Michigan or (d) the cities in which the Trustee or
the Paying Agent (as defined in the Indenture) or the Remarketing Agent have
their respective principal offices are authorized to close or (ii) a day on
which the New York Stock Exchange is closed.
"Company" shall mean SteriGenics International, a California
corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations, rulings and proclamations promulgated or issued thereunder.
"Credit Bank" shall mean Comerica Bank-California, a California
banking corporation and its successors and assigns, as issuer of the Letter of
Credit, or any issuer of a substitute Letter of Credit.
"Credit Provider Rate" shall mean one and one-half percent (1 1/2%)
in excess of the rate of interest established by Credit Bank from time to time
as its base rate during any period that interest shall accrue at such rate
pursuant to the terms of this Agreement, each change in such Base Rate to become
effective on the date such change is announced by Credit Bank, such rate to be
calculated on the basis of actual number of days elapsed and a 360-day year. In
each case, the Credit Provider Rate shall change when and as the Base Rate
changes.
"Date of Issuance" has the meaning set forth in Section 2.1 hereof.
"Deed of Trust" shall mean the Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Rents, dated as of March 1, 1996, by and
between the Company and L. Hunter Meacham, Jr., as trustee for the benefit of
the Credit Bank.
"Drawing" shall mean a drawing under the Letter of Credit in
accordance with its terms, and shall include a "Purchase Drawing," "Principal
Drawing," and "Interest Drawing."
"Drawing Fee" shall mean the fee described in Section 2.4 hereof.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" shall have the meaning set forth in Article 9
hereof.
"Expiration Date" shall have the meaning assigned to that term in
the Letter of Credit.
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"Environmental Indemnity" shall mean the unsecured environmental
indemnity agreement executed in favor of the Credit Bank as required by Section
3. 1 (h) hereof.
"Guaranty" shall mean the Guaranty, dated as of March 1, 1996, from
the Guarantors for the benefit of the Credit Bank, as the same may be
supplemented and amended in accordance with its terms.
"Guarantors" shall mean Charles King, Jr. and The Charles W. King,
Jr. Trust as guarantors under the Guaranty.
"Indenture" shall have the meaning set forth in the third WHEREAS
clause hereof, as the same may be supplemented and amended in accordance with
its terms.
"Interest Drawing" shall mean a Drawing under the Letter of Credit
to pay interest on the Bonds (other than Bonds registered in the name of the
Company) when due and payable by Company pursuant to Loan Agreement.
"Letter of Credit" shall mean the Letter of Credit issued by the
Credit Bank pursuant to this Agreement, and shall include any amended Letter of
Credit or any substitute Letter of Credit issued by the another bank.
"Letter of Credit Fee" shall mean the fee described in Section 2.2
hereof.
"Loan Agreement" shall mean that certain Loan Agreement, dated as of
March 1, 1996, by and between the Authority and the Company and relating to the
Bonds, as the same may be supplemented and amended in accordance with its terms.
"Official Statement" shall mean the official statement, dated March
8, 1996, relating to the delivery and sale of the Bonds, including any
supplement to such Official Statement.
"Permitted Encumbrances" shall mean, as of any particular time (i)
the Deed of Trust, (ii) liens for taxes and assessments not then delinquent or
which are being contested in good faith and for which adequate reserves have
been created, (iii) utility, access and other easements and rights of way
restrictions and exceptions that an authorized officer of Company certifies will
not interfere with or impair the use intended to be made of the Property and the
Project and as to the existence of which the Credit Bank has consented in
writing, (iv) covenants, conditions or restrictions or liens of record relating
to the Property and the Project and existing on the date of sale and delivery of
the Bonds as set forth in the ALTA Title Insurance Policy delivered pursuant to
Section 3. 1 (f) hereof, (v) covenants, conditions, restrictions or liens
relating to the Property or the Project over which Commonwealth Land Title
Insurance Company provides affirmative coverage, (vi) materialmen's, mechanic's
and similar liens securing amounts not yet past due or which are
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being contested in good faith and for which adequate reserves have been created
and (vii) such minor defects, irregularities, encumbrances and clouds on title
as normally exist with respect to property similar in character to the Property
and as do not materially impair the use intended to be made of property affected
thereby.
"PBGC" shall mean Pension Benefit Guaranty Corporation.
"Person" shall mean an individual, association, unincorporated
organization, corporation, partnership, joint venture, trust, government or any
governmental agency or political subdivision or any other entity or
organization.
"Plan" shall mean an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and is either (i) maintained by Company for employees of Company
or (ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
Company is then making or accruing an obligation to make contributions or has
within the preceding five years of such plan made contributions.
"Principal Drawing" shall mean a Drawing under the Letter of Credit
to pay the principal of the Bonds (other than Bonds registered in name of the
Company) required to be made by Company upon the maturity thereof or upon the
optional or mandatory redemption thereof, all pursuant to the Bonds and the
Indenture.
"Project" shall mean the additions, extensions, alterations and
improvements to the Property to be financed with the proceeds of the Bonds,
including the acquisition of an approximately 5.5 acre site at 10811 Withers
Cove Park Drive, Charlotte, North Carolina, the acquisition, construction and
equipping of an approximately 64,000 square foot contract radiation
sterilization processing facility and the acquisition and installation of
machinery, equipment and other personal property to be used in connection
therewith, to be used primarily for the sterilization of health care,
laboratory, pharmaceutical and packaging products located in Mecklenburg County,
North Carolina;
"Property" means the real property, and any buildings, structures
and fixtures thereon, described in Exhibit A to the Deed of Trust.
"Purchase Drawing" shall mean a Drawing under the Letter of Credit
to pay the purchase price of the Bonds following the failure to remarket any
Bonds as set forth in Section 3.02 of the Indenture.
"Remarketing Agent" shall mean Wheat, First Securities, Inc., as
Remarketing Agent under the Remarketing Agreement, or any successor to it as
remarketing agent
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"Remarketing Agreement" shall mean that certain Placement and
Remarketing Agreement dated as of March 1, 1996 by and among the Authority,
Company and the Remarketing Agent, and any successor remarketing agreement
entered into by the Authority, Company and a successor remarketing agent in
accordance with the provisions of the Indenture.
"Restrictions" shall have the meaning set forth in Section 6.4
hereof.
"Security Agreement" shall mean that certain Pledge and Security
Agreement dated as of March 1, 1996 from the Company to the Credit Bank, as the
same may be supplemented and amended in accordance with its terms.
"Special Counsel" shall mean Manatt, Phelps & Phillips, LLP.
"Stated Amount" shall mean the amount set forth in the Letter of
Credit as the "Stated Amount", as such amount is reduced and reinstated from
time to time in accordance with the Letter of Credit.
"Stated Expiration Date" shall have the meaning assigned to that
term in the Letter of Credit.
"Transfer Certificate" shall have the meaning assigned to that term
in the Letter of Credit.
"Transfer Fee" shall mean the fee described in Section 2.4 hereof.
"Trustee" shall mean Bank One, Columbus, N.A., in its capacity as
trustee under the Indenture, and any other bank or trust company at any time
substituted in its place pursuant to and in accordance with the Indenture.
"Uniform Customs and Practice" means the Uniform Customs and
Practice for Documentary Credits approved by the International Chamber of
Commerce and in effect and adhered to by the Credit Bank as of the date of
issuance of the Letter of Credit.
ARTICLE 2. LETTER OF CREDIT; FEES; REIMBURSEMENT.
SECTION 2.1. Amount and Terms of Letter of Credit. The Credit Bank
agrees, upon at least 24 hours' prior notice from Company to the Credit Bank and
on the terms and subject to the conditions hereinafter set forth, including,
without limitation, the conditions set forth in Article 3 hereof, to issue the
Letter of Credit on the date of delivery specified herein (the "Date of
Issuance"), provided such date of delivery is not later than March 10, 1996,
effective upon such delivery date and expiring on the Expiration Date. The
Letter of Credit will be issued in an initial Stated Amount of $9,148,000,
representing the
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aggregate principal amount represented by the Bonds as of the Date of Issuance,
plus interest on such principal amount for a period of 50 days at a rate not to
exceed twelve percent (12%) per annum. The Letter of Credit shall be issued to
the Trustee for the account of Company, and shall be substantially in the form
of Exhibit A hereto, with such changes to the form set forth in Exhibit A as
Company and the Credit Bank shall agree in writing are necessary or advisable.
SECTION 2.2. Letter of Credit Fee. Company shall pay to the Credit
Bank a nonrefundable letter of credit fee (the "Letter of Credit Fee") in an
amount equal to 1.375% of the Stated Amount per each 12-month period for the
period from and including the Date of Issuance until but excluding the
Expiration Date on the Stated Amount available under the Letter of Credit in
advance of the first 12-month period to be paid on the Date of Issuance and in
equal monthly installments thereafter. The Letter of Credit Fee shall be
calculated on the basis of a 360-day year and shall be payable in respect of
each 12-month period in advance; provided, however, commencing on the one year
anniversary of the issuance of the Letter of Credit, in the event there is no
default hereunder and the Letter of Credit has terminated before the end of a
12-month period for which the Letter of Credit Fee has been paid, Credit Bank
shall refund that portion of the Letter of Credit Fee relating to the period in
which the Letter of Credit is no longer in effect.
SECTION 2.3. Drawing Fee. Company shall pay to the Credit Bank for
each drawing on the date thereof a nonrefundable drawing fee (the "Drawing Fee")
in an amount equal to the usual and customary fee charged by the Credit Bank to
its customers for a draw under a letter of credit.
SECTION 2.4. Letter of Credit Transfer Fee. Any transfer of the
Letter of Credit by the Trustee or issuance of a substitute Letter of Credit
shall be made by, and be only effective upon, (a) in the case of such a
transfer, the Trustee providing the Credit Bank with a Transfer Certificate (as
defined in the Letter of Credit) in accordance with the Letter of Credit and (b)
in the case of such a transfer or such an issuance, payment to the Credit Bank
by Company of a transfer fee (the "Transfer Fee") of $500 for each transfer or
issuance and of the costs payable to the Credit Bank in respect of each such
transfer or issuance. No Transfer Fee shall be due in the event of a transfer or
substitution due to: (a) non-renewal of the Letter of Credit; (b) a downgrading
of the Letter of Credit; or (c) an increase in costs associated with the Letter
of Credit.
SECTION 2.5. Reduction and Reinstatement of Stated Amount. The
Stated Amount shall be automatically reduced and reinstated as specified in the
Letter of Credit.
SECTION 2.6. Interest. Company hereby agrees to pay interest at the
Credit Provider Rate on any and all amounts required to be paid by Company under
this Agreement from and after the due date thereof until paid in full, whether
before or after the expiration of the Letter of Credit and this Agreement, at
the Stated Expiration Date or otherwise, such
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interest to be payable on demand. Notwithstanding anything herein to the
contrary, to the extent permitted by law, if at any time the Credit Provider
Rate exceeds any statutory or constitutional interest rate limitation or
restriction and the Credit Bank shall not receive payment at the Credit Provider
Rate, any subsequent reduction in the Credit Provider Rate shall not reduce the
rate of interest utilized for the calculation of amounts payable to the Credit
Bank hereunder until the total amount due if the Credit Provider Rate had at all
times been utilized, has been paid to the Credit Bank.
SECTION 2.7. Increased Costs. If any change in any law or regulation
or in the interpretation thereof by any court or administrative or governmental
authority charged with the administration thereof shall either (i) impose,
modify or deem applicable any reserve, special deposit, capitalization or
similar requirement against letters of credit issued by the Credit Bank or (ii)
impose on the Credit Bank any other condition relating, directly or indirectly,
to this Agreement or the Letter of Credit or the holding or owning of any Bonds
by the Credit Bank or the purchasing thereof, and the result of any event
referred to in (i) or (ii) above shall be to increase the cost to the Credit
Bank of issuing or maintaining the Letter of Credit, or of purchasing the Bonds,
then, upon demand by the Credit Bank, Company shall, upon not less than 10 days'
prior notice from the Credit Bank (which notice shall specify in reasonable
detail the circumstances giving rise to the increase and the method of
calculating the increase), pay to the Credit Bank, from time to time as
specified by the Credit Bank, such additional amounts as shall be demanded by
the Credit Bank as sufficient to compensate the Credit Bank for such increased
cost, together with interest at the Credit Provider Rate on amounts required to
be paid under this Section 2.7 from the due date of such payment following not
less than 10 days' prior notice until payment in full thereof.
SECTION 2.8. Net Payments. All payments under this Agreement shall
be made without set-off or counterclaim and in such amounts as may be necessary
in order that all such payments (after deduction or withholding for or on
account of a proportionate share attributable to the transactions contemplated
by this Agreement or any future taxes, levies, imposts, duties or other charges
of whatsoever nature imposed by any government, any political subdivision or any
taxing authority other than any tax on or measured by the overall net income of
the Credit Bank pursuant to the income tax laws of the United States or the
jurisdiction where the Credit Bank's principal office is located (collectively,
the "Taxes")) shall not be less than the amounts otherwise specified to be paid
under this Agreement. A certificate as to any additional amounts payable to the
Credit Bank under this Section 2.8 submitted to Company by the Credit Bank shall
show in reasonable detail the amount payable and the calculations used to
determine in good faith such amount and shall be conclusive absent manifest
error. Any amounts payable by Company under this Section 2.8 with respect to
past payments shall be due within ten days following receipt by Company of such
certificate from the Credit Bank; any such amounts payable with respect to
future payments shall be due concurrently with such future payments. With
respect to each deduction or withholding for or on account of any Taxes, Company
shall promptly furnish to the Credit Bank such certificates, receipts and other
documents as may be required (in the reasonable
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judgment of the Credit Bank) to establish any tax credit to which the Credit
Bank may be entitled. Without in any way affecting any of its rights under this
Section 2.8, the Credit Bank agrees that, upon its becoming aware that any of
the present or future payments due it under this Agreement would be subject to
deduction for Taxes, it will notify Company in writing and the Credit Bank
further agrees that it will use reasonable efforts not disadvantageous to it (in
its sole determination) in order to avoid or minimize, as the case may be, the
payment by Company of any additional amounts for Taxes pursuant to this Section
2.8.
SECTION 2.9. Reimbursement of Principal Drawings and Interest
Drawings. (a) If a Principal Drawing or Interest Drawing is repaid at or prior
to 1:00 p.m. (Pacific time) on the same day on which it is made, no interest
shall be payable on such Drawing. Company hereby agrees to pay to the Credit
Bank the amount of each Principal Drawing and each Interest Drawing no later
than 1:00 p.m. (Pacific time) on the first Business Day following the date of
payment by the Credit Bank of such Drawing, plus interest at the Credit Provider
Rate on such amounts from and including the date such amounts are paid by the
Credit Bank until payment in full by Company (as determined by the Credit Bank).
If Company shall not have paid to the Credit Bank such amounts (and such
interest, if any) before 1:00 p.m. on the second Business Day following the date
of the Credit Bank's payment of such Drawing, Company shall pay interest on such
amounts from and including such second Business Day until payment in full by
Company at such fluctuating interest rate per annum as shall be in effect from
time to time, which rate per annum for each day shall be equal to the Credit
Provider Rate in effect on such day, but in no event higher than the maximum
rate permitted by applicable law. Unless otherwise waived by the Credit Bank,
Company shall be obligated, without notice of a Principal Drawing or Interest
Drawing or demand for reimbursement from the Credit Bank (which notice is hereby
waived by Company), to reimburse the Credit Bank for all Principal Drawings and
Interest Drawings (with interest as provided in the first sentence of this
Section 2.9) on or before 1:00 p.m. (Pacific time) on the second Business Day
following the day on which the Credit Bank honored such Drawings. If a Principal
Drawing or Interest Drawing is repaid after 1:00 p.m. (Pacific time) on any
Business Day, it shall be treated as having been repaid on the following
Business Day.
(b) The Credit Bank shall maintain in accordance with sound banking
practices an account or accounts evidencing the indebtedness of Company
resulting from each Principal Drawing and each Interest Drawing and the interest
accruing thereon, and in any legal action or proceeding in respect of this
Agreement, the entries made in such account or accounts shall, in the absence of
manifest error, be conclusive evidence of the existence and amounts of the
obligations of Company therein recorded.
SECTION 2.10. Reimbursement of Purchase Drawings. (a) Company's
obligation to reimburse the Credit Bank for any unreinbursed amounts drawn under
the Letter of Credit in respect of any Purchase Drawing shall be secured in part
by the delivery
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to Credit Bank of the purchased Bonds. The obligation of Company under this
Agreement and under the Indenture in respect of such Bonds purchased with the
proceeds of a Purchase Drawing shall be satisfied by the payment of such Bonds
in accordance with their terms and the terms of the Indenture and the subsequent
payment to Credit Bank of all such payments, or the reimbursement of the Credit
Bank pursuant to the terms of the Remarketing Agreement following the
remarketing of the Bonds.
(b) In the event that any Bonds are registered in the name of
Company, on the date on which the Letter of Credit expires for any reason, the
principal amount of such Bonds and the interest accrued thereon shall thereupon
be paid by Company immediately to the Credit Bank; provided that nothing herein
contained shall affect any right which the Credit Bank may have hereunder or
under the Indenture or the Bonds upon the occurrence of an Event of Default
hereunder or thereunder.
SECTION 2.11. Security. Company, in order to secure its obligation
to make payments to the Credit Bank pursuant to the terms of this Agreement and
to perform all of its other covenants and agreements under this Agreement, has
pledged, assigned and granted to the Credit Bank, a lien on and security
interest in the revenues of the Project subordinate only to the lien granted
under the Indenture to the owners of the Bonds and to the Trustee for its
reasonable compensation, expenses, charges, counsel fees and other disbursements
incurred in the performance of its powers and duties under the Indenture, and
has executed the Deed of Trust and caused to be delivered to Credit Bank the
Guaranty and the Security Agreement for the benefit of the Credit Bank.
SECTION 2.12. Place and Manner of Payment; Computation of Interest.
All payments by Company to the Credit Bank hereunder, except reimbursement of
Principal Drawings and Interest Drawings pursuant to Section 2.9 hereof and
reimbursement of Purchase Drawings pursuant to Section 2.10 hereof, shall be
made to the Credit Bank at 333 West Santa Clara Street, 2nd Floor, San Jose,
California 95113 in lawful currency of the United States in immediately
available funds not later than 1:00 p.m. (Pacific time) on the date due, without
set-off, counterclaim or deduction of any kind. In the event that the date
specified for any such payment hereunder is not a Business Day, such payment
shall be made not later than the next following Business Day. Company shall pay
interest on any such payment not made on the due date, at the Credit Provider
Rate, to the Business Day on which such payment is made. Computations of
interest hereunder shall be made by the Credit Bank and Company on the basis of
actual days elapsed and a 360-day year.
ARTICLE 3. CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF CREDIT.
SECTION 3.1. Documents to be Received. The Credit Bank's obligation
to issue the Letter of Credit as set forth in Section 2.1 hereof is subject to
the conditions precedent that, on or prior to the Date of Issuance, the Credit
Bank shall receive the
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following documents, all in form and substance satisfactory to the Credit Bank
and its Special Counsel:
(a) a copy of the resolution or resolutions of Company, certified as
of the date of the delivery of the Bonds by an authorized officer of Company,
authorizing, among other things, the execution, delivery and performance by
Company of this Agreement and the Bond Documents to which Company is a party and
authorizing Company to obtain the issuance of the Letter of Credit and certified
copies of all other documents evidencing any other action of Company taken with
respect thereto;
(b) a certificate, signed by a duly authorized officer of Company,
dated the date of the delivery of the Bonds, to the effect that:
(i) The representations and agreements of Company contained in
this Agreement and each of the Bond Documents to which it is a party
are true, complete and correct in all material respects as of the
Date of Issuance;
(ii) To such official's knowledge, Company has complied with
all agreements, covenants and conditions to be complied with by
Company at or prior to the Date of Issuance under this Agreement and
each of the Bond Documents to which it is a party;
(iii) To such official's knowledge, no event affecting Company
has occurred since the date of the Official Statement which either
makes untrue or incorrect in any material respect, as of the Date of
Issuance, the statements or information contained in the Official
Statement concerning Company or is not reflected in the Official
Statement but should be reflected therein in order to make the
statements and information therein concerning Company not misleading
in any material respect;
(iv) The information concerning Company and the Project
contained in the Official Statement and the appendices thereto does
not contain any untrue statement of a material fact or omit to state
any fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading in any material respect; and
(v) No Event of Default has occurred and is continuing, or
would result from the issuance of the Letter of Credit, the making
of this Agreement or any of the other Bond Documents to which
Company is a party, and no event has occurred and is continuing
which would constitute an Event of Default but for the requirement
that notice be given or time elapse or both;
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(c) a certificate of a duly authorized officer of Company certifying
the names and true signatures of the officers of Company authorized to sign this
Agreement and the Bond Documents to which Company is a party;
(d) evidence of the status of Company as a California corporation,
duly incorporated, validly existing and in good standing under the laws of the
State of California and fully authorized to operate the Project in North
Carolina and a copy of the Articles of Incorporation, certified by the Secretary
of State;
(e) a certified copy of the Bylaws of Company;
(f) an ALTA Tide Insurance Policy for the benefit of the Credit
Bank, insuring the Deed of Trust as a valid and enforceable first-priority lien
on the Property in the original Stated Amount, subject only to Permitted
Encumbrances;
(g) this Agreement, the Deed of Trust and the Environmental
Indemnity, duly executed by Company;
(h) the Security Agreement and Guaranty duly executed by the
Guarantors;
(i) all Bond Documents and other documents, certificates, opinions,
approvals or filings with respect to the Bond Documents, this Agreement or the
transactions contemplated thereby or hereby as the Credit Bank or its Special
Counsel shall reasonably request, in form and substance satisfactory to the
Credit Bank.
SECTION 3.2. Other Conditions Precedent to Issuance of the Letter of
Credit. The Credit Bank's obligation to issue the Letter of Credit as set forth
in Section 2.1 hereof shall be subject to the additional conditions precedent
that on or before the Date of Issuance:
(a) Company shall pay to the Credit Bank the Letter of Credit Fee,
for the first 12-month period in immediately available funds;
(b) no change shall have occurred in any law, regulation, ruling or
other action of the United States, or the State of North Carolina or the State
of California or any political subdivision or authority therein or thereof
which, in the opinion of Special Counsel for the Credit Bank would make it
illegal or inadvisable for the Credit Bank to issue the Letter of Credit as
provided therein; and
(c) all legal requirements provided herein incident to such issuance
shall be reasonably satisfactory to the Credit Bank and its Special Counsel.
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ARTICLE 4. INDEMNIFICATION.
In addition to any other amounts payable by Company under this
Agreement, Company hereby, agrees to release, protect, indemnify, pay and save
the Credit Bank and its officers, directors, employees, attorneys and agents
(each, an "indemnified person") harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
attorneys' fees) which any indemnified person may, other than as a result of its
gross negligence or willful misconduct, incur or be subject to as a consequence,
direct or indirect, of (i) the execution and delivery or transfer of, or payment
or failure to pay, under the Letter of Credit, (ii) any breach by any party
hereto of any representation or warranty, covenant, term or condition in, or the
occurrence of any default under, this Agreement or any of the Bond Documents,
including all fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default, (iii)
the holding or owning by the Credit Bank or its nominee of any Bond, (iv) the
issuance, sale or delivery of the Bonds, (v) the use of the proceeds of the
Bonds or any Drawing, or (vi) involvement of any indemnified person in any legal
suit, investigation, proceeding, inquiry or action as a consequence, direct or
indirect, of the Credit Bank's issuance of the Letter of Credit, the Credit
Bank's holding or owning of any Bond, the holding or owning of any Bond by the
Credit Bank's nominee, the Credit Bank's execution of this Agreement, or any
other event or transaction contemplated by any of the foregoing.
Promptly after receipt by an indemnified person of notice of the
commencement of any action in respect of which indemnity may be sought against
Company under this Article 4, such indemnified person will notify Company in
writing of the commencement thereof, and, subject to the provisions hereinafter
stated, Company may assume the defense of such action (including the employment
of counsel, who shall be satisfactory to the indemnified person, but at
Company's expense) insofar as such action shall relate to any alleged liability
in respect of which indemnification may be sought from Company.
An indemnified person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, and the
fees and expenses of such counsel shall be at the expense of Company.
ARTICLE 5. OBLIGATIONS ABSOLUTE.
To the fullest extent permitted by applicable law, the obligations
of Company under this Agreement shall be unconditional and irrevocable, and
shall be paid or performed strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:
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(a) any lack of validity or enforceability of the Letter of Credit,
this Agreement or any of the other Bond Documents;
(b) any amendment or waiver of or any consent to depart from the
terms of this Agreement (other than the provisions of this Agreement
specifically amended or waived) or any of the other Bond Documents;
(c) the existence of any claim, set-off, defense or other right
which Company may have at any time against the Trustee, any beneficiary or any
transferee of the Letter of Credit (or any persons or entities for whom the
Trustee, any such beneficiary or any such transferee may be acting), the Credit
Bank or any other person or entity, whether in connection with this Agreement,
any if the other Bond Documents or the transactions contemplated hereby or
thereby or any unrelated transaction;
(d) any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(e) any nonapplication or misapplication by the Trustee or otherwise
of the proceeds of any Drawing;
(f) payment by the Credit 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;
(g) the failure by the Credit Bank to honor any Drawing under the
Letter of Credit or to make any payment demanded under the Letter of Credit on
the grounds that the demand for such payment does not conform to the terms and
conditions of the Letter of Credit; or
(h) any other circumstances or happening similar to any of the
foregoing.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF COMPANY.
To induce the Credit Bank to enter into this Agreement and issue the
Letter of Credit, Company makes the representations and warranties to the Credit
Bank set forth in this Article 6 on and as of the date hereof.
SECTION 6.1. Organization: Powers. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California and has the power and authority to carry on its business as
presently conducted including, without limitation, the operation of the Project,
to own its assets and to enter into and
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perform its obligations under this Agreement and the other Bond Documents to
which it is a party.
SECTION 6.2. Corporate Authority, etc. The execution, delivery and
performance by Company of this Agreement and the other Bond Documents to which
Company is a party have been duly authorized by all necessary action of Company
and this Agreement and such other Bond Documents constitute legal, valid and
binding obligations of Company enforceable in accordance with their terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, by general equitable principles which may limit the
right to obtain equitable remedies and by provisions of applicable California or
North Carolina law.
SECTION 6.3. Compliance with Laws and Contracts. The execution,
delivery and performance by Company of this Agreement and the other Bond
Documents to which Company is a party do not and will not (a) violate any
provision of any order, writ, judgment, injunction, decree, determination or
award as currently in effect to which Company is subject or of the Articles of
Incorporation or by-laws of Company or, to the best of Company's knowledge, any
law, rule or regulation to which Company is subject; (b) result in a breach of
or constitute a default under the provisions of any material indenture, loan or
credit agreement or any other agreement, lease or instrument to which Company
may be or is subject or by which it, or its property, is bound; or (c) result
in, or require, the creation or imposition of any mortgage, deed of trust,
assignment, pledge, lien, security interest or other charge or encumbrance of
any nature or with respect to any of the Property other than as provided
therein; and Company is not in default under any such order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument or any law, rule or regulation to which Company is subject.
SECTION 6.4. Approvals. Company has obtained all authorizations,
consents, approvals, licenses, exemptions of or filings or registrations with
all commissions, boards, bureaus, agencies, instrumentalities, trustees, holders
of any indebtedness of Company or any other Person, domestic or foreign,
necessary to the valid execution, delivery and performance by Company of this
Agreement and the other Bond Documents to which Company is a party which are
capable of being obtained on or prior to the Date of Issuance, except as such
may be required under the state securities or Blue Sky laws in connection with
the distribution of the Bonds by the Remarketing Agent. Company is familiar with
all conditions, restrictions, reservations, whether or not of record, statutes,
regulations and ordinances affecting the Property, including, without
limitation, all pollution control, environmental protection, zoning and land use
regulations, building codes and all restrictions and requirements imposed by the
City of Charlotte, North Carolina and all other governmental entities
(collectively, the "Restrictions"), with respect to the Property, the Project
and the construction of the Project and the existing and contemplated use of the
Property. Company has obtained or will timely obtain all permits, approvals,
consents and
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other authorizations necessary under the Restrictions for such construction and
use. As of the date hereof, Company is not aware of any violation or asserted
violation of any Restrictions concerning the Property or the existing or
contemplated use thereof, and further, Company is not aware of any action or
proceeding pending before any court or governmental agency with respect to the
validity of any such Restrictions or any of such authorizations or permit.
SECTION 6.5. Financial Statements. The audited financial statements
of Company for the fiscal years ended in 1993 and 1994, and for the nine months
ending September 30, 1995 and the unaudited financial statements of Company for
the period from October 1, 1995 to December 31, 1995, copies of which have
heretofore been delivered to the Credit Bank, were prepared in accordance with
generally accepted accounting principles consistently applied, are true,
complete and correct in all material respects and fairly the financial position
of Company as of their respective dates, and there have been no material adverse
change in the financial position or operations of Company since the financial
statements were prepared.
SECTION 6.6. Litigation. There is no action, suit, proceeding,
inquiry or investigation at law or in equity or before or by any court, public
board or body pending against or affecting Company or the properties, assets or
operations of Company (a) wherein an unfavorable decision, ruling or finding
could have a materially adverse affect upon: (i) the transactions contemplated
by, or the validity of, this Agreement, the other Bond Documents, or any
agreement or instrument to which Company is a party and which is used or
contemplated for use in the consummation of the transactions contemplated by
this Agreement and the other Bond Documents, (ii) the tax-exempt status of the
interest on the Bonds, or (iii) Company's property, assets, operations or
condition, financial or otherwise, or its ability to perform its obligations in
respect of the Indenture or this Agreement; or (b) which in any way contests the
existence, organization or powers of Company or the titles of the officers of
Company to their respective offices.
SECTION 6.7. Employee Benefit Plans. Company is in compliance in all
material respects with ERISA to the extent applicable to it and has received no
notice to the contrary from the PBGC or any other governmental entity or agency
and no reportable event (as defined in ERISA) which could result in a material
accumulated deficiency under ERISA or a material liability to the PBGC has
occurred and is continuing.
SECTION 6.8. Defaults. No Event of Default or event which with the
passage of time, the giving of notice or both could become an Event of Default
has occurred and is continuing.
SECTION 6.9. Disclosure. The information contained in the Official
Statement under the captions "The Company," "The Project" and "Litigation" is
true and correct, and such information does not contain any untrue statement of
a material fact.
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There are no facts that Company has failed to disclose to the Credit Bank that,
individually or in the aggregate, materially adversely affect, or so far as
Company can foresee, will materially adversely affect, the operations, affairs,
properties, condition (financial or otherwise) or prospects of Company or its
ability to operate the Project and perform under this Agreement and the other
Bond Documents to which it is a party.
SECTION 6.10. Title. The Company holds fee simple title to the
Property.
SECTION 6.11. Reports. All reports and forms required to be filed
with the Internal Revenue Service by Company have been so filed.
SECTION 6.12. Utilities. All utility services necessary for the
construction and operation of the Project are either available within or at the
boundaries of the Property or all necessary steps have been or shall be taken by
Company to assure the complete construction thereof, including, without
limitation, all electrical and telephone facilities, water supply, gas, and
storm and sanitary sewer facilities.
SECTION 6.13. Condemnation. No taking of the Property or any part
thereof through eminent domain, conveyance in lieu thereof, condemnation or
similar proceeding is pending or, to Company's knowledge, threatened by any
governmental agency.
SECTION 6.14. Roads. All roads necessary for the full utilization of
the Project for their intended purpose have been completed.
SECTION 6.15. Brokers. Company has not dealt with any person, firm
or corporation who is or may be entitled to any finder's fee, brokerage
commission, loan commission or other sum in connection with the issuance of the
Letter of Credit pursuant to this Agreement nor the entering into of this
Agreement. Company hereby agrees to indemnify and defend the Credit Bank and
hold the Credit Bank harmless against any and all loss, liability, cost or
expense, including reasonable attorneys' fees, which the Credit Bank may suffer
or sustain should such warranty or representation prove inaccurate in whole or
in part.
SECTION 6.16. Mechanics' Liens. Company shall take whatever actions
may be necessary such that the title insurance policy required to be delivered
to the Credit Bank pursuant to Section 3.1(f) hereof not contain any exceptions
for any mechanics', materialmen's, carriers', warehousemen's or similar liens.
SECTION 6.17. Hazardous Materials. Company is not in violation of
any federal, state or local law, ordinance or regulation relating to
environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions. Neither Company, nor to Company's
knowledge, any third party, has used, generated, manufactured, refined,
produced, processed, stored or disposed of on, under or about the
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Property or transported to or from the Property any "Hazardous Materials" except
in compliance with applicable law nor does Company intend to use the Property in
the future for the purpose of generating, manufacturing, refining, producing,
storing, handling, transferring, processing or transporting of Hazardous
Materials except cobalt 60. For the purposes hereof, "Hazardous Materials" shall
mean any flammable explosives, radioactive materials, asbestos, organic
compounds known as polychlorinated biphenyls, chemicals known to cause cancer or
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances," "hazardous
materials," or "toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seg.; or the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq.; or any applicable law relating to radioactive and/or nuclear materials or
substances or any applicable North Carolina law; and in the regulations adopted,
published and/or promulgated pursuant to said laws.
ARTICLE 7. AFFIRMATIVE COVENANTS OF COMPANY.
Until the termination of this Agreement and the payment in full to
the Credit Bank of all amounts payable to the Credit Bank hereunder, Company
hereby covenants and agrees that it will:
SECTION 7.1. Reporting Requirements. Furnish to the Credit Bank:
(a) on request, notices of filing of all reports material to the
Project that Company may be required to file with any governmental commission,
department, board, bureau or agency of the Federal, State or local government
relating to the transactions contemplated by the Indenture; and
(b) upon receipt, copies of all Nuclear Regulatory Commission and
Food and Drug Administration reports relating to the Project;
SECTION 7.2. Notices.
(a) Give prompt notice in writing to the Credit Bank of a known
occurrence of an Event of Default or event which with the passage of time, the
giving of notice or both could become an Event of Default, and of any known
development, financial or otherwise, which may be reasonably expected to
adversely affect the ability of Company to perform its obligations as set forth
hereunder or under any of the other Bond Documents, setting forth the details of
and the action Company proposes to take with respect to such event or
development; and
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(b) Give prompt notice in writing to the Credit Bank of any known
pending action, suit or proceeding, relating to the operations or the condition
(financial or otherwise) of the Project or the ability of Company to repay any
debt incurred under this Agreement or the Indenture or which questions the
validity of the Bond Documents.
SECTION 7.3. Payment of Taxes and Other Obligations. From time to
time pay and discharge, or cause to be paid and discharged, all payments in lieu
of taxes, service charges, assessments or other governmental charges which may
lawfully be imposed upon the revenues and income from the Project and will pay
all lawful claims for labor, material and supplies which if unpaid might become
a lien or charge upon the Project, revenues or income or which might impair the
security of the Bonds or the use of the Project revenues or other funds to pay
the principal of and interest thereon, all to the end that the priority and
security of the Bonds and of the Credit Bank shall be preserved; provided that
nothing in this Section 7.3 shall require Company to make any such paymet so
long as it in good faith shall contest the validity thereof and shall have
established adequate reserves with respect thereto.
SECTION 7.4. Preservation of Existence, etc. Preserve and maintain
its existence as a corporation duly incorporated, validly existing and in good
standing in the State of California and duly admitted to conduct business and
operate the Project in North Carolina and its rights, franchises and privileges
material to the conduct of its business and to the performance of in obligations
under this Agreement and the Bond Documents to which it is a party, and will not
dissolve.
SECTION 7.5. Compliance with Laws, etc. Comply with the requirements
of all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which would, singly or in the aggregate,
materially and adversely affect its ability to complete or operate the Project
or perform under this Agreement or any other Bond Documents to which Company is
a party, unless the same shall be contested by it in good faith and by
appropriate proceedings which shall operate to stay the enforcement thereof.
SECTION 7.6. Inspection Rights. At any reasonable time and from time
to time upon three (3) days' prior written notice, permit the Credit Bank or any
agents or representatives thereof to examine and make copies of the records and
books of account related to the transactions contemplated by this Agreement, and
at any reasonable time to visit the Project and to discuss its affairs, finances
and accounts with Company and its independent accountants.
SECTION 7.7. Keeping of Records and Books of Account. Keep or cause
to be kept proper and current books and accounts (separate from all other
records and accounts) in which complete and accurate entries shall be made of
all transactions relating to the Project and the Revenues and other funds
provided for in the Loan Agreement, and will prepare and furnish to the Credit
Bank the financial statements required under Section 7. 1.
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SECTION 7.8. Maintenance of Approvals, Filings and Registrations. At
all times maintain in effect, renew and comply with all the terms and conditions
of all consents, licenses, approvals and authorizations as may be necessary or
appropriate under any applicable law or regulation for the execution, delivery
and performance of this Agreement and the other Bond Documents to which Company
is a party, and to make this Agreement and such other Bond Documents its legal,
valid, binding and enforceable obligations, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally, to general equitable principles which may limit the right
to obtain equitable remedies and to provisions of applicable California or North
Carolina law.
SECTION 7.9. Maintenance and Operation of the Project.
(a) Subject to applicable requirements and restrictions imposed, and
to the extent permitted, by law, operate or cause to operate the Project in the
manner described in the Official Statement.
(b) To the extent material to the transactions contemplated herein
or in the Bond Documents, operate and maintain or cause to operate and maintain
the Project in accordance with all applicable governmental laws, ordinances,
approvals, rules, regulations and requirements including, without limitation,
such zoning, sanitary, pollution and safety ordinances and laws and such rules
and regulations thereunder as may be binding upon Company. Company further
covenants and agrees that it will cause to be maintained and operated all
engines, boilers, pumps, machinery, apparatus, fixtures, fittings and equipment
of any kind in, or that shall be placed in any building or structure now or
hereafter at any time constituting part of the Project in good repair, working
order and condition, except such property or equipment as is no longer being
utilized by Company, and that it will from time to time make or cause to be made
all necessary and proper replacements, repairs, renewals and improvements so
that the efficiency and value of the Project shall not be impaired.
SECTION 7.10. Insurance and Performance Bonds Required. Maintain, in
accordance with the provisions hereof and of the Deed of Trust, insurance on the
Project with responsible and reputable insurance companies and associations
which are acceptable to the Credit Bank, including, without limitation, public
liability, property damage, hurricane, fire and extended coverage insurance,
title insurance, business and rental interruption insurance including
interruption due to earthquake; provided that such property damage, fire and
extended coverage and earthquake insurance and title insurance shall each be
maintained in an amount not less than the greater of the aggregate principal
amount of the Bonds or the full insurable replacement value of the Project (the
term "full insurable replacement value" as used herein shall mean the cost to
repair or replace the Project and any portion thereof with property of like kind
and quality, without deduction for depreciation). All such policies shall name
Company, the Credit Bank and the Trustee as insured parties, beneficiaries or
loss payees as their interest may appear. Each policy shall contain a provision
to the effect that the insurer shall not cancel or substantially modify the
policy provisions without first
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giving 30 days' advance written notice thereof to Company, the Trustee and the
Credit Bank. At least once during each 12-month period, commencing on the Date
of Issuance, Company shall file with the Trustee and the Credit Bank a
certificate setting forth the policies of insurance maintained pursuant to this
Agreement and the Deed of Trust, the names of the insurers and insured parties,
the amounts of such insurance and applicable deductibles, the risks covered
thereby and the expiration dates thereof.
SECTION 7.11. ERISA. Promptly pay and discharge all obligations and
liabilities, applicable to Company, arising under ERISA of a character which if
unpaid or unperformed might result in the imposition of a lien against any of
its properties or assets and promptly notify the Credit Bank of the occurrence
of any reportable event (as defined in ERISA) which might result in the
termination by the PBGC of any Plan or of receipt of any notice from PBGC of its
intention to seek termination of any Plan or appointment of a trustee therefor.
Company will notify the Credit Bank of its intention to terminate or withdraw
from any Plan and will not terminate any such Plan or withdraw therefrom unless
it shall be in compliance with all of the terms and conditions of this Agreement
after giving effect to any liability to PBGC resulting from such termination or
withdrawal.
SECTION 7.12. Bond Proceeds, Additional Funds. Cause the proceeds of
the Bonds to be used for the purposes set forth in the Indenture and the Loan
Agreement and make any necessary deposit into the funds and accounts established
under and referred to in the Indenture and the Loan Agreement.
SECTION 7.13. Further Assurances. Execute and deliver to the Credit
Bank all such documents and instruments and do all such other acts and things as
may be necessary or required by the Credit Bank to enable the Credit Bank to
exercise and enforce its rights under this Agreement and to realize thereon, and
record and file and re-record and re-file all such documents and instruments, at
such time or times, in such manner and at such place or places, all as may be
necessary or required by the Credit Bank to validate, preserve and protect the
position of the Credit Bank under this Agreement.
ARTICLE 8. NEGATIVE COVENANTS OF COMPANY.
Until the termination of this Agreement and the payment in full to
the Credit Bank of all amounts payable to the Credit Bank hereunder, Company
hereby covenants and agrees that, without the prior written consent of the
Credit Bank, Company will not directly or indirectly:
SECTION 8.1. Additional Indebtedness. Issue any other obligations
payable, with respect to principal or interest, from the revenues of the Project
which have, or purport to have, any lien upon the revenues of the Project
superior to or on a parity with the lien of the Credit Bank and the Trustee for
the Bonds; provided, however, that nothing in this covenant shall prevent
Company from issuing and selling pursuant to law refunding bonds or
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other refunding obligations payable from and having a first lien upon the
revenues of the Project if such refunding certificates or other refunding
obligations are issued for the purpose of, and are sufficient for the purpose
of, prepaying all of the Bonds authorized by the Indenture and then outstanding.
SECTION 8.2. Limitation on Encumbrances on the Project. Create,
assume or suffer to exist any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including the charge upon
property purchased under conditional sales or other title retention agreements)
(a "security interest") upon the Project, unless the obligations of Company
under this Agreement shall be secured prior to any indebtedness or other
obligation secured by such security interest and Company further covenants and
agrees that if such a security interest is created or assumed by Company, it
will make or cause to be made effective a provision whereby the obligation of
Company under this Agreement will be secured prior to such indebtedness or other
obligation secured by such security interest; provided, however, that
notwithstanding the foregoing provisions and without securing obligations of
Company under this Agreement, Company may create, suffer or assume Permitted
Encumbrances.
SECTION 8.3. Amendments. Amend, modify, terminate, grant or waive,
or permit the amendment, modification, termination or grant of, or any waiver
under (or consent to, or permit or suffer to occur any action or omission which
results in, or is equivalent to, an amendment, modification, or grant of a
waiver under) the Bond Documents or the resolutions adopted by Company on
February 23, 1996 authorizing the delivery of the agreements to be entered into
by Company relating to the issuance of the Letter of Credit and the Bonds.
SECTION 8.4. Official Statement. Make any changes in reference to
the Credit Bank in any revision or amendment of the Official Statement.
SECTION 8.5. Arbitrage. Use, or permit the use of, the proceeds of
any Bond in any manner that would have caused the Bonds, at the time of issuance
thereof, to be "arbitrage bonds" within the meaning of Section 148 of the Code.
SECTION 8.6. Prohibited Uses. Use any of the properties financed or
refinanced out of any proceeds of the Bonds or suffer or permit such properties,
to be used in any manner or take any action or omit to take any action which
would adversely affect the tax exempt status of interest on the Bonds.
SECTION 8.7. Prohibition on Sale of Assets. Sell, lease, assign,
transfer or otherwise dispose of any of the Project property or assets whether
now owned or acquired in the future, except (a) obsolete or worn out property or
equipment no longer necessary in the ordinary course of the Project's business,
or (b) property disposed of in the ordinary course of the Project's business for
adequate consideration.
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ARTICLE 9. DEFAULT AND REMEDIES.
SECTION 9.1. Events of Default. Each of the following events shall,
at the option of the Credit Bank, constitute an "Event of Default" under this
Agreement:
(a) the occurrence of any event which constitutes an "Event of
Default" under the Indenture, the Security Agreement, the Guaranty, the
Environmental Indemnity or the Deed of Trust; or
(b) the failure by Company to pay any amount payable hereunder
within three (3) Business Days following the due date of such amount; or
(c) the failure by Company to perform or observe any other term,
covenant or agreement contained in this Agreement, provided that the failure of
Company to perform such covenants (other than as provided in subsections (a) and
(b) of this Section 9.1 and other than the covenants set forth in Article 8
hereof) shall not be deemed an Event of Default if Company is diligently
proceeding to cure such nonperformance; provided, however, that such cure shall
have been achieved, in any event, no later than thirty (30) days after written
notice given to Company by the Credit Bank; or
(d) any warranty, representation or other written statement made by
or on behalf of Company contained in this Agreement, or in any Bond Document or
in any instrument furnished in compliance with or in reference to any of the
foregoing, is false or misleading in any material respect on any date as of
which made, and such falsity or misleading statement materially and adversely
affects the Project, the Property or Company, or its ability to or perform under
this Agreement, the Environmental Indemnity, the Deed of Trust or any other Bond
Documents to which Company is a party; or
(e) Company makes an assignment for the benefit of creditors, files
a petition in bankruptcy, is unable generally to pay its debts as they come due,
is adjudicated insolvent or bankrupt or there is entered any order or decree
granting relief in any involuntary case commenced against Company under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or if Company petitions or applies to any tribunal for any receiver,
trustee, liquidator, assignee, custodian, sequestrator or other similar official
of Company or of any substantial part of its properties, or commences any
proceeding in a court of law for a reorganization, readjustment of debt,
dissolution, liquidation or other similar procedure under the law or statutes of
any jurisdiction, whether now or hereafter in effect, or if there is commenced
against Company any such proceeding in a court of law which remains undismissed
or shall not be discharged, vacated or stayed, or such jurisdiction shall not be
relinquished, within sixty (60) days after commencement; or
(f) Company by any act, indicates its consent to, approval of, or
acquiescence in any such proceeding in a court of law, or to an order for relief
in an
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involuntary case commenced against Company under any such law, or to the
appointment of any receiver, trustee, liquidator, assignee, custodian,
sequestrator or other similar official for Company, or if Company suffers any
such receivership, trusteeship, liquidation, assignment, custodianship,
sequestration or other similar procedure to continue undischarged for a period
of sixty (60) days after commencement or if Company takes any action for the
purposes of effecting the foregoing; or
(g) any material provision of this Agreement, the Security
Agreement, the Deed of Trust, the Guaranty, the Environmental Indemnity or of
any of the Bond Documents shall cease to be valid and binding, or Company or any
governmental authority shall contest any such provision, or Company, or any
agent or trustee on behalf of Company, shall deny that it has any or further
liability under this Agreement, the Environmental Indemnity, the Deed of Trust,
or any of the Bond Documents; or
(h) final judgment for the payment of money in excess of an
aggregate of $100,000 related to the Project and not fully covered by insurance
shall be rendered against Company and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution shall not be
effectively stayed or for the payment of which a surety bond or other adequate
security has not been obtained in the judgment of the Credit Bank; or
(i) any reportable event (as defined in ERISA) which the Credit Bank
determines in good faith constitutes grounds for the termination of any Plan of
Company or for the appointment by the appropriate United States District Court
of a trustee to administer or liquidate any such Plan, shall have occurred and
be continuing thirty (30) days after written notice to such effect shall have
been given to Company by the Credit Bank; or any such Plan shall be terminated;
or a trustee shall be appointed by the appropriate United States District Court
to administer any such Plan; or the PBGC shall institute proceedings to
administer or terminate any such Plan; and in the case of any such event the
aggregate amount of vested unfunded liabilities under such Plan shall exceed
(either singly or in the aggregate in the case of any such liability arising
under more than one such Plan) 5% of the total assets of Company; or
(j) the failure of any Bonds to be remarketed within 60 days of the
date of a Purchase Drawing.
SECTION 9.2. Remedies. Upon the occurrence of an Event of Default
pursuant to Section 9.1(e) or (f), all amounts payable by Company under this
Agreement shall become due and payable, in each case automatically and
immediately without any presentment, demand, protest or other notice or
formality of any kind (all of which are expressly waived). Upon the occurrence
of an Event of Default (other than pursuant to Section 9.1(e) or (f)) the Credit
Bank may, by notice to Company, declare all amounts payable by Company under
this Agreement to be immediately due and payable (and the same shall upon such
notice become immediately due and payable), in each case without any
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presentment, demand, protest or other notice or formality of any kind. Upon any
such occurrence, the Credit Bank may, in addition, (a) exercise of all of its
rights and remedies under any other Bond Document or applicable law or (b)
exercise all or any combination of the remedies provided for in this Section
9.2.
ARTICLE 10. CONTINUING OBLIGATION.
This Agreement is a continuing obligation of Company and shall,
until the later of the Expiration Date or the date upon which all amounts due
and owing to the Credit Bank hereunder shall have been fully and finally paid,
be binding upon Company, its successors and assigns, and inure to the benefit of
and be enforceable by the Credit Bank and its successors, transferees and
assigns; provided, that Company may not assign all or any part of this Agreement
without the prior written consent of the Credit Bank.
ARTICLE 11. LIMITED LIABILITY OF THE CREDIT BANK.
Company hereby assumes all risks of the acts, omissions or misuse of
the Letter of Credit by the Trustee or any successor thereto. Neither the Credit
Bank nor any of its officers, directors or agents shall be liable or
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of, or the making of a Drawing under, the Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign the Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the Trustee to comply fully
with the conditions required in order to effect a Drawing; (iv) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise; (v) for any loss or delay in the
transmission or otherwise of any Bond, document or draft required in order to
make a Drawing; or (vi) for any consequences arising from causes beyond the
control of the Credit Bank; provided, however, that Company shall have a claim
against the Credit Bank, and the Credit Bank shall be liable to Company, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by Company which Company proves were proximately caused by (x)
the Credit Bank's willful misconduct or gross negligence in determining whether
documents presented under the Letter of Credit comply with the terms of the
Letter of Credit or (y) the Credit Bank's willful failure to pay under the
Letter of Credit after the presentation to it by the Trustee of a draft and
certificate strictly complying with the terms and conditions of the Letter of
Credit. None of the above shall affect, impair, or prevent the vesting of any of
the Credit Bank's rights or powers hereunder.
In furtherance and extension, and not in limitation, of the specific
provisions hereinabove set forth, any action taken or omitted by the Credit Bank
under or in connection
25
<PAGE> 27
with the Letter of Credit or any related Bond Documents or other documents, if
taken or omitted in good faith, shall be binding upon Company and shall not put
the Credit Bank under any resulting liability to Company.
ARTICLE 12. MISCELLANEOUS.
SECTION 12.1. Amendments, Nonwaiver and Remedies. This Agreement may
be amended only upon the written agreement of Company and the Credit Bank, and
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if Company shall first obtain the written
consent of the Credit Bank. No course of dealing between Company and the Credit
Bank, nor any delay in exercising any rights hereunder, shall operate as a
waiver of any rights of the Credit Bank hereunder. No single or partial exercise
of any right under this Agreement shall preclude any other further exercise of
such right or the exercise of any other right. The Credit Bank may remedy any
default by Company hereunder or with respect to any other person, firm or
corporation in a reasonable manner without waiving the default remedied and
without waiving any other prior or subsequent default by Company. The remedies
provided in this Agreement are cumulative and not exclusive of any remedies
provided by law.
SECTION 12.2. Survival of Representations and Warranties. All
agreements, representations and warranties of Company contained in this
Agreement and in any Bond Documents delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the issuance of the Letter of
Credit hereunder, and the agreements contained in Article 4 and Section 12.3
hereof shall survive payment of the Bonds, the reimbursement to the Credit Bank
of any payments or disbursements under the Letter of Credit and the termination
of this Agreement.
SECTION 12.3. Expenses. Whether or not the transactions contemplated
by this Agreement are consummated or the Letter of Credit is issued, Company
agrees to pay on demand, all reasonable costs and expenses of the Credit Bank
including, without limitation, the fees and expenses of Special Counsel in
connection with the preparation, issuance or delivery, as the case may be, of
the Letter of Credit, this Agreement, the other Bond Documents and any other
documents which may be delivered in connection with any of the foregoing. In
addition, Company agrees to pay on demand all costs and expenses of the Credit
Bank (including reasonable counsel fees and expenses) in connection with (i) the
filing, recording, administration, transfer, amendment, maintenance, renewal or
cancellation of the Letter of Credit, this Agreement or the other Bond
Documents, (ii) any payment by the Credit Bank under the Letter of Credit, or
(iii) any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
Letter of Credit, this Agreement or the other Bond Documents, and any other
documents which may be delivered in connection with this Agreement. In addition,
Company agrees to pay promptly all costs and expenses of the Credit Bank for (i)
any and all amounts which the Credit Bank has paid relating to the Credit Bank's
curing of any Event of
26
<PAGE> 28
Default under this Agreement or any of the other Bond Documents, (ii) the
enforcement of this Agreement or any of the other Bond Documents, or (iii) any
action or proceeding relating to a court order, injunction, or other process or
decree restraining or seeking to restrain the Credit Bank from paying any amount
under the Letter of Credit on the presentation of drafts and other documents in
connection with the same. Company agrees to save the Credit Bank harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omitting to pay any taxes and fees to the extent Company is
obligated to pay the same under this Section 12.3.
SECTION 12.4. Waiver of Right of Set-off and Limitation on Credit
Bank Collateral.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Credit Bank is hereby authorized at any time and from time to time,
without notice to Company (any such notice being expressly waived by Company)
and 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 Credit Bank to or for the
credit of the account of Company against any and all of the obligations of
Company now or hereafter existing under this Agreement, irrespective of whether
or not the Credit Bank shall have made any demand hereunder.
(b) The Credit Bank agrees promptly to notify Company after any such
set-off and application; provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Credit
Bank under this Section 12.4 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Credit Bank
may have.
SECTION 12.5. Notices. All notices, requests and other
communications hereunder shall be in written form (including bank wire,
telegram, facsimile, telex or similar writing) and shall be given to the party
to whom addressed, at its address, facsimile or telex number set forth below, or
such other address, facsimile or telex number as such party may hereafter
specify for the purpose by notice to the other parties listed below. Each such
notice, request or communication shall be effective (i) if given by telex,
facsimile or other electronic means, when such communication is transmitted to
the address specified below and the appropriate answer back is received, (ii) if
given by mail, three days after such communication is deposited in the United
States mail with postage prepaid by registered or certified mail, return receipt
requested, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified below. All notices given by telex, facsimile
or other electronic means shall be confirmed in writing as promptly as
practicable.
27
<PAGE> 29
If to Company:
SteriGenics International
4020 Clipper Court
Fremont, California 94538
Attention: Vice President-Finance
Telephone: (510) 770-9000
Facsimile: (510) 770-1499
with a copy to counsel:
Gray, Cary, Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Craig M. Tighe
Telephone: (415) 833-2362
Facsimile: (415) 327-3699
If to the Credit Bank:
Comerica Bank-California
333 West Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Commercial Real Estate Loan
Operations- Manager
Telephone: (408) 556-5224
Facsimile: (408) 998-7231
with a copy to counsel:
Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064-1614
Attention: Chris A. Carlson
Telephone: (310) 312-4000
Facsimile: (310) 312-4224
SECTION 12.6. Participation. The Credit Bank may at any time arrange
for other banking institutions of the Credit Bank's choosing ("Participants") to
participate in all or any portion of the Credit Bank's obligations, under the
Letter of Credit, of the obligations of Company evidenced hereby and by the
Bonds which may be held by the Credit Bank or its nominee ("Participations").
Without in any way limiting the right of the Participants hereunder, Company
agrees that the Participants shall be entitled to (i) receive copies of all
documents furnished to the Credit Bank pursuant to Section 7.1 hereof (at such
addresses as
28
<PAGE> 30
the Credit Bank shall designate from time to time to Company) and (ii) receive
the benefits of Sections 2.7 and 2.8 hereof to the extent of their respective
Participations. Notwithstanding the Credit Bank's granting of any
Participations, Company shall have the right to continue dealing solely with the
Credit Bank and agents of the Credit Bank which have been appointed in writing
(as to the appointment of which Company has received written notice). No
Participant shall enter into any reimbursement or other similar agreement with
Company with respect to the Letter of Credit, this Agreement or the Bonds.
SECTION 12.7. Satisfaction Requirement. If any agreement,
certificate or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to the Credit Bank, the
determination of such satisfaction shall be made by the Credit Bank in its sole
and exclusive judgment exercised in good faith.
SECTION 12.8. Uniform Customs and Practices. This Agreement and the
Letter of Credit shall be subject to the Uniform Customs and Practice (a copy of
which is available upon request), and, in the event any provision of the Uniform
Customs and Practice is or is construed to vary from or be in conflict with any
provision of the California Uniform
29
<PAGE> 31
Commercial Code, as from time to time amended and in force (the "Commercial
Code"), the Uniform Customs and Practice shall prevail. In addition to other
rights of the Credit Bank hereunder or under application for the Letter of
Credit, any action, inaction or omission taken or suffered by the Credit Bank,
or by any of its correspondents, under or in connection with the Letter of
Credit or the relative instruments, documents, or property, if in good faith and
in conformity with such foreign or domestic laws, regulation, or customs as the
Credit Bank or any of its correspondents may deem to be applicable thereto,
shall be binding upon the Company and shall not place the Credit Bank or any of
its correspondents under any liability to the Company.
SECTION 12.9. Governing Law. This Agreement and the Letter of Credit
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of California, without giving
effect to conflicts of law principles. The parties hereby waive, to the fullest
extent permitted by law, any rights they may have to a jury trial.
SECTION 12.10. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
SECTION 12.11. 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 nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
STERIGENICS INTERNATIONAL
By /s/ Edward M. Miller Jr.
--------------------------------
Name: Edward M. Miller Jr.
------------------------------
Title: Vice President Finance
-----------------------------
30
<PAGE> 32
COMERICA BANK-CALIFORNIA
By /s/ Michael J. Archer
--------------------------------
Name: Michael J. Archer
------------------------------
Title: Vice President
-----------------------------
31
<PAGE> 1
EXHIBIT 10.30
[Company Logo]
IRREVOCABLE DIRECT PAY LETTER OF CREDIT
March 6, 1996
Bank One, Columbus, N.A.
100 East Broad Street
Columbus, Ohio 43215-0181
Attention: Corporate Trust
Dear Sirs:
We hereby issue in your favor, as trustee ("Trustee") under the Indenture of
Trust ("Indenture") dated as of March 1, 1996, by and between you and The
Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority ("Authority") this Irrevocable Direct Pay Letter of Credit (this
"Credit") No. 532063 for the account of SteriGenics International ("Account
Party")in an amount NOT EXCEEDING Nine Million One Hundred Forty Eight Thousand
Dollars ($9,148,000) (the "Stated Amount") of which amount not exceeding
$9,000,000 ("Principal Amount") may be drawn upon with respect to the payment of
principal and $148,000 ("Interest Amount") may be drawn upon with respect to the
payment of interest of The Mecklenburg County Industrial Facilities and
Pollution Control Financing Authority Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996 (the "Bonds"). Funds under this
Credit are available to you against drawing certificate(s) ("Drawing
Certificate(s)"), duly signed and presented to us at 333 W. Santa Clara Street,
San Jose, California 95113 as follows:
1) If a drawing is being made with respect to the PAYMENTS OF INTEREST ON the
Bonds, or with respect to the PAYMENT OF PRINCIPAL ON the Bonds, your request
for payment shall be presented in the form of a certificate, with the blanks
appropriately filled in, as attached to this Credit as ANNEX A.
2) If a drawing is made with respect to the PAYMENT OF INTEREST AND PRINCIPAL in
connection with the PURCHASE OF TENDERED BONDS, your request shall be presented
in the form of a certificate, with the appropriate blanks filled in, as attached
to this Credit as ANNEX B.
Any Drawing Certificate may be presented in person or by telecopier at
408-556-5216 to the attention of Vicky Cercado providing the drawing by telecopy
is confirmed by telephone at
<PAGE> 2
[Company Logo]
408-556-5214 and the original certificates have been sent by overnight mail. The
certificate shall have all blanks appropriately filled in and shall be duly
executed by your authorized officer.
A Drawing Certificate PRESENTED PRIOR TO 11:00 A.M., Pacific time, on
any Business Day (as defined herein) shall be honored and the amount shall be
PAID IN IMMEDIATELY AVAILABLE FUNDS ON THE SAME BUSINESS DAY or such later
Business Day as specified in the Drawing Certificate. A Drawing Certificate
presented at or after 11:00 a.m., Pacific time, on any Business Day shall be
honored and the amount of the draft PAID IN IMMEDIATELY AVAILABLE FUNDS ON THE
FOLLOWING BUSINESS DAY BY 10:00 A.M. Pacific time or such later Business Day as
specified in the Drawing Certificate. Payment under this Credit shall be made in
accordance with the payment instructions set forth in the completed Drawing
Certificate accompanying each draft. All payments made by us under this Credit
shall be made from our own funds. Business Day for purposes hereof means any day
other than (i) a day on which the banking institutions in (a) New York, New York
or (b) the City of San Jose, California or (c) the cities in which the Trustee
or the Paying Agent (as defined in the Indenture) or the Remarketing Agent (as
defined in the Indenture) have their respective principal offices are authorized
to close or (ii) a day on which the New York Stock Exchange is closed.
This Credit is TRANSFERABLE in its entirety, but not in part, to any
transferee who has succeeded you as Trustee under the Indenture and may be
successively so transferred. Transfer of this Credit to such transferee shall be
affected by the presentation to us of this Credit accompanied by a Certificate
substantially in the form of ANNEX C.
Each payment of a Drawing with respect to the payment of interest on or
principal of the Bonds honored by us shall reduce the portion of the Principal
Amount and the Interest Amount available under this Credit subject to
reinstatement as provided below. The Stated Amount of this Credit shall also be
reduced by the amount stated in a written notice of reduction executed by the
Trustee. A reduction of the Stated Amount through the use of such a written
notice of reduction shall be effective as of the actual date of receipt by us of
such notice at our above stated address.
Following the honoring of a Drawing hereunder to pay interest on the
Bonds (other than interest in connection with redemption or purchase upon tender
of the Bonds in whole or in part), the available INTEREST AMOUNT SHALL BE
REINSTATED ON THE SIXTH DAY following such drawing to the original amount unless
you shall have received our notice to you by hand delivery or telecopier notice
at (614) 248-5195, receipt of which has been confirmed by you to us in writing
via telecopy at (408) 556-5216, within five (5) days of such drawing, followed
by delivery of the original notice by overnight delivery that we have not been
reimbursed for such payment in accordance with the terms of the Reimbursement
Agreement, dated as of March 1, 1996, by and between the Account Party and this
Bank ("Reimbursement Agreement"), or any other Event of Default under the
Reimbursement Agreement has occurred and is continuing, and as a consequence
thereof there shall be no such reinstatement, or if the sixth calendar day after
such Drawing would be after the expiration of this Credit.
Page 2 of 6 all of which constitute an
integral part of this Letter of Credit
<PAGE> 3
[Company Logo]
Following the honoring of a Drawing hereunder to pay principal and/or
interest of the Bonds in order to purchase the Bonds on behalf of the Account
Party, the available principal and interest amount shall not be reinstated to
the original amount unless you shall have received our notice to you by hand
delivery or telecopier notice at (614) 248-5195, receipt of which has been
confirmed by you to us in writing via return telecopy at (408) 556-5216,
followed by the delivery of the original notice by overnight delivery that there
shall be reinstatement of the Principal Amount and Interest Amount.
This Credit is subject to the Uniform Customs and Practices for
Documentary Credits (1993 Revision) International Chamber of Commerce,
Publication No. 500 (the "Uniform Customs"); provided, however, that Article
48(g) shall not apply to this Credit. As to matters not covered by the Uniform
Customs, this Credit shall be governed by the internal laws of the State of
California.
This Credit, unless extended, shall expire on the earliest of (i) MARCH
15, 2001, (ii) the date of receipt by us of notice from the Trustee and the
Account Party that the issuance of an alternate credit and liquidity facility in
substitution for this Credit has occurred, (iii) five (5) days following the
Conversion Date as stipulated in the form of Annex A delivered to us, or (iv)
the date that we receive notice from the Trustee that none of the Bonds are
outstanding under the Indenture.
We undertake that your Drawing Certificate(s), drawn and presented on
or before the expiration of this Credit in conformity with the terms of this
Credit, will be duly honored.
Very truly yours,
COMERICA BANK-CALIFORNIA
By: /s/ Signature Unreadable
------------------------
Vice President
Page 3 of 6 all of which constitute an
integral part of this Letter of Credit
<PAGE> 4
[Company Logo]
ANNEX A
Regular Drawing Certificate
Comerica Bank-California
333 W. Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Ms. Vicky Cercado
We refer to your LETTER OF CREDIT NO. 532063 issued in support of The
Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds (SteriGenics International
Project), Series 1996 (the "Credit"). Terms defined in the Credit not otherwise
defined herein shall have the same meaning herein as therein.
1. As Trustee pursuant to the Indenture, we hereby make demand for payment
under the Credit to pay or provide for the payment of interest on such Bonds in
the amount of $ ___________ and principal in the amount of $ _________________.
This Drawing is made as [a regularly scheduled interest payment] [an
extraordinary redemption] [an optional redemption] [a mandatory redemption] [a
mandatory redemption due to the Conversion Date of _______ [maturity of the
Bonds] [in connection with acceleration], under the provisions of Section
_____________ of the Indenture. (DELETE INAPPROPRIATE CLAUSES)
2. The amount demanded for the payment of principal and/or interest does not
exceed the amount available on the date hereof to be drawn under the Credit in
respect to the payment of principal and interest on the Bonds and the stated
amount of the Credit will be permanently reduced by the amount demanded herein
in respect to the payment of principal.
3 . Upon receipt of the amount demanded under this Credit, we will apply the
same directly to payment when due in respect to interest and/or principal on
account of such Bonds.
4. Please remit your payments on [insert date] as follows:
--------------------------------------
--------------------------------------
____________, 199__
Bank One, Columbus, N.A.,
as Trustee
By:______________________
Its:_____________________
Page 4 of 6 all of which constitute an
integral part of this Letter of Credit
<PAGE> 5
[Company Logo]
ANNEX B
Purchase Drawing
Comerica Bank-California
333 W. Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Ms. Vicky Cercado
We refer to your LETTER OF CREDIT NO. 532063 issued in support of The
Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds (SteriGenics International
Project), Series 1996 (the "Credit"). Terms defined in the Credit not otherwise
defined herein shall have the same meaning herein as therein.
1. As Trustee pursuant to the Indenture, we hereby make demand for payment
under the Credit to pay or provide for the payment of interest in the amount of
$ ________ and for payment of principal in the amount of $ _________ for the
purchase of tendered Bonds under the provisions of Section(s)_____ of the
Indenture. We certify to you that we are: (i) either contemporaneously
delivering to you an amount of money equal to the drawing under this paragraph
or (ii) we are holding Bonds owned by the Account Party for the benefit of you
as a secured party together with an amount of money to be transmitted to you and
the aggregate amount of such Bonds and money to be transmitted is equal to the
amount of the drawing under this paragraph.
2. The amount demanded for the payment of principal and/or interest does not
exceed the amount available on the date hereof to be drawn under the Credit with
respect to the payment of principal and interest on the Bonds.
3 . The stated amount of the Credit will be permanently reduced by the amount
demanded herein in respect to the payment of principal, unless you otherwise
advise us as provided in the Credit.
4. Upon receipt of the amount demanded under this Credit, we will apply the same
directly to payment when due with respect to interest and/or principal on
account of such Bonds.
5. Please remit your payments on [INSERT DATE] as follows:
-------------------------------------------
-------------------------------------------
________, 199__
Bank One, Columbus, N.A.,
as Trustee
By:________________________
Its:_______________________
Page 5 of 6 all of which constitute an
integral part of this Letter of Credit
<PAGE> 6
[Company Logo]
INSTRUCTIONS FOR TRANSFER
Comerica Bank-California
333 W. Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Ms. Vicky Cercado
We refer to your LETTER OF CREDIT NO. 532063 issued in support of The
Mecklenburg County Industrial Facilities and Pollution Control Financing
Authority Industrial Development Revenue Bonds (SteriGenics International
Project), Series 1996 (the "Credit"). The undersigned, as Trustee, is named as
beneficiary of the Credit. The Transferee named below has succeeded the
undersigned as Trustee under the Indenture defined in the Credit:
------------------
Name of Transferee
------------------
Address
Therefore, for value received, the undersigned hereby irrevocably
instructs you to transfer to such Transferee all rights of the undersigned to
draw under the Credit.
Bank One, Columbus, N.A.,
as Trustee
By: ________________
Its ________________
The undersigned (Name of Transferee) hereby accepts the foregoing
transfer of rights under the Credit and has accepted the obligations of the
Trustee under the Indenture.
-----------------------
(Name of Transferee)
By:_____________________
Title___________________
Address of Principal Corporate Trust
Office:
------------------------------------
------------------------------------
Telephone________________
Fax______________________
Page 6 of 6 all of which constitute an
integral part of this letter of credit
<PAGE> 1
EXHIBIT 10.31
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Agreement") is made as of
March 1, 1996, by STERIGENICS INTERNATIONAL, a California corporation
("Pledgor"), in favor of COMERICA BANK-CALIFORNIA, a California banking
corporation ("Bank").
RECITALS
WHEREAS, Pledgor, pursuant to the Reimbursement Agreement, dated as of
March 1, 1996, between Pledgor and Bank (the "Reimbursement Agreement"), has
agreed to reimburse Bank with respect to payments made and expenses incurred by
Bank pursuant to, and in connection with, the letter of credit described in the
Reimbursement Agreement (the "Letter of Credit");
WHEREAS, Bank, as a condition to issuing the Letter of Credit, is
requiring Pledgor to pledge as security for Pledgor's obligations to Bank under
the Reimbursement Agreement (the "Obligations"), the loan proceeds (the "Loan
Proceeds") that Pledgor receives pursuant to the Loan Agreement, dated as of
March 1, 1996, between Pledgor and The Mecklenburg County Industrial Facilities
and Pollution Control Financing Authority (the "Loan Agreement"); and
WHEREAS, Pledgor is willing to so pledge the Loan Proceeds; NOW,
THEREFORE, Pledgor and Bank agree as follows:
1. Pledge of Collateral.
(a) Pledgor hereby pledges, assigns and delivers to Bank and
grants to Bank a security interest in the Loan Proceeds, together with all
proceeds and substitutions of any thereof, all interest and other amounts paid
thereon, and all other cash and noncash proceeds of the foregoing (all
hereinafter called the "Pledged Collateral"), as security for the prompt
performance of all Obligations.
(b) Promptly upon the parties' execution hereof, Pledgor shall
deposit all of the Loan Proceeds in a bank account with Bank (the "Bank
Account").
2. Representations, Warranties and Covenants. Pledgor represents
and warrants to, and covenants with, Bank for the term hereof that:
(a) The Pledged Collateral is owned by Pledgor free and
clear of any security interests, liens, encumbrances, options or other
restrictions;
(b) Pledgor has full power and authority to create a lien on
the Pledged Collateral in favor of Bank and no disability or contractual
obligation exists that would prohibit Pledgor from pledging the Pledged
Collateral pursuant to this Agreement, and Pledgor will not assign, create or
permit to exist any other claim to,
1
<PAGE> 2
lien or encumbrance upon, or security interest in any of the Pledged Collateral,
other than the lien of Union Bank;
(c) Pledgor will not withdraw, cancel, redeem or seek
repayment of the Pledged Collateral from the Bank Account;
(d) Pledgor shall, immediately upon Bank's request execute and
deliver such further instruments and documents, and take all such other action,
as Bank deems reasonably necessary or desirable to further evidence and perfect
this pledge and grant of security; and
(e) The Pledged Collateral is not the subject of any present
or threatened suit, action, arbitration, administrative or other proceeding, and
Pledgor knows of no reasonable grounds for the institution of any such
proceedings.
All the above representations and warranties shall survive the making
of this Agreement.
3. Authorization of Bank Action. Pledgor irrevocably authorizes
and empowers Bank, at any time and from time to time, either in its own name or
in Pledgor's name, to:
(a) demand, collect, and receive payment of any and all
monies or proceeds represented by, or due with respect to, the Pledged
Collateral;
(b) execute any endorsements of the Pledged Collateral
and any or all instruments or documents for the withdrawal or repayment of some
or all of same;
(c) insert in any instrument or document utilized for the
withdrawal of funds represented by the Pledged Collateral signed by Pledgor the
date and amount due under the Pledged Collateral and to complete such instrument
or document in any respect Bank deems necessary or desirable; and
(d) deal in all respects with the Pledged Collateral as the
holder thereof and Pledgor irrevocably constitutes and appoints Bank as its
attorney to do any and all things Bank deems necessary or desirable to effect
this Agreement and the enforcement of Bank's rights and remedies hereunder.
4. Bank's Remedies Upon Event-of Default.
(a) Upon die occurrence of an Event of Default, as defined in
the Reimbursement Agreement, Bank shall have the right to exercise all such
rights as a secured party under the Uniform Commercial Code as it, in its sole
judgment, shall deem necessary or appropriate, including the right to liquidate
the Pledged Collateral.
2
<PAGE> 3
(b) After the disposal of any of the Pledged Collateral, Bank
may deduct all reasonable legal and other expenses and fees for protecting its
interests and enforcing its remedies under the Reimbursement Agreement and this
Agreement and shall apply the residue of the proceeds to, or hold as a reserve
against, the Obligations in such manner as Bank, in its reasonable discretion,
shall determine, and shall pay the balance, if any to Pledgor.
5. Release of Pledged Collateral. The Pledge of and grant of a
security interest in the Pledged Collateral pursuant to this Agreement shall be
of no further force or effect and the Pledged Collateral shall be returned to
Pledgor upon the payment in full of the Obligations to Bank and the expiration
or termination of the Reimbursement Agreement, provided, however, that this
Agreement shall be reinstated if any payment must be returned by Bank for any
reason, including, but not limited to, upon or after the insolvency, bankruptcy
or reorganization of Pledgor.
6. Notice. Unless otherwise set forth herein, all notices,
demands, requests and other written communications hereunder shall be given to
Bank and/or Pledgor by regular United States mail, postage prepaid and addressed
as follows:
If to Bank: Comerica Bank-California
333 West Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Commercial Real Estate Loan
Operations- Manager
Telephone: (408) 556-5224
Facsimile: (408) 998-7231
With a copy to: Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: Chris A. Carlson, Esq.
Telephone: (310) 312-4000
Facsimile: (310) 998-7231
If to Pledgor SteriGenics International
4020 Clipper Street
Fremont, California 94538
Attention: Vice President-Finance
Telephone: (510) 770-9000
Facsimile: (510) 770-1499
With a copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention; Craig M. Tighe, Esq,
Telephone: (415).833-2362
3
<PAGE> 4
Facsimile: (415) 327-3699
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof, on the earlier of the third day
following the day on which it is posted or the date of its receipt by the party
to be notified and to prove the service of any such notice it shall be
sufficient to prove that the same was properly address and posted as aforesaid
or actually received by any party to whom such notice was delivered in person.
Pledgor and Bank shall each have the right to change its address for the purpose
of this Agreement by giving at least three (3) days' written notice of any such
change to the other party hereto.
7. Governing law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.
8. WAIVER OF JURY TRIAL. PLEDGOR AND BANK EACH HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM DEMAND, ACTION, CAUSE OF ACTION, SUIT OR
PROCEEDINGS (A) ARISING UNDER HI-RS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT,
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (B) IN ANY WAY
CONNECTED WITH OR RELATED TO OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE REIMBURSEMENT AGREEMENT, OR
ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
PLEDGOR AND BANK HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, SUIT OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL, WITHOUT A
JURY, AND THAT EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
4
<PAGE> 5
9. Miscellaneous.
(a) This Agreement may not be amended or modified except
by a written instrument signed by Bank and Pledgor.
(b) This Agreement constitutes the entire agreement between
Bank and Pledgor with respect to the subject matter hereof and supersede all
prior agreements, understandings, offers and negotiations, oral or written.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement the day and year first above written.
CONERICA BANK-CALIFORNIA
By: /s/ Signature Unreadable
-------------------------
Title: President
-------------------------
STERIGENICS INTERNATIONAL
By: /s/ Signature Unreadable
-------------------------
Title: VICE PRESIDENT FINANCE
-------------------------
5
<PAGE> 1
EXHIBIT 10.33
$5,250,000
DEVELOPMENT AUTHORITY OF DEKALB COUNTY
Variable Rate Demand
Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project)
Series 1985
BOND PURCHASE AGREEMENT
March 12, 1985
On the basis of the representations, warranties and covenants contained
in this Bond Purchase Agreement and upon the terms and conditions contained in
this Bond Purchase Agreement, the undersigned, Prudential-Bache Securities Inc.
(the "Underwriter"), hereby offers to purchase from Development Authority of
DeKalb County (the "Issuer") up to $5,250,000 aggregate principal amount its
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985 (the "Bonds"), to be issued
under and pursuant to a trust indenture dated as of March 1, 1985 (the
"Indenture") between the Issuer and Bank One Trust Company, N.A., as trustee
(the "Trustee").
SECTION 1. ISSUER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
By the Issuer's execution, delivery and acceptance hereof the Issuer
hereby represents and warrants to, and agrees with, the Underwriter that:
(a) The Issuer is a body corporate and politic of the
State of Georgia. By virtue of the authority of the Constitution and
laws of the State of Georgia (the "State"), and particularly the
Development Authorities Law, Ga. Laws 1969, p. 137 et seq. (O.C.G.A.
36-62-1 et seg.), as amended the "Act"), the Issuer is authorized to
issue the Bonds to finance the Facilities, as defined in a loan
agreement dated as of March 1, 1985 (the "Agreement") between the
Issuer and Radiation
<PAGE> 2
Sterilizers, Incorporated, a California corporation (the "Company"),
and to pledge the payments to be received pursuant to the Agreement as
security for the payment of the principal of and premium, if any, and
interest on the Bonds.
(b) The Issuer has complied with all provisions of the
Constitution and laws of the State, including the Act, and has full
power and authority to consummate all transactions contemplated by this
Bond Purchase Agreement, the Indenture or the Agreement.
(c) The information describing the Issuer in the Offering
Statement of even date herewith (the "Offering Statement") to be used
in connection with the offering and sale of the Bonds by the
Underwriter under the caption "THE ISSUER" as of the Closing Date, as
hereinafter defined, is true and does not contain any untrue statement
of a material fact.
(d) The Issuer has duly authorized all necessary action for:
(1) the issuance and sale of the Bonds upon the terms set forth herein;
(2) the execution and delivery of the Indenture providing for the
issuance of and security for the Bonds (including the pledge by the
Issuer of the payments to be received pursuant to the Agreement
sufficient to pay the principal of and premium, if any, and interest on
the Bonds); (3) appointing the Trustee as Trustee, Paying Agent and
Bond Registrar under the Indenture; (4) the use of the Offering
Statement by the Underwriter in connection with the offer and sale of
the Bonds (provided, however, that the Issuer neither has nor will
assume any responsibility for the accuracy or completeness of the
information contained in the Offering Statement or in the Appendices
attached thereto, except such information as relates to the Issuer
under the caption "THE ISSUER"); (5) the financing of the Facilities;
(6) the execution, delivery, receipt and due performance of this Bond
Purchase Agreement, the Bonds, the Indenture, the Agreement and any and
all such other agreements and documents as may be required to be
executed, delivered and received by the Issuer in order to carry out,
give effect to and consummate the transactions contemplated hereby or
by the Indenture or the Agreement; and (7) the carrying out, giving
effect to and consummation of the transactions contemplated hereby or
by the Indenture or the Agreement.
-2-
<PAGE> 3
(e) There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public
board or body pending or, to the knowledge of the Issuer; threatened
against or affecting the Issuer, or any basis therefor, wherein an
unfavorable decision, ruling or finding would materially adversely
affect the transactions contemplated hereby or by the Indenture or the
Agreement or the validity of the Bonds, the Indenture, the Agreement,
this Bond Purchase Agreement or any agreement or instrument to which
the Issuer is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or by the
Indenture or the Agreement.
(f) The Issuer's authorization of the use of the Offering
Statement, and the execution and delivery of this Bond Purchase
Agreement, the Bonds, the Indenture, the Agreement and the other
agreements contemplated hereby or by the Indenture or the Agreement
will not contravene any law governing the Issuer and will not conflict
with any provision of the Act.
(g) The Issuer has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that the
Issuer is a bond issuer whose arbitrage certifications may not be
relied upon.
SECTION 2. COMPANY'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
To induce the Issuer and the Underwriter to enter into this Bond
Purchase Agreement, and in consideration of the foregoing and the execution and
delivery of this Bond Purchase Agreement, the Company represents, warrants and
covenants to and with the Issuer and the Underwriter as follows:
(a) The financial statements provided to the Underwriter in
connection with the offer and sale of the Bonds by the Underwriter
present fairly its financial position as of the dates indicated therein
and the results of operation for the periods specified therein, and
such financial statements have been prepared in conformity with
generally accepted accounting principles consistently applied in all
material respects with respect to the periods involved, except as may
otherwise be disclosed to the Underwriter or in the Offering Statement.
-3-
<PAGE> 4
(b) The descriptions and information to be contained in the
Offering Statement at the Closing Date, as defined herein, are true and
do not contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not
misleading; provided, however, that none of the representations and
warranties in this Bond Purchase Agreement shall apply to the
information contained under the caption "THE ISSUER" or in Appendix B
thereto (relating to Wells Fargo Bank, N.A. (the "Bank")).
(c) It will not take or omit to take any action which will in
any way result in the proceeds from the sale of the Bonds being applied
in a manner inconsistent with the provisions of the Agreement and the
Indenture, including the provisions with respect to "arbitrage"
therein.
(d) There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any public board or
body pending or threatened against or affecting it or any basis
therefor, wherein an unfavorable decision, ruling or finding would have
a material adverse effect on the transactions contemplated by this Bond
Purchase Agreement, the Indenture or the Agreement or would adversely
affect the validity or enforceability of the Bonds, the Indenture, the
Agreement or the Letter of Credit Agreement dated as of March 1, 1985
(the "Credit Agreement") between the Company and the Bank pursuant to
which an irrevocable letter of credit (the "Letter of Credit") will be
issued by the Bank.
(e) The Agreement, this Bond Purchase Agreement and the Credit
Agreement, when executed and delivered by the Company, will constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally.
(f) The execution and delivery of the Agreement, the Credit
Agreement and this Bond Purchase Agreement, and the performance by the
Company of its obligations under the foregoing, (i) have been duly
authorized by all necessary corporate action of the Company and no
approval or other action by any governmental authority or agency
-4-
<PAGE> 5
is required in connection therewith; (ii) do not and will not violate
the Articles of Incorporation or Bylaws of the Company, or any existing
court order by which the Company is bound, and such actions do not and
will not constitute a default under any existing agreement, indenture,
mortgage, lease, note or other obligation or instrument to which the
Company is a party; and (iii) will not be subject to the lien, pledge
or encumbrance of any existing agreement or document to which the
Company is a party (excluding any lien, pledge or encumbrance arising
under the Agreement and the Credit Agreement).
SECTION 3. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless the Issuer and the
Underwriter, and any member, officer, official or employee of the Issuer or the
Underwriter, and each person, if any, who controls the Underwriter, within the
meaning of Section 15 of the Securities Act of 1933, as amended (collectively
the "Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses whatsoever caused by any untrue statement or misleading
statement or allegedly misleading statement of a material fact contained in the
Offering Statement or caused by any omission or alleged omission from the
Offering Statement of any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses claims, damages, liabilities
or expenses are caused by any such untrue or misleading statement or omission or
allegedly untrue or misleading statement or omission in the information
contained under the caption "The Issuer" or in Appendix B thereto.
If any action shall be brought against one or more of the Indemnified
Parties based upon the Offering Statement and in respect of which indemnity may
be sought against it, the Indemnified Parties shall promptly notify the Company
in writing, and the Company shall promptly assume the defense thereof, including
the employment of counsel, the payment of all expenses and the right to
negotiate and consent to settlement. Any one or more of the Indemnified Parties
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Indemnified Parties unless
employment of such counsel has been specifically authorized by the Company. The
Company shall not be liable for any settlement of any such action effected
without its consent by any of the
-5-
<PAGE> 6
Indemnified Parties, but if settled with the consent of the Company or if there
be a final judgment for the plaintiff in any such action against the Company or
any of the Indemnified Parties, with or without the consent of the Company, the
Company agrees to indemnify and hold harmless the Indemnified Parties to the
extent provided in this Bond Purchase Agreement.
SECTION 4. PURCHASE, SALE AND DELIVERY OF THE BONDS.
On the basis of the representations, warranties and covenants of the
Issuer and the Company contained herein, and subject to the terms and conditions
herein set forth, at the Closing Time, as defined herein, the Underwriter agrees
to purchase from the Issuer and the Issuer agrees to sell to the Underwriter the
Bonds at 98.5% of the aggregate principal amount thereof.
The Bonds shall be issued under and secured as provided in the
Indenture. The Bonds will be payable (except to the extent payable from proceeds
of the sale of the Bonds and the earnings from the temporary investment thereof)
solely out of the payments received under the Agreement (including moneys paid
under the Letter of Credit). The Bonds shall be further secured by the Letter of
Credit. The Bonds shall mature on March 1, 2005, shall bear interest at a
variable interest rate (subject to conversion to a fixed interest rate), provide
a put option to the owners thereof and be subject to redemption, all as set
forth in the Indenture.
Payment for the Bonds shall be made in immediately available funds by
federal wire transfer or by certified or official bank check or draft payable to
the order of the Trustee for the account of the Issuer, at such place, time and
date as shall be mutually agreed upon by the Issuer and the Underwriter. The
date of such delivery and payment is herein called the "Closing Date," and the
hour and date of such delivery and payment is herein called the "Closing Time."
The delivery of the Bonds shall be made in definitive form and issued to and
registered in the name of the Underwriter, except to the extent that the
Underwriter may request the delivery of certain of the Bonds registered as to
other persons, and in such denominations as authorized by the Indenture as the
Underwriter shall specify in writing at least 24 hours prior to the Closing
Time. The Bonds shall be available for examination and packaging by the
Underwriter at least 24 hours prior to the Closing Time.
-6-
<PAGE> 7
SECTION 5. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS.
The Underwriter's obligations under this Bond Purchase Agreement shall
be subject to the due performance by the Issuer and the Company of their
respective obligations and agreements to be performed hereunder at or prior to
the Closing Time and to the accuracy of and compliance with the Issuer's and the
Company's representations and warranties contained herein, as of the date hereof
and as of the Closing Time, and are also subject to the following conditions:
(a) The Bonds, the Indenture, the Agreement, the Credit
Agreement and the Letter of Credit shall each have been duly
authorized, executed and delivered in the form mutually agreed upon by
the Issuer, the Underwriter, the Bank and the Company.
(b) At the Closing Time, the Underwriter shall receive:
(1) The opinions dated the Closing Date of (i) King &
Spalding, Bond Counsel, relating to the valid authorization
and issuance of the Bonds, the due authorization, execution
and delivery of the Indenture and the Agreement, the
tax-exempt status of the Bonds and certain other matters; (ii)
Gerald Wright, Esq., counsel to the Company, relating to the
due organization and existence of the Company, the due
authorization, execution and delivery of the Agreement, the
Credit Agreement and this Bond Purchase Agreement and certain
other matters; (iii) Sheppard, Mullin, Richter & Hampton,
counsel to the Bank, relating to the valid authorization and
issuance of the Letter of Credit and certain other matters;
(iv) Gingher & Christensen, counsel to the Trustee, relating
to certain matters with regard to the Trustee; (v) Chestnut &
Livingston, P.C., counsel to the Issuer, relating to certain
matters with regard to the Issuer; and (vi) Kutak Rock &
Campbell, counsel to the Underwriter, relating to certain
matters of federal bankruptcy law and federal securities law;
(2) A certificate, satisfactory to the Underwriter,
of the Chairman of the Issuer, dated as of the Closing Date,
to the effect that: (i) the Issuer has duly performed all
obligations to be performed by it at or prior to the Closing
Time and that each of the representations and warranties given
by the Issuer and contained herein is true as
-7-
<PAGE> 8
of the Closing Date; (ii) the Issuer has authorized, by all necessary
action, the execution, delivery, receipt and due performance of the
Bonds, the Indenture, the Agreement and any and all such other
agreements and documents as may be required to be executed, delivered
and received by the Issuer to carry out, give effect to and consummate
the transactions contemplated hereby; (iii) no litigation is pending,
or to such Chairman's knowledge threatened, to restrain or enjoin the
issuance or sale of the Bonds or in any way affecting any authority for
or the validity of the Bonds, the Indenture, the Agreement, this Bond
Purchase Agreement or the Issuer's existence or powers or the Issuer's
right to use the proceeds of the Bonds to finance the Facilities; and
(iv) the execution, delivery, receipt and due performance of the Bonds,
the Indenture, the Agreement and the other agreements contemplated
hereby under the circumstances contemplated hereby or by the Indenture
or the Agreement and the Issuer's compliance with the provisions
thereof comply with the Act;
(3) Certificates, satisfactory in form and substance
to the Underwriter, of the President and the Secretary of the Company,
or such other officers acceptable to the Underwriter, dated as of the
Closing Date, to the effect that (i) since the date as of which
information is given in Appendix A to the Offering Statement (including
the documents to be incorporated by reference therein), if any, or any
financial information described in Section 2(a) of this Bond Purchase
Agreement, there has not been any material adverse change in the
business, properties, financial position or results of operations of
the Company, whether or not arising from transactions in the ordinary
course of business, and since such date, except in respect of the Bonds
and in the ordinary course of business, the Company has not incurred
any undisclosed material liability; (ii) there is no action, suit,
proceeding or any investigation or inquiry at law or in equity or
before or by any public board or body pending or threatened against or
affecting the Company or its property or any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the
transactions contemplated hereby or by the Indenture or the Agreement
or the validity or enforceability of the Bonds, the
-8-
<PAGE> 9
Indenture, the Agreement, the Credit Agreement, the Pledge and Security
Agreement or this Bond Purchase Agreement; (iii) the information
contained in the Offering Statement (excluding information contained
under the caption "THE ISSUER" and in Appendix B thereto) is true in
all material respects and does not contain any untrue statement of a
material fact and does not omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which they were made, not misleading; and (iv) the Company has duly
authorized, by all necessary corporate action, the execution, delivery
and due performance by the Company of the Agreement, the Credit
Agreement and this Bond Purchase Agreement; and
(4) Such additional certificates, opinions and other
documents as the Underwriter or the Bank may reasonably request shall
have been delivered, including any certificates or opinions to evidence
performance of or compliance with the provisions hereof and the
transactions contemplated hereby, all such certificates and other
documents to be satisfactory in form and substance to the Underwriter
or the Bank.
(c) The Bank shall have delivered the Letter of Credit to
the Trustee for the benefit of the Bondholders.
SECTION 6. CONDITIONS OF ISSUER'S OBLIGATIONS.
The Issuer's obligations under this Bond Purchase Agreement are subject
to the Underwriter's performance of its obligations hereunder and to the due
completion of all proceedings, and the due satisfaction of all conditions
required by the Act for the issuance of the Bonds.
No provision, covenant or agreement contained in this Bond Purchase
Agreement shall be deemed to be the covenant or agreement of any member,
officer, attorney, agent or employee of the Issuer in an individual capacity;
and no such provision, covenant or agreement, and no obligation herein imposed
upon the Issuer, or the breach thereof, shall constitute an indebtedness of the
Issuer within the meaning of any provision of the constitution or law of the
State or constitute or give rise to any pecuniary liability of the Issuer or a
charge against its general credit or taxing power. No recourse shall be had for
the payment of the principal of or premium, if any, or interest on the Bonds, or
for any claim based hereon or on any instruments and documents executed and
delivered by the Issuer in connection
-9-
<PAGE> 10
with the Facilities, against any member, officer, agent, attorney or employee,
past, present or future, of the Issuer or of any successor body, or their
respective heirs, personal representatives, successors as such, either directly
or through the Issuer or any such successor body, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty, or otherwise, all of such liability being hereby released
as a condition of and as a consideration for the execution and delivery of this
Bond Purchase Agreement.
SECTION 7. TERMINATION.
Notwithstanding any other provision of this Bond Purchase Agreement to
the contrary, the Underwriter may terminate this Bond Purchase Agreement by
notification to the Issuer and the Company if at any time prior to the Closing
Date (A) legislation shall be introduced or enacted by the United States
Congress or adopted by either house thereof or a decision by a court of the
United States shall be rendered or a ruling, regulation or official statement by
or on behalf of the Treasury Department of the United States, the Internal
Revenue Service or other government agency shall be made with respect to federal
taxation upon interest received on bonds of the general character of the Bonds,
which would have the effect of changing directly or indirectly the federal
income tax consequences of interest on bonds of the general character of the
Bonds in the hands of the owners thereof; or (B) legislation shall be enacted or
any action shall be taken by the Securities and Exchange Commission which, in
the reasonable judgment of the Underwriter, has the effect of requiring the
contemplated distribution of the Bonds to be registered under the Securities Act
of 1933, as amended, or the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended; or (C) there shall exist any event which, in the
reasonable judgment of the Underwriter, either (1) makes untrue or incorrect in
any material respect any statement or information contained in the Offering
Statement or (2) is not reflected in the Offering Statement should be reflected
therein or in an attachment thereto in order to make any material statements or
information contained therein not misleading in any material respect; or (D)
there shall have occurred any outbreak of hostilities engaging the United States
in any local, national or international calamity or crisis, the effect of such
outbreak, calamity or crisis on the financial markets of the United States being
such as, in the reasonable judgment of the Underwriter, would materially affect
the marketability of the Bonds; or (E) there shall be in force a general
suspension of trading on the New York Stock Exchange or minimum or maximum
prices for trading shall
-10-
<PAGE> 11
have been fixed and be in force, or maximum ranges for prices for securities
shall have been required and be in force on the New York Stock Exchange, whether
by virtue of a determination by that Exchange or by order of the Securities and
Exchange Commission or any other governmental authority having jurisdiction; or
(F) a general banking moratorium shall have been declared by either federal,
Georgia, California or New York authorities having jurisdiction and be in force;
or (G) there shall have occurred any change, or any development involving a
prospective change, in or affecting the operations of the Issuer, the Company or
the Bank, which, in the reasonable judgment of the Underwriter, materially
impairs the investment quality of the Bonds; or (H) any legislation, ordinance,
rule or regulation shall be introduced in or be enacted by any governmental
body, department or agency in the State of Georgia or a decision by any court of
competent jurisdiction within the State of Georgia shall be rendered, which
materially adversely affects the market price of the Bonds; or (I) additional
material restrictions not in force as of the date hereof shall have been imposed
upon trading in securities generally by any governmental authority or by any
national securities exchange.
If the Issuer or the Company does not, in the exercise of good faith,
satisfy the conditions to the obligations of the Underwriter contained in this
Bond Purchase Agreement, or if the obligations of the Underwriter shall be
terminated for any reason permitted by this Bond Purchase Agreement, this Bond
Purchase Agreement shall terminate and the Underwriter, shall not have any
further obligations hereunder. The Underwriter, however, may in its sole
discretion waive one or more of the conditions imposed by this Bond Purchase
Agreement and proceed herewith.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All of the Issuer's and the Company's representations, warranties and
agreements shall remain operative and in full force and effect, regardless of
any investigations made by the Underwriter on its behalf, and shall survive
delivery of the Bonds to the Underwriter.
SECTION 9. PAYMENT OF EXPENSES.
Whether or not the Bonds are sold by the Issuer to the Underwriter, the
Underwriter shall be under no obligation to pay any expenses incident to the
performance of the obligations of the Issuer hereunder. All expenses and costs
-11-
<PAGE> 12
to effect the authorization, preparation, issuance, delivery and sale of the
Bonds (including, without limitation, the fees and disbursements of Bond
Counsel, counsel to the Bank, counsel to the Issuer, and the expenses and costs
for the preparation, printing, photocopying, execution and delivery of the
Bonds, (and the rating thereof by Standard & Poor's Corporation), the Indenture,
the Agreement, the Credit Agreement, this Bond Purchase Agreement and all other
agreements and documents contemplated hereby) shall be paid out of the proceeds
of the sale of the Bonds, or by the Company. The Company and the Underwriter
have agreed that certain expenses in connection with the offer and sale of the
Bonds by the Underwriter will be paid by the Underwriter, including the fees and
disbursements of the Underwriter and its counsel, expenses and costs for the
preparation, printing and delivery of the Preliminary Offering Statement and
Offering Statement, advertising and certain miscellaneous fees and expenses, and
neither the Company nor the Issuer shall be liable for the payment thereof.
SECTION 10. NOTICES.
Any notice or other communication to be given to the Issuer under this
Bond Purchase Agreement may be given by mailing (certified or registered) or
delivering the same in writing to Development Authority of DeKalb County, 6485
Peachtree Industrial Boulevard, Doraville, Georgia 30360, Attention: Chairman;
and any notice or other communication to be given to the Underwriter under this
Bond Purchase Agreement may be given by delivering the same in writing to
Prudential-Bache Securities Inc., 100 Gold Street, New York, New York 10292,
Attention: Public Finance Department, IDB/Pollution Control Group; and any
notice or other communication to be given to the Company may be given by
delivering the same in writing to Radiation Sterilizers, Incorporated, 3000 Sand
Hill Road, Building 4, Suite 245, Menlo Park, California 94025.
SECTION 11. APPLICABLE LAW; NONASSIGNABILITY.
This Bond Purchase Agreement shall be governed by the laws of the
State. This Bond Purchase Agreement shall not be assigned by the Issuer or the
Underwriter.
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<PAGE> 13
SECTION 12. AMENDMENTS; EXECUTION OF COUNTERPARTS.
This Bond Purchase Agreement may be executed in several counterparts,
each of which shall be regarded as an original and all of which shall constitute
one and the same document. This Bond Purchase Agreement may not be amended,
except in writing signed by all parties hereto.
DEVELOPMENT AUTHORITY OF
DEKALB COUNTY
Attest By /s/ Signature Unreadable
/s/ Signature Unrreadble --------------------------------
- ----------------------------- Chairman
(Assistant) Secretary
PRUDENTIAL-BACHE SECURITIES INC.
By /s/ Signature Unreadable
--------------------------------
Authorized Officer
RADIATION STERILIZERS,
INCORPORATED
By /s/ Charles W. King Jr.
--------------------------------
Secretary
-13-
<PAGE> 1
EXHIBIT 10.34
LOAN AGREEMENT
Between
DEVELOPMENT AUTHORITY OF DEKALB COUNTY
And
RADIATION STERILIZERS, INCORPORATED
Dated as of March 1, 1985
================================================================================
This Loan Agreement and certain rights of the Development Authority of DeKalb
County (the "Issuer") under this Loan Agreement have been assigned and pledged
to, and are subject to a security interest in favor of, Bank One Trust Company,
N.A., as trustee (the "Trustee") under the Trust Indenture, dated as of March 1,
1985, as amended or supplemented from time to time, between the Issuer and the
Trustee, which secures $5,250,000 in aggregate principal amount of Development
Authority of DeKalb County Variable Rate Demand Industrial Development Revenue
Bonds (Radiation Sterilizers, Incorporated Project), Series 1985. Information
concerning such security interest may be obtained from the Trustee at Bank One
Trust Company, N.A., Attention: Corporate Trust Administration, 100 East Broad
Street, Columbus, Ohio 43271-0181.
================================================================================
This instrument was prepared by:
KING & SPALDING
2500 Trust Company Tower
Atlanta, Georgia 30303
Telephone: (404) 572-4600
<PAGE> 2
LOAN AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Loan Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Loan Agreement.)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PARTIES 1
ARTICLE I. DEFINITIONS AND CERTAIN
RULES OF INTERPRETATION
Section 1.1. Definitions 2
Section 1.2. Certain Rules of Interpretation 12
ARTICLE II. REPRESENTATIONS
Section 2.1. Representations by the Issuer 13
Section 2.2. No Warranty by Issuer of Condition
or Suitability of the Facilities 15
Section 2.3. Representations by the Company 15
ARTICLE III. ACQUISITION, CONSTRUCTION AND
INSTALLATION OF THE FACILITIES;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction and
Installation of the Facilities 21
Section 3.2. Agreement to Issue Bonds;
Application of Proceeds 21
Section 3.3. Disbursements from
the Construction Fund 21
Section 3.4. Obligation to Furnish
Documents to Trustee 25
Section 3.5. Establishment of Completion Date 25
Section 3.6. Company Required to Pay
Costs of Facilities If
Construction Fund Insufficient 26
Section 3.7. Remedies Against Suppliers,
Contractors and Subcontractors
and Their Sureties 26
Section 3.8. Investment of Bond Fund and
Construction Fund Moneys Permitted 27
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Section 3.9. Title to the Facilities 27
ARTICLE IV. LOAN BY THE ISSUER TO THE
COMPANY; REPAYMENT OF LOAN
Section 4.1. Loan By the Issuer to the
Company; Repayment of Loan;
Obligations Unconditional 28
Section 4.2. Company Consent to Assignment of
Agreement and Execution of Indenture;
Company's Performance Under Indenture 29
Section 4.3. Prepayment of Loan 30
Section 4.4. Delivery of Letter of Credit
to Trustee 32
Section 4.5. Satisfaction of Company's Obligation 32
Section 4.6. Alternate Letter of Credit;
Alternate Credit Facility 32
Section 4.7. Extension of Letter of Credit 33
Section 4.8. Notice of Prepayments;
Issuer to Effect Redemption 33
Section 4.9. Relative Position of this
Article and the Indenture 33
Section 4.10. Place of Payment 34
Section 4.11. Payments to the Remarketing Agent
and the Paying Agent 34
ARTICLE V. PARTICULAR COVENANTS
Section 5.1. Maintenance of Existence 35
Section 5.2. Qualification in the State 35
Section 5.3. Indemnification of Issuer
and Trustee 35
Section 5.4. Payment of Trustee's Fees 36
Section 5.5. Maintenance and Operation
of the Facilities 37
Section 5.6. Covenants of Company and Issuer with
Respect to Exemption of Interest
from Federal Income Taxation 37
Section 5.7. Insurance Required 40
Section 5.8. Taxes, Other Governmental
Charges and Utility Charges 40
Section 5.9. Damage, Destruction and Eminent Domain 40
Section 5.10. Company's Obligation To Pay
Certain Fees Expenses of the Issuer 41
Section 5.11. Application of Certain Proceeds
Prior to the Expiration Date
of the Letter of Credit 41
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Section 5.12. Non-Arbitrage Covenant; Compliance
with Special Arbitrage Rules 42
Section 5.13. Fixed Interest Rate 47
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default 48
Section 6.2. Remedies on Events of Default 49
Section 6.3. No Remedy Exclusive 50
Section 6.4. Agreement To Pay Attorneys'
Fees and Expenses 51
Section 6.5. No Additional Waiver
Implied by One Waiver 51
ARTICLE VII. MISCELLANEOUS
Section 7.1. Termination of Agreement 52
Section 7.2. Confidential Information 52
Section 7.3. Cancellation of Bonds 52
Section 7.4. Amounts Remaining in Bond Fund,
Construction Fund and
Other Funds and Accounts 52
Section 7.5. Notices 52
Section 7.6. Binding Effect; Parties in Interest 53
Section 7.7. Extent of Covenants of the
Issuer; No Personal Liability 53
Section 7.8. Amendments, Changes and Modifications 53
Section 7.9. Execution Counterparts 53
Section 7.10. Severability 53
Section 7.11. Captions 53
Section 7.12. Payments Due on Non-Business Days 54
Section 7.13. Governing Law 54
TESTIMONIUM
SIGNATURES AND SEALS
EXHIBIT A - DESCRIPTION OF FACILITIES A-1
EXHIBIT B - REQUISITION AND CERTIFICATION B-1
EXHIBIT C - CERTIFICATE OF COMPLETION C-1
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LOAN AGREEMENT
Between
DEVELOPMENT AUTHORITY OF DEKALB COUNTY
and
RADIATION STERILIZERS, INCORPORATED
THIS LOAN AGREEMENT made as of the 1st day of March, 1985, between
the DEVELOPMENT AUTHORITY OF DEKALB COUNTY, a public body corporate and politic
created and existing under the laws of the State of Georgia (the "Issuer"), and
RADIATION STERILIZERS, INCORPORATED, a corporation organized and existing under
the laws of the State of California and qualified to do business in the State of
Georgia.
W I T N E S S E T H:
That the parties hereto, intending to be legally bound hereby, and
for and in consideration of the premises and the mutual covenants hereinafter
contained, do hereby covenant, agree and bind themselves, as follows; provided,
that any obligation of the Issuer created by or arising out of this Agreement
shall never constitute a debt or a pledge of the faith and credit or the taxing
power of the Issuer or any political subdivision or taxing district of the State
of Georgia but shall be payable solely out of the "Trust Estate" (defined in the
Trust Indenture hereinafter referred to), anything herein contained to the
contrary by implication or otherwise notwithstanding:
(Article I commences on the following page.)
<PAGE> 6
ARTICLE I.
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1 DEFINITIONS. In addition to the words and terms
elsewhere defined herein, the following words and terms as used herein shall
have the following meanings unless the context or use clearly indicates another
or different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:
"ACT" means an act of the General Assembly of the State of Georgia
(O.C.G.A. Section 36-62), as amended.
"ADJUSTMENT DATE" means, after the Conversion Date, the Interest
Payment Date next preceding the Expiration Date of the Alternate Credit Facility
or the Expiration Date of the Letter of Credit, as the case may be.
"AGREEMENT" means this Loan Agreement as from time to Anne
supplemented or amended in accordance with the provisions hereof and of the
Indenture.
"ALTERNATE CREDIT FACILITY" means a credit facility other than the
Letter of Credit, including without limitation, an irrevocable letter of credit
or bond insurance policy, which provides for payment of the principal of, and
the interest on the Bonds, when due.
"ALTERNATE LETTER OF CREDIT" means an irrevocable letter of credit
issued in accordance with Section 4.6 of this Agreement.
"AUTHORIZED COMPANY REPRESENTATIVE" means the person at the time
designated to act on behalf of the Company by written certificate furnished to
the Issuer, the Bank and the Trustee, containing the specimen signature of such
person and signed on behalf of the Company by its President or any Vice
President Such certificate may designate an alternate or alternates.
"AUTHORIZED ISSUER REPRESENTATIVE" means the person at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Company, the Bank and the Trustee containing the specimen signature of such
person and signed on behalf of the Issuer by its Chairman or Vice Chairman. Such
certificate may designate an alternate or alternates. Such person must be
satisfactory to the Company and shall be replaced by the Issuer upon the written
request of the Company.
"AVAILABLE MONEYS" means moneys on deposit in trust with the Trustee
for a period of at least one hundred twenty-three (123) days during
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which no petition in bankruptcy or similar insolvency proceeding has been filed
by or against the Company.
"BANK" means the issuer of the Letter of Credit, initially, Wells
Fargo Bank, N.A., San Jose, California, a national banking association.
"BOND FUND" means the Bond principal and interest payment fund
created in Section 702 of the Indenture and within which has been established a
general account and a special account. Any reference herein to the "Bond Fund"
without further limitation or explanation shall be deemed to be a reference to
the general account in the Bond Fund.
"BOND PAYMENT DATE" means any date upon which the principal of, and
the redemption premium (if any) or interest on, the Bonds shall be payable
pursuant to the Indenture, whether at stated maturity, by redemption, by
acceleration or otherwise.
"BOND RESOLUTION" means the resolution adopted by the Issuer
authorizing the issuance of the Bonds, as the same may be amended, modified or
supplemented by any amendments or modifications thereof and supplements thereto
entered into in accordance with the provisions of the Indenture.
"BONDHOLDER, "OWNER" or "HOLDER AFTER THE BONDS" means the
registered owner of any Bond.
"BONDS" means the Development Authority of DeKalb County Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985, in the aggregate principal amount of
$5,250,000, issued pursuant to the provisions of the Indenture.
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on
which banks located in the cities in which the principal corporate trust office
of the Trustee and the principal office of the Bank are located and in New York,
New York, are not required or authorized by law to remain closed and on which
The New York Stock Exchange, Inc. is not closed.
"CHAIRMAN" means the Chairman of the Issuer.
"CODE" means the Internal Revenue Code of 1954, as amended, and the
applicable Income Tax Regulations thereunder.
"COMMITMENT DATE" means October 4, 1983, the date of the it
"official action" resolution by which the Issuer agreed in principle to issue
the Bonds for the benefit of the Company to assist in the financing of the
Facilities.
"COMPANY" means Radiation Sterilizers, Incorporated, a corporation
organized under the laws of the State of California and qualified to do business
in the State, and lawful successors and assigns including any surviving,
resulting, or transferee entity as provided in Section 5.1.
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"COMPLETION DATE" means the date of completion of the acquisition,
construction and equipping of the Facilities as that date shall be certified as
provided in Section 3.5.
"CONSTRUCTION FUND" means the construction fund created in Section
601 of the Indenture.
"CONSTRUCTION PERIOD" means the period between the beginning of
acquisition, construction or equipping of the Facilities or the date on which
Bonds are first delivered to the Original Purchasers, whichever is earlier, and
the Completion Date.
"CONVERSION DATE" means the date upon which the Bonds begin to bear
interest at the Fixed Interest Rate, which date shall be established in
accordance with Section 402 of the Indenture.
"COUNTY" means DeKalb County, a political subdivision of the State.
"DEFAULT" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.
"DETERMINATION OF TAXABILITY" means a determination that the
interest income on any of the Bonds is subject to Federal income taxation as a
result of an Event of Taxability, which determination shall be deemed to have
been made upon the occurrence of the first to occur of the following:
(a) the date on which the Company files (in compliance with its
obligations hereunder) any Supplemental Statement which discloses that an
Event of Taxability has occurred;
(b) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service
that, based upon any filings of the Company, or upon any review or audit
of the Company, or upon any other grounds whatsoever, an Event of
Taxability has occurred;
(c) the date on which the Company receives notice from the Trustee
in writing that the Trustee has been advised by any holder or former
holder of a Bond that the Internal Revenue Service has issued a statutory
notice of deficiency or similar notice to such holder or former holder
which asserts in effect that the interest on the Bonds of such holder or
former holder is includable in the gross income of such holder or former
holder due to the occurrence of an Event of Taxability;
(d) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that
there has been issued a public or private ruling of the Internal Revenue
Service or a technical advice memorandum issued by the
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national office of the Internal Revenue Service that the interest on the
Bonds is includable for Federal income tax purposes in the gross income of
any holder or former holder of a Bond due to the occurrence of an Event of
Taxability; or
(e) the date on which the Company is advised in writing that a final
determination, from which no further right of appeal exists, has been made
by a court of competent jurisdiction in the United States of America in a
proceeding with respect to which the Company has been given written notice
and an opportunity to participate and defend that the interest on the
Bonds is includable in the gross income of any holder or former holder of
a Bond due to the occurrence of an Event of Taxabillity;
provided, however, no Determination of Taxability shall occur under subparagraph
(b), (c) or (d) of this paragraph unless the Company has been afforded the
opportunity, at its expense, to contest any such conclusion and/or assessment
and, further, no Determination of Taxability shall occur until such contest, if
made, has been finally determined. The Company shall be deemed to have been
afforded the opportunity to contest if it shall have been permitted to commence
and maintain any action in the name of any holder or former holder of a Bond to
judgment and through any appeals therefrom or other proceedings related thereto.
"ELIGIBLE INVESTMENTS" means:
(f) any bonds or other obligations of the United States of America
which as to principal and interest constitute direct obligations of the
United States of America, or any obligations of subsidiary corporations of
the United States of America fully guaranteed as to payment by the United
States of America;
(g) obligations of the Federal Land Bank;
(h) obligations of the Federal Home Loan Bank;
(i) obligations of the Federal Intermediate Credit Bank;
(j) obligations of the Central Bank for Cooperatives;
(k) certificates of deposit of national or state banks located
within the State which have deposits insured by the Federal Deposit
Insurance Corporation and certificates of deposit of Federal savings and
loan associations and state building and loan associations located within
the State which have deposits insured by the Federal Savings and Loan
Insurance Corporation (including the certificates of deposit of any bank,
savings and loan association or building and loan association acting as
depository, custodian or trustee for any proceeds of the Bonds); provided
however, that the portion of such certificates of deposit in excess of the
amount insured by the Federal Deposit
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Insurance Corporation or the Federal Savings and Loan Insurance
Corporation, if any, shall be secured by deposit with the Federal Reserve
Bank of Atlanta, Georgia, or with any national or state bank located
within the State, of any of the obligations included in (a), (b), (c), (d)
or (e) above; and
(l) repurchase agreements with respect to obligations included in
(a), (b), (c), (d) or (e) above and any other investments to the extent at
the time permitted by then applicable law for the investment of permitted
by then applicable law for the investment of public funds;
provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing on or prior to the date payment is due of the obligation
for which the draw was made.
"EVENT OF DEFAULT" means one of the events so denominated and
described in Section 6.1 of this Agreement.
"EVENT OF TAXABILITY" means the date on which the interest income on
any of the Bonds becomes subject to Federal income taxation as a result of any
of the following conditions or circumstances:
(a) as a result of Section 103(b)(6)(D) Capital Expenditures being
paid or incurred with respect to the Local Facilities, the aggregate face
amount of the Bonds determined in accordance with the provisions of
Section 103(b)(6)(D) of the Code exceeds the limit permitted by said
Section 103(b)(6)(D); or
(b) the Bonds constitute "arbitrage bonds" within the meaning of
Section 103(c) of the Code; or
(c) the weighted average maturity of the Bonds exceeds the weighted
average estimated economic life of the components comprising the
Facilities by more than 20%, determined pursuant to Section 103(b)(14) of
the Code; or
(d) (i) more than 25% of the net proceeds of the sale of the Bonds
are used to provide a facility the primary purpose of which is one
of the following: retail food and beverage services (including
eating and drinking places, but excluding grocery stores),
automobile sales or service, or the provision of recreation or
entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
A used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
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(iii) any portion of the net proceeds of the sale of the Bonds is
used to provide any airplane, skybox or other luxury box, any health club
facility, any facility primarily used for gambling, or any store the
principal business of which is the sale of alcoholic beverages for
consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds is
used (directly or indirectly) for the acquisition of land (or an interest
therein) to be used for farming purposes, or 25% or more of the net
proceeds of the sale of the Bonds is used directly or indirectly) for the
acquisition of land (or an interest therein) other than land to be used
for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds is used
for the acquisition of any property the first use of which property is not
pursuant to such acquisition, except with respect to any building (and the
equipment therefor) if the rehabilitation expenditures with respect to
such building equal or exceed 15% of the portion of the cost of acquiring
such building (and equipment) financed with the proceeds of the Bonds; or
(e) the Facilities are operating as a facility the primary purpose of
which causes the Facilities to constitute a prohibited facility within the
meaning of Section 103(b) of the Code; or
(f) the sum of the authorized face amount of the Bonds allocable to each
"test-period beneficiary" (as defined in Section 103(b)(15)(D) of the Code) plus
the respective aggregate face amount of all tax-exempt industrial development
bonds presently outstanding (not including any obligations which are to be
redeemed from the proceeds of the Bonds) which are allocable to each such
test-period beneficiary exceeds $40,000,000; or
(g) less than substantially all of the net proceeds of the sale of the
Bonds are used to pay the costs of land or property of a character subject to
the allowance for depreciation under Section 167 of the Code; or
(h) the taking of any action by the Issuer, the Company or any person
acting on the Company's behalf or upon the Company's direction, or the failure
of the Issuer, the Company (or any such person to take any action, or any
mistake in or untruthfulness of any representation of the Issuer or the Company
contained in this Agreement or in any certificate of the Issuer or the Company
delivered pursuant to this Agreement or the Indenture or in connection with the
issuance of the Bonds, if such act or omission, or such mistake in or
untruthfulness of such representation, has the effect of causing the interest
income on the Bonds to be or become subject to Federal income taxation;
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provided, however, that no Event of Taxability shall be deemed to have occurred
with respect to any Bond if the interest income thereon shall be subject to
Federal income taxation for any period solely because during that period such
Bond was held by a person who is a Substantial User or a Related Person; and,
provided further, that no Event of Taxability shall be deemed to have occurred
if the interest income on any of the Bonds becomes subject to Federal income
taxation as a result of a Taxability Change.
"EXCESS INVESTMENT EARNINGS ACCOUNT" means the excess investment
earnings account created pursuant to Section 804 of the Indenture.
"EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY" means the date
established in the Alternate Credit Facility for the expiration thereof, and in
the event such date is extended, such date as extended.
"EXPIRATION DATE OF THE LETTER OF CREDIT" means the date established
in the Letter of Credit for the expiration thereof in accordance with its terms,
initially April 15, 1988, and in the event such date is extended, such date as
extended.
"FACILITIES" means the real, personal and mixed property identified
in Exhibit A attached hereto, together with any additions and improvements
thereto, modifications thereof and substitutions therefor.
"FINANCING STATEMENTS" means any and all financing statements
(including continuation statements) filed for record from time to time to
perfect the security interests created or assigned.
"FIXED INTEREST RATE" means a fixed nonfloating interest rate on the
Bonds established in accordance with Section 402 of the Indenture.
"FORCE MAJEURE" means acts of God; strikes, lockouts or other
industrial disturbances; acts of public enemies; orders of any kind of the
government of the United States of America, or of a state of the United States
of America or any of their departments, agencies, political subdivisions or
officials, or any civil or military authority; insurrections; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes, tornadoes or storms;
floods; washouts; droughts; arrests; restraints of governments and people; civil
disturbances; explosions; breakage or accident to machinery, transmission pipes
or canals; partial or entire failure of utilities; or any cause or event not
reasonably within the control of the Company.
"GOVERNMENT OBLIGATIONS" means (a) direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged, or (b) obligations issued by a person
controlled or supervised by and acting as an instrumentality of the United
States of America, the payment of the principal of, premium, if any, and the
interest on which is fully guaranteed as a full faith and credit obligation of
the United States of America (including any securities described
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in (a) or (b) issued or held in book-entry form on the books of the Department
of the Treasury of the United States of America), which obligations, in either
case, are not subject to redemption prior to maturity at less than par by anyone
other than the holder.
"INDENTURE" means the Trust Indenture between the Issuer and the
Trustee, of even date herewith, as the same may be amended, modified or
supplemented by any amendments or modifications thereof and any supplements
thereto entered into in accordance with the provisions thereof.
"INDEPENDENT COUNSEL" means an attorney or firm thereof duly
admitted to practice law before the highest court of any state in the United
States of America or the District of Columbia and not an employee on a full-time
basis of either the Issuer or the Company (but who or which may be regularly
retained by either).
"INDEPENDENT ENGINEER" means an engineer or engineering firm
registered and qualified to practice the profession of engineering under the
laws of the State and not an employee on a full-time basis of either the Issuer
or the Company (but who or which may be regularly retained by either).
"INDEPENDENT TAX COUNSEL" means Independent Counsel selected by the
Company and satisfactory to the Trustee, experienced in matters relating to the
exemption from Federal income tax of interest on obligations issued by states or
their political subdivisions.
"INTEREST PAYMENT DATE" means with respect to the Bonds prior to and
including the Conversion Date the first Business Day of each calendar month
commencing May 1, 1985, and after the Conversion Date the first day of each
March and September.
"INTEREST RATE FOR ADVANCES" means a rate per annum which is equal
to the sum of two per centum (2%) and the Prime Rate.
"INTEREST RESERVE REQUIREMENT" means $266,000.
"ISSUER" means the Development Authority of DeKalb County, a public
body corporate and politic created and existing pursuant to the provisions of
the Act, and its successors and assigns.
"LETTER OF CREDIT" means the irrevocable letter of credit issued by
the Bank contemporaneously with the original issuance of the Bonds, except that
upon the issuance and delivery of an Alternate Letter of Credit, "LETTER OF
CREDIT" shall mean such Alternate Letter of Credit, and upon the delivery of an
Alternate Credit Facility, "LETTER OF CREDIT" shall, unless the context
otherwise requires, include reference to the Alternate Credit Facility.
"LETTER OF CREDIT AGREEMENT" means the Letter of Credit Agreement,
dated as of March 1, 1985, between the Company and the Bank, pursuant to which
the Letter of Credit is issued by the Bank and delivered to
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the Trustee, and any and all modifications, alterations, amendments and
supplements thereto, and includes any agreement between the Company and the Bank
pursuant to which any Alternate Letter of Credit is issued or any Alternate
Credit Facility is made available.
"LOAN TERM" means the period commencing on the date of this
Agreement and ending on the date on which the Bonds have been fully paid (or
provision for their payment has been made) in accordance with the provisions of
the Indenture.
"LOCAL FACILITIES" means "facilities" (as the term "facilities" is
used in Section 103(b)(6)(E) of the Code) of which the Company or a Related
Person thereto is or will be the Principal User and which are located wholly
within the County. For purposes of this definition, a contiguous or integrated
"facility" located on both sides of the border between any two or more political
jurisdictions shall be considered as being located wholly within each such
political jurisdiction.
"NET PROCEEDS OF THE SALE OF THE BONDS" means those proceeds of the
sale of the Bonds remaining after payment of all expenses in connection with the
issuance of the Bonds and the deposit of all accrued interest (if any) received
from the sale of the Bonds in the Bond Fund, together with investment earnings
on such net proceeds earned prior to the Completion Date.
"NET PROCEEDS", when used with respect to any insurance proceeds or
any condemnation award, means the gross proceeds thereof less the payment of all
expenses (including attorneys' fees and any extraordinary fees and expenses of
the Trustee) incurred in the collection of such gross proceeds.
"NOTICE ADDRESS" means
(a) As to the Company: Radiation Sterilizers, Incorporated
Attention: President
3000 Sand Hill Road
Menlo Park, California 94025
(b) As to the Issuer: Development Authority of DeKalb
County
Attention: Chairman
6485 Peachtree Industrial Blvd.
Doraville, Georgia 30360
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(c) As to the Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
Attention: George Huxtable,
Vice President
2055 Gateway Plaza, Suite 200
San Jose, California 95110
(d) As to the Trustee: Bank One Trust Company, N.A.
Attention: Corporate Trust
Administration
100 East Broad Street
Columbus, Ohio 43271-0181,
or such address as may hereafter be provided pursuant to Section 7.5.
"PERSON" means any natural person, corporation, cooperative,
partnership, trust or unincorporated organization, government or governmental
body or agency, political subdivision or other legal entity as in the context
may be appropriate.
"PRIME RATE" means the rate of interest as announced from time to
time by Wells Fargo Bank, N.A., San Francisco, California, as its prime rate of
interest, such rate changing automatically and immediately from time to time
effective as of the effective date of each such announced change.
"PRINCIPAL USER" means, with respect to any "facilities" (as the
term "facilities" is used in Section 103(b)(6)(E) of the Code), a "principal
user" of such "facilities" within the meaning of Section 103(b)(6) of the Code.
"RELATED PERSON", when used with reference to any Principal User or
any Substantial User, means a "related person" within the meaning of Section
103(b)(6) of the Code.
"SECRETARY" means the Secretary of the Issuer.
"SECTION 103(B)(6)(D) CAPITAL EXPENDITURES" means capital
expenditures described K Section 1.103-10(b)(2)(ii) of the Income Tax
Regulations, but shall not include capital expenditures described as "excluded
expenditures" in Section 1.103-10(b)(2)(iv) of the Income Tax Regulations.
"SECURITY INTEREST" or "security interests" shall refer to the
security interests created in the Indenture and shall have the meaning set forth
in the U.C.C.
"STATE" means the State of Georgia.
"SUBSTANTIAL USER" means, with respect to any "facilities" (as the
term "facilities" is used in Section 103(b)(6)(E) of the Code), a "substantial
user" of such "facilities" within the meaning of Section 103(b)(13) of the Code.
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"SUPPLEMENTAL STATEMENT" means any statement, supplemental statement
or other tax schedule, return or document filed with the Internal Revenue
Service (whether pursuant to Income Tax Regulations Section 1103-10(b)(2)(vi),
as the same may be amended or supplemented, or otherwise).
"TAXABILITY CHANGE" means any change in the Constitution or laws of
the United States of America or the applicable Income Tax Regulations thereunder
occurring after the date of issuance of the Bonds which results in the interest
on any of the Bonds being included in the gross income of any holder (other than
a holder who is a Substantial User or a Related Person).
"TAXABLE PERIOD" means, with respect to a Bond, the period which
elapses from the Event of Taxability until payment in full of such Bond.
"TRUSTEE" means the Trustee at the time serving as such under the
Indenture. "PRINCIPAL OFFICE" of the Trustee means the principal corporate trust
office of the Trustee, which office at the date of this Agreement is located at
the address hereinbefore specified under the definition, "NOTICE ADDRESS".
"U.C.C." means the Uniform Commercial Code of the State, as now or
hereafter amended. Section 1.2. CERTAIN RULES OF INTERPRETATION. The definitions
set forth in Section 1.1 shall be equally applicable to both the singular and
plural forms of the terms therein defined and, shall cover all genders.
"Herein", "hereby", "hereunder". "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement and not solely
to the particular Article, Section or subdivision hereof in which such word is
used.
Reference herein to an Article number (e.g., Article IV) or a
Section number (e.g., Section 6.2) shall be construed to be a reference to the
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.
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ARTICLE II.
REPRESENTATIONS
Section 2.1. REPRESENTATIONS BY THE ISSUER. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Organization and Authority. The Issuer is a public body
corporate and politic, created and validly existing pursuant to the
Constitution and laws of the State, including particularly the provisions
of the Act. The Issuer has all requisite power and authority under the Act
to (i) issue the Bonds, (ii) lend the proceeds thereof to the Company to
enable the Company to acquire, construct and install the Facilities, and
(iii) enter into, and perform its obligations under, this Agreement and
the Indenture.
(b) Pending Litigation. There are no actions, suits, proceedings,
inquiries or investigations pending, or to the knowledge of the Issuer
threatened, against or affecting the Issuer in any court or before any
governmental authority or arbitration board or tribunal, which involve the
possibility of materially and adversely affecting the transactions
contemplated by this Agreement or the Indenture or which, in any way,
would adversely affect the validity or enforceability of the Bonds, the
Indenture, this Agreement or any agreement or instrument to which the
Issuer is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized.
The issuance and sale of the Bonds and the execution and delivery by the
Issuer of this Agreement and the Indenture, and the compliance by the
issuer with all of the provisions of each thereof and of the Bonds (i) are
within the purposes, powers and authority of the Issuer, (ii) have been
done in full compliance with the provisions of the Act are legal and will
not conflict with or constitute on the part of the Issuer a violation of
or a breach of or default under, or result in the creation of any lien,
charge or encumbrance upon any property of the Issuer (other than as
contemplated by this Agreement and the Indenture) under the provisions of,
any charter instrument, by-law, indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Issuer is a party
or by which the Issuer is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over, the Issuer is any of its activities or
properties, and (iii) have been duly authorized by all necessary corporate
action on the part of the Issuer.
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<PAGE> 18
(d) Governmental Consents. Neither the nature of the Issuer nor
any of its activities or properties, nor any relationship between the
Issuer and any other person, nor any circumstance in connection with the
offer, issue, sale or delivery of any of the Bonds is such as to require
the consent approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Issuer
in connection with the execution, delivery and performance of this
Agreement, the Indenture and the Security Agreement or the offer, issue,
sale or delivery of the Bonds, other than those already obtained,
including (i) the public approval of the issuance of the Bonds and
compliance with the information reporting requirements contained in
Section 103(k) and Section 103(i), respectively, of the Code, (ii) receipt
of a Notice of Allocation under the Georgia Bond Allocation Plan, (iii)
the validation of the Bonds by the Superior Court of the County, (iv) the
filing of an election by the Issuer with respect to the Bonds under
Section 103(b)(6)(D) of the Code, and (v) the filing of Financing
Statements perfecting the security interests created under the Indenture.
(e) No Defaults. No event has occurred and no condition exists
with respect to the Issuer which would constitute an "Event of Default" as
defined in this Agreement or the Indenture or which, with the lapse of
time or with the giving of notice or both, would become an "Event of
Default" under this Agreement or the Indenture. The Issuer is not in
default under the Act or under any charter instrument, by-law or other
agreement or instrument to which it is a party or by which it is bound.
(f) No Prior Pledge. Neither this Agreement nor the Trust Estate
has been pledged or hypothecated in any manner or for any purpose other
than as provided in the Indenture as security for the payment of the
Bonds.
(g) Disclosure. Neither the representations of the
Issuer contained in this Agreement and the Indenture nor any written statement
relating to the Issuer furnished to the Original Purchasers of the Bonds by or
on behalf of the Issuer in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading.
(h) Nature and Location of Facilities. The financing
of the Facilities is in furtherance of the public purpose intended to be
served by the Act. The Facilities will be located within the County.
(i) No Other Outstanding Industrial Development Bonds. The Issuer
has no outstanding issues of "industrial development bonds" (as defined in
Section 103(b)(2) of the Code), the proceeds of which have been or will be
used with respect to the Local Facilities.
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(j) Official Action. By resolution duly adopted on October 4,
1983, the Issuer took "official action" (within this meaning of Section
103-8(a)(5) of the Income Tax Regulations under the Code) providing for
the acquisition, construction and installation of the Facilities and the
financing of the cost of the Facilities, in whole or in part through the
issuance of the Bonds.
(k) Limited Obligations. Notwithstanding anything
herein contained to the contrary, any obligation the Issuer may hereby
incur for the payment of money shall not constitute an indebtedness of the
State or of any political subdivision thereof within the meaning of any
state constitutional provision or statutory limitation and shall not give
rise to a pecuniary liability of the State or a political subdivision
thereof, or constitute a charge against the general credit or taxing power
of said State or a political subdivision thereof, but shall be limited
obligations of the Issuer payable solely from the Trust Estate.
Section 2.2. NO WARRANTY BY ISSUER OF CONDITION OR SUITABILITY OF
THE FACILITIES. The issuer makes no warranty, either express or implied, as to
the condition the Facilities or as to the suitability of the Facilities for the
Company's purposes.
Section 2.3. REPRESENTATIONS BY THE COMPANY. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization and Power. The Company (i) is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California and is qualified to do business and is
in good standing under the laws of the State, and (ii) has all requisite
power and authority and all necessary licenses and permits to own and
operate its properties and to carry on its business as now being conducted
and as presently proposed to be conducted.
(b) Pending Litigation. There are no proceedings pending, or
to the knowledge of the Company threatened, against or affecting the
Company in any court or before any governmental authority or arbitration
board or tribunal which involve the possibility of materially and
adversely affecting the properties, business, prospects, profits or
condition (financial or otherwise) of the Company, or the ability of the
Company to perform its obligations under this Agreement or the Letter of
Credit Agreement. The Company is not in default with respect to an order
of any court, governmental authority or arbitration board or tribunal.
(c) Agreements Are Legal and Authorized. The execution and
delivery by the Company of this Agreement and the Letter of Credit
Agreement and the compliance by the Company with all of the provisions
hereof and thereof (i) are within the corporate power of the Company, (ii)
will not conflict with or result in any breach of any of
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<PAGE> 20
the provisions of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property of the
Company under the provisions of, any agreement, charter document, by-law
or other instrument to which the Company is a party or by which it may be
bound, or any, license, judgment, decree, law, statute, order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its activities or properties, and (iii) have
been duly authorized by all necessary corporate action on the part of the
Company.
(d) Governmental Consent. Neither the Company nor any of its
business or properties, nor any relationship between the Company and any
other person, nor any circumstances in connection with the execution,
delivery and performance by the Company of this Agreement and the Letter
of Credit Agreement or the offer, issue, sale or delivery by the Issuer of
the Bonds, is such as to require the consent, approval or authorization of
or the filing, registration or qualification with, any governmental
authority on the part of the Company other than those already obtained.
l (e) No Defaults. No event has occurred and no condition exists
with respect to the Company that would constitute an "Event of Default"
under this Agreement, the Indenture or the Letter of Credit Agreement or
which, with the lapse of time or with the giving of notice or both, would
become an "Event of Default" under this Agreement, the Indenture or the
Letter of Credit Agreement. The Company is not in violation in any
material respect of any agreement, charter document, by-law or other
instrument to which it is a party or by which it may be bound.
(f) Compliance with Law. The Company is not in violation of
any laws, ordinances, governmental rules or regulations to which it is
subject and has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its
properties or to the conduct of its business, which violation or failure
to obtain might materially and adversely affect the properties, business,
prospects, profits or conditions (financial or otherwise) of the Company.
(g) Restrictions on the Company. The Company is not a party to
any contract or agreement, or subject to any charter or other corporate
restriction, that materially and adversely affects the business of the
Company. The Company is not a party to any contract or agreement that
restricts the right or ability of the Company to incur or guarantee
indebtedness for borrowed money.
(h) Disclosure. Neither the representations of the Company
contained in this Agreement and the Letter of Credit Agreement, nor any
written statement relating to the Company furnished by or on behalf of the
Company to the Issuer or the Original Purchasers of the
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<PAGE> 21
Bonds in connection with the transactions contemplated hereby or thereby,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein
not misleading. There is no fact that the Company has not disclosed to the
Issuer and to the Original Purchasers of the Bonds in writing that
materially and adversely affects or in the future may (so far as the
Company can now reasonably foresee) materially and adversely affect the
acquisition, construction, installation, ownership or operation of the
Facilities, or the properties, business, prospects, profits or condition
(financial or otherwise) of the Company, or the ability of the Company to
perform its obligations under this Agreement, the Letter of Credit
Agreement or any documents or transactions contemplated hereby.
(i) Inducement. The issuance of the Bonds by the Issuer and the
lending of the proceeds thereof to the Company to enable the Company to
acquire, construct and install the Facilities have induced the Company to
locate the Facilities in the County which will directly result in a
retention of employment opportunities in the County for approximately 40
persons.
(j) Operation of Facilities. The Company intends to operate the
Facilities from the Completion Date to the expiration or sooner
termination of this Agreement as provided herein as a 'project" within the
meaning of the Act and so long as the Bonds remain outstanding the Company
agrees that it shall not operate the Facilities as a facility the primary
purpose of which causes the Facilities to constitute a prohibited facility
within the meaning of Section 103(b) of the Code.
(k) Nature of Facilities. Substantially all of the net proceeds
of the sale of the Bonds will be used to acquire land or property of a
character subject to the allowance for depreciation under Section 167 of
the Code and such costs representing proceeds so used are properly
chargeable to a capital account of the Company for Federal income tax
purposes or would be so chargeable either with a proper election by the
Company or but for a proper election by the Company to deduct the costs.
(l) Commencement of Construction. The acquisition,
construction and installation of the Facilities commenced after October 4,
1983, and no obligation relating to the acquisition, construction or
installation of the Facilities was paid or incurred prior to such date.
(m) Prior Issues. Except for the Bonds, no bonds, notes or other
obligations of any state, territorial possession or any political
subdivision of the United States of America or any political subdivision
of any of the foregoing or of the District of Columbia have been issued
since April 30, 1968, and are now outstanding, the proceeds of which have
been or are to be used primarily with respect to the Local Facilities.
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<PAGE> 22
(n) Composite Issues. There are no other obligations heretofore
issued or to be issued by or on behalf of any state, territory or
possession of the United States, or political subdivision of any of the
foregoing, or of the District of Columbia, for the benefit of the Company
or any Related Person, which constitute "industrial development bonds"
within the meaning of Section 103(b) of the Code and which (i) were or are
to be sold at substantially the same time as the Bonds, (ii) were or are
to be sold at substantially the same interest rate as the interest rate of
the Bonds, (iii) were or are to be sold pursuant to a common plan of
marketing as the marketing plan for the Bonds, and (v) are payable
directly or indirectly by the Company or from the source from which the
Bonds are payable.
(o) Capital Expenditures. The principal amount of the Bonds and
the amount of all Section 103(b)(6)(D) Capital Expenditures that have been
paid or incurred with respect to the Local Facilities during the three
years next preceding the date of issue of the Bonds other than out of the
proceeds of the sale of the Bonds do not in the aggregate exceed the sum
of $10,000,000.
(p) Election Information. The information furnished by
the Company and used by the Issuer in preparing the election which has
been filed by or on behalf of the Issuer with the Internal Revenue Service
pursuant in Section 103(b)(6)(D) of the Code was true and complete as of
the date of filing of said election.
(q) I.R.S. Form 8038 Information. The information furnished by
the Company and used by the Issuer in preparing I.R.S. Form 8038,
"Information Return for Private Activity Bond Issues", which has been
filed by or on behalf of the Issuer with (i) the Internal Revenue Service
Center in Philadelphia, Pennsylvania, pursuant to Section 103(i) of the
Code, and (ii) the Department of Community Affairs of the State of
Georgia, Atlanta, Georgia, pursuant to O.C.G.A. Section 36-82-160, was
true and complete as of the date of filing thereof.
(r) Limitation on Maturity. The weighted average maturity of the
Bonds does not exceed the weighted average estimated economic life of the
components comprising the Facilities by more than 20%, determined pursuant
to Section 103(b)(14) of the Code.
(s) Restrictions on Financing and Operation of Certain Facilities.
At no time will:
(i) more than 25% of the net proceeds of the sale of the Bonds
be used to provide a facility the primary purpose of which is one of
the following: retail food and beverage services (including eating
and drinking places, but excluding grocery stores), automobile sales
or service, or the provision of recreation or entertainment; or
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(ii) any portion of the net proceeds of the sale of the Bonds
be used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
(iii) any, portion of the net proceeds of the sale of the
Bonds be used to provide any airplane, skybox, or other private
luxury box, any health club facility, any facility primarily used
for gambling, or any store the principal business of which is the
sale of alcoholic beverages for consumption off premises; or
(iv) any, portion of the net proceeds of the sale of the Bonds
be used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25% or more of
the net proceeds of the sale of the Bonds be used (directly or
indirectly) for the acquisition of land other than land to be used
for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
be used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of
the portion of the cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(vi) the Facilities be operated as a facility the primary
purpose of which causes the Facilities to, constitute a prohibited
facility within the meaning of Section 103(b) of the Code.
(t) Aggregation of Issues for Single Project. The Facilities are
not a part of a single building, an enclosed shopping mail, or a strip of
offices, stores or warehouses using substantial common facilities, and
with respect to which any other bonds, notes, or other obligations have
been or will be issued under Section 103(b) of the Code.
(u) Aggregate Limit Per Taxpayer for Small Issue Exemption.
The sum of the authorized face amount of the Bonds allocable to each
"test-period beneficiary" (as defined in Section 103(b)(15)(D) of the
Code) plus the respective aggregate face amount of all tax-exempt
industrial development revenue bonds presently outstanding (not including
any obligations which are to be redeemed from the proceeds of the Bonds)
which are allocable to each such test-period beneficiary, does not exceed
$40,000,000.
(v) Reasonable Expectations. Based on current facts, estimates
and circumstances, it is expected that:
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<PAGE> 24
(i) the acquisition, construction and installation of the
Facilities and the expenditure of all Bond proceeds will be
completed by that date which is not more than six months from the
Original Issuance Date of the Bonds,
(ii) work on the Facilities (which has commenced) will
proceed with due diligence to completion,
(iii) the net proceeds of the sale of the Bonds are needed
for the purpose of paying all or a part of the cost of the
acquisition, construction and installation of the Facilities, and
(iv) the Facilities will not be sold or disposed of, in whole
or in part, prior to payment in full of the Bonds.
(w) Substantial Binding Obligation. Various contracts providing
for the acquisition, construction and installation of the Facilities have
been entered into and the amounts required to be paid under said contracts
exceed $100,000 or 2 1/2%, whichever is less, of the estimated total cost
of the Facilities.
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ARTICLE III.
ACQUISITION, CONSTRUCTION AND
INSTALLATION OF THE FACILITIES;
ISSUANCE OF THE BONDS
Section 3.1. ACQUISITION,, CONSTRUCTION AND INSTALLATION OF THE
FACILITIES. The Company agrees that the acquisition, construction and
installation of the Facilities will be completed as promptly as practicable
after receipt of the proceeds from the sale of the Bonds, delays incident to
strikes, riots, acts of God or the public enemy or other causes beyond the
reasonable control of the Company only excepted, but if such acquisition,
construction and installation is not completed, there shall be no resulting
liability on the part of the Issuer and no diminution in or postponement of the
payments required to be paid by the Company hereunder.
Section 3.2. AGREEMENT TO ISSUE BONDS; APPLICATION OF PROCEEDS. In
order to provide funds for the payment of the cost of the acquisition,
construction and installation of the Facilities (including capitalized
interest), the Issuer agrees that as soon as possible it will authorize,
validate, sell and cause to be delivered to the Original Purchasers thereof, the
Bonds, bearing interest and maturing as set forth in Article II of the
Indenture, at a price to be approved by the Company, and it will thereupon
deposit an amount equal to the Interest Reserve Requirement into the Bond Fund
and will deposit the balance of the proceeds received from said sale in the
Construction Fund.
The Company may cause such changes to be made to the "Description of
Facilities" attached hereto as Exhibit A as it may desire provided that such
changes shall not result in (i) the Facilities not being a 19 "project" within
the meaning of the Act, (ii) the Facilities constituting a prohibited facility
within the meaning of Section 103(b) of the Code, (iii) less than substantially
all of the net proceeds of the sale of the Bonds being used to pay the costs of
land or property of a character subject to the allowance for depreciation under
Section 167 of the Code, and (iv) a violation of the limitation on maturity of
the Bonds under Section 103(b)(14) of the Code.
Section 3.3. DISBURSEMENTS FROM THE CONSTRUCTION FUND. The Issuer
will in the Indenture authorize and direct the Trustee to use the moneys in the
Construction Fund for the following purposes but, subject to the provisions of
Section 3.8, for no other purposes:
(a) payment of the initial or acceptance fee of the Trustee and fees
and expenses of its counsel, the fees for recording the deeds whereby the
appropriate title in and to the Facilities has been acquired by the
Company, payments for title examination and insurance, and any title
curative documents that the Company may deem desirable to file for record
in order to perfect or protect its title in and to the Facilities and the
fees and expenses in connection with any actions or proceedings that the
Company may deem desirable to bring in order to perfect its title in and
to the Facilities;
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<PAGE> 26
(b) payment to the Company of such amounts, if any, as shall be
necessary to reimburse the Company in full for all advances and payments
made by it prior to or after the delivery of the Bonds for expenditures in
connection with the acquisition by the Company of appropriate title in and
to the Facilities (including the cost of such acquisition and of any
rights-of-way for the purpose of providing access to and from the
Facilities), clearing the site, site improvement, the preparation of plans
and specifications for the Facilities (including any preliminary study or
planning of the Facilities or any aspect thereof), the acquisition,
construction and installation of the Facilities and the acquisition,
construction and installation necessary to provide utility services or
other facilities including trackage to connect the Facilities with public
transportation facilities, and all real or personal properties deemed
necessary in connection with the Facilities, or any one or more of said
expenditures (including architectural, engineering and supervisory
services) with respect to any of the foregoing;
(c) payment of, or reimbursement of the Company and the Issuer for,
the legal and accounting fees and expenses, financial consultants' fees,
financing charges (including underwriting or placement fees) and printing
and engraving costs incurred in connection with the authorization, sale
and issuance of the Bonds, the preparation of this Agreement, the Letter
of Credit Agreement, the Letter of Credit, the Indenture, the Bond
Purchase Agreement, the Financing Statements and all other documents in
connection therewith and in connection with the acquisition of appropriate
title in and to the Facilities, including fees for filing the Financing
Statements;
(d) payment of, or reimbursement of the Company for, labor,
services, material, supplies and/or equipment used or furnished in site
improvement and in the construction of the Facilities, all as provided in
the plans and specifications therefor, payment for the cost of the
acquisition and installation of the Facilities, payment for the cost of
acquisition, construction and installation of utility services or other
facilities including trackage to connect the Facilities with public
transportation facilities, and all real and personal properties deemed
necessary in connection with the Facilities and payment for the
miscellaneous expenses incidental to any of the foregoing;
(e) payment of, or reimbursement of the Company for, the fees, if
any, for architectural, engineering and supervisory services with respect
to the Facilities;
(f) payment of, or reimbursement of the Company and the Issuer for,
as such payments become due, the fees and expenses of the Trustee, the
Bond Registrar, the paying agent(s) and the fees and expenses of their
counsel properly incurred under the Indenture that may become due during
the Construction Period; and payment into the Bond Fund of sufficient
moneys to pay interest on the Bonds accruing during the Construction
Period or to reimburse the Bank for drawings
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<PAGE> 27
under the Letter of Credit to pay interest on the Bonds accruing during
the Construction Period, as the case may be;
(g) payment of, or reimbursement of the Company and the Issuer for,
any other legal and valid costs and expenses relating to the Facilities;
(h) all moneys remaining in the Construction Fund (including moneys
earned on investments made pursuant to the provisions of Section 3.8)
after the Completion Date and payment in full of the cost of the
acquisition, construction and installation of the Facilities, and after
payment of all other items provided for in the preceding subsections of
this Section then due and payable, shall at the direction of the Company
be (i) subject to Section 5.6(f), used to acquire, construct and install
additions, extensions and improvements to the Facilities in accordance
with amended plans and specifications therefor duly filed with the Issuer,
(ii) used by the Trustee to redeem Bonds, to the maximum extent
practicable consistent with making partial redemptions in amounts of not
less than $50,000 or integral multiples thereof, or, on or after the
Conversion Date, $5,000 or integral multiples thereof, at the earliest
date permitted by the Indenture or to purchase Bonds for the purpose of
cancellation at any time prior to the earliest date permitted by the
Indenture for the redemption of Bonds, (iii) paid into the Bond Fund to
pay interest on the Bonds, or (iv) a combination of (i), (ii) and/or (iii)
as is provided in such direction, provided that amounts approved by the
Authorized Company Representative and the Authorized Issuer Representative
shall be retained by the Trustee in the Construction Fund for payment of
costs not then due and payable. Any balance remaining of such retained
moneys after full payment of all such costs shall be used by the Trustee
as directed by, the Company in the manner specified in clauses (i), (ii),
(iii) or (iv) of this subsection. Amounts directed by the Company to be
used by the Trustee in the manner specified in clause (ii) shall not,
pending such use, be invested at a yield which exceeds the yield on the
Bonds. Amounts in excess in the aggregate of 7.5% of the net proceeds of
the sale of the Bonds shall not be directed by the Company to be used for
the purposes described in clauses (i), (ii) (iii) or iv) without providing
the Trustee with an opinion of Independent Tax Counsel stating that such
use will not impair the exemption of the interest on the Bonds from
Federal income taxation pursuant to Section 103(b) of the Code.
The payments specified in subsections (a) through (g) of this
Section shall be made by the Trustee only upon receipt of the following:
(1) a written requisition for such payment signed by the
Authorized Company Representative and the Authorized Issuer
Representative;
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(2) a certificate by the persons signing such requisition
certifying:
(i) that an obligation in the stated amount has been incurred
(A) in connection with the issuance of the Bonds, or (B) and is
required to reimburse the Bank for a drawing under the Letter of
Credit, or (C) in connection with the acquisition, construction and
installation of the Facilities;
(ii) that such obligation is a proper charge against the
Construction Fund and has not been the basis of any previous
withdrawal from the Construction Fund, and specifying the purpose
and circumstances of such obligation in reasonable detail and the
name and address of the person to whom such obligation is owed,
accompanied by a bill or statement of account for such obligation;
(iii) that (A) they have no notice of any vendors',
materialmen's, mechanics', suppliers' or other similar liens or
right to liens, chattel mortgages or conditional sales contracts, or
other contracts or obligations which should be satisfied or
discharged before payment of such obligation is made, or (B) such
requisition is for the purpose of obtaining funds to be used to
satisfy or discharge a lien or contract of the type described in (A)
above;
(iv) that such requisition contains no request for payment on
account of any portion of such obligation which the Company is, as
of the date of such requisition, entitled to retain under any
retained percentage agreements;
(v) that payment of such obligation when added to all other
payments previously made from the Construction Fund will not result
in less than substantially all of the net proceeds of the sale of
the Bonds expended at such time being used to provide land or
property of a character subject to the allowance for depreciation
under Section 167 of the Code; and
(vi) that such requisition contains no request for payment on
account of any obligation paid or incurred prior to October 4, 1983;
and
(3) with respect to any such requisition for payment for labor,
services, material, supplies and/or equipment, an additional certificate,
signed by the Authorized Company Representative, certifying that insofar
as such obligation was incurred for labor, services, material, supplies
and/or equipment in connection with the acquisition, construction and
installation of the Facilites, such labor and/or services were actually
performed in a satisfactory manner and such material supplies and/or
equipment were actually used in or about the
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<PAGE> 29
construction or delivered at the site of the Facilities for that purpose
and that the item of equipment with respect to which any payment is
requested Constitutes a portion of the Facilities. Such requisition and
certification shall be in substantially the form attached hereto as
Exhibit B and by this reference thereto made a part hereof.
In approving or certifying any requisition under this Section, the
Issuer may rely as to the completeness and accuracy of all statements in such
requisition upon the approval of or certification to such requisition by the
Authorized Company Representative, and the Company hereby agrees to indemnity
and save harmless the Issuer, its directors, officers, agents and employees from
any liability incurred in connection with any requisition so approved or
certified.
In making any such payment from the Construction Fund the Trustee
may rely on any such requisitions and any such certificates delivered to it
pursuant to this Section and the Trustee shall be relieved of all liability with
respect to making such payments in accordance with any such requisitions and
such supporting certificate or certificates without inspection of the Facilities
or any other investigation.
Anything herein to the contrary notwithstanding, the Trustee hereby,
agrees that it will not make any disbursement from the Construction Fund without
the prior written approval of the Bank (subject to certain pre-approvals of
disbursements by the Bank).
The Issuer and the Company agree for the benefit of each other and
for the benefit of the Trustee and the holders of the Bonds that the proceeds of
the Bonds will not be used in any manner which would result in the loss of the
exemption from Federal income taxation of the interest on the Bonds.
Section 3.4. OBLIGATION TO FURNISH DOCUMENTS TO TRUSTEE. The Issuer
and the Company agree to cooperate with each other in furnishing to the Trustee
the documents referred to in Section 3.3 that are required to effect payments
out of the. Construction Fund, and to cause such requisitions and certificates
to be directed by the Authorized Company Representative and the Authorized
Issuer Representative to the Trustee as may be necessary to effect such
payments. Such obligation of the Issuer and the Company is subject to any
provisions hereof or of the Indenture requiring additional documentation with
respect to payments and shall not extend beyond the moneys in the Construction
Fund available for payment under the terms of the Indenture.
Section 3.5. ESTABLISHMENT OF COMPLETION DATE. The Completion Date
shall be evidenced to the Trustee by a certificate signed by the Authorized
Company Representative stating that, except for amounts retained by the Trustee
for costs of the Facilities not then due and payable as provided in Section
3.3(h),
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(a) the acquisition, construction and installation of the Facilities
have been completed substantially in accordance with the plans and
specifications therefor and all labor, services, materials, supplies
and/or equipment used in such acquisition, construction and installation
have been paid for,
(b) all other facilities necessary in connection with the Facilities
have been acquired, constructed and installed substantially in accordance
with the plans and specifications therefor and all costs and expenses
incurred in connection therewith have been paid,
(c) the Facilities and all other facilities in connection therewith
have been acquired, constructed and installed In his satisfaction and are
suitable and sufficient for the efficient operation of the Facilities for
its intended purposes,
(d) substantially all of the net proceeds of the sale of the Bonds
have been used to acquire land or property of a character subject to the
allowance for depreciation under Section 167 of the Code and such costs
representing proceeds so used are properly chargeable to the capital
account of the Company for Federal income tax purposes or would be so
chargeable either with a proper election by the Company or but for a
proper election by the Company in deduct the costs, and
(e) a certificate of occupancy, if required, and any other
permissions required of governmental authorities for the occupancy of the
Facilities have been obtained.
Notwithstanding the foregoing, such certificate by the Authorized Company
Representative shall state that it is given without prejudice to any rights
against third parties which exist on the date of such certificate or which may
subsequently come into being and shall be in substantially the form attached
hereto as Exhibit C and by this reference thereto made a part hereof. The
Company agrees to furnish a copy of such certificate to the Issuer at the same
time such document is furnished to the Trustee.
Section 3.6. COMPANY REQUIRED TO PAY COSTS OF FACILITIES IF
CONSTRUCTION FUND INSUFFICIENT. If the moneys in the Construction Fund available
for payment of the cost of the Facilities should not be sufficient to pay the
cost thereof in full, the Company agrees to complete the Facilities and to pay
all that portion of the cost of the Facilities as may be in excess of the moneys
available therefor in the Construction Fund. The Issuer does not make any
warranty, either express or implied, that the moneys which will be paid into the
Construction Fund and which, under the provisions of this Agreement, will be
available for payment of the cost of the Facilities will be sufficient to pay
all costs which will be incurred in that connection. The Company agrees that if
after exhaustion of the moneys in the Construction Fund the Company should pay
any portion of the cost of the Facilities pursuant to the provisions of this
Section, it shall not be entitled to any reimbursement therefor from the Issuer
or from the Trustee or from the
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holders or owners of any of the Bonds, nor shall it be entitled to any
diminution in or Postponement of the payments required to be made hereunder.
Section 3.7. REMEDIES AGAINST SUPPLIERS, CONTRACTORS AND
SUBCONTRACTORS AND THEIR SURETIES. The Company may prosecute or defend any
action or proceeding or take any other action involving any defaulting supplier,
contractor, subcontractor or surety therefor which the Company deems reasonably
necessary, and in such event the Issuer agrees to cooperate fully with the
Company, to the extent it might lawfully do so, in any such action or
proceeding. Any moneys recovered by way of damages, refunds, adjustments or
otherwise in connection with the foregoing shall belong to the Company.
Section 3.8. INVESTMENT OF BOND FUND AND CONSTRUCTION FUND MONEYS
PERMITTED. Any moneys held in the Bond Fund or the Construction Fund shall be
invested or reinvested by the Trustee upon the oral or written request and
direction of the Company, and, if oral, promptly confirmed in writing, in
Eligible Investments, to the extent permitted by the laws of the State. Such
investments shall be made upon direction of the Authorized Company
Representative and shall mature in such amounts and at such times as may be
necessary to provide funds when needed to make payments from the Bond Fund or
the Construction Fund. The Trustee may make any and all such investments through
its own investment department. Any interest or gain received from such
investments shall be credited to and held in the Bond Fund or the Construction
Fund and any loss from such investments shall be charged against the Bond Fund
or the Construction Fund and paid by the Company at such time as there are
insufficient moneys in any such Fund to make a required payment. The Trustee
shall not be responsible or liable for any loss suffered in connection with any
investment of funds made by it in accordance with the provisions of Article VIII
of the Indenture. The provisions of this Section 3.8 shall be subject to the
provisions of Section 5.12(b) of this Agreement and Section 804 of the
Indenture.
Section 3.9. TITLE TO THE FACILITIES. The Issuer acknowledges and
agrees that it will not be vested with any interest in the Facilities by virtue
of executing, delivering and performing this Agreement or issuing the Bonds to
finance the cost of the acquisition, construction and installation thereof and
that the Facilities will not constitute any part of the security for the Bonds.
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ARTICLE IV.
LOAN BY THE ISSUER TO THE COMPANY;
REPAYMENT OF LOAN
Section 4.1. LOAN BY THE ISSUER TO THE COMPANY; REPAYMENT OF LOAN; OBLIGATIONS
UNCONDITIONAL. The Issuer shall lend from time to time, pursuant to Section 3.3,
to the Company the proceeds of the sale of the Bonds for the purposes provided
in this Agreement. The Company will repay said loan, as follows: On each Bond
Payment Date until the principal of, and the redemption premium (if any) and the
interest on, all Bonds shall have been fully paid (or provision for the payment
thereof shall have been made in accordance with the provisions of the Indenture)
a sum in immediately available funds
which, when added to the balance which is then in the Bond Fund and available
for such purpose, shall be equal to the amount payable as principal of, and
redemption premium (if any) and interest on, the Bonds then outstanding under
the Indenture on such Bond Payment Date.
Not later than the fifth (5th) Business Day next succeeding each
Interest Payment Date prior to the Interest Payment Date next preceding the
Expiration Date of the Letter of Credit, the Company shall pay an amount equal
to the difference between the Interest Reserve Requirement and the aggregate
amount of Available Moneys on deposit in or credited to the Bond Fund on the
Business Day next succeeding such Interest Payment Date.
In any event, the amount payable under this Section 4.1 on any Bond
Payment Date shall be sufficient to pay the total amount due with respect to the
principal of, and redemption premium (if any) and interest on, the Bonds on such
Bond Payment Date. If, after making any transfer from the Construction Fund to
the Bond Fund required by the Indenture, on any Bond Payment Date the balance in
the Bond Fund is insufficient to make required payments of principal of, and
redemption premium (if any) and interest on, the Bonds on such date, the Company
shall forthwith pay to the Trustee, on behalf of the Issuer for deposit into the
Bond Fund, any such deficiency; provided, however, that if at any time all the
outstanding Bonds are paid and discharged as provided in Article X of the
Indenture no further such payments shall be required. In the Indenture, the
Issuer has directed the Trustee to apply such payments in accordance with the
provisions of the Indenture and this Agreement.
The obligations of the Company to make the payments required in this
Section 4.1 and in Section 4.3 in the amounts and at the times specified and to
perform and observe the other agreements on its part contained herein shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, any set-off, counterclaim, recoupment, defense
(other than payment itself) or other right which the Company may have against
the Issuer, the Trustee, or anyone else for any reason whatsoever. The Company
hereby waives, to the extent permitted by applicable law, any and all rights
which it may now have or which at any time
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hereafter may be conferred upon it, by statute or otherwise, to terminate or
cancel this Agreement except in accordance with the express terms hereof.
Nothing contained in this Section 4.1 shall be construed to release the Issuer
from the performance of any of the agreements on its part herein contained; and
in the event the Issuer should fail to perform any such agreement on its part,
the Company may institute such action against the Issuer as the Company may deem
necessary to compel performance or recover its damages for nonperformance so
long as such action will not be inconsistent with the agreements on the part of
the Company contained in the first sentence of this paragraph.
In the event the Company should fail to make any of the payments
required in this Section 4.1, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been paid in full. The Company agrees to pay interest on all overdue amounts
which represent repayments of principal of, or redemption premium on, the Bonds
at the rate borne by such Bonds.
Anything herein, in the Indenture or in the Bonds to the contrary
notwithstanding, the obligations of the Company hereunder shall be subject to
the limitation that payments constituting interest under this Section shall not
be required to the extent that the receipt of such payment by the holder of any
Bond would be contrary to the provisions of law applicable to such holder which
limit the maximum rate of interest which may be charged or collected by such
holder.
Section 4.2. COMPANY CONSENT TO ASSIGNMENT OF AGREEMENT AND
EXECUTION OF INDENTURE; COMPANY'S PERFORMANCE UNDER INDENTURE. The Company
understands that the Issuer, as security for the payment of the principal of,
and the redemption premium (if any) and the interest on, the Bonds, will assign
and pledge to, and create a security interest in favor of, the Trustee pursuant
to the Indenture certain of its rights, title and interest in and to this
Agreement including all Revenues reserving, however, its rights (a) pursuant to
this Agreement providing that notices, approvals, consents, requests and other
communications be given to the Issuer, (b) to reimbursement and payment of costs
and expenses under Sections 5.3, 5.10 and 6.4, and (c) to indemnification and to
exemption from liability, both individual and corporate, under Section 5.3, and
the Company hereby agrees and consents to such assignment and pledge. The
Company acknowledges that it has received a copy of the indenture and consents
to the execution of the same by the Issuer.
The Company agrees, for the benefit of the bondholders, to do and
perform all acts and things contemplated in the Indenture to be done or
performed by it.
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Section 4.3. PREPAYMENT OF LOAN.
(a) Mandatory Prepayment of the Loan. The Company shall be
obligated to prepay unpaid amounts of the ban made by the Issuer to the Company
pursuant to Section 4.1 prior to the stated maturity of the Bonds in the event
that the Bonds are required to be redeemed pursuant to Section 301 of the
Indenture.
(b) Optional Prepayments Pursuant In the Indenture. The Company
shall have the right, at its option, to direct the Issuer to effect the
redemption of the Bonds pursuant to Section 301(a) or (c) of the Indenture.
(c) Optional Prepayments upon Condemnation of Facilities.
After the Conversion Date, in the event that title to or the temporary use
of the Facilities, or any part thereof, shall be taken under the exercise
of the power of eminent domain by any governmental body or by any person,
firm or corporation acting under governmental authority, any Net Proceeds
received from any award made in any such eminent domain proceedings may,
at the option of the Company (which option must be exercised within ninety
(90) days of the date of entry of a fianl order in any eminent domain
proceedings granting condemnation), be paid to the Trustee in prepayment
of unpaid amounts of the loan made by the Issuer pursuant to Section 4.1
and shall be applied by the Trustee as shall be directed in writing by the
Authorized Company Representative (i) to the redemption of all of the
Bonds or purchase of Bonds in the open market for the purpose of
cancellation pursuant to the Indenture upon exercise of the prepayment
option set forth in Section 4.3(d) below, or (ii) to the redemption of
less than all of the Bonds pursuant to the Indenture or payment into the
Bond Fund; provided that, in the case of (ii), the Company shall furnish
the Issuer and the Trustee (x) a certificate of an Independent Engineer
selected by the Company stating (A) that the property forming a part of
the Facilities that was taken by such condemnation was not essential to
the character of the Facilities as industrial facilities, or (B) that the
Facilities have been restored to a condition substantially equivalent to
their condition as industrial facilities prior to the taking by such
condemnation proceedings, with such changes, alterations and modifications
(including the substitution and addition of other property) as may be
desired by the Company and as will not materially impair the character of
the Facilities as industrial facilities, or (C) that improvements have
been acquired which are suitable for the operation of the Facilities as
industrial facilities, and (y) an opinion of Independent Tax Counsel or a
ruling of the Internal Revenue Service to the effect that such application
of the Net Proceeds will not jeopardize the exemption of interest on the
Bonds from Federal income taxation.
(d) Optional Prepayments in Certain Events. After the Conversion
Date, the Company shall have the right, at its option, within ninety (90) days
following the event under clause (i) or (H) below authorizing the exercise of
such option, or at any time during the continuation of an event under clause
(iii) or (iv) below authorizing the exercise of such option, to give written
notice to the Issuer and the Trustee
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of its exercise of such option and to prepay, or cause to be prepaid, all the
amounts payable pursuant to Section 4.1 and such other amounts as specified in
this Section 4.3(d) within ninety (90) days following the giving of notice of
such exercise, if any of the following shall have occurred:
(i) all or a substantial part of the Facilities shall have been
damaged or destroyed (A) to such extent that the Company deems it not
practicable or desirable to restore such damaged or destroyed property
within a period of three (3) consecutive months to the condition thereof
immediately preceding such damage or destruction, or (B) to such extent
that the Company is thereby reasonably expected to be prevented from
carrying on its normal operations at the Facilities for a period of three
(3) consecutive months;
(ii) title to, or the temporary use of, all or a substantial part of
the Facilities shall have been taken, or condemned under the exercise of
the power of eminent domain, by any governmental authority, person, firm
or corporation acting under governmental authority (including such a
taking or takings as result in the Company's being reasonably expected to
be prevented from carrying on its normal operations at the Facilities for
a period of three (3) consecutive months)
(iii) changes in costs or economic availability of energy, labor,
raw materials, operating supplies, including fuel, power, or facilities
necessary for the operation of all or a substantial part of the Facilities
shall have occurred, or such technological or other changes shall have
occurred, which in the Company's reasonable judgment render continued
operation of all or a substantial part of the Facilities impracticable or
uneconomic for their purpose; or
(iv) any court or administrative body shall enter a judgment, order
or decree, or shall take administrative action, requiring the Company to
cease all or any substantial part of its operations at the Facilities to
such extent that the Company is or will be prevented from carrying on its
normal operations at the Facilities for a period of three (3) consecutive
months.
For purposes of this Section 4.3(d), the term "substantial part" when used with
reference to the Facilities shall mean any part of the Facilities as to which
the total acquisition, restoration and equipping cost amounted to (i) at least
twenty-five per centum (25%) of the aggregate principal amount of Bonds issued
pursuant to the Indenture, or (ii) an amount equal to the aggregate principal
amount of Bonds then outstanding, whichever is less.
The amount payable by the Company in the; event it is required to
prepay the ban pursuant to subsection (a) of Section 4.3 or it exercises the
option granted to it in subsection (d) of this Section 4.3 shall be a sum which,
when added to the moneys and investments held for the credit of the Bond Fund
and all other funds and accounts then held by the Trustee in
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respect of the Bonds and available for the purpose, will be sufficient pursuant
to the provisions of Article X of the Indenture to pay and discharge all the
then outstanding Bonds on the first possible date for redemption, plus an amount
of money payable to the Trustee equal to the Trustee's and Paying Agent's fees,
charges and expenses under the Indenture accrued and to accrue until such final
payment and redemption of the Bonds.
The amount payable by the Company in the event it exercises the
option granted to it pursuant to subsection (b) of this Section 4.3 shall be
sufficient pursuant to Section 301(a) or Section 301(c) of the Indenture to pay
the applicable redemption price of the Bonds to be redeemed.
Section 4.4. DELIVERY OF LETTER OF CREDIT TO TRUSTEE. The Company
shall cause the Letter of Credit to be issued and delivered to the Trustee on
the Original Issuance Date of the Bonds. The Company hereby authorizes and
directs the Trustee to draw moneys under the Letter of Credit, in accordance
with the provisions of the Letter of Credit Agreement and the Indenture.
Section 4.5. SATISFACTION OF COMPANY'S OBLIGATION. The obligation of
the Company to make any payments required under Sections 4.1 and 4.3 of thus
Agreement shall be deemed to be satisfied and discharged to the extent of (a)
the corresponding payment made by the Bank to the Trustee under the Letter of
Credit, or (b) payments of principal of, or interest on, the Bonds from moneys
transferred from the Construction Fund pursuant to Section 3.3(h), or (c) Net
Proceeds of insurance or condemnation awards which are applied to the payment of
principal of, or interest on, the Bonds.
Section 4.6. ALTERNATE LETTER OF CREDIT; ALTERNATE CREDIT FACILITY.
At any time prior to the sixtieth (60th) day next preceding the Expiration Date
of the Letter of Credit, the Company may, at its option, provide for the
delivery to the Trustee of an Alternate Letter of Credit. An Alternate Letter of
Credit shall be an irrevocable letter of credit, other than the Letter of Credit
issued by the Bank and delivered to the Trustee on the Original Issuance Date of
the Bonds, issued by a commercial bank, the terms of which shall in all material
respects be the same as the Letter of Credit. At least forty-six (46) Business
Days but not more than sixty (60) days prior to the date of delivery of an
Alternate Letter of Credit, the Company shall (i) deliver to the Trustee an
opinion of Independent Tax Counsel stating that the delivery of such Alternate
Letter of Credit to the Trustee is authorized under this Agreement and the Act,
complies with the terms of this Agreement and will not adversely affect the
exemption from Federal income taxation of interest on the Bonds, (ii) deliver to
the Trustee written evidence from Moody's, if the Bonds are rated by Moody's,
and S&P, if the Bonds are rated by S&P, in each case to the effect that such
rating agency has reviewed the proposed Alternate Letter of Credit and that the
substitution of the Alternate Letter of Credit for the Letter of Credit will
not, by itself, result in a reduction of its rating of the Bonds from that which
then prevails, and (iii) direct that the Trustee notify the Bank and the holders
of outstanding Bonds, in accordance with of Section 302 of the Indenture, that
an Alternate Letter of Credit will be delivered to the Trustee.
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On or after the Conversion Date or the Interest Payment Date next
preceding the Expiration Date of the Letter of Credit, the Company may provide
for the delivery of an Alternate Credit Facility to provide security for payment
of the principal of, and the interest on, the Bonds; provided that the Company
shall (i) deliver to the Trustee an opinion of Independent Tax Counsel stating
that the delivery of such Alternate Credit Facility is authorized under this
Agreement and the Act, complies with the terms of this Agreement and will not
adversely affect the exemption from Federal income taxation of interest on the
Bonds, and (ii) direct the Trustee to notify the Bank and the holders of
outstanding Bonds, in accordance with Section 302 of the Indenture, that an
Alternate Credit Facility will be delivered to the Trustee. In the event that
such Alternate Credit Facility is to be delivered prior to the Conversion Date,
such Alternate Credit Facility may provide for payment of the purchase price of
Bonds delivered to the Trustee in accordance with Section 302 of the Indenture.
Any Alternate Letter of Credit or Alternate Credit Facility shall
have an initial term of not less than one (1) year.
Section 4.7. EXTENSION OF LETTER OF CREDIT. The Company may, at its
election and with the consent of the Bank, provide for one or more extensions of
the Letter of Credit for any period commencing after April 15, 1988.
Section 4.8. NOTICE OF PREPAYMENTS; ISSUER TO EFFECT REDEMPTION. If
the Company shall be required or determines to make any payments, or cause any
payments to be made, pursuant to subsections (a), (b), (c) or (d) of Section
4.3, it shall give notice in writing of such intention to the Issuer and the
Trustee, which notice shall state the provisions of the Indenture under which
the Issuer is to apply such payment. In such event or in the event that moneys
in the Bond Fund are sufficient to redeem all the Bonds then outstanding under
the Indenture and to pay interest to accrue thereon to the redemption date, the
Issuer (or the Company upon the request and on behalf of the Issuer) will, but
only upon the direction of the Company, forthwith take all steps that may be
necessary to effect the redemption of all or part of the then outstanding Bonds
as specified by the Company, on the earliest redemption date on which such
redemption may be made under the applicable provisions of the Indenture. Except
as otherwise provided in said subsections (c) and (d) of Section 4.3, such
notice must be received by the Issuer and the Trustee prior to the first date on
which the Issuer would be required to give notice to the Trustee prior to take
any other action in respect to the Issuer's right In effect the redemption a
Bonds pursuant to the appropriate provision of the Indenture.
Section 4.9. RELATIVE POSITION OF THIS ARTICLE AND THE INDENTURE.
The rights and options granted to the Company in this Article shall be and
remain prior and superior to the Indenture and may be exercised whether or not
the Company, is in default under this Agreement, provided that such default will
not result in nonfulfillment of any condition to the exercise of any such right
or option.
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Section 4. 10. PLACE OF PAYMENT. All amounts payable by the Company
pursuant to Section 4.1 or Section 4.3 of this Agreement shall be paid directly
to the Trustee at its Principal Office on behalf of the Issuer for deposit into
the Bond Fund as provided in the Indenture and the Issuer consents to said
amounts being paid in such manner.
Section 4.11. PAYMENTS TO THE REMARKETING AGENT AND THE PAYING
AGENT. The Company shall pay to the Remarketing Agent and the Paying Agent
amounts equal to the amounts to be paid by the Paying Agent or the Remarketing
Agent pursuant to Section 401(g) of the Indenture or by the Paying Agent
pursuant to Section 401(h) of the Indenture, such amounts to be paid by the
Company to the Remarketing Agent or the Paying Agent on the dates such payments
are to be made pursuant to said Sections 401(g) or 401(h), respectively;
provided, however, that the obligation of the Company to make any such payments
hereunder shall be reduced by the amount of any moneys available for such
payments under clause (i) or (ii) of said Section 401(g) or clause (i) of said
Section 401(h); and provided, further, that the obligation of the Company to
make any payment hereunder shall be deemed to be satisfied and discharged to the
extent that payment is made using moneys described in clause OH) of said Section
401(g) or clause (ii) of said Section 401(h).
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ARTICLE V.
PARTICULAR COVENANTS
Section 5.1. MAINTENANCE OF EXISTENCE. The Company agrees that
during the Loan Term it will maintain its existence, will not voluntarily
dissolve or otherwise dispose of all or substantially all of its assets and will
not consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it; provided, that the Company may,
without violating the agreements contained in this Section 5.1, consolidate with
or merge into another entity, or permit one or more other entities to
consolidate with or merge into it, or sell or otherwise transfer to another
entity all or substantially all of its assets as an entirety and thereafter
dissolve, provided that if the surviving, resulting or transferee entity, as the
case may be, is other than the Company, such surviving, resulting or transferee
entity is solvent, assumes in writing all of the obligations of the Company
hereunder, is organized under the laws of the United States of America, a state
thereof or the District of Columbia and is qualified to do business in the
State.
If consolidation, merger or sale or other transfer is made as
provided in this Section 5.1, the provisions of this Section 5.1 shall continue
in full force and effect and no further consolidation, merger or sale or other
transfer shall be made except in compliance with the provisions of this Section
5.1.
Section 5.2. QUALIFICATION IN THE STATE. The Company warrants that
it is and throughout the Loan Term it will continue to be an entity either
organized under the laws of the State or qualified to do business in the State
as a foreign entity.
The Company shall preserve anti keep in full force and effect all
licenses and permits necessary to the proper conduct of its business.
Section 5.3. INDEMNIFICATION OF ISSUER AND TRUSTEE. The Company
shall indemnify and save the Issuer and the Trustee harmless against and from
all claims by or on behalf of any person, firm or corporation arising from the
conduct or management of, or from any work or thing done on, the Facilities
during the Loan Term, and against and from all claims arising during the Loan
Term from
(a) any condition of the Facilities caused by the Company,
(b) any failure on the part of the Company in the performance of
any of its obligations hereunder,
(c) any contract entered into in connection with the acquisition,
construction and installation of the Facilities,
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(d) any act a negligence of the Company or of its agents,
contractors, servants, employees or licensees, and
(e) any act of negligence of any assignee or sublessee of the
Company, or of any agent, contractor, servant, employee or licensee of any
assignee or sublessee of the Company.
The Company shall indemnify and save the Issuer and the Trustee harmless from
and against all costs and expenses incurred in or in connection with any action
or proceeding brought thereon, and upon notice from the Issuer or the Trustee,
the Company shall defend them or either of them in any such action or
proceeding. The Company shall indemnify and save the Trustee harmless from and
against any loss, liability, expense or advance incurred or made without gross
negligence or bad faith on the part of the Trustee, arising out of or in
connection with the acceptance or administration of the trusts established under
the Indenture and this Agreement, including the costs and expenses of defending
itself against any claim of liability in the premises.
The Company agrees to pay to the Trustee any and all sums of money
required to be paid by the Issuer pursuant to Section 1202 of the Indenture.
The provisions of this Section shall survive the termination of this
Agreement.
Section 5.4. PAYMENT OF TRUSTEE'S FEES. Except as paid out of the
Construction Fund pursuant In Section 3.3 of this Agreement, the Company agrees
to pay to or upon the order of the Trustee, during the Loan Term, (i) an amount
equal to the fees of the Trustee, as Trustee, which will be payable on such
dates as shall be mutually agreeable to the Trustee and the Company for the
Ordinary Services of the Trustee rendered and its Ordinary Expenses incurred
under the Indenture, (ii) the reasonable fees, charges and expenses of the.
Trustee, as Bond Registrar and Paying Agent (including any charges imposed with
respect to the transfer of registration or exchange of Bonds), and of Paying
Agents on the Bonds for acting as Paying Agents as provided in the Indenture, as
and when the same become due, and (iii) the reasonable fees, charges and
expenses of the Trustee for Extraordinary Services rendered and Extraordinary
Expenses incurred by it under the Indenture, as and when the same become due;
provided that the Company may contest in good faith the necessity for any such
Extraordinary Services and Extraordinary Expenses and the reasonableness of any
such fees, charges or expenses (so long as such action shall not impair the
agreements of the Company contained in this Section 5.4), and such contest or
action shall not constitute a default or an Event of Default hereunder.
If the Company should fail to make any of the payments required in
this Section, the item or installment which the Company has failed to make shall
continue as an obligation of the Company until the same shall have been fully
paid, and the Company agrees to pay the same with interest thereon at the
Interest Rate for Advances until paid in full.
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Section 5.5. MAINTENANCE AND OPERATION OF THE FACILITIES. The
Company agrees that during the Loan Term it will keep the Facilities including
all appurtenances thereto in good repair and good operating condition at its own
cost. The Company has represented in Section 2.3(j) its intention with respect
to the operation of the Facilities; provided, however, the Company shall not be
under any obligation to operate the Facilities if, in the judgment of the
Company, such operation is not in the best interest of the Company.
The Company shall have the privilege of remodeling the Facilities or
making additions, modifications, substitutions and improvements to the
Facilities from time to time as it, in its sole discretion, may deem to be
desirable for its uses and purposes, provided that such remodeling, additions,
modifications, substitutions and improvements, when constructed do not
materially adversely affect the character of the Facilities as an industrial
facility, or cause the Facilities to cease to be a "project" within the meaning
of the Act, or cause the Facilities to constitute a prohibited facility with the
meaning of Section 103(b) of the Code. The cost of such remodeling, additions,
modifications, substitutions and improvements shall be paid by the Company or,
to the extent permitted by this Agreement and the Indenture, from the
Construction Fund.
The Company may remove and dispose of any items included as
Facilities which the Company determines have become inadequate, obsolete, worn
out, unsuitable, undesirable or unnecessary, provided that any such removal will
not materially impair the character of the Facilities as an industrial facility,
or cause the Facilities to cease to be a "project" within the meaning of the
Act, or cause the Facilities to constitute a prohibited facility within the
meaning of Section 103(b) of the Code. In the event any such removal causes
damage to the remaining Facilities, the Company shall restore the same or repair
such damage.
The Company may from time to time, in its sole discretion, and at
its own expense, install additional property in conjunction with the Facilities.
Such property may be modified or removed at any time, provided that such
modification or removal will not materially adversely affect the character of
the Facilities as an industrial facility, or cause the Facilities to cease to be
a "project" within the meaning of the Act, or cause the Facilities to constitute
a prohibited facility with the meaning of Section 103(b) of the Code.
Section 5.6. COVENANTS OF COMPANY AND ISSUER WITH RESPECT TO
EXEMPTION OF INTEREST FROM FEDERAL INCOME TAXATION. The Bonds are being issued
by the Issuer in compliance with the conditions necessary for the interest
income on the Bonds to be exempt from Federal income taxation pursuant to the
provisions of Section 103(b)(6)(D) of the Code relating to "industrial
development bonds" issued as part of an issue the aggregate authorized face
amount of which is $10,000,000 or less and substantially all of the proceeds of
which are to be used for the acquisition, construction, reconstruction or
improvement of land or property of a character subject to the allowance for
depreciation under Section 167 of the Code. It is the
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intention of the parties hereto that the interest on the Bonds be and remain
free from Federal income taxation, and, to that end, the Issuer and the Company
do hereby covenant with each other, the Trustee and each of the holders of any
Bonds, as follows:
(a) that the Issuer will not cause and the Company will not cause or
permit the proceeds of the Bonds to be used in a manner which will cause
the interest on the Bonds to lose the exemption from Federal income
taxation conferred by Section 103(b)(6)(D) of the Code;
(b) that during the three-year period immediately following the date
of the issuance and delivery of the Bonds, neither of them shall make or
cause or permit to be made any Section 103(b)(6)(D) Capital Expenditures
with respect to the Local Facilities which would cause the interest
payable on the Bonds to be or become subject to Federal income taxation;
(c) that should the circumstances set forth in Sections 103(b)(6)(D)
and (E) of the Code occur (during the six-year period referred to
therein), either through the fault of the Company or through circumstances
beyond the Company's control, and there shall occur a Determination of
Taxability, the Company shall prepay all amounts payable under Section 4.1
and cause such amounts to be applied by the Trustee to the redemption of
all outstanding Bonds and otherwise as provided in Section 4.3(a) and
Section 301 of the Indenture;
(d) that promptly following the filing of the Company's Federal
income tax return for each of its fiscal years which covers any portion of
the three-year period following the date of issuance and delivery of the
Bonds it will furnish to the Trustee a copy of each Supplemental Statement
filed by the Company in connection with each such Federal income tax
return or that portion of each such Supplemental Statement which reports
Section 103(b)(6)(D) Capital Expenditures relating to the Local
Facilities;
(e) that, during the term of this Agreement the Company will fully
comply with all effective rules, rulings and regulations promulgated by
the Department of the Treasury or the Internal Revenue Service, with
respect to bonds issued under Section 103(b)(6)(D) of the Code so as to
maintain the tax-exempt status of the interest payable on the Bonds;
(f) that the Company will make no change in the plans and
specifications for the Facilities. which would result in (i) the
Facilities not being a "project" within the meaning of the Act, (ii) the
Facilities constituting a prohibited facility within the meaning of
Section 103(b) of the Code, (iii) less than substantially all of the net
proceeds of the sale of the Bonds being used to pay the costs of land or
property of a character subject to the allowance for depreciation under
Section 167 of
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the Code, or (iv) a violation of the limitation on maturity of the Bonds
under Section 103(b)(14) of the Code;
(g) that at no time will:
(i) more than 25% of the net proceeds of the sale of the Bonds
be used to provide a facility the primary purpose of which is one of
the following: retail food and beverage services (including eating
and drinking places, but excluding grocery stores), automobile sales
or service, or the provision of recreation or entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
be used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds
be used to provide any airplane, skybox, or other private luxury
box, any health club facility, any facility primarily used for
gambling, or any store the principal business of which is the sale
of alcoholic beverages for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
be used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25% or more of
the net proceeds of the sale of the Bonds be used (directly or
indirectly) for the acquisition of land other than land to be used
for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
be used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of
the portion of the cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(vi) the Facilities be operated as a facility the primary
purpose of which causes the Facilities to constitute a prohibited
facility within the meaning of Section 103(b) of the Code; and
(h) that at no time during the three-year period beginning on the
later of the date the Facilities are placed in service or the date of
issuance and delivery of the Bonds will the Company permit any person to
be an owner or Principal User of the Facilities if the sum of the
authorized face amount of the Bonds allocable to such person plus the
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aggregate face amount of all tax-exempt industrial development bonds
presently outstanding which are allocable to such person exceeds
$40,000,000.
Section 5.7. INSURANCE REQUIRED. Throughout the Loan Term the
Company shall keep the Facilities continuously insured against such risks as are
customarily insured against by businesses of like size and type, paying as the
same become due all premiums in respect thereto. The insurance hereby required
may be contained in blanket policies now or hereafter maintained by the Company
and may provide for such deductible provisions as are customary with businesses
of like size and type. In addition, the Company shall comply, or cause
compliance, with applicable workers' compensation laws of the State.
All such policies, or a certificate or certificates of the insurers
that such insurance is in force and effect, shall be deposited with the Trustee
and shall contain a provision that such policy may not be cancelled unless the
Trustee is notified at least thirty (30) days prior to cancellation; and at
least thirty (30) days prior to expiration of any such policy, the Company shall
furnish the Trustee with evidence satisfactory to the latter that the policy has
been renewed or replaced or is no longer required hereby.
Section 5.8. TAXES, OTHER GOVERNMENTAL CHARGES AND UTILITY CHARGES.
The Company agrees to pay, as the same respectively become due, all taxes,
assessments, whether general or special, and governmental or utility charges of
any kind whatsoever that may at any time be lawfully assessed, levied or imposed
against or with respect to or incurred in the operation, maintenance or use of
the Facilities (including, without limiting the generality of the foregoing, any
taxes levied upon or with respect to the receipts, income or revenues of the
Issuer from this Agreement) which, if not paid, may become or be made a lien or
a charge on the amounts payable by the Company under this Agreement.
The Company may, at its expense and in its own name and behalf, in
good faith contest any such taxes, assessments or charges and, in the event of
any such contest, may permit the taxes, assessments or charges so contested to
remain unpaid during the period of such contest, including any appeal period,
unless by nonpayment of any such items prior to the final adjudication if said
contest (i) the ability of the Company to make the payments hereunder will be
materially endangered, or (ii) the moneys or investments in the Bond Fund or the
Construction Fund will be subject to loss or forfeiture, or (iii) the continued
proper and efficient operation of the Facilities will be materially threatened,
and in any such event such taxes, assessments or charges shall be paid promptly.
Section 5.9. DAMAGE, DESTRUCTION AND EMINENT DOMAIN. If at any time
during the Loan Term, the Facilities, or any portion thereof, shall be damaged
or destroyed by fire, flood, windstorm or other casualty or title to, or the
temporary use of, the Facilities, or any portion thereof, shall have
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been taken by the exercise of the power of eminent domain, the Company (unless
it shall have exercised its option to prepay the loan pursuant to Section 4.3(c)
or 4.3(d)) shall cause the Net Proceeds from insurance or condemnation or an
amount equal thereto (i) to be used for the repair, reconstruction, restoration
or improvement of such Facilities, or such portion thereof, as industrial
facilities, or (ii) to be used for the acquisition, construction or improvement
of additional industrial facilities within the County for use in connection with
operational facilities of the Company, provided that the Company shall first
have obtained an opinion of Independent Tax Counsel or a ruling of the Internal
Revenue Service that the proposed use pursuant to this clause (ii) will not
cause the interest on the Bonds to become included in the gross income of the
holders of the Bonds for the purposes of Federal income taxation, or (iii) to be
deposited into the Bond Fund (but only for application, as instructed by the
Authorized Company Representative, to the purchase of Bonds in the open market
for the purpose of cancellation at prices not exceeding the then open market
price of the Bonds or to the redemption of the Bonds at the next available
optional redemption date in the manner provided in the Indenture), or (iv) to be
used for any combination of the purposes permitted by (and subject to the
conditions described in) clauses (i), (ii) and (iii) above.
Section 5.10. COMPANY'S OBLIGATION TO PAY CERTAIN FEES EXPENSES OF
THE ISSUER. The Company agrees to pay to the Issuer reasonable out-of-pocket or
extraordinary expenses of the Issuer, related to the Facilities and incurred as
a result of a request of the Company or a requirement (in the reasonable
judgment of the Issuer) of this Agreement or the Indenture, and which are not
otherwise required to be paid by the Company under the terms of this Agreement,
including but not limited to the fees and expenses incurred in complying with
Section 503 of the Indenture.
In consideration of the issuance and delivery of the Bonds by the
Issuer and the lending of the proceeds thereof to the Company to enable it to
acquire, construct and install the Facilities, the Company agrees to pay to the
Issuer on the Original Issuance Date of the Bonds, an amount equal to 1/8 of 1%
of the principal amount of the Bonds, and on each anniversary of the Original
Issuance Date of the Bonds, an amount equal to $400 per $1,000,000 of
Outstanding Bonds as of such date.
In the event the Company should fail to make any of the payments
required in this Section 5.10, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid, and the Company agrees to pay the same with interest thereon
until paid at the Interest Rate for Advances.
The provisions of this Section shall survive the termination of this
Agreement.
Section 5.11. APPLICATION OF CERTAIN PROCEEDS PRIOR TO THE
EXPIRATION DATE OF THE LETTER OF CREDIT. Notwithstanding the provisions of
Section 5.9 of this Agreement, prior to the Expiration Date of the Letter of
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Credit, any moneys available for application in accordance with clause (iii) of
Section 5.9 of this Agreement shall be held by the Trustee in a separate account
for a period of one hundred twenty-three (123) days from the date of receipt
thereof. If during said one hundred twenty-three (123) day period no petition in
bankruptcy or similar insolvency proceeding has been filed by or against the
Company or by the Issuer, such moneys shall be applied to the maximum extent
possible to the purchase for cancellation or redemption of Outstanding Bonds,
and any moneys remaining thereafter shall be applied to payment of interest on
the Bonds on the Interest Payment Date next following said one hundred
twenty-three (123) day period.
Section 5.12. NON-ARBITRAGE COVENANT; COMPLIANCE WITH SPECIAL
ARBITRAGE RULES.
(a) The Company hereby covenants and agrees with the Issuer and the
Trustee for the benefit of the holders of any of the Bonds, present and future,
that it will proceed with due diligence to spend the "gross proceeds"
(hereinafter defined) of the Bonds in connection with the acquisition,
construction and installation of the Facilities and that it will not make, or
permit, any use of the proceeds of the Bonds which will cause the Bonds in be
"arbitrage bonds" within the meaning of Section 103(c) of the Code and any
Income Tax Regulations promulgated thereunder as such regulations may apply to
obligations issued as of the date of the Bonds. The Company shall deliver to the
Issuer its certificate, evidencing the reasonable expectations of the Company,
in such reasonable form as the Issuer shall specify and upon which the Issuer
may rely in furnishing the certificate required by Section 207 of the Indenture.
(b) The Company hereby further covenants and agrees with the Issuer
and the Trustee, and with the holders of any of the Bonds, present and future,
as follows:
(1) All of the gross proceeds of the Bonds, other than gross
proceeds held in a "bona fide debt service fund" (hereinafter defined)
will be expended on the Facilities within six (6) months of the date of
issuance and delivery of the Bonds, or
(2) If any part of the gross proceeds of the Bonds has not been
expended on the Facilities within six (6) months of the date of issuance
and delivery of the Bonds, the Company shall invest or cause such gross
proceeds to be invested in the manner described in subparagraph (A) below
and shall pay or cause to be paid to the United States the amounts
described in subparagraph (B) below in accordance with the terms and
conditions set forth therein.
(A) Except during any "temporary period" (hereinafter
defined), the aggregate amount of gross proceeds of the Bonds which
are invested in "nonpurpose obligations" (hereinafter defined)
having a "Yield" (hereinafter defined) higher than the yield on the
Bonds shall at no time during any "bond year"
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(hereinafter defined) exceed one hundred fifty per centum (150%) of
the "debt service" (hereinafter defined) on the Bonds for such bond
year. In addition, the aggregate amount of gross proceeds of the
Bonds invested hereunder in nonpurpose obligations having a yield
higher than the yield on the Bonds shall be promptly and
appropriately reduced as the amount of outstanding Bonds is reduced
(whether by payment at maturity, mandatory sinking fund redemption,
redemption prior to maturity, or otherwise). The Company shall not
be required to sell or dispose of nonpurpose obligations if such
sale or disposition would result in the realization of a loss, for
Federal income tax purposes, that exceeds the amount that would be
rebated to the United States pursuant to the provisions of
subparagraph (b)(2)(B) below (but for such sale or disposition), at
the time of such sale or disposition if a rebate were due at such
time. The provisions of the foregoing sentence shall not apply to
the extent that other nonpurpose obligations acquired with the gross
proceeds of the Bonds may be sold or disposed of without incurring
the loss described above, and in any event the provisions of the
foregoing sentence shall cease to apply thirty (30) days after the
last day of the first "computation period" (defined in subparagraph
(b)(2)(B)) ending thereafter on which such nonpurpose obligations
can be sold or disposed of without incurring the loss described
hereinabove. The provisions of this subparagraph (A) shall not apply
to gross proceeds of the Bonds which are:
(i) invested for the initial temporary period provided
in Section 1.103-14(b)(1) of the Income Tax Regulations;
(ii) held in a bona fide debt service fund for the Bonds
and invested for the 13-month temporary period provided in
Section 1.103-14(b)(10) of the Income Tax Regulations;
(iii) invested for either of the temporary periods
provided for a sinking fund for the Bonds in Sections
1.103-14(b)(8) and 1.103-14(b)(12) of the Income Tax
Regulations;
(iv) invested during the one-year temporary period
provided for investment earnings derived from invested
proceeds of the Bonds and from the investment of amounts held
in a sinking fund for the Bonds under Sections 1.103-14(b)(6)
and 1.103-14(b)(9) of the Income tax Regulations;
(v) invested for the temporary period provided for
proceeds of a refunding issue in Section 1.103-14(e)(3) of the
Income Tax Regulations; or
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(vi) held in a "revolving fund" (within the meaning of
Section 1.103-14(b)(11) of the Income Tax Regulations) and invested
during the three-year temporary period set forth therein.
(B) At the time or times hereinafter set forth, the Company
shall pay or shall cause the Trustee to pay to the United States an
amount, hereinafter referred to as the "Rebate Amount", which is
equal to the sum of:
(i) the excess of --
(a) the aggregate amounts earned from the Original
Issuance Date of the Bonds on all nonpurpose obligations
in which gross proceeds of the Bonds have been invested
(other than nonpurpose obligations attributable to an
excess described herein) over
(b) the aggregate amounts which would have been
earned if the yield on such nonpurpose obligations
(other than nonpurpose obligations attributable to an
excess described herein) had been equal to the yield on
the Bonds, plus
(ii) any income attributable to the excess described in
clause (i) above.
The Rebate Amount payable to the United States shall be determined
annually by the Company for each bond year during which Bonds remain
outstanding and upon retirement of the last of the Bonds (each such
period is hereinafter referred to as a "computation period"). The
Rebate Amount determined for one bond year shall not be reduced or
offset as a result of any determination of the Rebate Amount for any
other bond year. Such Rebate Amounts shall be deposited annually in
the Excess Investment Earnings Account created pursuant to the
provisions of Section 804 of the Indenture. The Rebate Amount shall
be paid to the United States in installments, as follows:
(I) subject to clause (III) below, the first such
installment shall be paid no later than thirty (30) days after
the end of the fifth (5th) bond year of the Bonds;
(II) subject to clause OH) below, an additional
installment shall be paid on or prior to the last day of each
additional installment payment period during which any of the
Bonds remain outstanding. For purposes of this clause (II), an
installment payment period shall commence on the last day on
which a preceding installment of the Rebate
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Amount was required to be paid, and shall end on the day
preceding the fifth (5th) anniversary of such payment date;
(III) anything herein to the contrary notwithstanding,
the last installment shall be paid no later than thirty (30)
days after the last of the Bonds has been retired; and
(IV) each installment shall be in an amount which, when
aggregated with the amount of any prior installments paid to
the United States hereunder, will equal at least ninety per
centum (90%) of the total Rebate Amount payable to the United
States hereunder as of the date such installment is paid;
provided, however, that the last installment shall be in an
amount equal to the entire remaining balance of the Rebate
Amount payable to the United States hereunder.
The Company shall maintain or cause to be maintained records of such
determinations for each computation period until six years after
payment in full of the Bonds and shall make such records available
to the Issuer, the Trustee and their representatives upon reasonable
request therefor. The Issuer and the Trustee hereby agree to
cooperate with the Company in making the determinations for each
computation period required pursuant to this subparagraph (b).
To that end the Trustee, as Construction Fund and Bond Fund
custodian, has covenanted and agreed in Section 804 of the Indenture
that it will, on or before each anniversary of the date of issuance
of the Bonds, prepare and file with the Issuer and the Company a
report with respect to the Construction Fund and the Bond Fund
setting forth the total amounts invested during the preceding bond
year, the investments made with the moneys in the Construction Fund
and the Bond Fund and the investment earnings (and losses) resulting
from the investments in each such Fund, respectively, together with
such additional information concerning such Funds and the
investments therein, respectively, as the Issuer or the Company
shall reasonably request.
(3) For purposes of clause (a) of subparagraph (2)(13)(i) of this
subparagraph (b), the Company, in determining the aggregate amounts earned
on all nonpurpose obligations acquired with gross proceeds of the Bonds--
(A) will take into account any gain or loss incurred on the
disposition of any such nonpurpose obligation, and
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(B) unless the Issuer otherwise elects, will not take into
account any amounts earned on nonpurpose obligations held in a bona
fide debt service fund for the Bonds during any bond year in which
the gross earnings on such fund do not exceed One Hundred Thousand
Dollars ($100,000).
(4) Except as provided in Section 1.103-15AT(d)(6) of the Temporary
Income Tax Regulations with respect to the purchase of obligations of the
United States Treasury directly from the United States Treasury, at no
time shall any of the gross proceeds of the Bonds be invested in (A)
nonpurpose obligations having a purchase price which is not equal to the
fair market value of comparable obligations or producing a yield which is
not equal to the fair market yield of comparable obligations, or (B) in
any other manner resulting in a "prohibited payment" (within the meaning
of Section 1.103-15 AT(d)(6) of the Temporary Income Tax Regulations) of
any portion of the Rebate Amount, directly or indirectly, to a party other
than the United States.
(5) Notwithstanding the provisions of subparagraph (b)(1), if gross
proceeds of the Bonds subsequently arise following the end of the
six-month period commencing on the date of issuance and delivery of the
Bonds (whether due to sale of the Project, condemnation of the Project,
damage or destruction to the Project, or otherwise) the provisions of
subparagraph (b)(1) shall cease to apply and the Company shall be
obligated to (i) make the payments to the United States set forth in
subparagraph (b)(2)(B) with respect to the gross proceeds of the Bonds
which arise following the end of such six-month period (but not with
respect to gross proceeds of the Bonds expended during such six-month
period) and perform the other duties set forth in subparagraph (b)(2)(B),
and (ii) limit the amount of gross proceeds of the issue and perform the
other duties set forth in subparagraph (b)(2)(A) above.
(c) For purposes of construing this Section and Section 804 of the
Indenture, the following definitions shall apply:
(1) "bona fide debt service fund" shall have the meaning set forth
in Income Tax Regulation Section 1.103-13(b)(12);
(2) "bond year" shall mean the one-year period commencing on
Original Issuance Date of the Bonds and ending one year later, and each
one year period thereafter until payment in full of the Bonds;
(3) "debt service" shall have the meaning set forth in Code Section
103(c)(6)(C)(iii) and Temporary Income Tax Regulation Section
1.103-15AT(b)(5) and Temporary Income Tax Regulation Section
1.103-15AT(c)(4);
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(4) "gross proceeds" shall have the meaning set forth in Temporary
Income Tax Regulation Section 1.103-15AT(b)(6) and shall include:
(i) original proceeds of the Bonds;
(ii) investment proceeds of the Bonds;
(iii) transferred proceeds of the Bonds;
(iv) amounts held in a sinking fund for the Bonds;
(v) amounts held in a reasonably required reserve or
replacement fund for the Bonds;
(vi) securities or obligations pledged as security for the
payment of debt service on the Bonds;
(vii) amounts received with respect to acquired purpose
obligations acquired with the proceeds of the Bonds;
(viii) any other amount to be used to pay credit service on the
Bonds; and
(ix) any amounts received as a result of investing any
amounts described in (i) through (viii) above;
(5) "nonpurpose obligations" shall have the meaning set forth in
Code Section 103(c)(6)(H)(ii) and Temporary Income Tax Regulation Section
1.103-15AT(b)(2);
(6) "temporary period" shall mean the temporary periods set forth in
Temporary Income Tax Regulation Section 1.103-15AT(c)(2) and described in
clauses (i)-(vi) of subparagraph (b)(2)(A) above; and
(7) "Yield" shall have the meaning set forth in Code Section
103(c)(6)(C)(ii) and Temporary Income Tax Regulation Section
1.103-15AT(b)(3) and Temporary Income Tax Regulation Section 1.
103-15AT(c)(4).
(d) The covenants and agreements contained in subparagraph (b) above
are intended to assure compliance with Section 103(c)(6) of the Code and with
Temporary Income Tax Regulation Section 1.103-15AT. In the event such Temporary
Income Tax Regulations are hereafter modified, or Final Income Tax Regulations
are promulgated in substitution for such Temporary Income Tax Regulations, and
such modifications or such Final Income Tax Regulations modify or delete any
element of the covenants contained in subparagraph (b) above, the Company shall
be relieved of its obligation to comply with such covenants to the extent
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of such modification or deletion. In the event such modifications or Final
Income Tax Regulations impose additional requirements which are applicable to
the Bonds, the Company hereby covenants and agrees to comply with the provisions
of the Temporary Income Tax Regulations, as modified, or with such Final Income
Tax Regulations.
Section 5.13. FIXED INTEREST RATE. The Company acknowledges that the
interest rate on the Bonds shall be converted to the Fixed Interest Rate upon
the happening of certain events specified in Section 402 of the Indenture. The
Company agrees to use its best efforts to deliver to the Trustee an opinion of
Independent Tax Counsel to the effect that conversion to the Fixed Interest Rate
will not adversely affect the exemption of the interest on the Bonds from
Federal income taxation.
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ARTICLE VI,
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. EVENTS OF DEFAULT. An Event of Default shall mean one
or more of the following described events:
(a) failure by the Company to pay any amounts required to be paid
under Section 4.1 or 4.3 of this Agreement on or prior to the date on
which payment is required to be made by said Section 4.1 or 4.3;
(b) failure by the Company to observe and perform any covenant,
condition or agreement on its part to be observed or performed under this
Agreement, other than as referred to in paragraph (a) of this Section 6.1
or in Section 5.6 or Section 5.12 of this Agreement, and the continuance
thereof for a period of sixty (60) days after written notice, specifying
such failure and requesting that it be remedied, has been given to the
Company by the Issuer or the Trustee, unless the Trustee shall agree to an
extension of such time prior to its expiration, or if the failure be such
that it cannot be corrected within the applicable period, it shall not
constitute an Event of Default if corrective action is instituted by the
Company within the applicable period and diligently pursued until the
failure is corrected;
(c) any representation by or on behalf of the Company contained in
this Agreement or in any instrument furnished in compliance with or in
reference to this Agreement or the Indenture proves false or misleading in
any material respect as of the date of the making or furnishing thereof;
(d) the Company shall (i) apply for or consent to the appointment
of, or the taking or possession by, a receiver, custodian, trustee or
liquidator of the Company or of all or a substantial part of its property,
(ii) admit in writing its inability to pay its debts as such debts become
due, (iii) make a general assignment for the benefit of its creditors,
(iv) commence a voluntary case under the Federal Bankruptcy Code (as now
or hereafter in effect), (v) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding
up, or composition or adjustment of debts, (vi) fail to controvert in a
timely or appropriate manner, or acquiesce in writing to, any petition
filed against the Company in an involuntary case under said Federal
Bankruptcy Code, or (vii) take any action for the purpose of effecting any
of the foregoing;
(e) a proceeding or case shall be commenced, without the application
or consent of the Company, in any, court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding-up, or
composition or readjustment of debts, of the Company, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the
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like of the Company or of all or any substantial part of its assets, or
(iii) similar relief in respect of the Company, as the case may be, under
any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceedings or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of sixty (60) days from commencement of such
proceeding or case, or an order for relief against the Company shall be
entered in an involuntary case under said Federal Bankruptcy Code; or
(f) an "Event of Default" occurs and is continuing under Section
1101 of the Indenture.
The provisions of subsection (b) of this Section are subject to the limitation
that if, by reason of Force Majeure, the Company is unable in whole or in part
to carry out its agreements on its part herein contained, other than the
obligations on the part of the Company contained in Sections 4.1, 4.3, 5.3, 5.4,
5.6, 5.7, 5.8 and 5.12, the Company shall not be deemed in default during the
continuance of such inability. The Company agrees, however, to use all
reasonable efforts to remedy with all reasonable dispatch the cause or causes
preventing the Company from carrying out its agreements; provided, that the
settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Company, unfavorable to the Company.
The declaration of an Event of Default under subsections (d) or (e)
of this Section 6.1, and the exercise of remedies upon any such declaration,
shall be subject to any applicable limitations of Federal bankruptcy law
affecting or precluding such declaration or exercise during the pendency of or
immediately following any bankruptcy, insolvency or reorganization proceedings.
The provisions of Sections 6.1 and 6.2 are subject to the further
limitation that the rescission or annulment of a declaration that all the Bonds
outstanding under the Indenture are immediately due and payable shall also
consitute a rescission or annulment of any corresponding declaration made
pursuant to Sections 6.1 or 6.2 and a waiver and rescission of the consequences
of such declaration and of the Event of Default with respect to which such
declaration had been made, provided that no such waiver or rescission shall
extend to or affect any subsequent or other Event of Default or impair any right
consequent thereon.
Section 6.2. REMEDIES ON EVENTS OF DEFAULT. Whenever any Event of Default
referred to in Section 6.1 shall have happened and be subsisting, any one or
more of the following remedial steps may be taken; provided, however, that if an
Event of Default under subsection (b) of
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<PAGE> 55
Section 6.1 occurs as a result of the failure to observe or perform any
covenants or agreements under Section 5.5. the remedies of the Issuer and the
Trustee shall be limited to those provided in subsections (c) and (d) of this
Section 6.2:
(a) the Issuer or the Trustee may, or the Trustee, under the
circumstances provided in Section 1102 of the Indenture, shall be
obligated to, declare as the case may, be, all unpaid amounts payable
pursuant to Section 4.1 or 4.3 of this Agreement to be immediately due and
payable, whereupon the same shall become immediately due and payable;
(b) the Issuer may at its options, or the Trustee, as provided in
Section 1103 of the Indenture, may at its option take or shall be
obligated to take, as the case may be, whatever action at law or in equity
may appear necessary or desirable to collect the amounts then due and
thereafter to become due;
(c) the Issuer or the Trustee may take whatever action at law or in
equity may appear necessary or desirable to enforce performance and
observance of any obligation, agreement or covenant of the Company under
this Agreement; and
(d) in the event any of the Bonds shall at the time be outstanding
and unpaid, the Issuer or the Trustee may have access to and inspect
examine and make copies of the books and records and any and all accounts
and data of the Company as the Issuer may reasonably request but only,
however, insofar as they pertain to the Facilities.
Any amounts collected pursuant to action taken under this Section 6.2 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if the Bonds have been fully paid (or provision for payment
thereof has been made in accordance with the provisions of the Indenture), and
all reasonable fees, charges and expenses of the Trustee and Paying Agents
provided for herein have been paid, shall be paid to the Bank to the extent that
any moneys are owed to the Bank pursuant to the Letter of Credit Agreement and,
otherwise, to the Company; provided, however, that any such amounts which do not
represent payments which the Company is required to make pursuant to Section 4.1
or 4.3 of this Agreement shall be paid to the party to whom such amounts are
owed.
Notwithstanding the foregoing, in the event the Bank has fully
funded the Letter of Credit, neither the Issuer nor the Trustee shall have any
right to pursue remedies under subsections (b) and (c) above.
Section 6.3. NO REMEDY EXCLUSIVE. No remedy conferred upon or
reserved to the Issuer or the Trustee bye this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law, in equity or
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<PAGE> 56
by statute. No delay in exercising or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right and power which
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the Issuer or the Trustee to exercise any remedy reserved to it
in this Article VI, it shall not be necessary to give any notice, other than
such notice as may be herein expressly required.
Section 6.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. Should
an Event of Default occur or in the event the Company should default under any
of the provisions of this Agreement and the Issuer or the Trustee should employ
attorneys or incur other expenses for the collection of the amounts payable
hereunder by the Company or for the enforcement of performance or observance of
any obligation or agreement on the part of the Company contained in this
Agreement the Company agrees that it will on demand therefor reimburse the
lawful and reasonable fees of such attorneys and such other expenses so
incurred. If any such fees and expenses are not so reimbursed, the amount
thereof, together with interest thereon from the date of demand for payment at
the Interest Rate for Advances, shall, to the extent permitted by law,
constitute indebtedness secured hereby and by the Indenture, and in any action
brought to collect such indebtedness, the Trustee or the Issuer, as applicable,
shall be entitled to seek the recovery of such fees and expenses in such action
except as limited by law or by judicial order or decision entered in such
proceedings.
The provisions of this Section shall survive the termination of this
Agreement.
Section 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the
event any agreement contained in this Agreement should be breached by either
party and thereafter waived by the other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder.
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ARTICLE VII.
MISCELLANEOUS
Section 7.1. TERMINATION OF AGREEMENT. This Agreement shall be in
full force and effect from the date hereof until the end of the Loan Term, at
which time the obligations of the Issuer and the Company hereunder shall
terminate, provided that any obligations of the Company with respect to the
payment of costs and expenses under this Agreement shall survive such
termination and continue in effect until such costs and expenses are paid in
full.
Section 7.2. CONFIDENTIAL INFORMATION. The Company shall not be
required to disclose, or to permit the Issuer, the Trustee or others to acquire
access to, any information deemed by the Company to be proprietary or
confidential.
Section 7.3. CANCELLATION OF BONDS. The Company shall have the right
to cause Bonds to be delivered to the Trustee for cancellation, and the Issuer
shall cause the Trustee to cancel any Bonds so delivered to the Trustee.
Section 7.4. AMOUNTS REMAINING IN BOND FUND, CONSTRUCTION FUND AND
OTHER FUNDS AND ACCOUNTS. It is agreed by the parties hereto that any amounts
remaining in the Bond Fund, the Construction Fund or any other fund or account
created under this Agreement or the Indenture and held by the Trustee after
payment in full of the Bonds (or provision for payment thereof having been made)
in accordance with the provisions of the Indenture and the fees, charges and
expenses of the Trustee and Paying Agent and all other amounts required to be
paid under the Indenture or under this Agreement shall belong to and be paid by
the Trustee to the Bank to the extent that any moneys are owed to the Bank
pursuant to the Letter of Credit Agreement and, otherwise, to the Company;
provided, however, any amounts remaining in the Excess investment Earnings
Account shall be held and disbursed solely in accordance with the provisions of
Section 5.12(b) hereof and Section 804 of the Indenture.
Section 7.5. NOTICES. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered mail, postage prepaid, addressed to the Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, the Bank or the
Trustee shall also be given to the others. The Company, the Issuer, the Bank and
the Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates, requests or other
communications shall be sent or persons to whose attention the same shall be
directed.
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Section 7.6. BINDING EFFECT; PARTIES IN INTEREST. This Agreement
shall inure to the benefit of and shall be binding upon the Issuer, the Company
and their respective successors and assigns, subject, however, to the
limitations contained in Sections 4.1 and 5.1, and subject to the further
limitation that any obligation of the Issuer created by or arising out of this
Agreement shall not be a general debt of the Issuer but shall be a limited
obligation payable solely out of payments, revenues and other income, charges
and moneys realized under this Agreement, the sale of the Bonds or the Net
Proceeds as provided herein. Nothing in this Agreement is intended or shall be
construed to give to any person, firm or corporation other than the Trustee, the
Bank and the parties hereto any legal or equitable remedy or claim under or in
respect of this Agreement or any provision herein contained.
Section 7.7. EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL
LIABILITY. All covenants, stipulations, obligations and agreements of the Issuer
contained in this Agreement shall be effective to the extent authorized and
permitted by applicable law. No such covenant, stipulation, obligation or
agreement shall be deemed to be a covenant, stipulation, obligation or agreement
or any present or future director, officer, agent or employee of the Issuer in
his individual capacity, and neither the directors of the Issuer nor any officer
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof or by
reason of the covenants, stipulations, obligations or agreements of the Issuer
contained in this Agreement or in the Indenture.
Section 7.8. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided in this Agreement or in the Indenture, subsequent to the
initial issuance of Bonds and prior to payment of the Bonds in full (or
provision of the payment thereof having been made) in accordance with the
provisions of the Indenture, this Agreement may not be effectively amended,
changed, modified, altered or terminated without the prior written consent of
the Trustee, and prior to the Expiration Date of the Letter of Credit, the Bank.
Section 7.9. EXECUTION COUNTERPARTS. This Agreement may be executed
in several counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same Agreement.
Section 7.10. SEVERABILITY. If any clause, provision or section of
this Agreement shall be held illegal or invalid by any court, the invalidity of
such clause, provision or section shall not affect any of the remaining clauses,
provisions or sections hereof and this Agreement shall be construed and enforced
as if such illegal or invalid clause, provision or section had not been
contained herein. In case any agreement or obligation contained in this
Agreement shall be held to be in violation of law, then such agreement or
obligation shall be deemed to be the agreement or obligation of the Issuer or
the Company, as the case may be, to the full extent permitted by law.
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<PAGE> 59
Section 7.11. CAPTIONS. The captions or headings in this Agreement
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Agreement.
Section 7.12. PAYMENTS DUE ON NON-BUSINESS DAYS. After the
Conversion Date, in any case where the date for any payment required to be made
hereunder or under the Indenture shall not be a Business Day, then payment need
not be made on such date but may be made on the next succeeding Business Day
with the same force and effect as if made on the date fixed for such payment,
and if such payment is made on the next succeeding Business Day no interest
shall accrue for the period after such date.
Section 7.13. GOVERNING LAW. This Agreement shall be governed exclusively
by, and construed in accordance with, the laws of the State.
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IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective corporate names by their duly
authorized officers, all as of the date first above written.
DEVELOPMENT AUTHORITY
OF DEKALB COUNTY
(CORPORATE SEAL)
By: [SIG]
-----------------------
Chairman
Attest:
[SIG]
- -------------------------------
Secretary
(Execution by the Company appears on the following page.)
<PAGE> 61
RADIATION STERILIZERS, INCORPORATED
(CORPORATE SEAL) By:[SIG]
-------------------------------
President
Attest:
[SIG]
- ----------------------------
Secretary
(Exhibit A begins on the following page.)
<PAGE> 62
EXHIBIT A
DESCRIPTION OF FACILITIES
The Facilities consist of a 21,185 square foot building located on a
1.445 acre site. The building is of reinforced masonry and steel frame
construction with a brick exterior. It includes 1,500 square feet of
air-conditioned office area and a radiation cell comprising 3,000 square feet.
The radiation cell is a monolithically poured, reinforced concrete structure,
with walls and roof being six feet thick, covering a 23-foot deep, stainless
steel lined, water pool. The balance of the building is used for storage,
loading and shipping materials.
The building site includes ample on-site parking and a loading dock
to the rear of the building. There are 9,000 feet of contoured landscaping in
front of the building, and four to twenty feet of landscaping along the sides of
the site.
The principal installed equipment consists of a computer-controlled
conveyor system and a quantity of Cobalt-60. The business of the Company is to
utilize the Cobalt-60 to sterilize materials--primarily medical
supplies--manufactured by other companies. The process also has potential
applications for sterilizing foodstuffs.
(Exhibit B begins on the following page.)
A-1
<PAGE> 63
EXHIBIT B
REQUISITION AND CERTIFICATION
Request No.____________ Date:_______
Bank One Trust Company, N.A., as Trustee under the Trust Indenture, dated as of
March 1, 1985, relating to $5,250,000 Development Authority of DeKalb County
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985
Attention: Corporate Trust Administration
The undersigned Authorized Company Representative and Authorized
Issuer Representative designated pursuant to the terms of a Loan Agreement,
dated as of March 1, 1985 (the "Agreement"), between the Development Authority
of DeKalb County, a public body corporate and politic created and existing under
the laws of the State of Georgia (the "Issuer"), and Radiation Sterilizers,
Incorporated, a California corporation (the "Company") hereby request that there
be paid from the Construction Fund (hereinbelow described) the sum of
$_________________________, and in that connection with respect to the use of
the proceeds of the $5,250,000 Development Authority of DeKalb County Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985 (the "Bonds"), DO HEREBY CERTIFY, as follows:
1. The requested payment is a proper charge against the Development
Authority of DeKalb County Construction Fund-Radiation Sterilizers,
Incorporated Project, 1985 and has not been the basis of any previous
withdrawal from said
Construction Fund,
2. Payment should be made to:
Name:
Address:
B-1
<PAGE> 64
3. Attached hereto is a bill, statement of account or a schedule
showing in reasonable detail the items with respect to which payment is
being requested, and, if the Company or the Issuer is to be reimbursed,
proof of payment of such items is attached hereto, which proof is
satisfactory to the undersigned and the Trustee may act thereon.
4. Payment of this obligation when added to all other payments
previously made from said Construction Fund will not result in less than
substantially all of the net proceeds of the sale of the Bonds (net
proceeds being those proceeds remaining after paying all expenses incurred
in connection with the issuance of the Bonds, together with investment
earnings on such net proceeds earned prior to the "Completion Date"
(defined in the Agreement)) being used to provide land or property of a
character subject to the allowance for depreciation under Section 167 of
the
Internal Revenue Code of 1954, as amended.
5. (a) The Company has no notice of any vendors materialmen's
mechanics', supplier's or other similar liens or right to liens, chattel
mortgages or conditional sales contracts, or other contracts or
obligations which should be satisfied or discharged before payment of such
obligation is made, or (b) this requisition is for the purpose of
obtaining funds to be used to satisfy or discharge a lien or contract of
the type described in (a) above.
6. This requisition contains no request for payment on account of
any portion of such obligation which the Company is, as of the date
hereof, entitled to retain under retained percentage agreements.
7. The obligation does not represent a cost paid or incurred by the
Issuer (Dr the Company prior to October 4, 1983.
As provided in Section 3.3 of the Agreement, the Issuer may rely
upon the Company as to the completeness and accuracy of all statements contained
herein.
By:_________________________________
Authorized Company Representative
By:________________________________
Authorized Issuer Representative
B-2
<PAGE> 65
With respect to any such item representing payment for labor,
services, material supplies and/or equipment, insofar as such obligation was
incurred for labor, services, material, supplies and/or equipment in connection
with the acquisition, construction and installation of the "Facilities" (defined
in the Agreement), (i) such labor and/or services were actually performed in a
satisfactory manner, and (ii) such material, supplies and/or equipment were
actually used in or about the construction of the Facilities or delivered at the
site of the Facilities for that purpose and the item of equipment with respect
to which such payment is requested constitutes a portion of the Facilities.
By:_________________________________
Authorized Company Representative
(Exhibit "C" begins on the following page.)
B-3
<PAGE> 66
EXHIBIT C
CERTIFICATE OF COMPLETION
-------------------------
The undersigned Authorized Company Representative designated
pursuant to that certain Loan Agreement (the "Agreement"), dated as of March 1,
1985, between the Development Authority of DeKalb County, a public body
corporate and politic created and existing under the laws of the State of
Georgia, and Radiation Sterilizers, Incorporated, a California corporation (the
"Company"), DOES HEREBY CERTIFY, as follows:
1. The acquisition, construction and installation of the
"Facilities" as described in the Agreement have been completed
substantially in accordance with the plans and specifications therefor and
all labor, services, material, supplies and/or equipment used in such
acquisition, construction and installation have been paid for, except for
amounts retained in the "Construction Fund" created in the Agreement for
costs of the Facilities not yet due and payable.
2. All other facilities necessary in connection with the Facilities
have been acquired, constructed and installed substantially in accordance
with the plans and specifications therefor and all costs and expenses
incurred in connection therewith have been paid, except for amounts
retained in said Construction Fund for costs of the Facilities not yet due
and payable.
3. The Facilities and all other facilities in connection therewith
have been acquired, constructed and installed in a satisfactory manner and
are suitable and sufficient for the efficient operation of the Facilities
for its intended purposes.
4. Substantially all of the net proceeds of the $5,250,000 in
aggregate principal amount of Development Authority of DeKalb County
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985 (the "Bonds") (net
proceeds being those proceeds remaining after paying all expenses incurred
in connection with the issuance of the Bonds, together with investment
earnings on such net proceeds earned prior to the "Completion Date"
(defined in the Agreement)), have been used to acquire land or property of
a character subject to the allowance for depreciation under Section 167 of
the Internal Revenue Code of 1954, as amended, and such costs representing
proceeds so used are properly chargeable to the capital account of the
Company for Federal income tax purposes or would be so chargeable either
with a proper election by the Company or but for a proper election by the
Company to deduct the costs.
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<PAGE> 67
5. A certificate of occupancy and all other permissions required of
governmental authorities for the occupancy of the Facilities have been
obtained.
This Certificate is given without prejudice to any rights against
third parties which exist on the date of this Certificate or which may
subsequently come into being.
This the ____ day of _________, 19 ____.
RADIATION STERILIZERS, INCORPORATED
By:_________________________________
Authorized Company Representative
(END OF LOAN AGREEMENT.)
C-2
<PAGE> 1
EXHIBIT 10.35
================================================================================
TRUST INDENTURE
Between
DEVELOPMENT AUTHORITY OF DEKALB COUNTY
And
BANK ONE TRUST COMPANY, N.A.,
As Trustee
Dated as of March 1, 1985
----------------------
Securing
$5,250,000
Development Authority of DeKalb County
Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project),
Series 1985
----------------------
================================================================================
This instrument was prepared by:
KING & SPALDING
2500 Trust Company Tower
Atlanta, Georgia 30303
Telephone: (404) 572-4600
<PAGE> 2
TRUST INDENTURE
TABLE OF CONTENTS
(The Table of Contents for this Trust Indenture is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Trust Indenture.)
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PARTIES 1
RECITALS 1
GRANTING CLAUSES 3
HABENDUM 4
GRANT IN TRUST 4
GENERAL COVENANT 4
ARTICLE I. DEFINITIONS AND CERTAIN
RULES OF INTERPRETATION
Section 101. Definitions 5
Section 102. Certain Rules of Interpretation 15
ARTICLE II. THE BONDS
Section 201. Authorized Amount of Bonds 17
Section 202. Issuance of Bonds 17
Section 203. Replacement Bonds is
Section 204. Execution; Limited Obligation 18
Section 205. Authentication 19
Section 206. Form of Bonds 19
Section 207. Delivery of Bonds 38
Section 208. Mutilated, Lost, Stolen
or Destroyed Bonds 39
Section 209. Exchangeability and Transfer of
Bonds; Persons Treated as Owners 39
ARTICLE III. REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption Dates and Prices 41
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Section 302. Notices of Redemption, Conversion
Date, Expiration Date of the Letter
of Credit, Expiration Date of the
Alternate Credit Facility or Delivery
of an Alternate Letter of Credit
or Alternate Credit Facility 43
Section 303. Cancellation 44
Section 304. Payment of Bonds Upon Redemption 45
Section 305. Pro Rata Redemption 45
ARTICLE IV PURCHASE AND PLACEMENT OF
BONDS; LETTER OF CREDIT
Section 401. Purchase of the Bonds 46
Section 402. Conversion to Fixed Interest Rate 51
Section 403. Remarketing Agent 52
Section 404. Letter of Credit 54
Section 405. No Federal Guarantee 54
ARTICLE V. GENERAL COVENANTS
Section 501. Payment of Principal,
Purchase Price, Redemption Premium
(if Any) and Interest 55
Section 502. Performance of Covenants; Authority 55
Section 503. Filing of Financing Statements 55
Section 504 Priority of Pledge
and Security Interest 56
Section 505. Rights Under Agreement 56
Section 506. Maintenance of Insurance;
Payment of Taxes, Charges, etc. 56
Section 507. Maintenance and Repair 56
Section 508. Issuer's Election to Issue Bonds
Pursuant to Section 103(b)(6)(D)
of the Code 56
ARTICLE VI. CUSTODY AND APPLICATION
OF PROCEEDS OF BONDS
Section 601. Creation of the Construction Fund 57
Section 602. Disposition of Bond Proceeds 57
Section 603. Disbursements from Construction Fund 57
Section 604. Completion of the Facilities 57
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ARTICLE VII. REVENUES AND FUNDS
Section 701. Source of Payment of Bonds 59
Section 702. Creation of the Bond Fund 59
Section 703. Payments into the Bond Fund 59
Section 704. Use of Moneys in the Bond Fund 60
Section 705. Custody of the Bond Fund 61
Section 706. Non-presentment of Bonds at Maturity 61
Section 707. Payments to the Company
from the Bond Fund 61
ARTICLE VIII. INVESTMENTS
Section 801. Construction Fund Investments 63
Section 802. Bond Fund Investments 63
Section 803. Non-Arbitrage Covenant; Compliance
with Special Arbitrage Rules 63
Section 804. Excess Investment Earnings Account 64
ARTICLE IX. SUBORDINATION TO RIGHTS OF COMPANY
Section 901. Subordination to Rights of the Company 65
ARTICLE X. DISCHARGE OF LIEN
Section 1001. Discharge of Lien
and Security Interests 66
Section 1002. Provision for Payment of Bonds 66
Section 1003. Discharge of the Indenture 67
ARTICLE XI. DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 1101. Defaults; Events of Default 68
Section 1102. Acceleration 69
Section 1103. Other Remedies 70
Section 1104. Right of Bondholders
to Direct Proceeding 70
Section 1105. Application of Moneys 71
Section 1106. Rights and Remedies Vested in Trustee 72
Section 1107. Rights and Remedies of Bondholders 73
Section 1108. Termination of Proceedings 73
Section 1109. Waivers of Events of Default 73
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ARTICLE XII. THE TRUSTEE; PAYING AGENT;
AND BOND REGISTRAR
Section 1201. Acceptance of the Trusts 75
Section 1202. Fees, Charges and Expenses of Trustee 78
Section 1203. Notice to Bondholders
If Event of Default Occurs 78
Section 1204. Intervention by Trustee 79
Section 1205. Successor Trustee 79
Section 1206. Resignation by the Trustee; Judicial
Appointment of Successor Trustee 79
Section 1207. Removal of the Trustee 79
Section 1208. Appointment of Successor Trustee by
the Bondholders; Temporary Trustee 80
Section 1209. Concerning Any Successor Trustee 80
Section 1210. Trustee Protected in Relying
Upon Resolutions, etc. 80
Section 1211. Successor Trustee as Custodian of
Funds, Paying Agent and Bond Registrar 81
Section 1212. Trust Estate May Be
Vested in Co-Trustee 81
Section 1213. Filing of.-Certain
Continuation Statements 82
Section 1214. Adoption of Authentication 82
Section 1215. Succession of Paying Agents 82
Section 1216. Right of Trustee to Pay
Taxes and Other Charges 82
Section 1217. Several Capacities 83
ARTICLE XIII. SUPPLEMENTAL INDENTURES
Section 1301. Supplemental Indentures Not
Requiring Consent of Bondholders 84
Section 1302. Supplemental Indentures Requiring
Consent of Bondholders 85
Section 1303. Trustee Authorized to Join in
Supplements; Reliance on Counsel 86
Section 1304. Approval of Bank 86
ARTICLE XIV. AMENDMENT OF AGREEMENT
AND LETTER OF CREDIT
Section 1401. Amendments, etc., to Agreement and
Letter of Credit Not Requiring
Consent of Bondholders 87
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Section 1402. Amendments, etc., to Agreement
and Letter of Credit Requiring
Consent of Bondholders 87
Section 1403. Trustee Authorized to Join in
Amendments; Reliance on Counsel 87
Section 1404. Approval of Bank 88
ARTICLE XV. MEETINGS OF BONDHOLDERS
Section 1501. Purposes for Which Bondholders'
Meetings May Be Called 89
Section 1502. Place of Meetings of Bondholders 89
Section 1503. Call and Notice of
Bondholders' Meetings 89
Section 1504. Persons Entitled to Vote
at Bondholders' Meetings 90
Section 1505. Determination of Voting Rights;
Conduct and Adjournment of Meetings 90
Section 1506. Counting Votes and Recording
Action of Meetings 91
Section 1507. Revocation by Bondholders 91
ARTICLE XVI. MISCELLANEOUS
Section 1601. Consents, etc., of Bondholders 92
Section 1602. Issuer's Obligations Limited 92
Section 1603. Immunity of Directors, Officers
and Employees of Issuer 93
Section 1604. Limitation of Rights 93
Section 1605. Severability 94
Section 1606. Notices 94
Section 1607. Trustee as Paying Agent
and Bond Registrar 95
Section 1608. Payments Due on Days
Other Than Business Days 95
Section 1609. Counterparts 95
Section 1610. Priority Over Other Liens 95
Section 1611. Binding Effect 95
Section 1612. Captions 95
Section 1613. Notice to S&P 95
Section 1614. References to Bank 95
Section 1615. Laws Governing Indenture 95
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TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGMENT AND CONSENT OF COMPANY
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TRUST INDENTURE
THIS TRUST INDENTURE (the "Indenture"), dated as of March 1, 1985,
made and entered into by, and between the DEVELOPMENT AUTHORITY OF DEKALB
COUNTY, a public body corporate and politic created and existing under the laws
of the State of Georgia (the "Issuer"), and BANK ONE TRUST COMPANY, N.A., a
national banking association organized and existing under and by virtue of the
laws of the United States of America, having power and authority to accept and
execute trusts, and having a principal corporate trust office in Columbus, Ohio,
as trustee (the "Trustee")
W I T N E S S E T H:
WHEREAS, the Issuer has been created pursuant to the provisions of
an act of the General Assembly of the State of Georgia (O.C.G.A. Section 36-62),
as amended (the "Act"), and an activating resolution of the Board of
Commissioners of DeKalb County, Georgia, adopted on September 24, 1974, and
amended on May 25, 1976; the Issuer has been activated as required by the terms
of the Act, its directors have been appointed as provided therein and are
currently acting in that capacity and a copy of said activating resolution has
been filed with the Secretary of State of the State of Georgia as required by
law; and
WHEREAS, the Issuer has been created to develop and promote for the
public good and general welfare trade, commerce, industry and employment
opportunities and to promote the general welfare of the State of Georgia; the
Act empowers the Issuer to issue its revenue obligations, in accordance with the
applicable provisions of the Revenue Bond Law of the State of Georgia (O.C.G.A.
Sections 36-82-60--36-82-85), as heretofore and hereafter amended, in
furtherance of the public purpose for which it was created; and
WHEREAS, the Issuer, by due corporate action, has authorized the
financing of the acquisition, construction and installation of an industrial
facility in DeKalb County, Georgia (the "Facilities"), pursuant to plans and
specifications therefor, such Facilities to be financed by the Issuer for
Radiation Sterilizers, Incorporated, a California corporation qualified to do
business in the State of Georgia (the "Company"), pursuant to a Loan Agreement,
dated as of March 1, 1985 (the "Agreement"); and
WHEREAS,, after careful study and investigation of the nature of the
proposed Facilities, the Issuer has determined that, in assisting with the
financing of the Facilities, it will be acting in furtherance of the public
purposes intended to be served by the Act; and
WHEREAS, the Issuer has been advised by the Company that the amount
necessary to finance the cost of the acquisition, construction and
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installation of the Facilities, including expenses incidental thereto, is
$5,250,000 and, by proper corporate action, the Issuer has authorized the
issuance and sale of $5,250,000 in aggregate principal amount of its Development
Authority of DeKalb County Variable Rate Demand Industrial Development Revenue
Bonds (Radiation Sterilizers, Incorporated Project), Series 1985 (the "Bonds"),
the proceeds of which will be used to finance the cost of the acquisition,
construction and installation of the Facilities; and
WHEREAS, the Issuer has entered into the Agreement with the Company
under the terms of which the Issuer has agreed to finance the cost of acquiring,
constructing and installing the Facilities through the issuance of the Bonds
and, in consideration thereof, the Company has agreed to pay to the Issuer
moneys sufficient (i) to pay the principal of, and the redemption premium (if
any) and the interest on, the Bonds as the same become due and payable, (ii) to
pay the purchase price of any Bonds required to be purchased hereunder, and
(iii) to pay certain administrative expenses in connection with the Bonds, and
WHEREAS, as security for the payment of the Bonds, the Issuer has
agreed to assign and pledge to the Trustee all right, title and interest of the
Issuer in (a) the Agreement (except certain rights reserved by the Issuer under
the terms of this Indenture), together with the Agreement, (b) all amounts on
deposit from time to time in the "Bond Fund" and the "Construction Fund" (each
being hereinafter defined), but excluding any amounts on deposit in the "Excess
Investment Earnings Account" (hereinafter defined), and (c) the "Revenues"
(hereinafter defined); and
WHEREAS, Wells Fargo Bank, N.A., a national banking association (the
"Bank"), is issuing its irrevocable stand-by Letter of Credit, dated the date of
delivery of the Bonds (the "Letter of Credit"), in favor of the Trustee, for the
account of the Company, obligating the Bank to pay to the Trustee for the period
described therein upon request and in accordance with the terms thereof, up to
(i) an amount equal to the aggregate principal amount of the Bonds then
outstanding (A) to pay the principal of the Bonds, whether at maturity, upon
redemption or otherwise, and (B) to enable the Trustee to pay the purchase price
of any Bonds required to be purchased under the terms of this Indenture, plus
(ii) an amount equal to fifty-five (55) days accrued and unpaid interest at the
maximum rate which may be borne by the Bonds on all outstanding Bonds (other
than Bonds held by the Bank as a result of a drawing under the Letter of
Credit); and
WHEREAS, the Bank and the Company will enter into a Letter of Credit
Agreement, dated as of March 1, 1985 (the "Letter of Credit Agreement, under the
terms of which the Company will agree to reimburse the Bank for all amounts
drawn by the Trustee under the Letter of Credit, together with interest on all
such amounts, and to pay to the Bank a commission for issuing the Letter of
Credit; and
WHEREAS, all things necessary to make the Bonds, when authenticated
by the Trustee and issued and delivered as in this Indenture
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provided, the legal, valid, binding and enforceable limited obligations of the
Issuer, according to the import thereof, and to create a valid assignment and
pledge of the Revenues to the payment of the principal and purchase price of,
and the redemption premium (if any) and the interest on, the Bonds and a valid
assignment of certain of the rights, title and interest of the Issuer in the
Agreement have been done and performed, and the execution and delivery of this
Indenture and the execution, issuance and delivery of the Bonds, subject to the
terms hereof, have in all respects been authorized;
NOW, THEREFORE, KNOW ALL BY THESE PRESENTS, THIS INDENTURE
WITNESSETH:
That the Issuer, in consideration of the premises and of the
acceptance by the Trustee of the trusts hereby created, and of the purchase and
acceptance of the Bonds by the holders thereof, and of the sum of TEN DOLLARS
($10.00), lawful money of the United States of America, to it paid by the
Trustee, at or before the execution and delivery of these presents, and for
other good and valuable considerations the receipt of which are hereby
acknowledged, in order to secure the payment of the principal and purchase price
of, and the redemption premium (if any) and the interest on, the Bonds and all
other amounts payable by the Issuer pursuant to the terms of the Bonds and/or
this Indenture according to their tenor and effect and to insure the performance
and observance by the Issuer of all the agreements expressed or implied herein
and in the Bonds, has given, granted, assigned and pledged and does by these
presents give,, grant., assign and pledge to the Trustee, and to its successors
in the trusts hereby created, and to them and their assigns forever:
GRANTING CLAUSE I.
All right, title and interest of the Issuer in the Agreement,
together with the Agreement itself, and all amendments, modifications and
renewals thereof, reserving, however, the rights (a) providing that notices,
approvals, consents, requests and other communications be given to the Issuer,
and (b) of the Issuer under Sections 5.3, 5.10 and 6.4 of the Agreement.
GRANTING CLAUSE II.
All right, title and interest of the Issuer in the Revenues.
GRANTING CLAUSE III.
All amounts on deposit from time to time in the Bond Fund and the
Construction Fund, but excluding any amounts on deposit in the Excess Investment
Earnings Account, subject to the provisions of this Indenture and the Agreement
permitting or requiring the application thereof for the purposes and on the
terms and conditions set forth herein and therein.
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GRANTING CLAUSE IV.
Any and all other property of every name and nature from time to
time hereafter by delivery or by writing of any, kind, given, granted, assigned
and pledged as and for additional security hereunder, by the Issuer or by anyone
in its behalf or with its written consent, to the Trustee, which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;
TO HAVE AND TO HOLD all the same with all privileges and
appurtenances hereby given, granted, assigned and pledged or agreed or intended
so to be, to the Trustee and its successors in said trusts and to them and their
assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth,
for the equal and proportionate benefit, security and protection of all holders
of the Bonds issued or to be issued under and secured by this Indenture, without
preference, priority or distinction as to lien or otherwise of any of the Bonds
over any of the others except as herein expressly provided;
PROVIDED, HOWEVER, that when the principal of, and the interest on,
all of the Bonds secured hereby have been paid or shall be deemed to have been
paid in accordance with the terms and provisions of this Indenture, then this
Indenture and the rights hereby granted shall cease, determine and be void;
otherwise, this Indenture shall be of full force and effect.
THIS INDENTURE FURTHER WITNESSETH and it is expressly declared that
all Bonds issued and secured hereunder are to be issued, authenticated and
delivered and all property hereby given, granted, assigned or pledged is to be
dealt with and disposed of under, upon and subject to the terms, conditions,
stipulations, agreements, trusts, uses and purposes as hereinafter expressed,
and the Issuer has agreed and DOES HEREBY AGREE with the Trustee and with the
respective holders, from time to time, of the Bonds or any part thereof, as
follows, that is to say:
(Article I commences on the following page.)
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ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 101. DEFINITIONS. In addition to the words and terms
elsewhere defined herein, the following words and terms as used herein shall
have the following meanings unless the context or use clearly indicates another
or different meaning or intent, and any other words and terms defined in the
Agreement shall have the same meanings as assigned to them in the Agreement when
used herein unless the context or use clearly indicates another or different
meaning or intent:
"ACT" means an act of the General Assembly of the State of Georgia
(O.C.G.A. Section 36-62), as amended.
"ADJUSTMENT DATE" means, after the Conversion Date, the Interest
Payment Date next preceding the Expiration Date of the Alternate Credit Facility
or the Expiration Date of the Letter of Credit, as the case may be.
"AGREEMENT" means the hereinbefore-mentioned Loan Agreement, of even
date herewith, between the Issuer and the Company, including any amendment
thereto.
"ALTERNATE CREDIT FACILITY" means a credit facility other than the
Letter of Credit, including without limitation, an irrevocable letter of credit
or bond insurance policy, which provides for payment of the principal of, and
the interest on, the Bonds, when due.
"ALTERNATE INTEREST INDEX" means for any Interest Period ending
prior to the Conversion Date 65% of the interest rate applicable to 13-week
United States Treasury bills determined by the Remarketing Agent on the basis of
the average per annum bond equivalent yield at which such 13-week Treasury bills
shall have been sold at the most recent Treasury auction during the next
preceding Interest Period. If no such auction shall have been conducted during
the next preceding Interest Period, or if the Remarketing Agent shall fail to
determine the Alternate Interest Index, the Alternate Interest Index during such
Interest Period will be the same as for the preceding Interest Period.
"ALTERNATE LETTER OF CREDIT" means an irrevocable letter of credit
issued in accordance with Section 4.6 of the Agreement.
"AVAILABLE MONEYS" means moneys on deposit in trust with the Trustee
for a period of at least one hundred twenty-three (123) days during which no
petition in bankruptcy or similar insolvency proceeding has been filed by or
against the Company.
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"BANK" means the issuer of the Letter of Credit, initially, Wells
Fargo Bank, N.A., a national banking association.
"BOND FUND" means the Bond principal and interest payment fund
created in Section 702 of this Indenture in which there shall be established a
general account and a special account. Any reference herein to the "Bond Fund"
without further qualification shall constitute a reference to said general
account.
"BOND PAYMENT DATE" means any date upon which the principal of, and
the redemption premium (if any) or interest on, the Bonds shall be payable
pursuant to the Indenture, whether at stated maturity, by redemption, by
acceleration or otherwise.
"BOND PURCHASE AGREEMENT" means the bond purchase agreement among
the Original Purchasers, the Issuer and the Company, providing for the sale of
Bonds to the Original Purchasers.
"BOND REGISTRAR" means the Trustee acting in such capacity.
"BOND RESOLUTION" means the resolution adopted by the Issuer
authorizing the issuance of the Bonds, as the same may be amended, modified or
supplemented by any amendments or modifications thereof and supplements thereto
entered into in accordance with the provisions of the Indenture.
"BONDHOLDER", "OWNER" or "HOLDER OF THE BONDS" means the registered
owner of any Bond.
"BONDS" means the Development Authority of DeKalb County Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985, in the aggregate principal amount of
$5,250,000, issued pursuant to the provisions of this Indenture.
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on
which banks located in the cities in which the principal corporate trust office
of the Trustee and the principal office of the Bank are located and in New York,
New York, are not required or authorized by law to remain closed and on which
The New York Stock Exchange, Inc. is not closed.
"CHAIRMAN" means the Chairman of the Issuer.
"CODE" means the Internal Revenue Code of 1954, as amended, and the
applicable Income Tax Regulations thereunder.
"COMPANY" means Radiation Sterilizers, Incorporated, a corporation
organized under the laws of the State of California and qualified to do business
in the State, and its lawful successors and assigns, including any surviving,
resulting or transferee entity as provided in Section 5.1 of the Agreement.
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"CONSTRUCTION FUND" means the Construction Fund created in Section
601 of this Indenture.
"CONVERSION DATE" means the date upon which the Bonds begin to bear
interest at the Fixed Interest Rate, which date shall be established in
accordance with Section 402.
"DATE OF TAXABILITY" means the date as of which all or any part of
the interest on the Bonds is first required to be included in the gross income
of any holder or former holder thereof for Federal income tax purposes by reason
of the occurrence of an Event of Taxability which results in a Determination of
Taxability.
"DETERMINATION OF TAXABILITY" means a determination that the
interest income on any of the Bonds is subject to Federal income taxation as a
result of an Event of Taxability, which determination shall be deemed to have
been made upon the occurrence of the first to occur of the following:
(a) the date on which the Company files (in compliance with its
obligations under the Agreement) any Supplemental Statement which
discloses that an Event of Taxability has occurred;
(b) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service
that, based upon any filings of the Company, or upon any review or audit
of the Company, or upon any other grounds whatsoever, an Event of
Taxability has occurred;
(c) the date on which the Company receives notice from the Trustee
in writing that the Trustee has been advised by any holder or former
holder of a Bond that the Internal Revenue Service has issued a statutory
notice of deficiency or similar notice to such holder or former holder
which asserts in effect that the interest on the Bonds of such holder or
former holder is includable in the gross income of such holder or former
holder due to the occurrence of an Event of Taxability;
(d) the date on which the Company is advised in writing by the
Commissioner or any District Director of the Internal Revenue Service that
there has been issued a public or private ruling of the Internal Revenue
Service or a technical advice memorandum issued by the national office of
the Internal Revenue Service that the interest on the Bonds is includable
for Federal income tax purposes in the gross income of any holder or
former holder of a Bond due to the occurrence of an Event of Taxability;
or
(e) the date on which the Company is advised in writing that a final
determination, from which no further right of appeal exists, has been made
by a court of competent jurisdiction in the United States of America in a
proceeding with respect to which the Company has been given written notice
and an opportunity to participate and defend that
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the interest on the Bonds is includable in the gross income of any holder
or former holder of a Bond due to the occurrence of an Event of
Taxability;
provided, however, no Determination of Taxability shall occur under subparagraph
(b), (c) or (d) of this paragraph unless the Company has been afforded the
opportunity, at its expense, to contest any such conclusion and/or assessment
and, further, no Determination of Taxability shall occur until such contest, if
made, has been finally determined. The Company shall be deemed to have been
afforded the opportunity to contest if it shall have been permitted to commence
and maintain any action in the name of any holder or former holder of a Bond to
judgment and through any appeals therefrom or other proceedings related thereto.
"ELIGIBLE INVESTMENTS" means:
(a) any bonds or other obligations of the United States of America
which as to principal and interest constitute direct obligations of the
United States of America, or any obligations of subsidiary corporations of
the United States of America fully guaranteed as to payment by the United
States of America;
(b) obligations of the Federal Land Bank;
(c) obligations of the Federal Home Loan Bank;
(d) obligations of the Federal Intermediate Credit Bank;
(e) obligations of the Central Bank for Cooperatives;
(f) certificates of deposit of national or state banks located
within the State which have deposits insured by the Federal Deposit
Insurance Corporation and certificates of deposit of Federal savings and
loan associations and state building and loan associations located within
the State which have deposits insured by the Federal Savings and Loan
Insurance Corporation (including the certificates of deposit of any bank,
savings and loan association or building and loan association acting as
depository, custodian or trustee for an), proceeds of the Bonds); provided
however, that the portion of such certificates of deposit in excess of the
amount insured by the Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation, if any, shall be secured by
deposit with the Federal Reserve Bank of Atlanta, Georgia, or with any
national or state bank located within the State, of any of the obligations
included in (a), (b), (c), (d) or (e) above; and
(g) repurchase agreements with respect to obligations included in
(a), (b), (c), (d) or (e) above and any other investments to the extent at
the time permitted by then applicable law for the investment of permitted
by then applicable law for the investment of public funds;
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provided, however, that "Eligible Investments" with respect to any proceeds
resulting from a draw under the Letter of Credit shall mean only Government
Obligations maturing on or prior to the date payment is due of the obligation
for which the draw was made.
"EVENT OF DEFAULT" means the events so denominated in Section 1101,
subject to the terms of Section 1109.
"EVENT OF TAXABILITY" means the date on which the interest income on
any of the Bonds becomes subject to Federal income taxation as a result of any
of the following conditions or circumstances:
(a) as a result of Section 103(b)(6)(D) Capital Expenditures being
paid or incurred with respect to the Local Facilities, the aggregate face
amount of the Bonds determined in accordance with the provisions of
Section 103(b)(6)(D) of the Code exceeds the limit permitted by said
Section 103(b)(6)(D); or
(b) the Bonds constitute "arbitrage bonds" within the meaning of
Section 103(c) of the Code; or
(c) the weighted average maturity of the Bonds exceeds the weighted
average estimated economic life of the components comprising the
Facilities by more than 20%, determined pursuant to Section 103(b)(14) of
the Code; or
(d) (i) more than 25% of the net proceeds of the sale of the Bonds
are used to provide a facility the primary purpose of which is one
of the following: retail food and beverage services (including
eating and drinking places, but excluding grocery stores),
automobile sales or service, or the provision of recreation or
entertainment; or
(ii) any portion of the net proceeds of the sale of the Bonds
is used to provide the following: any private or commercial golf
course, country club, massage parlor, tennis club, skating facility
(including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot
tub facility, suntan facility or racetrack; or
(iii) any portion of the net proceeds of the sale of the Bonds
is used to provide any airplane, skybox or other luxury box, any
health club facility, any facility primarily used for gambling, or
any store the principal business of which is the sale of alcoholic
beverages for consumption off premises; or
(iv) any portion of the net proceeds of the sale of the Bonds
is used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25%
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or more of the net proceeds of the sale of the Bonds is used
(directly or indirectly for the acquisition of land (or an interest
therein) other than land to be used for farming purposes; or
(v) any portion of the net proceeds of the sale of the Bonds
is used for the acquisition of any property the first use of which
property is not pursuant to such acquisition, except with respect to
any building (and the equipment therefor) if the rehabilitation
expenditures with respect to such building equal or exceed 15% of
the portion of the cost of acquiring such building (and equipment)
financed with the proceeds of the Bonds; or
(e) the Facilities are operating as a facility the primary purpose
of which causes the Facilities to constitute a prohibited facility within
the meaning of Section 103(b) of the Code; or
(f) the sum of the authorized face amount of the Bonds allocable to
each "test-period beneficiary" (as defined in Section 103(b)(15)(D) of the
Code) plus the respective aggregate face amount of all tax-exempt
industrial development bonds presently outstanding (not including any
obligations which are to be redeemed from the proceeds of the Bonds) which
are allocable to each such test-period beneficiary exceeds $40,000,000; or
(g) less than substantially all of the net proceeds of the sale of
the Bonds are used to pay the costs of land or property of a character
subject to the allowance for depreciation under Section 167 of the Code;
or
(h) the taking of any action by the Issuer, the Company or any
person acting on the Company's behalf or upon the Company's direction, or
the failure of the Issuer, the Company or any such person to take any
action, or any mistake in or untruthfulness of any representation of the
Issuer or the Company contained in the Agreement or in any certificate of
the Issuer or the Company delivered pursuant to the Agreement or this
Indenture or in connection with the issuance of the Bonds, if such act or
omission, or such mistake in or untruthfulness of such representation, has
the effect of causing the interest income on the Bonds to be or become
subject to Federal income taxation;
provided, however, that no Event of Taxability shall be deemed to have occurred
with respect to any Bond if the interest income thereon shall be subject to
Federal income taxation for any period solely because during that period such
Bond was held by a person who is a Substantial User or a Related Person; and,
provided further, that no Event of Taxability shall be deemed to have occurred
if the interest income on any of the Bonds becomes subject to Federal income
taxation as a result of a Taxability Change.
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"EXCESS INVESTMENT EARNINGS ACCOUNT" means the excess investment
earnings account created by Section 804.
"EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY" means the date
established in the Alternate Credit Facility for the expiration thereof, and in
the event such date is extended, such date as extended.
"EXPIRATION DATE OF THE LETTER OF CREDIT" means the date established
in the Letter of Credit for the expiration thereof in accordance with its terms,
initially April 15, 1988, and in the event such date is extended, such date as
extended.
"EXTRAORDINARY SERVICES" and "EXTRAORDINARY EXPENSES" means all
services rendered and all expenses incurred by the Trustee under this Indenture
other than Ordinary Services and Ordinary Expenses.
"FACILITIES" means the real, personal and mixed property identified
in Exhibit A to the Agreement, together with any additions and improvements
thereto, modifications thereof and substitutions therefor.
"FINANCING STATEMENTS" means any and all financing statements
(including continuation statements) filed for record from time to time to
perfect the security interests created or assigned
"FIRST OPTIONAL REDEMPTION DATE" means the March 1 occurring in the
year which is a number of years after the Conversion Date equal to the number of
years between the March 1 immediately following the Conversion Date (unless the
Conversion Date is a March 1, in which case from such March 1) and March 1,
2005, multiplied by 1/2 and rounded up to the nearest whole number.
"FIXED INTEREST RATE" means a fixed interest rate on the Bonds
established in accordance with Section 402.
"GOVERNMENT OBLIGATIONS" means (a) direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged, or (b) obligations issued by a person
controlled or supervised by and acting as an instrumentality of the United
States of America, the payment of the principal of, premium, if any, and the
interest on which is fully guaranteed as a full faith and credit obligation of
the United States of America (including any securities described in (a) or (b)
issued or held in book-entry form on the books of the Department of the Treasury
of the United States of America), which obligations, in either case, are not
subject to redemption prior to maturity at less than par by anyone other than
the holder.
"INDENTURE" means this Trust Indenture as the same may be amended,
modified or supplemented by any amendments or modifications hereof and
supplements hereto entered into in accordance with the provisions hereof.
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"INTEREST INDEX" means for any Interest Period ending prior to the
Conversion Date 55% of the rate of interest per annum publicly announced by
Morgan Guaranty Trust Company of New York in New York, New York, as its prime
rate.
"INTEREST PAYMENT DATE" means with respect to the Bonds prior to and
including the Conversion Date the first (1st) Business Day of each month
commencing May 1, 1985, and after the Conversion Date the first (1st) day of
each March and September.
"INTEREST PERIOD" means with respect to the Bonds prior to the
Conversion Date a period from and including the Interest Payment Date in each
calendar month to and including the day next preceding the Interest Payment Date
in the following calendar month, except that the first Interest Period shall be
the period from and including the Original Issuance Date to and including April
30, 1985.
"INTEREST RESERVE REQUIREMENT" means $266,000.
"INVESTMENT COMPANY" means any open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended.
"ISSUER" means the Development Authority of DeKalb County, a public
body corporate and politic created and existing pursuant to the provisions of
the Act, and its successors and assigns.
"LETTER OF CREDIT" means the irrevocable letter of credit issued by
the Bank contemporaneously with the original issuance of the Bonds, except that
upon the issuance and delivery of an Alternate Letter of Credit, "LETTER OF
CREDIT" shall mean such Alternate Letter of Credit, and upon the delivery of an
Alternate Credit Facility, "LETTER OF CREDIT" shall, unless the context
otherwise requires, include reference to the Alternate Credit Facility.
"LETTER OF CREDIT AGREEMENT" means the Letter of Credit Agreement
dated as of March 1, 1985, between the Company and the Bank pursuant to which
the Letter of Credit is issued by the Bank and delivered to the Trustee, and any
and all modifications, alterations, amendments and supplements thereto, and
includes any agreement between the Company and the Bank pursuant to which any
Alternate Letter of Credit is issued or any Alternate Credit Facility is made
available.
"LOAN" means the loan by the Issuer to the Company of the proceeds
from the sale of the Bonds to the Original Purchasers.
"LOAN TERM" means the period commencing on the date of the Agreement
and ending on the date on which the Bonds have been fully paid (or provision for
their payment has been made) in accordance with the provisions of this
Indenture.
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"MOODY'S" means Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by, the Issuer, at the request of the Company, by notice to
the Trustee and the Bank.
"ORDINARY SERVICES" and "ORDINARY EXPENSES" means those services
normally rendered and those expenses normally incurred by a trustee under
instruments similar hereto, including, but not limited to, counsel fees.
"ORIGINAL ISSUANCE DATE" means the date on which the Bonds are first
authenticated and delivered to the Original Purchasers against payment therefor.
"ORIGINAL PURCHASERS" means Prudential-Bache Securities Inc., New
York, New York.
"OUTSTANDING BONDS" or "BONDS OUTSTANDING" means when used with
reference to the Bonds at any date as of which the amount of Outstanding Bonds
is to be determined, means all Bonds which have been authenticated and delivered
by the Trustee hereunder, except:
(a) Bonds cancelled because of payment or redemption or purchase
prior to maturity, or otherwise;
(b) Bonds for the payment or redemption of which sufficient moneys
and/or Government Obligations meeting the terms and conditions specified
in Section 1002 shall have been theretofore transferred or deposited into
the Bond Fund (whether upon or prior to the maturity or redemption date of
any such Bonds); provided that if such Bonds are to be redeemed prior to
the maturity thereof, notice of such redemption shall have been given or
arrangements satisfactory to the Trustee shall have been made therefor, or
waiver of such notice satisfactory in form to the Trustee shall have been
filed with the Trustee;
(c) Bonds in lieu of which others have been authenticated under
Section 203, 208 or 209; and
(d) For purposes of any consent or other action to be taken by the
holders of a specified percentage of outstanding Bonds hereunder, all
Bonds held by or for the Issuer or the Company, except that for purposes
of any such consent or action the Trustee shall be obligated to consider
as not being outstanding only Bonds known by the Trustee to be so held.
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<PAGE> 21
"PAYING AGENT" means the Trustee, and its successors, and any other
Paying Agent or Paying Agents as may be appointed by the Issuer from time to
time with the consent of the Company. "Principal Office" of the Paying Agent
means the office of the Paying Agent designated in writing to the Issuer, the
Company, the Trustee, the Bank, the Bond Registrar and the Remarketing Agent.
"PAYMENT IN FULL OF THE BONDS" specifically encompasses the
situations referred to in Section 1002.
"PERSON" means any natural person, corporation, cooperative,
partnership, trust or unincorporated organization, government or governmental
body or agency, political subdivision or other legal entity as in the context
may be appropriate.
"PRINCIPAL USER" means, with respect to any "facilities" (as the
term "facilities" is used in Section 103(b)(6)(E) of the Code), a "principal
user" of such "facilities" within the meaning of Section 103(b)(6) of the Code.
"RECORD DATE" means with respect to any Interest Payment Date on or
before the Conversion Date the fifth (5th) day next preceding such Interest
Payment Date; provided that if such day is not a Business Day, then the next
preceding Business Day, and with respect to any Interest Payment Date after the
Conversion Date the fifteenth (15th) day of the month next preceding such
Interest Payment Date.
"RELATED PERSON", when used with reference to any Principal User or
any Substantial User, means a "related person" within the meaning of Section
103(b)(6) of the Code.
"REMARKETING AGENT" means the remarketing agent appointed in
accordance with Section 403. "Principal Office" of the Remarketing Agent shall
mean the office thereof designated in writing to the Trustee, the Paying Agent
the Company, the Issuer and the Bank.
"REPLACEMENT BONDS" shall mean any Bonds delivered on or after the
Conversion Date to replace Bonds issued prior to the Conversion Date, as
provided in Section 203.
"REVENUES" means (a) the payments and other amounts which under the
Agreement are payable by the Company directly to the Trustee to meet amounts due
with respect to the principal of, and the redemption premium (if any) and the
interest on, the Bonds, (b) all other moneys received by the Issuer, or the
Trustee on behalf of the Issuer, in respect of the repayment of the Loan
including, but not limited to, moneys drawn under the Letter of Credit, and (c)
income and profit from the investment of the payments and moneys described in
(a) and (b) above, all subject, however, to certain provisions in this Indenture
with respect to the Trustee's holding moneys for the benefit of the holders of
particular Bonds and to certain other provisions of this Indenture relating to
excess investment earnings and the rebate thereof to the United States.
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<PAGE> 22
"S&P" means Standard & Poor's Corporation, a corporation organized
and existing under the laws of the State of New York, its successors and their
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Issuer, at the request of the Company, by notice to the
Trustee and the Bank.
"SECRETARY" means the Secretary of the Issuer.
"SECURITY INTEREST" or "SECURITY INTERESTS" refers to the security
interests created herein and shall have the meaning set forth in the U.C.C.
"STATE" means the State of Georgia.
"SUBSTANTIAL USER" means, with respect to any "facilities" (as the
term "facilities" is used in Section 103(b)(6)(E) of the Code), a "substantial
user" of such "facilities" within the meaning of Section 103(b)(13) of the Code.
"SUPPLEMENTAL STATEMENT" means any statement, supplemental statement
or other tax schedule, return or document filed with the Internal Revenue
Service (whether pursuant to Income Tax Regulations Section 1.103-10(b)(2)(vi),
as the same may be amended or supplemented, or otherwise).
"TAXABILITY CHANGE" means any change in the Constitution or laws of
the United States of America or the applicable Income Tax Regulations thereunder
occurring after the date of issuance of the Bonds which results in the interest
on any of the Bonds being included in the gross income of any holder (other than
a holder who is a Substantial User or a Related Person).
"TAXABLE PERIOD" means, with respect to a Bond, the period which
elapses from the Event of Taxability until payment in full of such Bond.
"TRUST ESTATE" means the property described in the granting clauses
hereof.
"Trustee" means Bank One Trust Company, N.A., Columbus, Ohio, and
its successors and any corporation or association resulting from or surviving
any consolidation or merger to which it or its successors may be a party, and
any successor trustee at the time serving as successor trustee under the
Indenture. "Principal Office" of the Trustee means the principal corporate trust
office of the Trustee, which office at the date of acceptance by the Trustee of
the duties and obligations imposed on the Trustee by this Indenture is located
at the address specified in Section 1606.
"U.C.C." means the Uniform Commercial Code of the State, as now or
hereafter amended.
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<PAGE> 23
Section 102. CERTAIN RULES OF INTERPRETATION. The definitions set
forth in Section 101 shall be equally applicable to both the singular and plural
forms of the words and terms therein defined and shall cover all genders.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Indenture and not solely
to the particular Article, Section or subdivision hereof in which such word is
used.
Reference herein to an Article number (e.g., Article IV) or a
Section number (e.g., Section 702) shall be construed to be a reference to the
designated Article number or Section number hereof unless the context or use
dearly indicates another or different meaning or intent.
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<PAGE> 24
ARTICLE II.
THE BONDS
Section 201. AUTHORIZED AMOUNT OF BONDS. No Bonds may be issued
under the provisions of this Indenture except in accordance with this Article.
The total principal amount of Bonds that may be issued hereunder is expressly
limited to $5,250,000, subject to the provisions of Sections 203, 208 and 209.
Section 202. ISSUANCE OF BONDS. The Bonds shall be designated
"Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985", and shall bear interest payable on each Interest Payment Date. The
interest rate on the Bonds shall be as provided for in the form of Bond
contained in Section 206. The Bonds shall mature on March 1, 2005.
Anything herein or in the Bonds to the contrary notwithstanding, the
obligation of the Issuer hereunder shall be subject to the limitation that
payments of interest to the holder of any Bond shall not be required to the
extent that the receipt of any such payment by such holder would be contrary to
the provisions of law applicable to such holder which limit the maximum rate of
interest which may be charged or collected by such holder.
The Bonds shall be issued initially as registered Bonds without
coupons in the denomination of $50,000 each, or any integral multiple thereof,
and, after the Conversion Date, in the denomination of $5,000 each, or any,
integral multiple thereof. The Bonds shall be numbered consecutively from R-1
upwards (in order of the issuance) according to the records of the Bond
Registrar.
The Bonds are subject to redemption prior to maturity as provided in
Section 301.
Prior to the Conversion Date, the Bonds may be purchased prior to
maturity as provided in Section 401.
Principal of and redemption premium (if any) and interest on, the
Bonds shall be payable in lawful money of the United States of America from
funds available therefor under this Indenture, without deduction for services of
any Paying Agent. Principal of, and redemption premium (if any) on, each Bond
shall be paid to the holder thereof upon presentation and surrender of such Bond
as it becomes due at the Principal Office of the Trustee or any other Paying
Agent. Interest on each Bond shall be payable by check drawn upon the Paying
Agent and mailed on each Interest Payment Date to the holder of such Bond as of
the close of business on the Record Date next preceding the Interest Payment
Date at the registered address of such holder as it shall appear as of the close
of business on such Record Date on the
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<PAGE> 25
registration books maintained pursuant to this Indenture notwithstanding the
cancellation of any of such Bonds upon any exchange or transfer of registration
thereof subsequent to the Record Date and prior to such Interest Payment Date,
except that, if and to the extent that there shall be a default in the payment
of the interest due on such Interest Payment Date, such defaulted interest shall
be paid to the holder in whose name any such Bond is registered at the close of
business on the fifth (5th) Business Day next preceding the date of payment of
such defaulted interest.
Notwithstanding the provisions of the immediately preceding
paragraph, a holder of Bonds in an aggregate principal amount of $500,000 or
more may, by notice to the Paying Agent, direct the Paying Agent to make
payments of interest on such holder's Bonds by means of wire transfers, in
immediately available funds, to a banking institution located in the United
States of America designated in such notice for the account of such holder. Any
fees or charges for such wire transfers shall be paid by the Company.
The Bonds as originally issued shall be dated the Original Issuance
Date. Bonds subsequently issued shall be dated the date of authentication
thereof. Each Bond shall bear interest from and including the Original Issuance
Date, or if authenticated after the Original Issuance Date from and including
the last date to which interest shall have been paid on the Bonds until payment
of the principal or redemption price thereof shall have been made or provided
for in accordance with the provisions of this Indenture, whether at maturity,
upon redemption or otherwise. Interest on the Bonds shall be paid on each
Interest Payment Date and, prior to the Conversion Date, shall be computed on
the basis of a year of 365 or 366 days, as appropriate, for the actual number of
days elapsed. After the Conversion Date, interest on the Bonds shall be computed
on the basis of a 360-day year and twelve 30-day months.
Section 203. REPLACEMENT BONDS. Replacement Bonds may be issued to
replace Bonds which are not tendered for purchase pursuant to the provisions of
Section 401. Any such Replacement Bonds shall be executed and authenticated as
provided in this Indenture. Replacement Bonds shall be issued as registered
Bonds without coupons. Replacement Bonds shall contain the terms and provisions
specified herein as to interest rate, maturity date and redemption and such
other provisions as are consistent with the provisions of this Indenture.
Replacement Bonds shall be in form satisfactory to the Trustee, the Issuer and
the Company. The Company shall bear all expenses in connection with the
preparation and delivery of Replacement Bonds.
Section 204. EXECUTION; LIMITED OBLIGATION. The Bonds shall be
executed on behalf of the Issuer by the manual or facsimile signature of its
Chairman or Vice Chairman and the Issuer's corporate seal shall be affixed
thereto or printed or otherwise reproduced thereon and attested by the manual or
facsimile signature of its Secretary. If any officer of the Issuer who shall
have executed any Bond shall cease to be such officer before the Bond so
executed (by manual or facsimile signature) shall be authenticated
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<PAGE> 26
and delivered by the Trustee, such Bond nevertheless may be authenticated and
delivered as though the person who executed such Bond had not ceased to be such
officer of the Issuer, and also any Bond may be executed on behalf of the Issuer
by such persons as at the actual time of such execution of such Bond shall be
the proper officers of the Issuer, although at the date of such Bond such
persons may not have been officers of the Issuer.
The obligation of the Issuer to pay the Bonds and the interest
thereon shall not be a general obligation of the Issuer but shall be a limited
obligation which shall be payable from, and wholly secured by, the Trust Estate.
Section 205. AUTHENTICATION. (Only such Bonds as shall have endorsed
thereon a certificate of authentication substantially in the form hereinafter
set forth executed by the Trustee shall be entitled to any right or benefit
hereunder. No Bond shall be valid or obligatory for any purpose unless and until
such certificate of authentication shall have been executed by the Trustee, and
such executed certificate of the Trustee upon any such Bond shall be conclusive
evidence that such Bond has been authenticated and delivered hereunder. Said
certificate of authentication on any Bond shall be deemed to have been executed
by the Trustee if signed by an authorized officer of the Trustee, but it shall
not be necessary that the same officer sign the certificate of authentication on
all of the Bonds issued hereunder.
Section 206. FORM OF BONDS. The Bonds, the Trustee's certificate of
authentication, the validation certificate and the form of assignment shall, at
the Trustee's discretion, be in substantially the forms and format hereinafter
set forth with such appropriate variations, omissions, substitutions and
insertions as are permitted or required hereby, including without limitation any
deletion of terms no longer applicable after the Conversion Date and the
inclusion of provisions described in Section 203, and may have such letters,
numbers or other marks of identification and such legends and endorsements
placed thereon, as may be required to comply with any applicable laws or rules
or regulations, or as may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution of the Bonds:
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<PAGE> 27
[FORM OF BOND - FRONT]
No. R- $________
UNITED STATES OF AMERICA
STATE OF GEORGIA
DEVELOPMENT AUTHORITY OF DEKALB COUNTY
VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BOND
(RADIATION STERILIZERS, INCORPORATED PROJECT)
SERIES 1985
Maturity Date: March 1, 2005
Original Issuance Date: March 21, 1985 CUSIP:______
Registered Holder:______________________________________________________________
Principal Amount:_________________________________ Dollars ($__________________)
FOR VALUE RECEIVED, the DEVELOPMENT AUTHORITY OF DEKALB COUNTY (the
"Issuer"), a public body corporate and politic created and existing pursuant to
an act of the General Assembly of the State of Georgia (O.C.G.A. Section 36-62),
as amended (the "Act"), promises to pay to the Registered Holder identified
above, or registered assigns, but solely from the sources and in the manner
hereinafter set forth, the Principal Amount identified above on the Maturity
Date identified above, and to pay from said sources interest thereon from the
Original Issuance Date identified above, or if this Bond is authenticated after
the Original Issuance Date, from and including the last date to which interest
shall have been paid on the "Bonds" (hereinafter defined), at the rates and on
the dates set forth herein until payment of such principal sum has been made or
provided for, subject to the provisions hereinafter mentioned with respect to
redemption prior to maturity. The principal sum of this Bond is payable in
lawful money of the United States of America without deduction for services of
any paying agent, at the principal corporate trust office of the Trustee,
currently BANK ONE TRUST COMPANY, NA., Columbus, Ohio, but only upon
presentation and surrender of this Bond at maturity or upon redemption prior to
maturity. Interest payable on any "Interest Payment Date" (hereinafter defined)
will be paid, in lawful money of the United States of America without deduction
for services of the paying agent and, subject to certain exceptions provided in
the "Indenture" hereinafter described, to the person in whose name this Bond is
registered at the close of business on the "Record Date" (hereinafter defined)
for such Interest Payment Date. Except as otherwise provided in the Indenture,
interest on this Bond is payable by check drawn upon the Trustee and mailed to
the registered holder of this Bond at his address as it appears on the
registration books of the Trustee. This Bond shall be purchased on the demand of
the registered holder by the "Paying Agent" and/or the "Remarketing Agent" as
hereinafter described.
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<PAGE> 28
This Bond is one of a duly authorized issue of Development Authority
of DeKalb County Variable Rate Demand Industrial Development Revenue Bonds
(Radiation Sterilizers, Incorporated Project), Series 1985 (the "Bonds"),
issuable under a Trust Indenture, dated as of March 1, 1985 (hereinafter, as the
same may be amended and supplemented in accordance with its terms, referred to
as the "Indenture"), duly executed and delivered by the Issuer to Bank One Trust
Company, N.A., a national banking association, as Trustee (the term "Trustee"
where used herein referring to said Trustee or its successors in said trust
appointed pursuant to the Indenture), aggregating in principal amount Five
Million Two Hundred Fifty Thousand Dollars ($5,250,000) and issued for the
purpose of providing funds to lend to Radiation Sterilizers, Incorporated, a
California corporation qualified to do business in the State of Georgia (the
"Company"), so that the Company may acquire, construct and install property
comprising an industrial facility for the sterilization of packaged products
using ionizing radiation, such facility to be located in DeKalb County, Georgia
(the "Facilities"). The proceeds of the Bonds will be lent to the Company
pursuant to the terms of the Loan Agreement (the "Agreement"), dated as of March
1, 1985, between the Issuer and the Company.
THIS BOND AND THE REDEMPTION PREMIUM (IF ANY) AND THE INTEREST
HEREON SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A GENERAL OBLIGATION OR A
PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF GEORGIA OR OF ANY POLITICAL
SUBDIVISION THEREOF, AND DOES NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE
SAID STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY OR TO PLEDGE ANY FORM OF
TAXATION WHATEVER FOR THE PAYMENT OF SUCH PRINCIPAL, REDEMPTION PREMIUM (IF ANY)
AND INTEREST. This Bond is payable solely from the "Revenues" (defined in the
Indenture) and the Issuer is obligated to pay the principal of, and the
redemption premium (if any) and the interest on, this Bond only from the
Development Authority of DeKalb County Bond Fund -- Radiation Sterilizers,
Incorporated Project, 1985 (the "Bond Fund"), created in the Indenture. No
holder of this Bond shall ever have the right to compel the exercise of the
taxing power of the State of Georgia or any political subdivision thereof,
including DeKalb County, Georgia, to pay this Bond or the redemption premium (if
any) or the interest hereon or any other cost incident thereto, or to enforce
payment hereof against any property of said State or any political subdivision
thereof. No recourse shall be had for the payment of the principal of, or the
redemption premium (if any) or the interest on, this Bond against any officer or
director of the Issuer.
This Bond is issued and the Indenture was authorized, executed and
delivered by the Issuer under and pursuant to the Constitution and laws of the
State of Georgia, including particularly the Act and a resolution of the Issuer
duly adopted on March 5, 1985. Pursuant to the terms of the Agreement the
Company has agreed to pay to the Issuer such amounts as will be fully sufficient
to pay the principal of, and the redemption premium (if any) and the interest
on, the Bonds as the same become due and to pay certain administrative expenses
in connection with the Bonds.
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<PAGE> 29
Reference to the Indenture is hereby made for a description of the
aforesaid Bond Fund which is charged with, and pledged to, the payment of the
principal of, and the redemption premium (if any) and the interest on, the
Bonds, the nature and extent of the security, the rights, duties and obligations
of the Issuer, the Company and the Trustee, the rights of the holders of the
Bonds, the terms and conditions under and upon the occurrence of which the
Indenture and the Agreement may be modified and the terms and conditions under
and upon the occurrence of which the lien of the Indenture may be defeased as to
this Bond prior to the maturity or redemption date hereof, to all of the
provisions of which the holder hereof, by the acceptance of this Bond, assents.
THE TERMS AND PROVISIONS OF THIS BOND AND THE DEFINITIONS OF CERTAIN
TERMS USED HEREIN ARE CONTINUED ON THE REVERSE SIDE HEREOF AND SUCH CONTINUED
TERMS AND PROVISIONS AND DEFINITIONS SHALL FOR ALL PURPOSES HAVE SUCH EFFECT AS
THOUGH SET FORTH FULLY AT THIS PLACE.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and
things required by the Constitution and laws of the State of Georgia to happen,
exist and be performed precedent to and in the issuance of this Bond, the
execution of the Indenture and the adoption of the aforesaid resolution by the
Issuer, have happened, exist and have been performed in due time, form and
manner as required by law.
This Bond shall not be entitled to any benefit under the Indenture
and shall not become valid or obligatory for any purpose until it shall have
been authenticated by execution by the Trustee by manual signature of the
certificate hereon endorsed.
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<PAGE> 30
IN WITNESS WHEREOF, the DEVELOPMENT AUTHORITY OF DEKALB COUNTY has
caused this Bond to be executed with the manual or duly authorized reproduced
facsimile signature of its Chairman, and the reproduced facsimile of its
corporate seal to be imprinted hereon and attested by the manual or duly
authorized reproduced facsimile signature of its Secretary.
DEVELOPMENT AUTHORITY
OF DEKALB COUNTY
(CORPORATE SEAL) By: [FORM]
------------------------------
Chairman
ATTEST:
[FORM]
- -----------------------------
Secretary
* * * * *
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<PAGE> 31
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
TO APPEAR ON FRONT OF BOND]
This Bond is one of the Bonds described in the within-mentioned
Indenture.
BANK ONE TRUST COMPANY, N.A.,
as Trustee
By:__________________________________
Authorized Signature
Date of Authentication:______________
* * * * *
[FORM OF VALIDATION CERTIFICATE
TO APPEAR ON FRONT OF BOND]
VALIDATION CERTIFICATE
STATE OF GEORGIA
COUNTY OF DEKALB
The undersigned Clerk of the Superior Court of DeKalb County,
Georgia, HEREBY CERTIFIES that the within Bond was confirmed and validated by
judgment of the Superior Court of DeKalb County, Georgia, rendered on the 18th
day of March, 1985, that no intervention or objection was filed thereto and that
no appeal has been taken therefrom.
WITNESS the manual or duly authorized reproduced facsimile of my
signature and the reproduced facsimile seal of said Court.
(SEAL) [FORM]
--------------------------------
Clerk, Superior Court,
DeKalb County, Georgia
* * * * *
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<PAGE> 32
[FORM OF BOND - BACK]
DEFINITIONS
In addition to the words and terms defined on the face of this Bond
and in the Indenture and the Agreement the following words and terms as used
herein shall have the following meanings unless the context or use indicates
another or different meaning or intent and such definitions shall be equally
applicable to both the singular and plural forms of any of the words and terms
herein defined:
"ADJUSTMENT DATE" means, after the Conversion Date, the Interest
Payment Date next preceding the Expiration Date of the Alternate Credit Facility
or the Expiration Date of the Letter of Credit, as the case may be.
"ALTERNATE CREDIT FACILITY" means a credit facility other than the
Letter of Credit, including without limitation, an irrevocable letter of credit
or bond insurance policy, which provides for payment of the principal of, and
interest on, the Bonds, when due.
"ALTERNATE INTEREST INDEX" means for any Interest Period ending
prior to the Conversion Date 65% of the interest rate applicable to 13-week
United States Treasury bills determined by the Remarketing Agent on the basis of
the average per annum bond equivalent yield at which such 13-week Treasury bills
shall have been sold at the most recent Treasury auction during the next
preceding Interest Period. If no such auction shall have been conducted during
the next preceding Interest Period, or if the Remarketing Agent shall fail to
determine the Alternate Interest Index, the Alternate Interest Index during such
Interest Period will be the same as for the preceding Interest Period.
"ALTERNATE LETTER OF CREDIT" means an irrevocable letter of credit
other than the Letter of Credit issued in accordance with the Agreement.
"BANK" means the issuer of the Letter of Credit, initially, Wells
Fargo Bank, N.A., a national banking association.
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on
which banks located in the cities in which the principal corporate trust office
of the Trustee and the principal office of the Bank are located and in New York,
New York, are not required or authorized by law to remain closed and on which
The New York Stock Exchange, Inc. is not closed.
"CONVERSION DATE" means the date upon which the Bonds begin to bear
interest at the Fixed Interest Rate.
"DATE OF TAXABILITY" means the date as of which all or any part of
the interest on the Bonds is first required to be included in the gross income
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<PAGE> 33
of any holder or former holder thereof for Federal income tax purposes by reason
of the occurrence of an "Event of Taxability" (defined in the Indenture) which
results in a "Determination of Taxability" (defined in the Indenture).
"EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY" means the date
established in the Alternate Credit Facility for the expiration thereof, and in
the event such date is extended, such date as extended.
"EXPIRATION DATE OF THE LETTER OF CREDIT" means the date established
in the Letter of Credit for the expiration thereof in accordance with its terms,
initially April 15, 1988, and in the event such date is extended, such date as
extended.
"FIRST OPTIONAL REDEMPTION DATE" means the March I occurring in the
year which is a number of years after the Conversion Date equal to the number of
years between the March 1 immediately following the Conversion Date (unless the
Conversion Date is a March 1, in which case from such March 1) and March 1,
2005, multiplied by 1/2 and rounded up to the nearest whole number.
"FIXED INTEREST RATE" means a fixed non-floating interest rate on
the Bonds.
"INTEREST INDEX" means for any Interest Period ending prior to the
Conversion Date 55% of the rate of interest per annum publicly announced by
Morgan Guaranty Trust Company of New York in New York, New York, as its prime
rate.
"INTEREST PAYMENT DATE" means with respect to the Bonds prior to and
including the Conversion Date the first Business Day of each month commencing
May 1, 1985, and after the Conversion Date the first day of each March and
September.
"INTEREST PERIOD" means with respect to the Bonds prior to the
Conversion Date a period from and including the Interest Payment Date in each
calendar month to and including the day next preceding the Interest Payment Date
in the following calendar month, except that the first Interest Period shall be
the period from and including the Original Issuance Date to and including April
30, 1985.
"INVESTMENT COMPANY" means any open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended.
"LETTER OF CREDIT" means the irrevocable letter of credit issued by
the Bank contemporaneously with the original issuance of the Bonds, except that
upon the issuance and delivery of an Alternate Letter of Credit, "LETTER OF
CREDIT" shall mean such Alternate Letter of Credit, and upon the delivery of an
Alternate Credit Facility, "Letter OF CREDIT" shall, unless the context
otherwise requires, include reference to the Alternate Credit Facility.
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<PAGE> 34
"LETTER OF CREDIT AGREEMENT" means the Letter of Credit Agreement,
dated as of March 1, 1985, between the Company and the Bank pursuant to which
the Letter of Credit is issued by the Bank and delivered to the Trustee, and any
and all modifications, alterations, amendments and supplements thereto, and
includes any agreement between the Company and the Bank pursuant to which any
Alternate Letter of Credit is issued or any Alternate Credit Facility is made
available.
"MOODY'S" means Moody's Investors Service, Inc.
"PAYING AGENT" means the paying agent appointed in accordance with
the Indenture, initially Bank One Trust Company, N.A., Columbus, Ohio.
"RECORD DATE" means with respect to any Interest Payment Date on or
before the Conversion Date the fifth (5th) day next preceding such Interest
Payment Date; provided that if such day is not a Business Day, then the next
preceding Business Day, and with respect to any Interest Payment Date after the
Conversion Date the fifteenth (15th) day of the month next preceding such
Interest Payment Date.
"REMARKETING AGENT" means the remarketing agent appointed in
accordance with the Indenture, initially Prudential-Bache Securities Inc., New
York, New York.
"S&P" means Standard & Poor's Corporation.
Interest Rate
For the first Interest Period, the Bonds shall bear interest at the
rate of 5.60% per annum. Thereafter, for each Interest Period ending before the
Conversion Date, the interest rate on the Bonds shall be a rate determined by
the Remarketing Agent, in its discretion, to be that rate which, if borne by the
Bonds, would, in the judgment of the Remarketing Agent, having due regard to
prevailing financial market conditions, be the interest rate necessary to enable
the Remarketing Agent to remarket all outstanding Bonds on the Interest Payment
Date occurring in such Interest Period at a price equal to 100% of the principal
amount thereof; provided, however, that the interest rate so determined shall
not be more than 140% of the greater of, nor less than 90% of the lesser of, the
Interest Index and the Alternate Interest Index for such Interest Period unless
the Interest Index and the Alternate Interest Index have been eliminated
pursuant to a supplemental indenture entered into in accordance with the
provisions of the Indenture.
For the second Interest Period and each Interest Period thereafter
ending prior to the Conversion Date, the interest rate to be borne by the Bonds
shall be determined as provided in the preceding paragraph as of, and shall be
made available to the Company, the Trustee and the Bank on, the fourth Business
Day next preceding the first day of each Interest
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<PAGE> 35
Period. The determination of the interest rate on the Bonds by the Remarketing
Agent will be conclusive and binding upon the bondholders.
Notwithstanding anything to the contrary contained herein the
interest rate on the Bonds shall never exceed twenty per centum (20%) per annum.
Prior to the Conversion Date, interest on the Bonds shall be
computed on the basis of a year of 365 or 366 days, as appropriate, for the
actual number of days elapsed.
Optional Redemption of Bonds
Prior to the Conversion Date, the Bonds are subject to redemption by
the Issuer, at the option of the Company, in whole or in part in integral
multiples of $50,000 on any Interest Payment Date, on a date selected by the
Company at a price equal to 100% of the principal amount to be redeemed plus
accrued interest thereon, if any, to the redemption date.
After the Conversion Date, the Bonds are subject to redemption by
the Issuer, at the option of the Company, in whole at any time or, to the extent
permitted by Section 4.3(c) of the Agreement, in part in integral multiples of
$5,000 on any Interest Payment Date, at a redemption price of 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date,
in the event of (1) condemnation of the Facilities or any part thereof to the
extent provided in Section 4.3(c) of the Agreement, or (2) exercise by the
Company of its prepayment option as provided in Section 4.3(d) of the Agreement.
After the Conversion Date, the Bonds are subject to redemption by
the Issuer, at the option of the Company, on or after the First Optional
Redemption Date, in whole at any time or in part on any Interest Payment Date in
integral Multiples of $5,000, on a date selected by the Company at the
redemption prices (expressed as percentages of the principal amount to be
redeemed) set forth in the following table plus accrued interest, if any, to the
redemption date:
-28-
<PAGE> 36
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date through
the following February 28 103%
First Anniversary of the First Optional
Redemption Date through the following
February 28 102%
Second Anniversary of the First Optional
Redemption Date through the following
February 28 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Mandatory Redemption of Bonds
Upon the occurrence of a Determination of Taxability, the Bonds are
subject to mandatory redemption by the Issuer at a redemption price of 100% of
the principal amount to be redeemed plus accrued interest, if any, to the
redemption date on the fifteenth (15th) Business Day following the date of such
Determination of Taxability if the date of such Determination of Taxability
precedes the Conversion Date, or on the seventy-fifth (75th) day following the
date of such Determination of Taxability if the date of Determination of
Taxability is on or after the Conversion Date. The Bonds shall be redeemed in
whole unless, in the opinion of "Independent Tax Counsel" (defined in the
Agreement) the redemption of a portion of the outstanding principal amount of
the Bonds would have the result that the interest payable on the Bonds remaining
outstanding after such redemption would not be included in the gross income for
Federal income tax purposes of any holder of the Bonds (other than a holder who
is a "substantial user" of the Facilities or a "related person" within the
meaning of Section 103(b) of the Internal Revenue Code of 1954, as amended), in
which event only such portion of the outstanding Bonds shall be redeemed.
Purchase of Bonds
On or before the Conversion Date, any Bond or portion thereof in an
integral multiple of $50,000 shall be purchased by the Paying Agent, on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Paying Agent at its principal corporate trust office in Columbus, Ohio, of a
written notice which states (A) that such holder is an Investment Company, (B)
the principal amount of such Bond to be purchased, and (C) the date on which
such Bond or portion thereof shall be purchased pursuant to this paragraph,
which date shall be a Business Day not prior to the seventh (7th) day next
succeeding the date of the delivery of
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<PAGE> 37
such notice to the Paying Agent; and (ii) delivery of such Bond, and, in the
case of a Bond or portion thereof to be purchased prior to an Interest Payment
Date and after the Record Date in respect thereof, a due-bill check, in form
satisfactory to the Paying Agent, for interest due on such Interest Payment
Date, at the Paying Agent's principal office in Columbus, Ohio, at or prior to
10:00 a.m., New York City time, on the date specified in the aforesaid notice;
provided, however, that such Bond or portion thereof shall be purchased pursuant
to this paragraph only if the Bond so delivered to the Paying Agent shall
conform in all respects to the description thereof in the aforesaid notice. Upon
receipt by the Paying Agent of notice from any Investment Company holder of its
intention to require any Bonds held by such holder to be purchased, the Paying
Agent shall notify the Remarketing Agent by telephone or telegraph and confirmed
promptly in writing of such fact, and the Remarketing Agent shall undertake to
remarket any such Bonds in the same manner as in the case of Bonds purchased by
the Remarketing Agent pursuant to the next succeeding paragraph.
On or before the Conversion Date, any Bond or portion thereof in an
intergral multiple of $50,000 shall be purchased by the Remarketing Agent, on
the demand of the holder thereof, on any Business Day at a purchase price equal
to the principal amount thereof plus accrued interest, if any, to the date of
purchase upon: (i) delivery to the Remarketing Agent at its Principal Office of
a written notice which (A) states the principal amount of such Bond to be
purchased, and (B) states the date on which such Bond or portion thereof shall
be purchased pursuant to this paragraph, which date shall be a Business Day not
prior to the seventh (7th) day next succeeding the date of the delivery of such
notice to the Remarketing Agent; and (ii) delivery of such Bond and, in the case
of a Bond or portion thereof to be purchased prior to the Interest Payment Date
for any Interest Period and after the Record Date in respect thereof, a due-bill
check, in form satisfactory to the Remarketing Agent for interest due on such
Interest Payment Date, to an office designated by the Remarketing Agent in New
York, New York, presently, c/o Marine Midland Bank, 140 Broadway, New York, New
York 10004, Attention: Clearance Department Level A, at or prior to 10:00 a.m.,
New York City time, on the date specified in the aforesaid notice; provided,
however, that such Bond or portion thereof shall be so purchased pursuant to
this paragraph only if the Bond so delivered to the Remarketing Agent shall
conform in all respects to the description thereof in the aforesaid notice.
All Bonds shall be purchased by the Paying Agent on the Interest
Payment Date next preceding the Expiration Date of the Letter of Credit and on
the Interest Payment Date next preceding the Expiration Date of the Alternate
Credit Facility, at a purchase price equal to the principal amount thereof,
except (i) Bonds, or portions thereof in an integral multiple of $50,000 if
prior to the Conversion Date or $5,000 if on or after the Conversion Date, with
respect to which the Paying Agent shall have received written directions not to
so purchase such Bonds or portions thereof from the holders of the same, (ii)
Bonds delivered to the Paying Agent or the Remarketing Agent as described in the
two preceding paragraphs for
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<PAGE> 38
purchase on such Interest Payment Date or on any Business Day in the Interest
Period next preceding such Interest Payment Date and (iii) Bonds issued upon the
registration of transfer of Bonds referred to in clauses (i) or (ii) above. Any
Bonds not delivered to the Paying Agent for purchase as described above (other
than Bonds described in clauses (i), (ii) or (iii) above) shall nonetheless be
deemed to be tendered for sale by the holders thereof and purchased by the
Paying Agent.
All Bonds shall be purchased by the Paying Agent on the Conversion
Date at a purchase price equal to the principal amount thereof except (i) Bonds,
or portions thereof in an integral multiple of $5,000, with respect to which the
Paying Agent shall have received written directions not to so purchase such
Bonds or portions thereof from the holders of the same, (ii) Bonds delivered to
the Remarketing Agent or the Paying Agent as described in the second and third
preceding paragraphs for purchase on any Business Day in the Interest Period
next preceding the Conversion Date, and (iii) Bonds issued upon the registration
of transfer of Bonds referred to in clauses (i) or (ii) above. Any Bonds not
delivered to the Paying Agent for purchase (other than Bonds described in
clauses (i), (ii) or (iii) above) shall nonetheless be deemed to be tendered for
sale by the holders thereof and purchased by the Paying Agent. The provisions of
this paragraph shall not apply if there has occurred and is continuing on the
prospective purchase date an "Event of Default" (defined in the Indenture).
In the event that all Bonds are to be purchased by the Paying Agent
pursuant to either of the two next preceding paragraphs, a holder of Bonds may
direct the Paying Agent not to purchase any Bond or portion thereof owned by
such holder by delivering to the Paying Agent, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Bonds held by such holder, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of the second paragraph under the heading
"Notices" hereinafter set forth, and (iii) directing the Paying Agent not to
purchase such Bonds or portions thereof. Any instrument delivered to the Paying
Agent in accordance with this paragraph shall be irrevocable with respect to the
Bonds for which such instrument is delivered and shall be binding upon
subsequent holders of such Bonds.
ANY UNTENDERED BONDS, FOR WHICH THERE SHALL HAVE BEEN IRREVOCABLY
DEPOSITED ON OR BEFORE THE INTEREST PAYMENT DATE NEXT PRECEDING (A) THE
EXPIRATION DATE OF THE LETTER OF CREDIT OR (B) THE EXPIRATION DATE OF THE
ALTERNATE CREDIT FACILITY, OR THE CONVERSION DATE, AS THE CASE MAY BE, IN TRUST
WITH THE TRUSTEE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE OF SUCH BONDS
DUE WITH RESPECT TO THE PURCHASE THEREOF SHALL CEASE TO ACCRUE INTEREST ON THE
INTEREST PAYMENT DATE NEXT PRECEDING (A) THE EXPIRATION DATE OF THE LETTER OF
CREDIT OR (B) THE EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY, OR THE
CONVERSION DATE, AS THE CASE MAY BE, AND SHALL BE DEEMED
-31-
<PAGE> 39
TO HAVE BEEN TENDERED FOR PURCHASE AND PURCHASED BY THE PAYING AGENT,
REPLACEMENT BONDS SHALL BE ISSUED IN PLACE OF SUCH UNTENDERED BONDS PURSUANT TO
SECTION 203 OF THE INDENTURE.
NO DELIVERY OF BONDS TO THE PAYING AGENT OR THE REMARKETING AGENT OR
PURCHASE OF BONDS BY THE PAYING AGENT OR THE REMARKETING AGENT SHALL CONSTITUTE
A REDEMPTION OF BONDS OR ANY EXTINGUISHMENT OF THE DEBT REPRESENTED THEREBY.
Conversion to Fixed Interest Rate
At any time, the Company may, by notice in writing to the Issuer,
the Trustee, the Paying Agent, the Remarketing Agent and the Bank, direct that a
Fixed Interest Rate be established for the Bonds. The Company's notice shall set
forth: (i) the Conversion Date desired by the Company, which shall be an
Interest Payment Date not less than thirty (30) days after the date of such
notice; and (ii) the date the Fixed Interest Rate shall be established, which
shall be not less than twelve (12) Business Days prior to the Conversion Date.
The notice shall be accompanied by an opinion of Independent Tax Counsel stating
that the conversion to a Fixed Interest Rate is authorized and permitted by the
Indenture and the Act, and that such conversion will not adversely affect the
exemption of interest on the Bonds from Federal income taxation. The Remarketing
Agent shall determine the Fixed Interest Rate on the date specified in such
notice, which rate shall be the lowest rate at which the Remarketing Agent shall
have received bids, not later than the twelfth (12th) Business Day prior to the
Conversion Date, to purchase all of the outstanding Bonds at a purchase price of
100% of the outstanding principal amount thereof on the Conversion Date. Prior
to the Expiration Date of the Letter of Credit, conversion to the Fixed Interest
Rate shall require the prior written consent of the Bank.
Any Bonds purchased by the Remarketing Agent or the Paying Agent
pursuant to the terms of the Indenture after the Trustee has given notice of the
establishment of a Conversion Date shall not be remarketed except to a buyer who
agrees at the time of such purchase either (i) to accept the Fixed Interest Rate
on the Conversion Date, or (ii) to require purchase of such Bonds by the
Remarketing Agent or the Paying Agent on or before the Conversion Date pursuant
to the first two paragraphs under the heading "Purchase of Bonds" set forth
above.
The Letter of Credit shall be cancelled on the fifteenth (15th) day
following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank stating that
the Letter of Credit is not to be cancelled on such day.
In the event that the Letter of Credit or an Alternate Credit
Facility is in effect with respect to Bonds following the Conversion Date, the
Fixed Interest Rate shall be adjusted on the Adjustment Date so as to equal
-32-
<PAGE> 40
the lowest rate of interest at which the Remarketing Agent shall have received
bids on or prior to the twelfth (12th) Business Day next preceding the
Adjustment Date to purchase all outstanding Bonds on the Adjustment Date at a
price of 100% of the principal amount thereof. Following such adjustment, the
Bonds shall bear interest at the Fixed Interest Rate determined pursuant to this
paragraph until maturity.
THE BONDS SHALL NOT BE SUBJECT TO PURCHASE, AS PROVIDED IN SECTION
401 OF THE INDENTURE, AFTER THE EXPIRATION DATE OF THE LETTER OF CREDIT.
The owner of this Bond, by the acceptance hereof, hereby covenants,
and consents to and agrees to be bound by the covenant of the Trustee, not to
claim or accept the benefits of any Federal guarantee which would cause any Bond
to become subject to Federal income taxation under the provisions of Section
103(h) of the Internal Revenue Code of 1954, as amended, and acknowledges and
agrees that in the event of a failure by the Bank to fulfill its obligations, in
whole or in part, with respect to any draw on the Letter of Credit, the Trustee
is prohibited from making any claim on the Federal Deposit Insurance Corporation
with respect to any such failure and agrees that no claim will be made by or on
behalf of such registered owner against the Federal Deposit Insurance
Corporation in the event of a failure by the Bank to fulfill its obligations, in
whole or in part, with respect to any draw on the Letter of Credit.
Notices
In the event any Bonds are called for redemption, the Trustee, on
behalf of the Issuer, shall give notice of such redemption, which notice shall
(i) identify the Bonds or portions thereof to be redeemed, the redemption date,
the redemption price and the place or places where the amounts due upon such
redemption shall be payable (which shall be principal corporate trust office of
the Trustee), and (ii) state that on the redemption date the Bonds to be
redeemed shall cease to bear interest. Such notice shall be given at least ten
(10) Business Days prior to the redemption date if the redemption date is on or
prior to the Conversion Date and at least thirty (30) days prior to the
redemption date if the redemption date is after the Conversion Date.
The Trustee, on behalf of the Issuer, shall give notice of the
establishment of the Conversion Date, the Expiration Date of the Letter of
Credit or the Expiration Date of the Alternate Credit Facility, which notice
shall include a statement (i) of the date on which the Bonds are to be purchased
by the Paying Agent as a result of the establishment of the Conversion Date or
the expiration of the Letter of Credit or the Alternate Credit Facility, (ii) if
applicable, that the Letter of Credit or the Alternate Credit Facility shall
terminate fifteen (15) days after such purchase date, (iii) that any ratings of
the Bonds by Moody's or S&P may be withdrawn or reduced from the ratings on the
Bonds then prevailing, (iv) that the Indenture provides that Bonds are required
to be delivered to the Paying
-33-
<PAGE> 41
Agent for purchase on the date specified in such notice, and that Bonds not
delivered to the Paying Agent on such date shall nonetheless be deemed to have
been purchased by the Paying Agent (unless the holders thereof have directed the
Paying Agent not to purchase such Bonds or portions thereof) and, accordingly,
no interest subsequent to the date specified in such notice shall be payable to
such holders, (v) of the rights of the holders to direct the Paying Agent not to
purchase Bonds held by them, and the method of exercising such rights, (vi) that
on the purchase date designated in such notice the Paying Agent shall hold
moneys equal to the purchase price for all Bonds not delivered on such date, in
trust,. for the holders of such Bonds, which moneys shall be paid upon surrender
of Bonds to the Paying Agent and (vii) that if the purchase of the Bonds will
result from the establishment of the Conversion Date, after the Conversion Date
the Bonds will bear interest at the Fixed Interest Rate and the holders of the
Bonds will not have the right to require the Paying Agent to purchase Bonds.
Such notice shall be given at least ten (10) Business Days prior to the date on
which the Bonds are to be purchased as a result of the establishment of a
Conversion Date or the expiration of the Letter of Credit or the Alternate
Credit Facility.
If the Company shall direct the Trustee to notify the Bank and the
holders of outstanding Bonds that an Alternate Letter of Credit or an Alternate
Credit Facility will be delivered to the Trustee, the Trustee shall give such
notice, which notice shall state (i) the proposed date of delivery to the
Trustee of the Alternate Letter of Credit or Alternate Credit Facility, (ii) the
date of the Alternate Letter of Credit or Alternate Credit Facility, (iii) the
expiration date of the Letter of Credit for which the Alternate Letter of Credit
or Alternate Credit Facility is to be substituted, (iv) the expiration date of
the Alternate Letter of Credit or Alternate Credit Facility, (v) the issuer of
the Alternate Letter of Credit or Alternate Credit Facility, and a brief
description of such issuer, and (vi) if the Bonds are then rated by Moody's or
S&P either (A) that any ratings of the Bonds by Moody's or S&P may be withdrawn
or reduced from such ratings then prevailing, or (B) such ratings of the Bonds
by Moody's or S&P shall have been based upon such Alternate Letter of Credit or
Alternate Credit Facility. Such notice shall be given at least thirty (30)
Business Days prior to the delivery of the Alternate Letter of Credit or
Alternate Credit Facility to the Trustee.
Any notice required to be given pursuant to any of the three
preceding paragraphs shall be given by mailing a copy thereof by registered or
certified mail to the holder of each Bond (provided, however, that a notice of
redemption need be given only to holders of Bonds to be redeemed in whole or in
part) at the address for such holder shown on the registration books maintained
by the Bond Registrar pursuant to the Indenture. Failure to give such notice by
mailing, or any defect in such notice, to the holder of any Bonds shall not
affect the validity of the proceedings with respect to any other Bonds.
If, because of the temporary or permanent suspension of regular mail
service, or for any other reason, it is impossible or impractical to mail
-34-
<PAGE> 42
such notice of redemption or purchase in the manner herein provided, then such
other manner of giving notice in lieu thereof as shall be made with the approval
of the Trustee shall constitute a sufficient notice. Failure to give or receive
such notice with respect to any Bond shall not affect the validity of any
proceedings for the redemption or purchase of any other Bonds.
Miscellaneous
The Bonds are issuable only as fully registered bonds in the
denomination of $50,000 or any integral multiple thereof; provided, however,
that any Bonds issued upon exchange or transfer on or after the Conversion Date
shall be in the denomination of $5,000 or any integral multiple thereof. The
Bonds are interchangeable in equal aggregate principal amounts and in authorized
denominations at the principal corporate trust office of the Trustee, as Bond
Registrar, in the manner, subject to the limitations and on payment of the
charges provided in the Indenture.
This Bond is transferable by the bondholder in person or by his
attorney duly authorized in writing at the principal corporate trust office of
the Trustee, in Columbus, Ohio, all subject to the terms and conditions provided
in the Indenture.
The Bonds, upon the surrender thereof at the principal corporate
trust office of the Trustee with a written instrument of transfer satisfactory
to the Trustee executed by the bondholder or his duly authorized attorney, may,
at the option of the bondholder, be exchanged for an equal aggregate principal
amount of Bonds of the same maturity and interest rate of any other authorized
denomination, in the manner and subject to the conditions provided in the
Indenture.
The Trustee shall not be required to transfer or exchange any Bond
(i) during the period following the Record Date next preceding any Interest
Payment Date of such Bond and such Interest Payment Date, (ii) after the giving
of notice calling such Bond for redemption or partial redemption has been made,
or (iii) until the certificate of validation on any replacement Bond shall have
been properly executed by the Clerk of the Superior Court of DeKalb County,
Georgia.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith as a condition precedent to the exercise of such privilege.
This Bond is issued with the intent that the laws of the State of
Georgia shall govern its construction.
The person in whose name this Bond is registered shall be deemed and
regarded as the absolute owner hereof for all purposes, and payment of or on
account of either principal or interest made to such
-35-
<PAGE> 43
registered holder shall be valid and effectual to satisfy and discharge the
liability upon this Bond to the extent of the sum or sums so paid.
The particular Bond of this series, or portion thereof in the case
of certain bonds of a principal amount greater than $50,000, or, on or after the
Conversion Date, $5,000, to be redeemed in the case of a partial redemption
under any of the provisions of the Indenture, shall be selected by the Trustee
by prorating the amount of Bonds to be redeemed among the holders by equalizing,
from time to time, the portions of the Bonds to be redeemed, all in the manner
set forth in the Indenture. Any partial redemption shall be in multiples of
$50,000, or, on or after the Conversion Date, $5,000.
Upon deposit with the Trustee of the moneys required to effect any
redemption, the Bonds or portion thereof thus called and provided for shall not
bear interest after the redemption date and shall not be considered to be
outstanding or to have any other rights under the Indenture other than the right
to receive payment.
By the acceptance of this Bond, the bondholder agrees that if less
than the entire principal amount of this Bond is to be redeemed, payment of the
redemption price will be made only upon the surrender of this Bond to the
Trustee. Upon surrender hereof, there shall be issued to the bondholder, without
charge therefor, for the unredeemed balance hereof, a Bond or Bonds in any of
the authorized denominations as more fully set out in the Indenture.
The holder of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the agreements
therein, or to take any action with respect to any "Event of Default" as defined
in the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture. The stated
maturity of this Bond and the stated dates for the payment of interest may be
accelerated upon the occurrence of certain "Events of Default" as defined in the
Indenture. The occurrence of certain other such "Events of Default" will permit
the acceleration of the stated maturity of this Bond and the stated dates for
the payment of interest as provided in the Indenture. Modifications, amendments
or supplements to the Indenture may be made only to the extent and in the
circumstances permitted by the Indenture.
* * * * *
-36-
<PAGE> 44
[FORM OF ASSIGNMENT
TO APPEAR ON BACK OF BOND]
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFICATION NUMBER OF ASSIGNEE
- ----------------------------------
- ----------------------------------
- ----------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within bond of the DEVELOPMENT AUTHORITY OF DEKALB COUNTY and does hereby
constitute and appoint _____________________ attorney to transfer the said bond
on the books of the within named issuer, with full power of substitution in the
premises.
Dated:
In the presence of: ____________________ ________________________________
Bondholder
Signature Guaranteed:
________________________________
[END OF FORM OF BOND]
-37-
<PAGE> 45
Section 207. DELIVERY OF BONDS. Upon the execution and delivery
hereof, the Issuer shall execute the Bonds and deliver them to the Trustee, and
the Trustee shall authenticate the Bonds and deliver them to the Original
Purchasers as shall be directed by the Issuer as hereinafter in this Section
provided.
Prior to the delivery by the Trustee of any of the Bonds there shall
be filed with the Trustee:
(a) A copy, certified by the Secretary of the Issuer, of all
resolutions adopted and proceedings had by the Issuer authorizing the
issuance of the Bonds, including the Bond Resolution authorizing the
execution, delivery and performance of this Indenture and the Agreement;
(b) An original executed counterpart of this Indenture, the
Agreement and the Letter of Credit Agreement and the original Letter of
Credit;
(c) Copies of the Financing Statements filed to perfect the security
interests;
(d) An original executed counterpart of the certification of the
Issuer establishing its reasonable expectations to the effect that the
Bonds will not be "arbitrage bonds" within the meaning of Section 103(c)
of the Code, together with an opinion of King & Spalding, Bond Counsel, to
the effect that the Bonds are not "arbitrage bonds";
(e) A copy of completed IRS Form 8038, "Information Return for
Private Activity Bond Issues", filed by or on behalf of the Issuer
pursuant to (i) Section 103(1) of the Code, and (ii) O.C.G.A. Section
36-82-160;
(f) A copy of the notice of election filed by or on behalf of the
Issuer with the Internal Revenue Service pursuant to Section 103(b)(6)(D)
of the Code;
(g) A copy of the transcript of the proceeding in the DeKalb County
Superior Court validating the Bonds;
(h) The written opinion of Counsel for the Company or other Counsel
satisfactory to the Issuer and the Trustee expressing the opinion that the
Financing Statements referred to in (c) above have been filed and said
security interests are "perfected" security interests within the meaning
of the U.C.C., as amended, and that there are no other properly indexed
financing statements or liens of record affecting the property as to which
said security interests were created;
(i) An opinion of Counsel for the Company to the effect that the
Agreement and the Letter of Credit Agreement have been duly authorized,
executed and delivered by the Company;
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<PAGE> 46
(j) An opinion of King & Spalding, Bond Counsel, to the effect that
the Bonds have been duly authorized, executed and delivered by the Issuer
and constitute legal, valid, binding and enforceable limited obligations
of the Issuer entitled to the benefits of and secured by this Indenture;
and
(k) A request and authorization to the Trustee on behalf of the
Issuer and signed by its Chairman or Vice Chairman to authenticate and
deliver the Bonds in such specified denominations as permitted herein to
the Original Purchasers upon payment to the Trustee, but for the account
of the Issuer, of a specified sum of money. The proceeds from the sale of
the Bonds shall be paid over to the Trustee and deposited to the credit of
the Bond Fund and Construction Fund as hereinafter provided in Article VI.
Section 208. MUTILATED, LOST, STOLEN OR DESTROYED BONDS. If any Bond
is mutilated, lost, stolen or destroyed, the Issuer may execute and the Trustee
(upon the receipt of a written authorization from the Issuer) may authenticate
and deliver a new Bond of the same maturity, interest rate, aggregate principal
amount and tenor in lieu of and in substitution for the Bond mutilated, lost,
stolen or destroyed; provided that, in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee, as Bond Registrar, and
in the case of any lost, stolen or destroyed Bond, there shall be first
furnished to the Trustee evidence satisfactory to it of the ownership of such
Bond and of such loss, theft or destruction, together with indemnity
satisfactory to it. If any such Bond shall have matured or a redemption date
pertaining thereto shall have passed, instead of issuing a new Bond the Issuer
may pay the same without surrender thereof. The Issuer and the Trustee may
charge the holder of such Bond with their reasonable fees and expenses in this
connection.
In executing a new Bond and in furnishing the Trustee with the
written authorization to authenticate and deliver a new Bond as provided for in
this Section, the Issuer may rely conclusively on a representation of the
Trustee that the Trustee is satisfied with the adequacy of the evidence
presented concerning the mutilation, loss, theft or destruction of any Bond.
Section 209. EXCHANGEABILITY AND TRANSFER OF BONDS; PERSONS TREATED
AS OWNERS. The Issuer shall cause books for the registration and for the
transfer of the Bonds as provided herein to be kept by the Trustee which is
hereby constituted and appointed the Bond Registrar of the Issuer.
Bonds may be transferred on the books of registration kept by the
Trustee by the holder in person or by his duly authorized attorney, upon
surrender thereof, together with a written instrument of transfer executed by
the holder or his duly authorized attorney. Upon surrender for transfer of any
Bond with all partial redemptions endorsed thereon at the principal office of
the Trustee, the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Bond or Bonds of the
same maturity, interest rate, aggregate principal
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<PAGE> 47
amount and tenor and of any authorized denomination or denominations and
numbered consecutively in order of issuance according to the records of the Bond
Registrar.
Bonds may be exchanged at the principal office of the Trustee for an
equal aggregate principal amount of Bonds of the same maturity, interest rate,
aggregate principal amount and tenor and of any authorized denomination or
denominations. The Issuer shall execute and the Trustee shall authenticate and
deliver Bonds which the bondholder making the exchange is entitled to receive,
bearing numbers not contemporaneously then outstanding.
Such transfers of registration or exchanges of Bonds shall be
without charge to the holders of such Bonds, but any taxes or other governmental
charges required to be paid with respect to the same shall be paid by the holder
of the Bond requesting such transfer or exchange as a condition precedent to the
exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond
(i) during the period following the record date next preceding any interest
payment date of such Bond and such interest payment date, (ii) after the giving
of notice calling such Bond for redemption or partial redemption has been made,
or (iii) until the certificate of validation on any replacement Bond shall have
been properly executed by the Clerk of the Superior Court of the County.
The person in whose name any Bond shall be registered shall be
deemed and regarded as the absolute owner thereof for all purposes, and payment
of or on account of either principal or interest shall be made only to or upon
the order of the registered owner thereof or his duly authorized attorney, but
such registration may be changed as hereinabove provided. All such payments
shall be valid and effectual to satisfy and discharge the liability upon such
Bond to the extent of the sum or sums so paid.
The inclusion of the foregoing provisions shall constitute (i) a
continuing request from the Issuer to the Clerk of the Superior Court of the
County to execute the certificate of validation on any replacement Bonds issued,
and (ii) the appointment of the Trustee as agent for the Issuer to do any and
all things necessary to effect any exchange or transfer.
All Bonds issued upon any transfer or exchange of Bonds shall be
legal, valid and binding limited obligations of the Issuer, evidencing the same
debt, and entitled to the same security and benefits under this Indenture as the
Bonds surrendered upon such transfer or exchange.
In executing any Bond upon exchange or transfer provided for in this
Section, the Issuer may rely conclusively on a representation of the Trustee
that such execution is required.
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<PAGE> 48
ARTICLE III.
REDEMPTION OF BONDS BEFORE MATURITY
Section 301. REDEMPTION DATES AND PRICES.
Optional Redemption
(a) Prior to the Conversion Date, the Bonds are subject to
redemption by the Issuer, at the option of the Company, in whole at any
time or in part in integral multiples of $50,000 on any Interest Payment
Date on a date selected by the Company at a price equal to 100% of the
principal amount to be redeemed plus accrued interest thereon, if any, to
the redemption date. Prior to the Expiration Date of the Letter of Credit
any such redemption shall be made solely from Available Moneys.
(b) After the Conversion Date, the Bonds are subject to redemption
by the Issuer, at the option of the Company, in whole at any time or, to
the extent permitted by Section 4.3(c) of the Agreement in part in
integral multiples of $5,000 on any Interest Payment Date, at a redemption
price of 100% of the principal amount thereof plus accrued interest, if
any, to the redemption date, in the event of (1) condemnation of the
Facilities or any part thereof to the extent provided in Section 4.3(c) of
the Agreement or, (2) exercise by the Company of its prepayment option as
provided in Section 4.3(d) of the Agreement. Prior to the Expiration Date
of the Letter of Credit, any such redemption shall be made solely from
Available Moneys.
(c) After the Conversion Date, the Bonds are subject to redemption
by the Issuer, at the option of the Company, on or after the First
Optional Redemption Date, in whole at any time or in part on any Interest
Payment Date in integral multiples of $5,000, on a date selected by the
Company at the redemption prices (expressed as percentages of the
principal amount to be redeemed) set forth in the following table plus
accrued interest, if any, to the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date through
the following February 28 103%
First Anniversary of the First Optional
Redemption Date through the following
February 28 102%
Second Anniversary of the First Optional
Redemption Date through the following
</TABLE>
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<PAGE> 49
<TABLE>
<S> <C>
February 28 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
Prior to the Expiration Date of the Letter of Credit, any such
redemption shall be made solely from Available Moneys.
(d) If less than all of the Bonds are called for redemption
(regardless of whether such redemption is at the option of the Company or
pursuant to any mandatory redemption provisions of this Indenture), the
selection of Bonds or portions thereof to be called shall be made by the
Trustee in accordance with Section 305; provided, however, that Bonds held
by the Bank as a result of any draw under the Letter of Credit shall be
selected for redemption prior to any other Bonds.
(e) Prior to the Conversion Date, the Issuer, or the Company on
behalf of the Issuer, shall give the Trustee written notice of an election
to redeem Bonds at least ten (10) Business Days prior to the latest day on
which the Trustee may give the bondholders notice of redemption pursuant
to subsection (a) of Section 302 of this Indenture; provided, however,
that prior to the Expiration Date of the Letter of Credit, no such notice
shall be deemed effective unless at the time such notice is received by
the Trustee the Trustee is holding sufficient Available Moneys to pay the
principal of, and redemption premium (if any) and interest on, the Bonds
to be redeemed.
Mandatory Redemption
Upon the occurrence of a Determination of Taxability, the Bonds are
subject to mandatory redemption by the Issuer at a redemption price of 100% of
the principal amount redeemed plus accrued interest, if any, to the redemption
date on the fifteenth (15th) Business Day following the date of such
Determination of Taxability if the date of such Determination of Taxability
precedes the Conversion Date, or on the seventy-fifth (75th) day following the
date of such Determination of Taxability if the date of Determination of
Taxability is on or after the Conversion Date. The Bonds shall be redeemed in
whole unless, in the opinion of Independent Tax Counsel, the redemption of a
portion of the outstanding principal amount of the Bonds would have the result
that the interest payable on the Bonds remaining outstanding after such
redemption would not be included in the gross income for Federal income tax
purposes of any holder of the Bonds (other than a holder who is a "substantial
user" of the Facilities or a "related person" within the meaning of Section
103(b) of the Code), in which event only such portion of the outstanding Bonds
shall be redeemed. Prior to the Expiration Date of the Letter of Credit the
redemption price shall be paid solely with proceeds drawn under the Letter of
Credit.
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<PAGE> 50
Section 302. NOTICES OF REDEMPTION, CONVERSION DATE, EXPIRATION DATE
OF THE LETTER OF CREDIT, EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY OR
DELIVERY OF AN ALTERNATE LETTER OF CREDIT OR ALTERNATE CREDIT FACILITY.
(a) In the event any Bonds are called for redemption, the Trustee,
on behalf of the Issuer, shall give notice of such redemption, which notice
shall (i) identify the Bonds or portions thereof to be redeemed, the redemption
date, the redemption price and the place or places where the amounts due upon
such redemption shall be payable (which shall be the Principal Office of the
Trustee), and (ii) state that on the redemption date the Bonds to be redeemed
shall cease to bear interest. Such notice may set forth any additional
information relating to such redemption. Such notice shall be given at least ten
(10) Business Days prior to the redemption date if the redemption date is on or
prior to the Conversion Date and at least thirty (30) days prior to the
redemption date if the redemption is after the Conversion Date.
(b) The Trustee, on behalf of the Issuer, shall give notice of the
establishment of the Conversion Date, the Expiration Date of the Letter of
Credit or the Expiration Date of the Alternate Credit Facility, which notice
shall include a statement (i) of the date on which the Bonds are to be purchased
by the Paying Agent as a result of the establishment of the Conversion Date or
the expiration of the Letter of Credit or the Alternate Credit Facility, (ii) if
applicable, that the Letter of Credit or the Alternate Credit Facility shall
terminate fifteen (15) days after such purchase date, (iii) that any ratings of
the Bonds by Moody's or S&P may be withdrawn or reduced from the ratings on the
Bonds then prevailing, (iv) that the Indenture provides that Bonds are required
to be delivered to the Paying Agent for purchase on the date specified in such
notice, and that Bonds not delivered to the Paying Agent on such date shall
nonetheless be deemed to have been purchased by the Paying Agent (unless the
holders thereof have directed the Paying Agent not to purchase such Bonds or
portions thereof) and, accordingly, no interest subsequent to the date specified
in such notice shall be payable to such holders, (v) of the rights of the
holders to direct the Paying Agent not to purchase Bonds held by them,, and the
method of exercising such rights, (vi) that on the purchase date designated in
such notice the Paying Agent shall hold moneys equal to the purchase price for
all Bonds not delivered on such date, in trust, for the holders of such Bonds,
which moneys shall be paid upon surrender of Bonds to the Paying Agent and (vii)
that if the purchase of the Bonds will result from the establishment of the
Conversion Date, after the Conversion Date the Bonds will bear interest at the
Fixed Interest Rate and the holders of the Bonds will not have the right to
require the Paying Agent to purchase Bonds. Such notice shall be given at least
ten (10) Business Days prior to the date on which the Bonds are to be purchased
as a result of the establishment of a Conversion Date or the expiration of the
Letter of Credit or the Alternate Credit Facility.
(c) If the Company, in accordance with Section 4.6 of the Agreement
shall direct the Trustee to notify the Bank and the holders of
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<PAGE> 51
Outstanding Bonds that an Alternate Letter of Credit or an Alternate Credit
Facility will be delivered to the Trustee, the Trustee shall give such notice,
which notice shall state (i) the proposed date of delivery to the Trustee of the
Alternate Letter of Credit or Alternate Credit Facility, (ii) the date of the
Alternate Letter of Credit or Alternate Credit Facility, (ii) the expiration
date of the Letter of Credit for which the Alternate Letter of Credit or
Alternate Credit Facility is to be substituted, (iv) the expiration date of the
Alternate Letter of Credit or Alternate Credit Facility, (v) the issuer of the
Alternate Letter of Credit or Alternate Credit Facility, and a brief description
of such issuer, and (vi) if the Bonds are then rated by Moody's or S&P, either
(A) that any ratings of the Bonds by Moody's or S&P may be withdrawn or reduced
from such ratings then prevailing, or (B) such ratings of the Bonds by Moody's
or S&P shall have been based upon such Alternate Letter of Credit or Alternate
Credit Facility. Such notice shall be given at least thirty (30) Business Days
prior to the delivery of the Alternate Letter of Credit or Alternate Credit
Facility to the Trustee. The Company shall cause a description of the issuer of
the Alternate Letter of Credit or Alternate Credit Facility to be furnished to
the Trustee in time sufficient to permit the Trustee to give the notice provided
for in this subsection (c).
(d) Any notice required to be given pursuant to subsections (a), (b)
or (c) of this Section 302 shall be given by mailing a copy thereof by
registered or certified mail to the holder of each Bond (provided, however, that
a notice of redemption need be given only to holders of Bonds to be redeemed in
whole or in part) at the address for such holder shown on the registration books
maintained by the Bond Registrar pursuant to the Indenture. Failure to give such
notice by mailing, or any defect in such notice, to the holder of any Bonds
shall not affect the validity of the proceedings with respect to any other
Bonds.
(e) If, because of the temporary or permanent suspension of regular
mail service, or for any other reason, it is impossible or impractical to mail
such notice of redemption or purchase in the manner herein provided, then such
other manner of giving notice in lieu thereof as shall be made with the approval
of the Trustee shall constitute a sufficient notice. Failure to give or receive
such notice with respect to any Bond shall not affect the validity of any
proceedings for the redemption or purchase of any other Bonds.
(f) Prior to the Expiration Date of the Letter of Credit, any notice
required to be given pursuant to subsection (a) or (b) of this Section 302 shall
also be given to the Bank. Any such notice and any notice required to be given
to the Bank pursuant to subsection (c) of this Section 302 shall be given to the
Bank by telephone or telegraph, promptly confirmed in writing. Immediately after
the redemption or cancellation of any Bonds, the Trustee shall promptly notify
the Bank, in accordance with the provisions of the Letter of Credit, of the
aggregate principal amount of Bonds redeemed or cancelled and the aggregate
principal amount of Bonds Outstanding after such cancellation or redemption.
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<PAGE> 52
Section 303. CANCELLATION. All Bonds which have been surrendered for
the purpose of payment redemption, exchange or transfer shall be cancelled by
the Trustee. No Bonds shall be authenticated in lieu of or in exchange for any
Bond cancelled as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Bonds held by the Trustee shall be disposed of as
directed by a written order of the Issuer or the Company.
If any Bonds are deemed to have been purchased by the Trustee
pursuant to subsections (c) or (d) of Section 401, then such Bonds shall be
deemed cancelled whether or not such bonds shall have been delivered to the
Trustee; and the Issuer shall execute and the Trustee shall authenticate and
deliver to or upon the order of the Company, a Replacement Bond or Bonds in the
principal amount equal to the aggregate principal amount of Bonds deemed
cancelled in accordance with this paragraph.
Section 304. PAYMENT OF BONDS UPON REDEMPTION. In the case of a
redemption of any Bond or a portion thereof, on the date set for redemption in
the written notice to bondholders required to be given in Section 302, the
Trustee, as paying agent shall pay the redemption price upon surrender of such
Bond to the Trustee in lawful money of the United States of America. Upon
surrender of a Bond for partial redemption, there shall be issued to such
bondholder, without charge therefor, for the unredeemed balance thereof, a Bond
or Bonds in any of the authorized denominations as provided in Section 209.
Section 305. PRO RATA REDEMPTION. With respect to any partial
redemption of Bonds, the Trustee shall prorate the aggregate principal amount of
Bonds to be redeemed among all holders in proportion to the principal amount of
such Bonds registered in the name of each such holder; provided, however, that
in any such prorating the Trustee shall, according to such method as it shall
deem proper in its discretion, make such adjustments by increasing or decreasing
by not more than $50,000 or, on or after the Conversion Date, $5,000, the amount
which would be allocable on the basis of exact proportion to any one or more
holders of Bonds as may be necessary to the end that the principal amount so
prorated shall be in each instance an integral multiple of $50,000 or, on or
after the Conversion Date, $5,000. On each subsequent partial redemption of
Bonds, the Trustee shall make such adjustments, to the extent practicable, as
will equalize on a cumulative basis, the prorations among bondholders. Any
partial redemption shall be in a multiple of $50,000 or, on or after the
Conversion Date, $5,000.
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<PAGE> 53
ARTICLE IV.
PURCHASE AND PLACEMENT OF BONDS;
LETTER OF CREDIT
Section 401. PURCHASE OF THE BONDS.
(a) On or before the Conversion Date, any Bond or portion thereof in
an integral multiple of $50,000 shall be purchased by the Paying Agent on the
demand of the holder thereof, if such holder shall be an Investment Company, on
any Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the date of purchase, upon: (i) delivery to the
Paying Agent at its Principal Office of a written notice which states (A) that
such holder is an Investment Company, (B) the principal amount of such Bond to
be purchased and (C) the date on which such Bond or portion thereof shall be
purchased pursuant to this subsection (a), which date shall be a Business Day
not prior to the seventh (7th) day next succeeding the date of the delivery of
such notice to the Trustee; and (ii) delivery of such Bond, and, in the case of
a Bond or portion thereof to be purchased prior to an Interest Payment Date and
after the Record Date in respect thereof, a due-bill check, in form satisfactory
to the Paying Agent for interest due on such Interest Payment Date, at the
Paying Agent's Principal Office at or prior to 10:00 a.m., New York City time,
on the date specified in the aforesaid notice; provided, however, that such Bond
or portion thereof shall be so purchased pursuant to this subsection (a) only if
the Bond so delivered to the Paying Agent shall conform in all respects to the
description thereof in the aforesaid notice. Upon receipt by the Paying Agent of
notice from any Investment Company holder of its intention to require any Bonds
held by such holder to be purchased, the Paying Agent shall notify the
Remarketing Agent by telephone or telegraph and confirmed promptly in writing of
such fact, and the Remarketing Agent shall undertake to remarket any such Bonds
in the same manner as in the case of Bonds purchased by the Remarketing Agent
pursuant to subsection (b) below.
(b) On or before the Conversion Date, any Bond or portion thereof in
an integral multiple of $50,000 shall be purchased by the Remarketing Agent on
the demand of the holder thereof, on any Business Day at a purchase price equal
to the principal amount thereof plus accrued interest, if any, to the date of
purchase, upon: (i) delivery to the Remarketing Agent at its Principal Office of
a written notice which states (A) the principal amount of such Bond to be
purchased, and (B) the date on which such Bond or portion thereof shall be
purchased pursuant to this subsection (b), which date shall be a Business Day
not prior to the seventh (7th) day next succeeding the date of the delivery of
such notice to the Remarketing Agent and (ii) delivery of such Bond and, in the
case of a Bond or portion thereof to be purchased prior to the Interest Payment
Date for any Interest Period and after the Record Date in respect thereof, a
due-bill check, in form satisfactory to the Remarketing Agent, for interest
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<PAGE> 54
due on such Interest Payment Date, to the Principal Office of the Remarketing
Agent at or prior to 10:00 a.m., New York City time, on the date specified in
the aforesaid notice; provided, however, that such Bond or portion thereof shall
be so purchased pursuant to this subsection (b) only if the Bond so delivered to
the Remarketing Agent shall conform in all respects to the description thereof
in the aforesaid notice.
(c) All Bonds shall be purchased by the Paying Agent on the Interest
Payment Date next preceding the Expiration Date of the Letter of Credit and on
the Interest Payment Date next preceding the Expiration Date of the Alternate
Credit Facility, at a purchase price equal to the principal amount thereof,
except (i) Bonds, or portions thereof in an integral multiple of $50,000 if
prior to the Conversion Date or $5,000 if on or after the Conversion Date, with
respect to which the Paying Agent shall have received written directions not to
so purchase such Bonds or portions thereof from the holders of the same, (ii)
Bonds delivered to the Paying Agent or the Remarketing Agent as described in
subsection (a) or (b) of this Section 401 for purchase on such Interest Payment
Date, or on any Business Day in the Interest Period next preceding such Interest
Payment Date, and (iii) Bonds issued upon the registration of transfer of Bonds
referred to in clauses (i) or (ii) above. Any Bonds not delivered to the Paying
Agent for purchase as described above (other than Bonds described in clauses
(i), (ii) or (iii) above) shall nonetheless be deemed to be tendered for sale by
the holders thereof and purchased by the Paying Agent.
(d) All Bonds shall be purchased by the Paying Agent on the
Conversion Date at a purchase price equal to the principal amount thereof except
(i) Bonds, or portions thereof in an integral multiple of $5,000, with respect
to which the Paying Agent shall have received written directions not to so
purchase such Bonds or portions thereof from the holders of the same, (ii) Bonds
delivered to the Paying Agent or the Remarketing Agent as described in
subsection (a) or (b) of this Section 401 for purchase on the Conversion Date or
on any Business Day in the Interest Period next preceding the Conversion Date,
and (iii) Bonds issued upon the registration of transfer of Bonds referred to in
clauses (i) or (ii) above. Any Bonds not delivered to the Paying Agent for
purchase (other than Bonds described in clauses (i), (ii) or (iii) above) shall
nonetheless be deemed to be tendered for sale by the holders thereof and
purchased by the Paying Agent. The provisions of this paragraph (d) shall not
apply if there has occurred and is continuing on the prospective purchase date
an Event of Default.
(e) In the event that all Bonds are to be purchased by the Paying
Agent pursuant to subsections (c) or (d) of this Section 401, a holder of Bonds
may direct the Paying Agent not to purchase any Bonds or portions thereof owned
by such holder by delivering to the Paying Agent, on or before the third (3rd)
Business Day preceding the date fixed for such purchase, an instrument or
instruments in writing executed by such holder (i) specifying the numbers of the
Bonds held by such holder, (ii) specifically acknowledging each of the matters
set forth in clauses (i) through (vii) of Section 302(b) of this Indenture, and
(iii) directing the Paying Agent not to
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<PAGE> 55
purchase such Bonds or portions thereof. Any instrument delivered to the Paying
Agent in accordance with this subsection (e) shall be irrevocable with respect
to the Bonds for which such instrument is delivered and shall be binding upon
subsequent holders of such Bonds. Any Bond purchased by the Remarketing Agent or
the Paying Agent pursuant to the terms of this Indenture after the Trustee has
given notice of the Expiration Date of the Letter of Credit, the Expiration Date
of the Alternate Credit Facility or the Conversion Date, pursuant to subsection
(b) of Section 302 of this Indenture, shall not be remarketed except to a buyer
who either (i) specifically acknowledges, in writing, on the date of purchase
each of the matters set forth in clauses (i) through (vii) of subsection (b) of
Section 302 of this Indenture, or (ii) agrees to require purchase of such Bonds
by the Remarketing Agent or the Paying Agent on or before the Expiration Date of
the Letter of Credit or the Expiration Date of the Alternate Credit Facility, as
the case may be.
(f) Upon delivery to the Paying Agent of Bonds in accordance with
subsection (a) or by the Remarketing Agent of Bonds in accordance with
subsection (b) of this Section 401, the Remarketing Agent shall offer such Bonds
for sale and shall use its best efforts to sell such Bonds, any such sale to be
at a price equal to 100% of the principal amount thereof on the date stated in
the notice provided by the holder of such Bonds; provided that to the extent any
moneys described in clause (i) of subsection (g) of this Section 401 or moneys
derived from the sale of Bonds to the Company, Charles King & Associates, a
California limited partnership, or Charles King, its general partner, shall be
on deposit with the Trustee, any Bonds delivered to the Remarketing Agent shall
be purchased with such moneys and shall not be sold by the Remarketing Agent.
(g) On the date Bonds are to be purchased by the Paying Agent in
accordance with subsection (a) or by the Remarketing Agent in accordance with
subsection (b) of this Section 401, the Paying Agent or the Remarketing Agent
shall purchase such Bonds with immediately available funds at a purchase price
equal to the principal amount thereof plus accrued interest, if any, to the date
of purchase. Funds for the payment of such purchase price shall be derived
solely from the following sources in the order of priority indicated, and
neither the Issuer, the Paying Agent nor the Remarketing Agent shall be
obligated to provide funds from any other source:
(i) Available Moneys representing proceeds described in Section 5.11
of the Agreement;
(ii) proceeds of the sale of such Bonds by the Remarketing Agent,
excluding proceeds of any such sale of Bonds to the Company, Charles King
& Associates, a California limited partnership, or Charles King, its
general partner;
(iii) moneys representing proceeds of a drawing by the Trustee
pursuant to the Letter of Credit; and
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<PAGE> 56
(iv) moneys representing moneys furnished by the Company pursuant to
Section 4.11 of the Agreement.
The Remarketing Agent shall direct the Trustee, by telephone or telegraph and
confirmed promptly in writing, to provide such moneys to the Paying Agent or the
Remarketing Agent (and to draw moneys under the Letter of Credit, if necessary)
to the extent necessary to make timely payments required to be made in
accordance with this subsection (g).
(h) On any date on which Bonds are to be purchased by the Paying
Agent in accordance with subsection (c) or (d) of this Section 401, the Paying
Agent shall purchase such Bonds with immediately available funds at the purchase
price specified therein. Funds for the payment of such purchase price shall be
derived solely from the following sources in the order of priority indicated,
and neither the Issuer nor the Trustee nor the Paying Agent shall be obligated
to provide funds from any other source:
(i) Available Moneys representing proceeds described in Section 5.11
of the Agreement;
(ii) moneys representing proceeds of a drawing by the Trustee
pursuant to the Letter of Credit; and
(iii) moneys furnished by the Company to the Trustee pursuant to
Section 4.11 of the Agreement.
(i) The Remarketing Agent and the Paying Agent shall hold in a
separate account moneys representing the purchase price of Bonds purchased in
accordance with this Section 401 until such Bonds have been delivered to the
Remarketing Agent or the Paying Agent, as the case may be, by the holders
thereof. The Remarketing Agent and the Paying Agent shall invest such moneys
only in Government Obligations maturing not more than thirty (30) days after
purchase, as directed by the Company by telephone and confirmed in writing.
Earnings from such investments shall be paid into the Bond Fund.
(j) Bonds sold by the Remarketing Agent pursuant to subsection (f)
of this Section 401 shall be delivered to the purchaser thereof. Bonds purchased
by the Remarketing Agent with moneys described in clause (i) of subsection (g)
of this Section 401 and Bonds purchased with moneys derived from the Company,
Charles King & Associates, a California limited partnership, or Charles King,
its general partner, shall be delivered to the Trustee for cancellation. Bonds
purchased by the Remarketing Agent with moneys described in clause (iii) of
subsection (g) of this Section 401 shall be registered in the name of, and
delivered to, the Bank or its nominee. Bonds purchased by the Remarketing Agent
with moneys described in clause (iv) of subsection (g) of this Section 401
shall, at the direction of the Company, be (A) held by the Remarketing Agent for
the account of the Company, (B) delivered to the Trustee for cancellation, or
(C) delivered to the Company; provided, however, that any Bonds so purchased
after the
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<PAGE> 57
selection thereof by the Trustee for redemption shall be cancelled; and,
provided further, that any Bonds so purchased shall be registered in the name
of, and delivered to, the Bank or its nominee if the Trustee shall have received
notice from the Bank of the occurrence of an Event of Default under the Letter
of Credit Agreement. The Remarketing Agent shall deliver to the person to whom
any Bond is delivered the due-bill check relating to such Bond, if any,
delivered to the Remarketing Agent in accordance with subsection (b) of this
Section 401.
(k) Bonds purchased by the Trustee with moneys described in clause
(i) of subsection (h) of this Section 401 shall be cancelled. Bonds purchased by
the Trustee with moneys described in clause (ii) of subsection (h) of this
Section 401 shall be registered in the name of, and delivered to, the Bank or
its nominee. Bonds purchased by the Trustee with moneys described in clause
(iii) of subsection (h) of this Section 401 shall, at the direction of the
Company, be (A) cancelled, or (B) delivered to the Company; provided, however,
that any Bonds so purchased after the selection thereof by the Trustee for
redemption shall be cancelled; and, provided further, that any Bonds so
purchased shall be registered in the name of, and delivered to, the Bank or its
nominee if the Trustee shall have received notice from the Bank of the
occurrence of an Event of Default under the Letter of Credit Agreement.
(1) The Paying Agent shall deliver to the Bank the due-bill checks,
if any, delivered to the Paying Agent in accordance with subsection (a) of this
Section 401.
(m) Bonds delivered as provided in subsections (j) or (k) of this
Section 401 shall be registered in the manner directed by the recipient thereof.
(n) Whenever Bonds are delivered to the Bank pursuant to subsections
(j) or (k) of this Section 401, the Trustee, as Bond Registrar, shall notify the
Company of the principal amount of such Bonds and the date of delivery thereof
to the Bank (which date of delivery shall be deemed to be the date upon which
the draw on the Letter of Credit resulting in such delivery was made). The
Trustee shall create and maintain records sufficient to permit the Trustee to
determine the interest payable on any Bond during any period in which such Bond
is held by the Bank as a result of a draw on the Letter of Credit, and the
Trustee shall advise the Company not later than the Business Day immediately
preceding each Interest Payment Date as to the amount of such interest.
(o) The Trustee shall upon receipt of any direction by the
Remarketing Agent pursuant to subsection (g) of this Section 401, draw moneys
under the Letter of Credit in accordance with the terms thereof in the amounts
specified in such direction and furnish such moneys to the Remarketing Agent.
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(p) Any Bonds delivered to the Remarketing Agent or the Paying Agent
pursuant to the terms of this Indenture during the period commencing on the date
that the Trustee has given the first notice described in Section 302(c) of this
Indenture and ending on the date of delivery to the Trustee of an Alternate
Letter of Credit or Alternate Credit Facility shall not be remarketed except to
a buyer who expressly acknowledges at the time of such purchase each of the
matters set forth in the notice required by Section 302(c) of this Indenture and
agrees to purchase such Bonds notwithstanding the proposed delivery of an
Alternate Letter of Credit or Alternate Credit Facility.
ANY UNTENDERED BONDS, FOR WHICH THERE SHALL HAVE BEEN IRREVOCABLY
DEPOSITED ON OR BEFORE THE INTEREST PAYMENT DATE NEXT PRECEDING (A) THE
EXPIRATION DATE OF THE LETTER OF CREDIT OR (B) THE EXPIRATION DATE OF THE
ALTERNATE CREDIT FACILITY, OR THE CONVERSION DATE, AS THE CASE MAY BE, IN TRUST
WITH THE TRUSTEE AN AMOUNT SUFFICIENT TO PAY THE PURCHASE PRICE OF SUCH BONDS
DUE WITH RESPECT TO THE PURCHASE THEREOF SHALL CEASE TO ACCRUE INTEREST ON THE
INTEREST PAYMENT DATE NEXT PRECEDING (A) THE EXPIRATION DATE OF THE LETTER OF
CREDIT OR (B) THE EXPIRATION DATE OF THE ALTERNATE CREDIT FACILITY, OR THE
CONVERSION DATE, AS THE CASE MAY BE, AND SHALL BE DEEMED TO HAVE BEEN TENDERED
FOR PURCHASE AND PURCHASED BY THE PAYING AGENT, REPLACEMENT BONDS SHALL BE
ISSUED IN PLACE OF SUCH UNTENDERED BONDS PURSUANT TO SECTION 203 HEREOF.
NO DELIVERY OF BONDS TO THE PAYING AGENT OR THE REMARKETING AGENT OR
PURCHASE OF BONDS BY THE PAYING AGENT OR THE REMARKETING AGENT SHALL CONSTITUTE
A REDEMPTION OF BONDS OR ANY EXTINGUISHMENT OF THE DEBT REPRESENTED THEREBY.
Section 402. CONVERSION TO FIXED INTEREST RATE.
(a) At any time, the Company may, by notice in writing to the
Issuer, the Trustee, the Paying Agent, the Remarketing Agent and the Bank direct
that a Fixed Interest Rate be established for the Bonds. The Company's notice
shall set forth: (i) the Conversion Date desired by the Company, which shall be
an Interest Payment Date not less than thirty (30) days after the date of such
notice; and (ii) the date the Fixed Interest Rate shall be established, which
shall be not less than twelve (12) Business Days prior to the Conversion Date.
The notice shall be accompanied by an opinion of Independent Tax Counsel stating
that the conversion to a Fixed Interest Rate is authorized and permitted by this
Indenture and the Act, and that such conversion will not adversely affect the
exemption of interest on the Bonds from Federal income taxation. The Remarketing
Agent shall determine the Fixed Interest Rate on the date specified in such
notice, which rate shall be the lowest rate at which the Remarketing Agent shall
have received bids, not later than the twelfth (12th) Business Day prior to the
Conversion Date, to purchase all of the Outstanding Bonds at a purchase price of
100% of the outstanding principal amount thereof on the Conversion Date. Prior
to the
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Expiration Date of the Letter of Credit, conversion to the Fixed Interest Rate
shall require the prior written consent of the Bank.
(b) Any Bonds purchased by the Remarketing Agent or the Paying Agent
pursuant to the terms of this Indenture after the Trustee has given notice of
the establishment of a Conversion Date, pursuant to subsection (b) of Section
302 of this Indenture, shall not be remarketed except to a buyer who agrees at
the time of such purchase either (i) to accept the Fixed Interest Rate on the
Conversion Date, or (ii) to require purchase of such Bonds by the Remarketing
Agent or the Paying Agent on or before the Conversion Date pursuant to
subsection (a) or (b) of Section 401 of this Indenture.
(c) The Letter of Credit shall be cancelled on the fifteenth (15th)
day following the Conversion Date, and the Trustee shall deliver the Letter of
Credit to the Bank on such day, unless prior to such day the Trustee has
received written notification from both the Company and the Bank stating that
the Letter of Credit is not to be cancelled on such day.
(d) In the event that the Letter of Credit or an Alternate Credit
Facility is in effect with respect to Bonds following the Conversion Date, the
Fixed Interest Rate shall be adjusted on the Adjustment Date so as to equal the
lowest rate of interest at which the Remarketing Agent shall have received bids
on or prior to the twelfth (12th) Business Day next preceding the Adjustment
Date to purchase all Outstanding Bonds on the Adjustment Date at a price of 100%
of the principal amount thereof. Following such adjustment, the Bonds shall bear
interest at the Fixed Interest Rate determined pursuant to this Section 402(d)
until maturity.
THE BONDS SHALL NOT BE SUBJECT TO PURCHASE, AS PROVIDED IN SECTION
401 OF THIS INDENTURE, AFTER THE EXPIRATION DATE OF THE LETTER OF CREDIT.
Section 403. REMARKETING AGENT. Prudential-Bache Securities Inc.,
New York, New York, is hereby appointed the Remarketing Agent for the Bonds. The
Remarketing Agent shall designate to the Trustee, the Paying Agent, the Company,
the Issuer and the Bank its principal office and signify the acceptance of the
duties and obligations imposed upon it under the Indenture by a written
instrument of acceptance delivered to the Issuer and the Trustee under which the
Remarketing Agent will agree, particularly:
(a) to hold all Bonds delivered to it pursuant to the Indenture in
trust for the benefit of the respective bondholders who shall have so
delivered such Bonds until moneys representing the purchase price of such
Bonds shall have been delivered to or for the Account of or to the order
of such bondholders;
(b) to hold all moneys delivered to it for the purchase of Bonds in
trust for the benefit of the person who shall have so delivered such
moneys until the Bonds purchased with such moneys shall have been
delivered to or for the account of such person;
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(c) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available for
inspection by the Issuer, the Company, the Bank, the Trustee and the
Paying Agent at all reasonable times;
(d) not later than the fourth (4th) Business Day preceding each
Interest Payment Date, to give telegraphic or telephonic notice, promptly
confirmed by a written notice, to the Company, the Trustee and the Bank
specifying the interest rate on the Bonds for the Interest Period
commencing on such Interest Payment Date, determined pursuant to and in
accordance with the provisions contained in the form of Bond contained in
Section 206 of this Indenture;
(e) to deliver to the Company, the Trustee, the Paying Agent and the
Bank a copy of each notice delivered to it in accordance with Section
401(b) of this Indenture and, immediately upon the delivery to it of Bonds
in accordance with said Section 401(b), to give telephonic or telegraphic
notice to the Company, the Trustee, the Paying Agent and the Bank
specifying the principal amount of the Bonds so delivered and the
principal amount of such Bonds remarketed; and
(f) to deliver all Bonds and due-bill checks delivered to it
pursuant to the Indenture to the persons to whom the same are to be
delivered in accordance with Section 401(j) of this Indenture.
The Issuer shall cooperate with the Trustee to cause the necessary
arrangements to be made and to be thereafter continued whereby Bonds executed by
the Issuer and authenticated by the Trustee shall be made available to the
Remarketing Agent to the extent necessary for delivery to purchasers thereof.
The Remarketing Agent may at any time resign and be discharged of
the duties and obligations created by this Indenture by giving at least ninety
(90) days written notice to the Issuer, the Company, the Bank, the Trustee and
the Paying Agent. The Remarketing Agent may be removed at any time, at the
direction of the Company, by an instrument signed by the Issuer and filed with
the Remarketing Agent, the Bank, the Trustee and the Paying Agent. In the event
of the resignation or removal of the Remarketing Agent, a successor Remarketing
Agent shall be designated by the Issuer, at the direction of the Company and
with the consent of the Bank. Any successor Remarketing Agent shall be
authorized by law to perform all the duties imposed upon it by this Indenture
and shall be a commercial bank having an aggregate of capital, paid in surplus
and retained earnings of not less than FIFTY MILLION DOLLARS ($50,000,000) or a
member of the National Association of Securities Dealers, Inc. having a
capitalization of at least FIFTEEN MILLION DOLLARS ($15,000,000) or having a
line of credit with a commercial bank in the amount of at least FIFTEEN MILLION
DOLLARS ($15,000,000). In addition, any successor Remarketing Agent (or its
parent corporation, if such successor is a subsidiary of a holding company)
shall have outstanding securities rated not lower than Baa3 (or a substantially
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equivalent rating) by Moody's if such a requirement is a condition to the
maintenance of the then existing Moody's rating of the Bonds.
Section 404. LETTER OF CREDIT.
(a) The Trustee shall draw moneys under the Letter of Credit in
accordance with the terms thereof to the extent necessary to make timely
payments of principal of and interest on the Bonds and to pay the purchase price
of Bonds purchased pursuant to Section 401 of this Indenture.
(b) If at any time there shall have been delivered to the Trustee
(i) an Alternate Letter of Credit or an Alternate Credit Facility and (ii) an
opinion of Independent Tax Counsel stating that the delivery of such Alternate
Letter of Credit or Alternate Credit Facility to the Trustee is authorized under
the Agreement and the Act, complies with the terms of the Agreement and will not
adversely affect the tax-exempt status of the Bonds, then the Trustee shall
accept such Alternate Letter of Credit or Alternate Credit Facility and
immediately surrender the previously held Letter of Credit to the Bank, in
accordance with the terms of such Letter of Credit, for cancellation. Unless the
Company and the Bank shall have given written notice to the Trustee to the
contrary, the Trustee shall fifteen (15) days after the Conversion Date
surrender the Letter of Credit to the Bank, in accordance with the terms of the
Letter of Credit, for cancellation. If at any time there shall cease to be any
Bonds outstanding under the Indenture, other than Bonds delivered to the Bank
pursuant to any draw under the Letter of Credit, the Trustee shall immediately
surrender the Letter of Credit to the Bank, in accordance with the terms of the
Letter of Credit, for cancellation. The Trustee shall comply with the procedures
set forth in the Letter of Credit Agreement and the Letter of Credit (including,
but not limited to, execution and delivery of appropriate certificates) relating
to the extension, reduction, reinstatement or termination of the Letter of
Credit.
Section 405. NO FEDERAL GUARANTEE. Notwithstanding any other
provision of this Indenture, neither the Issuer, the Trustee nor any bondholder
shall claim or accept the benefits of any Federal guarantee which would cause
the Bonds to become subject to Federal income taxation under the provisions of
Section 103(h) of the Code, including, without limitation, insurance of the
Federal Deposit Insurance Corporation, if any, applicable to the Letter of
Credit. In the event of the failure by the Bank to fulfill its obligations, in
whole or in part, with respect to any draw on the Letter of Credit, the Trustee
shall have no power or right to make any claim against the Federal Deposit
Insurance Corporation with respect to any such failure by the Bank.
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ARTICLE V.
GENERAL COVENANTS
Section 501. PAYMENT OF PRINCIPAL, PURCHASE PRICE, REDEMPTION
PREMIUM (IF ANY) AND INTEREST. The Issuer covenants that it will promptly pay
(but only from the funds hereinafter described) the principal or purchase price
of, and the redemption premium (if any) and the interest on, the Bonds at the
place, on the dates and in the manner provided herein and in the Bonds. The
Bonds are payable solely out of the Revenues in the manner and to the extent
herein specified, and nothing in the Bonds or in this Indenture should be
considered to be an assignment or pledge of any other funds or assets of the
Issuer other than the Trust Estate. The Bonds and the interest and redemption
premium (if any) thereon shall not now or ever be deemed to constitute or to
create in any manner a debt, liability or obligation of the State or of any
political subdivision thereof or a pledge of the faith and credit of the State
or any such political subdivision nor a general obligation of the Issuer but
shall be limited obligations of the Issuer payable solely from the Revenues and
other funds pledged therefor in accordance with the Agreement and this Indenture
and shall not be payable from any assets or funds of the Issuer other than the
Revenues and other funds pledged therefor, and neither the faith and credit nor
the taxing power of the State or any political subdivision thereof is pledged to
the payment of the principal or purchase price of, or the redemption premium (if
any) or the interest on, the Bonds.
Section 502. PERFORMANCE OF COVENANTS; AUTHORITY. The Issuer
covenants that it will faithfully perform at all times any and all covenants,
agreements, undertakings, stipulations and provisions contained in this
Indenture, in any and every Bond, and in all proceedings of the Issuer
pertaining thereto. The Issuer covenants that it is duly authorized under the
Constitution and laws of the State including particularly the Act, (a) to issue
the Bonds, (b) to execute, deliver and perform this Indenture, and (c) to assign
and pledge the Trust Estate in the manner and to the extent herein set forth;
and that all action on its part for the issuance of the Bonds and the execution,
delivery and performance of this Indenture has been duly and effectively taken;
and that the Bonds are and will be legal, valid, binding and enforceable limited
obligations of the Issuer according to the import thereof.
Section 503. FILING OF FINANCING STATEMENTS. The Issuer agrees that
it will cause all Financing Statements (other than continuation statements) to
be filed, at the request of the Trustee, in such manner and in such places as
may be required by law in order to fully protect and preserve the priority of
the interest of the bondholders in the property conveyed thereunder and the
rights, privileges and options of the Trustee thereunder. Pursuant to Section
1213, the Trustee has agreed to file or cause to be filed certain continuation
statements.
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Section 504. PRIORITY OF PLEDGE AND SECURITY INTEREST. The pledge
herein made of the Trust Estate and the security interest created herein with
respect thereto constitutes a first and prior pledge of, and a security interest
in, the Trust Estate. Said pledge and security interest shall at no time be
impaired directly or indirectly by the Issuer or the Trustee, and the Trust
Estate shall not otherwise be pledged and, except as provided herein and in the
Agreement, no persons shall have any rights with respect thereto.
Section 505. RIGHTS UNDER AGREEMENT. The Agreement sets forth the
respective obligations of the Issuer and the Company, including a provision that
subsequent to the initial issuance of the Bonds and prior to payment in full of
the Bonds, the Agreement may not be effectively amended, changed, modified,
altered or terminated other than as provided in Article XIV. Reference is hereby
made to the Agreement for detailed statements of the obligations of the Company
thereunder, and the Issuer agrees that the Trustee in its own name or in the
name of the Issuer may enforce all rights of the Issuer and all obligations of
the Company under and pursuant to the Agreement (except certain rights reserved
by the Issuer under the terms hereof) for and on behalf of the bondholders,
whether or not the Issuer is in default hereunder.
Section 506. MAINTENANCE OF INSURANCE; PAYMENT OF TAXES, CHARGES,
ETC. Pursuant to the provisions of Section 5.7 of the Agreement, the Company has
agreed to maintain certain insurance and to pay all lawful taxes, assessments
and charges at any time levied or assessed upon or against the Facilities or any
part thereof. The Company shall furnish evidence of such insurance to the
Trustee upon request.
Section 507. MAINTENANCE AND REPAIR. Pursuant to the provisions of
Section 5.5 of the Agreement, the Company has agreed at its own expense to
maintain and operate the Facilities.
Section 508. ISSUER'S ELECTION TO ISSUE BONDS PURSUANT TO SECTION
103(B)(6)(D) OF THE CODE. Prior to the issuance and delivery of the Bonds, all
necessary filings to effect an election with respect to the Bonds under Section
103(b)(6)(D) of the Code will have been made.
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ARTICLE VI.
CUSTODY AND APPLICATION
OF PROCEEDS OF BONDS
Section 601. CREATION OF THE CONSTRUCTION FUND. There is hereby
created by the Issuer and ordered established with the Trustee a trust fund to
be designated "Development Authority of DeKalb County Construction Fund --
Radiation Sterilizers, Incorporated Project, 1985".
Section 602. DISPOSITION OF BOND PROCEEDS. Upon the issuance and
delivery of the Bonds, an amount equal to the Interest Reserve Requirement shall
be deposited in the Bond Fund and the balance of the proceeds of the sale of the
Bonds shall be deposited in the Construction Fund.
Section 603. DISBURSEMENTS FROM CONSTRUCTION FUND. Moneys in the
Construction Fund shall be disbursed in accordance with the provisions of the
Agreement, and particularly Section 3.3 thereof. The Issuer agrees to promptly
take all necessary and appropriate action in approving and certifying all such
disbursements. The Trustee is hereby authorized and directed to issue its checks
for each disbursement to be made pursuant to the provisions of the Agreement and
the Trustee shall be relieved of all liability with respect to disbursements
made in accordance with the provisions of Section 3.3 of the Agreement.
The Trustee shall maintain adequate records pertaining to the
Construction Fund and all disbursements therefrom, and after the Facilities have
been completed and a certificate of payment of all costs filed as provided in
Section 604, the Trustee shall file with the Issuer such certificate of payment.
Section 604. COMPLETION OF THE FACILITIES. The completion of the
Facilities and the payment of all costs and expenses incident thereto shall be
evidenced by the filing with the Trustee of the certificate signed by the
Authorized Company Representative (designated pursuant to the terms of the
Agreement), which certificate shall state that all costs and expenses in
connection with the Facilities and payable out of the Construction Fund have
been paid except for costs and expenses not then due and payable with respect to
which funds are being retained in the Construction Fund with the approval of the
Company for the payment of the same. As soon as practicable, and in any event
not later than sixty (60) days from the date of the latter certificate referred
to in the preceding sentence, any moneys remaining in the Construction Fund
(other than moneys retained to pay costs and expenses not then due and payable)
shall be used as specified in Section 3.3(h) of the Agreement relating to the
use of moneys in the Construction Fund. Any balance remaining of moneys retained
to pay costs and expenses after full payment of such costs and expenses shall be
used as specified in Section 3.3(h) of the Agreement. Unless there shall be
delivered to the
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Trustee an opinion of Independent Tax Counsel, amounts held for application
under this Section shall not, after the completion of the Facilities be invested
at a yield in excess of the yield on the Bonds.
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ARTICLE VII.
REVENUES AND FUNDS
Section 701. SOURCE OF PAYMENT OF BONDS. The obligation of the
Issuer to pay the principal of, and the redemption premium (if any) and the
interest on, the Bonds is not a general obligation of the Issuer but is a
limited obligation payable solely from the Revenues.
The payments required to be made by the Company under Sections 4.1
and 4.3 of the Agreement are to be remitted directly to the Trustee for the
benefit of the owners of the Bonds and are to be deposited in the Bond Fund.
Said payments are sufficient in amount and become due in a timely manner so as
to insure the prompt payment of the principal of, and the redemption premium (if
any) and the interest on, the Bonds.
Section 702. CREATION OF THE BOND FUND. There is hereby created by
the Issuer and ordered established with the Trustee a trust fund to be
designated "Development Authority of DeKalb County Bond Fund -- Radiation
Sterilizers, Incorporated Project, 1985", which shall be used to pay the
principal of, and the redemption premium (if any) and interest on, the Bonds.
There shall be established as trust accounts within the Bond Fund a general
account and a special account. Any reference in this Indenture to "Bond Fund"
without further qualification or explanation shall constitute a reference to
said general account.
Section 703. PAYMENTS INTO THE BOND FUND. There shall be paid into
the Bond Fund, as and when received,
(a) from the proceeds derived from the sale of the Bonds, an amount
equal to the Interest Reserve Requirement,
(b) all payments made by the Company pursuant to Sections 4.1 and
4.3 of the Agreement,
(c) prior to the Expiration Date of the Letter of Credit, all
amounts drawn by the Trustee under the Letter of Credit to pay principal
of, or interest on, the Bonds, and
(d) all other moneys received by the Trustee when accompanied by the
directions that such moneys are to be paid into the Bond Fund.
Notwithstanding any provision hereof to the contrary, all amounts received by
the Trustee as amounts drawn under the Letter of Credit shall not be commingled
but shall be held in trust in a segregated account in the special account in the
Bond Fund by the Trustee and used solely to pay amounts due in respect of the
Bonds. The Issuer covenants that so long as any of the Bonds are outstanding it
will pay, or cause to be paid, into the Bond Fund all moneys received pursuant
to the Agreement (except for funds received
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pursuant to Sections 5.3 and 5.4 of the Agreement) to pay promptly the principal
of, the redemption premium (if any) and interest on, the Bonds as the same
become due and payable and to this end the Issuer covenants and agrees that if
there occurs an Event of Default under the Agreement, the Issuer will fully
cooperate with the Trustee and with the bondholders to the end of fully
protecting the rights and security of the bondholders. Nothing herein shall be
construed as requiring the Issuer to operate the Facilities or to use any funds
from any source to pay the principal or purchase price of, and the redemption
premium (if any) and the interest on, the Bonds or to pay the costs of
maintaining and insuring the Facilities other than the payments to be received
pursuant to the Agreement and the Revenues.
Section 704. USE OF MONEYS IN THE BOND FUND.
(a) Except as provided in Sections 707, 802 and 1202, moneys in the
Bond Fund shall be used solely for the payment of the principal of, redemption
premium (if any) and interest on, the Bonds. At the direction of the Company,
any moneys in the Bond Fund may be used to redeem (as herein otherwise
permitted) a portion of the Bonds so long as the Company is not in default with
respect to any payments due under the Agreement and to the extent that such
moneys are in excess of the amount required for the payment of Bonds theretofore
matured or called for redemption and the payment of interest then due in all
cases where such Bonds have not been presented for payment. No part of the
payments required to be paid into the Bond Fund under the Agreement shall be
used to redeem, prior to maturity, a portion of the Bonds; provided, that
whenever after the Conversion Date the moneys held in the Bond Fund (in the
general account and the special account) from any source whatsoever are
sufficient to redeem all of the Bonds and to pay interest to accrue thereon
prior to such redemption, the Issuer agrees to take and cause to be taken the
necessary steps to redeem all of the Bonds on the next succeeding redemption
date for which the required redemption notice can be given, and, provided,
further, that any moneys in the Bond Fund may be used after the Conversion Date
to redeem a portion of the Bonds so long as the Company has made all required
payments under the Agreement.
(b) At the maturity date or redemption date prior to maturity of
each Bond and at the due date of each installment of interest on each Bond the
Trustee shall transfer from the general account in the Bond Fund to the special
account in the Bond Fund sufficient moneys to pay all principal of, the
redemption premium (if any) and the interest then due and payable with respect
to, each such Bond. Moneys so transferred into said special account shall not
thereafter be invested in any manner but shall be held by the Trustee without
liability on the part of the Trustee or the Issuer for interest thereon until
actually paid out for the purposes intended.
The Issuer hereby authorizes and directs the Trustee to withdraw,
from time to time, sufficient moneys from the special account in the Bond Fund
to pay the principal of, the redemption premium (if any) and the interest on,
the Bonds as the same become due and payable, which
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authorization and direction the Trustee hereby accepts. Funds for such payments
of the principal of, the redemption premium (if any) and the interest on, the
Bonds shall be derived from the following sources in the order of priority
indicated:
(1) Available Moneys constituting proceeds described in Section 5.11
of the Agreement;
(2) all payments made by the Company pursuant to Sections 4.1 and
4.3 of the Agreement and amounts derived from the investment of such
amounts to the extent that they constitute Available Moneys;
(3) prior to the Expiration Date of the Letter of Credit, all
amounts drawn by the Trustee under the Letter of Credit; and
(4) all other amounts received by the Trustee under and pursuant to
the Agreement or from any other source when accompanied by directions by
the Company that such amounts are to be paid into the Bond Fund, and
amounts derived from the investment of such amounts.
Section 705. CUSTODY OF THE BOND FUND. The Bond Fund shall be held
by the Trustee as a trust fund for the benefit of the bondholders. The general
account and the special account established in the Bond Fund shall also
constitute trust accounts. All moneys paid over to the Trustee for the account
of the Bond Fund (to be held in the general account or the special account
therein) under any provision of this Indenture shall be held in trust by the
Trustee for the benefit of the owners of the Bonds entitled to be paid
therefrom.
Section 706. NON-PRESENTMENT OF BONDS AT MATURITY. If any Bond shall
not be presented for payment when the principal thereof becomes due, either at
stated maturity, at the date fixed for redemption prior to stated maturity, or
upon maturity by declaration, provided moneys sufficient to pay such Bond shall
have been made available to the Trustee to be held in the special account in the
Bond Fund for the benefit of the owner thereof, all liability of the Issuer to
the holder thereof for the payment of such Bond shall forthwith cease, determine
and be completely discharged, and thereupon it shall be the duty of the Trustee
to hold such moneys, subject to the provisions of Section 707(b), in said
special account, without liability for interest thereon, for the benefit of the
owner of such Bond, who shall thereafter be restricted exclusively to such
moneys held in said special account, or paid by the Trustee to the Company or
the Bank pursuant to the provisions of Section 707(b), for any claim of whatever
nature on his part under this Indenture or on, or with respect to, such Bond.
Section 707. PAYMENTS TO THE COMPANY FROM THE BOND FUND.
(a) Any moneys remaining in the general account in the Bond Fund
after Payment in Full of the Bonds (taking into consideration that sufficient
moneys or obligations such as are described in Section 1001 have
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been transferred to or deposited in the special account in the Bond Fund to pay
all principal of, and interest then due and payable with respect to, each Bond
not yet presented for payment and to pay all principal and redemption premium
(if any) and interest relating to each Bond which is not yet due and payable but
with respect to which the lien of this Indenture has been defeased upon
compliance with Article X), the fees, charges and expenses of the Trustee, the
Paying Agent and the Bond Registrar which have accrued and which will accrue and
all other items required to be paid hereunder (other than items payable from the
special account in the Bond Fund) shall be paid to the Bank to the extent that
any moneys are owed to the Bank pursuant to the Letter of Credit Agreement and,
otherwise, to the Company upon the expiration or sooner termination of the
Agreement.
(b) Any moneys held by the Trustee in the special account in the
Bond Fund shall be retained by the Trustee for the payment or the redemption of
Bonds not yet presented for payment or redemption. If after three (3) years such
moneys held for the owners of certain Bonds have not been claimed, then, it
shall be the duty of the Trustee forthwith to return to the Bank to the extent
that any moneys are owed to the Bank pursuant to the Letter of Credit Agreement
and, otherwise, to the Company all moneys held by the Trustee in said special
account, subject to any other requirements of law as may be applicable to such
funds, and any such owner shall thereafter, as an unsecured general creditor,
look only to the Company for the payment of any such Bond and all liability of
the Trustee shall thereupon cease.
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ARTICLE VIII.
INVESTMENTS
Section 801. CONSTRUCTION FUND INVESTMENTS. Moneys held in the
Construction Fund or in any other trust fund or account held by the Trustee
hereunder (except the Bond Fund or an account in the Bond Fund) shall be
invested and reinvested by the Trustee in Eligible Investments as directed by
the Company pursuant to Section 3.8 of the Agreement. Such investments shall be
held by or under the control of the Trustee and shall be deemed at all times a
part of the Construction Fund or other pertinent trust fund and the interest
accruing thereon and any profit resulting therefrom shall be credited to the
Construction Fund or other pertinent trust fund and any loss resulting therefrom
shall be charged to the Construction Fund or other pertinent trust fund. The
Trustee at the direction of the Company shall sell and convert to cash a
sufficient amount of such investments whenever the cash held in the Construction
Fund or other pertinent trust fund is insufficient to pay a requisition when
presented or to otherwise make a timely disbursement required to be made
therefrom. The provisions of this Section 801 shall be subject to the provisions
of Section 804 of this Indenture and Section 5.12(b) of the Agreement.
Section 802. BOND FUND INVESTMENTS. Moneys held in the Bond Fund
(other than moneys held in the special account in the Bond Fund referred to in
Section 702) shall be invested and reinvested by the Trustee in Eligible
Investments as directed by the Company pursuant to Section 3.8 of the Agreement.
Such investments shall be held by or under the control of the Trustee and shall
be deemed at all times a part of the Bond Fund and the interest accruing thereon
and any profit realized therefrom shall be credited to the Bond Fund and any
loss resulting therefrom shall be charged to the Bond Fund. So long as there is
no default hereunder, the Trustee at the direction of the Company shall sell and
convert to cash a sufficient amount of such investments in the Bond Fund
whenever the cash held in the Bond Fund is insufficient to provide for the
payment of the principal of (whether at the maturity date or the redemption date
prior to maturity) and the interest on the Bonds as the same become due and
payable. Any interest or gain received from such investments shall be credited
to and held in the Bond Fund and any loss from such investments shall be charged
against the Bond Fund and paid by the Company. The provisions of this Section
802 shall be subject to the provisions of Section 804 of this Indenture and
Section 5.12(b) of the Agreement.
Section 803. NON-ARBITRAGE COVENANT; COMPLIANCE WITH SPECIAL
ARBITRAGE RULES. The Issuer covenants and agrees with the Trustee and with the
holders of any of the Bonds from time to time outstanding that so long as any of
the Bonds remain outstanding, moneys on deposit in any fund or account created
and held in connection with the Bonds, whether or not such moneys were derived
from the "gross proceeds" (defined in Section 5.12(c) of the Agreement) of the
Bonds or from any other sources, will not be used in a
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manner which will cause the Bonds to be classified as "arbitrage bonds" within
the meaning of Section 103(c) of the Code.
The Issuer and the Trustee jointly and severally covenant and agree
with each other, with the Company and with the holders of any of the Bonds from
time to time outstanding that so long as any of the Bonds remain outstanding,
they will cooperate with the Company in complying with Section 5.12(b) of the
Agreement.
Section 804. EXCESS INVESTMENT EARNINGS ACCOUNT. There is hereby
established a special trust account to be designated the "Development Authority
of DeKalb County Excess Investment Earnings Account - Radiation Sterilizers,
Incorporated Project, 1985" (hereinafter referred to as the "Excess Investment
Earnings Account"), to be held by the Trustee. The Company has covenanted and
agreed that it will (a) prepare and file with the Trustee and the Issuer a
report setting forth the "Rebate Amount" determined in accordance with Section
5.12(b) of the Agreement, and (b) deposit or cause to be deposited into the
Excess Investment Earnings Account any and all Rebate Amounts promptly following
a determination of any such Rebate Amount.
The Trustee, as Construction Fund and Bond Fund custodian, covenants
and agrees that it will, on or before each anniversary of the date of issuance
of the Bonds, prepare and file with the Issuer and the Company a report with
respect to the Construction Fund and the Bond Fund setting forth the total
amounts invested during the preceding bond year, the investments made with the
moneys in the Construction Fund and the Bond Fund and the investment earnings
(and losses) resulting from the investments in each such Fund, respectively,
together with such additional information concerning such Funds and the
investments therein, respectively, as the Issuer or the Company shall reasonably
request.
The Trustee agrees that it will, to the extent practicable, keep all
moneys in the Excess Investment Earnings Account fully invested in Eligible
Investments and it will disburse all moneys in the Excess Investment Earnings
Account to the United States at the times and in the manner set forth in Section
5.12(b) of the Agreement.
Moneys in the Excess Investment Earnings Account, including
investment earnings thereon, if any, shall not be subject to the pledge of this
Indenture and shall not constitute part of the Trust Estate held for the benefit
of the holders of the Bonds.
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ARTICLE IX.
SUBORDINATION TO RIGHTS OF COMPANY
Section 901. SUBORDINATION TO RIGHTS OF THE COMPANY. So long as
there exists no Event of Default under the Agreement, this Indenture and the
rights, options and privileges hereunder of the Trustee and the bondholders are
specifically made subject and subordinate to the rights, options and privileges
of the Company set forth in the Agreement.
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ARTICLE X.
DISCHARGE OF LIEN
Section 1001. DISCHARGE OF LIEN AND SECURITY INTERESTS. If the
Issuer shall pay or cause to be paid the principal of, and the redemption
premium (if any) and the interest on, the Bonds at the times and in the manner
stipulated therein and herein, and shall pay or cause to be paid all fees and
expenses of the Trustee, the Bond Registrar and the Paying Agent due or to
become due in connection with the payment of the Bonds and all other amounts due
or to become due hereunder, and if the Issuer shall keep, perform and observe
all and singular the covenants and agreements in the Bonds and in this Indenture
expressed as to be kept, performed and observed by it or on its part, then the
lien of this Indenture, these presents and the Trust Estate shall cease,
terminate and be discharged, and thereupon the Trustee shall execute and deliver
to the Issuer such instruments in writing as shall be required to cancel and
discharge this Indenture and the Agreement and assign and deliver to the Issuer
so much of the Trust Estate as may be in its possession or subject to its
control, except moneys or Government Obligations deposited with the Trustee for
the payment of the principal of, and the redemption premium (if any) and the
interest on, the Bonds which have become due but have not yet been presented for
payment and moneys in the Bond Fund required to be paid to the Company or the
Bank pursuant to Section 707; provided, however, such cancellation and discharge
of this Indenture shall not terminate the powers and rights granted to the
Trustee with respect to the payment, registration of transfer and exchange of
the Bonds.
Section 1002. PROVISION FOR PAYMENT OF BONDS. Bonds shall be deemed
to have been paid within the meaning of Section 1001 if
(a)(i) the principal of, redemption premium (if any) and all
interest on all Bonds have been paid in accordance with the terms thereof;
or
(ii) there shall have been irrevocably deposited in the special
account in the Bond Fund either:
(A) sufficient moneys, or
(B) Government Obligations of such maturities and interest
payment dates and bearing such interest as will, without further
investment or reinvestment of either the principal amount thereof or
the interest earnings thereon (said earnings to be held in trust
also), be sufficient together with any moneys referred to in
subsection (i) above,
for the payment at their respective maturities or redemption dates prior
to maturity, of the principal thereof and the interest to accrue thereon
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to such maturity or redemption dates, as the case may be; provided,
however, that Bonds will be deemed to be paid by making the deposit
pursuant to clause (ii) only after the Expiration Date of the Letter of
Credit;
(b) there shall have been paid to the Trustee all Trustee's, Bond
Registrar's and Paying Agent's fees and expenses due or to become due in
connection with the payment or redemption of the Bonds or there shall be
sufficient moneys in said special account to make said payments; and
(c) if any Bonds are to be redeemed on any date prior to their
maturity, the Issuer shall have given to the Trustee in form satisfactory
to the Trustee irrevocable instructions to redeem such Bonds on such date
and either evidence satisfactory to the Trustee that all redemption
notices required by this Indenture have been given or irrevocable power
authorizing the Trustee to give such redemption notices.
Limitations elsewhere specified herein regarding the investment of
moneys held by the Trustee in the special account in the Bond Fund shall not be
construed to prevent the depositing and holding in said special account of the
obligations described in the preceding subparagraph (a)(ii)(B) for the purpose
of defeasing the lien of this Indenture as to Bonds which have not yet become
due and payable.
Section 1003. DISCHARGE OF THE INDENTURE. Notwithstanding the fact
that the lien of this Indenture upon the Trust Estate may have been discharged
and cancelled in accordance with Section 1001, this Indenture and the rights
granted and duties imposed hereby, to the extent not inconsistent with the fact
that the lien upon the Trust Estate may have been discharged and cancelled,
shall nevertheless continue and subsist until the principal of, the redemption
premium (if any) and the interest on, all of the Bonds shall have been paid in
full or the Trustee shall have returned to the Company or the Bank pursuant to
Section 707(b) all funds theretofore held by the Trustee for payment of any
Bonds not theretofore presented for payment and all of the Company's obligations
to the Issuer as to expense reimbursement and indemnification under this
Indenture have been fulfilled.
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ARTICLE XI.
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 1101. DEFAULTS; EVENTS OF DEFAULT. If any of the following
events occurs, subject to the provisions of Section 1109, it is hereby defined
as and declared to be and to constitute an "Event of Default" hereunder:
(a) failure in the payment of the principal of or any interest or
redemption premium on any Bond when and as the same shall have become due,
whether at the stated maturity thereof, by acceleration or call for
redemption;
(b) the occurrence of an Event of Default specified in subsection
(a) of Section 6.1 of the Agreement;
(c) failure in the performance or observance of any covenant,
agreement or condition on the part of the Issuer included in this
Indenture, in the Bonds or in the Agreement, other than as set forth in
subsection (a) or (b) above, which materially adversely affects the lien
of this Indenture on the Revenues, the Bond Fund or the Construction Fund;
provided, however, that prior to the Expiration Date of the Letter of
Credit such failure shall not constitute an Event of Default;
(d) the occurrence of any Event of Default specified in subsections
(b), (c), (d) or (e) of Section 6.1 of the Agreement; provided, however,
that prior to the Expiration Date of the Letter of Credit such occurrences
shall not constitute an Event of Default;
(e) failure to pay amounts due to holders of Bonds who have
delivered Bonds to the Trustee for purchase for a period of five (5) days
after such payment has become due and payable; or
(f) receipt by the Trustee of notice from the Bank of the occurrence
of an "Event of Default" under the Letter of Credit Agreement.
The term "default" shall mean (i) any Event of Default described
above; and (ii) the occurrence of an event specified in subsections (b), (c),
(d) or (e) of Section 6.1 of the Agreement exclusive of any period of grace
required to constitute such occurrence an "Event of Default" as defined in the
Agreement.
If a default or an Event of Default shall occur under the provisions
of this Section, the Trustee shall, within two (2) Business Days after having
actual knowledge of such default or Event of Default or being
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deemed to have notice thereof under subsection (e)(iv) of Section 1201, give
written notice of such default or Event of Default to the Issuer, the Company,
the Bank and the Original Purchasers of the Bonds.
Section 1102. ACCELERATION. Upon the occurrence of any Event of
Default described in subsections (a) through (e), inclusive, of Section 1101 the
Trustee may, and upon the written request of the holders of not less than
twenty-five per centum (25%) in aggregate principal amount of Bonds then
outstanding the Trustee shall, by notice in writing delivered to the Issuer and
the Company, declare the principal of all Bonds then outstanding and the
redemption premium (if any) on Bonds called for redemption, and the interest
accrued thereon immediately due and payable. Upon the occurrence of an Event of
Default described in subsection (f) of Section 1101 and receipt by the Trustee
of a request from the Bank to do so, the Trustee shall, by notice in writing
delivered to the Issuer and the Company, declare the principal of all Bonds then
outstanding and the redemption premium (if any) on Bonds called for redemption,
and the interest accrued thereon immediately due and payable. Any such
principal, redemption premium and interest shall thereupon become and be
immediately due and payable. Upon such declaration of acceleration and if an
Event of Default under Section 6.1 of the Agreement shall have happened and be
subsisting, the Trustee shall immediately declare all amounts payable under
Sections 4.1 or 4.3 of the Agreement to be immediately due and payable in
accordance with Section 6.2 of the Agreement, and prior to the Expiration Date
of the Letter of Credit, shall draw moneys under the Letter of Credit in
accordance with Section 6.2 of the Agreement, in either case to pay the
principal of all outstanding Bonds and the accrued interest thereon to the date
of acceleration.
The provisions of this Section are subject, however, to the
condition that after the Expiration Date of the Letter of Credit if, at any time
after the principal of, and the redemption premium (if any) and the interest
accrued on, the Bonds shall have been so declared due and payable, all sums
payable hereunder except the principal of the Bonds which have not reached their
maturity date shall have been duly paid and all existing Events of Default shall
have been cured, all before a judgment or decree for payment of moneys due has
been obtained by the Trustee, then and in every such case such payment or cure
of such Event of Default shall constitute a waiver of such Event of Default and
its consequences and an automatic rescission and annulment of such declaration
but no such waiver shall extend to or affect any subsequent Event of Default or
impair any rights consequent thereon.
The provisions of this Section are further subject to the condition
that any waiver of any Event of Default under the Letter of Credit Agreement and
a rescission and annulment of its consequences shall constitute a waiver of the
corresponding Event of Default under this Indenture and a rescission and
annulment of the consequences thereof. If notice of such Event of Default under
the Letter of Credit Agreement shall have been given and if the Trustee shall
thereafter have received notice that such Event of Default shall have been
waived, the Trustee shall promptly give written notice of such waiver,
rescission and annulment to the Issuer, the Company
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and the Remarketing Agent, and shall give notice thereof to holders of the Bonds
in the same manner as a notice of redemption; but no such waiver, rescission and
annulment shall extend to or affect any subsequent Event of Default under this
Indenture or impair any right or remedy consequent thereon.
Section 1103. OTHER REMEDIES. Upon the occurrence of an Event of
Default the Trustee may pursue any available remedy to enforce the payment of
the principal of, and any redemption premium and interest on, the Bonds then
outstanding.
If an Event of Default shall have occurred, and if (a) requested to
do so by (i) the holders of twenty-five per centum (25%) in aggregate principal
amount of Bonds then outstanding, and (ii) prior to the Expiration Date of the
Letter of Credit, the Bank if it is not then in default in making any payment
under the Letter of Credit and (b) indemnified as provided in Section 1201, the
Trustee shall be obligated to exercise such one or more of the rights and powers
conferred by this Section as the Trustee, being advised by counsel, shall deem
most expedient in the interests of the owners of the Bonds.
No remedy by the terms of this Indenture conferred upon or reserved
to the Trustee (or to the owners of the Bonds) is intended to be exclusive of
any other remedy, but each and every such remedy shall be cumulative and shall
be in addition to any other remedy given to the Trustee or to the owners of the
Bonds hereunder or now or hereafter existing.
No delay or omission to exercise any right or power accruing upon
any default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein; and ever, such right and power may be exercised from time to time and
as often as may be deemed expedient.
No waiver of any Event of Default hereunder, whether by the Trustee
or by the owners of the Bonds shall extend to or shall affect any subsequent
default or Event of Default or shall impair any rights or remedies consequent
thereon.
Section 1104. RIGHT OF BONDHOLDERS TO DIRECT PROCEEDING. Anything in
this Indenture to the contrary notwithstanding, the holders of a majority in
aggregate principal amount of Bonds then outstanding shall have the right, at
any time, by an instrument or instruments in writing executed and delivered to
the Trustee, to annul or overrule any direction given to the Trustee by holders
of less than a majority in aggregate principal amount of Bonds or to direct the
method and place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture or any other
proceedings hereunder; provided, that (a) such direction shall not be otherwise
than in accordance with the provisions of law and of this Indenture, (b) the
Trustee shall be indemnified to its satisfaction, and (c) prior to the
Expiration Date of the Letter of Credit and
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so long as the Bank is not then in default in making any payment under the
Letter of Credit, the Bank shall have the exclusive right to annul or overrule
or give any such direction to the Trustee.
Section 1105. APPLICATION OF MONEYS. If, prior to the Completion
Date, all of the Bonds should be called for redemption or there shall occur a
declaration by the Trustee that the principal of all Bonds then outstanding and
the redemption premium (if any) on Bonds called for redemption, and the interest
accrued thereon are immediately due and payable, then the Trustee shall
immediately transfer all moneys and investments then on deposit in the
Construction Fund to the Bond Fund and shall hold the same in the special
account in the Bond Fund and use such moneys and those resulting from the
liquidation of such investments for the retirement of principal of the Bonds
ratably to the principal amount of Bonds then outstanding. All moneys, including
all moneys received pursuant to the next preceding sentence, received by the
Trustee pursuant to any right given or action taken under the provisions of this
Article shall, after payment of the fees, costs and expenses of the proceedings
resulting in the collection of such moneys and of the fees, expenses,
liabilities and advances incurred or made by the Trustee, including, without
limitation, any amounts payable to the Trustee pursuant to Section 1202, be
deposited in the Bond Fund and all such moneys in the Bond Fund shall be
applied, as follows:
(a) unless the principal of all the Bonds shall have become or have
been declared due and payable, all such moneys shall be applied:
FIRST--To the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, in the order of the
maturity of the installments of such interest and, if the amount
available shall not be sufficient to pay in full any particular
installment, then to the payment ratably, according to the amounts
due on such installment, to the persons entitled thereto, without
any discrimination or privilege; and
SECOND--To the payment to the persons entitled thereto of the
unpaid principal of any of the Bonds which shall have become due
(other than Bonds previously called for redemption for the payment
of which moneys and/or Government Obligations are held pursuant to
the provisions of this Indenture), in the order of their due date,
with interest on such Bonds from the respective dates upon which
they become due and if the amount available shall not be sufficient
to pay in full all Bonds due on any particular date, together with
such interest, then to the payment ratably, according to the amount
of principal due on such date, to the persons entitled thereto
without any discrimination or privilege;
(b) if the principal of all the Bonds shall have become due or shall
have been declared due and payable, all such moneys shall be applied to
the payment of the principal and interest then due and
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unpaid upon the Bonds, without preference or priority of principal over
interest or of interest over principal, or of any installment of interest
over any other installment of interest, or of any Bond over any other
Bond, ratably, according to the amounts due respectively for principal and
interest, to the persons entitled thereto without any discrimination or
privilege; and
(c) if the principal of all the Bonds shall have been declared due
and payable, and if such declaration shall thereafter have been rescinded
and annulled under the provisions of Section 1102 or 1109 then, subject to
the provisions of subsection (b) of this Section in the event that the
principal of all the Bonds shall later become due or be declared due and
payable, the moneys shall be applied in accordance with the provisions of
subsection (a) of this Section.
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied as soon as practicable in the manner
hereinabove set forth. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any moneys and of the fixing of any such
date, and may make payment but shall not be required to make payment to the
holder of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement, or for cancellation if fully paid.
Whenever all Bonds and interest thereon have been paid under the
provisions of this Section and all fees, expenses and charges of the Trustee,
Paying Agent and Bond Registrar have been paid, any balance remaining in the
Bond Fund shall be paid to the Bank or the Company as provided in Section 707.
Notwithstanding the provisions of this Section proceeds of a draw on
the Letter of Credit received by the Trustee pursuant to the exercise of any
right or action taken under this Article shall be applied only to the payment of
principal of and interest on the Bonds.
The Trustee shall take into account such amounts as are payable to
it in determining the amount otherwise available hereunder to pay amounts due on
the Bonds before computing the amount necessary to be drawn under the Letter of
Credit.
Section 1106. RIGHTS AND REMEDIES VESTED IN TRUSTEE. All rights of
action (including the right to file proof of claims) under this Indenture or
under any of the Bonds may be enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any trial or other proceeding
relating thereto and any such suit or proceeding instituted by the Trustee shall
be brought in its name as Trustee without the necessity of joining as plaintiffs
or defendants any holders of the Bonds, and any recovery of judgment shall
(except for any amounts payable to the Trustee pursuant to Section 1202) be
applied first for the ratable benefit of the holders of the outstanding Bonds
and when all such Bonds have been paid or provision for their payment has been
made in accordance with the Indenture then for the benefit of the Bank or the
Company pursuant to Section 707.
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Section 1107. RIGHTS AND REMEDIES OF BONDHOLDERS. No holder of any
Bond shall have any right to institute any suit, action or proceeding for the
enforcement of this Indenture or for the execution of any trust hereof or any
other remedy hereunder, unless an Event of Default has occurred of which the
Trustee has been notified as provided in subsection (e)(iv) of Section 1201, or
of which by said subsection it is deemed to have notice, and the holders of a
majority in aggregate principal amount of Bonds then outstanding, or the Bank,
in accordance with the provisions of Section 1104 shall have made written
request to the Trustee and shall have offered reasonable opportunity either to
proceed to exercise the powers hereinbefore ,granted or to institute such
action, suit or proceeding in its own name, nor unless also they have offered to
the Trustee indemnity as provided in Section 1201 nor unless the Trustee shall
thereafter fail or refuse to exercise the powers hereinbefore granted or to
institute such action, suit or proceeding in its, his, her or their own name or
names; and such notification, request and offer of indemnity are hereby declared
in every case at the option of the Trustee to be conditions precedent to any
action or cause of action for the enforcement of this Indenture or for any other
remedy hereunder; it being further understood and intended that no one or more
holders of the Bonds shall have any right in any manner whatsoever to affect,
disturb or prejudice the lien of this Indenture by its, his, her or their action
or to enforce any right hereunder except in the manner herein provided and that
proceedings shall be instituted, had and maintained in the manner herein
provided and for the ratable benefit of the holders and owners of all Bonds then
outstanding. Nothing in this Indenture contained shall, however, affect or
impair the right of any bondholder to enforce the payment of the principal of,
and interest on, any Bond at and after the maturity thereof, or the obligation
of the Issuer to pay the principal of, and redemption premium (if any) and
interest on, each of the Bonds issued hereunder to the respective holders
thereof at the time, place, from the source and in the manner provided in the
Bonds.
No holder of any Bond shall have the right to institute any suit,
action or proceeding in equity or at law to enforce a drawing under the Letter
of Credit to make any payment on the Bonds.
Section 1108. TERMINATION OF PROCEEDINGS. In case the Trustee shall
have proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer and the Trustee shall be restored to their former
positions and rights hereunder with respect to the Trust Estate, and (subject to
such determination) all rights, remedies and powers of the Trustee shall
continue as if no such proceedings had been taken.
Section 1109. WAIVERS OF EVENTS OF DEFAULT. The Trustee may in its
discretion waive any Event of Default hereunder and its consequences and rescind
any declaration of maturity of principal, and shall do so upon the written
request of (a) the holders of (i) a majority in aggregate principal
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amount of all the Bonds then outstanding in respect of which an Event of Default
in the payment of principal or interest exists, or (ii) a majority in aggregate
principal amount of all Bonds then outstanding in case of any other default or
Event of Default, and (b) prior to the Expiration Date of the Letter of Credit,
the Bank; provided, however, that there shall not be waived any Event of Default
after the Trustee has drawn on the Letter of Credit to provide funds for the
payment of the principal of, and the interest on, the Bonds called for
redemption pursuant to Section 1102; and there shall not be waived (A) an Event
of Default in respect of any failure in the payment of the principal of any
outstanding Bonds when due, whether at the date of maturity specified therein,
by acceleration or by call for redemption, or (B) an Event of Default in respect
of any failure in the payment when due of the interest on any such Bonds unless
prior to such waiver or rescission, all arrears of payments of principal,
redemption premium and interest (with interest to the extent permitted by law at
the rate borne by the Bonds in respect of which such failure shall have occurred
on overdue installments of interest), as the case may be, and all expenses of
the Trustee, in connection with such Event of Default, shall have been paid or
provided for. In case of any such waiver or rescission or in case any proceeding
taken by the Trustee on account of any such Event of Default shall have been
discontinued or abandoned or determined adversely, then and in every such case
the Issuer, the Trustee, the Bank and the bondholders shall be restored to their
former positions and rights hereunder, respectively, but no such waiver or
rescission shall extend to any subsequent or other Event of Default, or impair
any right consequent thereon.
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ARTICLE XII.
THE TRUSTEE; PAYING AGENT;
AND BOND REGISTRAR
Section 1201. ACCEPTANCE OF THE TRUSTS. The Trustee hereby accepts
the trusts imposed upon it hereby, and agrees to perform said trusts, but only
upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically
set forth in this Indenture, and no implied agreements or obligations
shall be read into this Indenture against the Trustee. In case an Event of
Default has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in its exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees but shall be answerable for the conduct of the same in
accordance with the standard specified in subsection (a) above, except
that as to attorneys, agents or receivers the Trustee shall only be
answerable for the selection of same in accordance with said standard, and
shall be entitled to advice of counsel concerning all matters of trusts
hereof and the duties hereunder, and may in all cases pay such reasonable
compensation to all such attorneys, agents, receivers and employees as may
reasonably be employed in connection with the trusts hereof. The Trustee
may act upon the opinion or advice of counsel (who may be the counsel for
the Issuer or the Company), approved by the Trustee in the exercise of
reasonable care. The Trustee shall not be responsible for any loss or
damage resulting from any action or non-action in good faith in reliance
upon such opinion or advice.
(c) Except as is specifically provided in Section 1213 with respect
to the filing of continuation statements, the Trustee shall not be
responsible for any recital herein, or in the Bonds (except in respect to
the authentication certificate of the Trustee endorsed on the Bonds), or
for insuring the Trust Estate or any part of the Facilities or collecting
any insurance moneys, or for the validity of the execution hereof by the
Issuer or of any supplements hereto or instruments of further assurance,
or for the sufficiency of the security for the Bonds; and the Trustee
shall not be bound to ascertain or inquire as to the performance or
observance of any agreements or conditions on the part of the Issuer or on
the part of the Company under the Agreement,
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except as hereinafter set forth; but the Trustee may require of the Issuer
or the Company full information and advice as to the performance of the
agreements and conditions aforesaid and as to the condition of the Trust
Estate. The Trustee shall not be responsible or liable for any loss
suffered in connection with any investment of funds made by it in
accordance with the provisions of Article VIII.
(d) Except to the extent herein specifically provided in Sections
601, 602 and 804, the Trustee shall not be accountable for the use of the
proceeds of any of the Bonds. The Trustee, the Paying Agent, the Bond
Registrar or the Remarketing Agent, in its individual capacity, may in
good faith buy, sell, own, hold or deal in any of the Bonds issued
hereunder, and may join in any action which any bondholder may be entitled
to take with like effect as if it did not act in any capacity hereunder.
The Trustee, the Paying Agent, the Bond Registrar or the Remarketing Agent
in its individual capacity, either as principal or agent, may also engage
in or be interested in any financial or other transaction with the Issuer
or the Company, and may act as depositary, trustee or agent for any
committee or body of bondholders secured thereby or other obligations of
the Issuer as freely as if it did not act in any capacity hereunder.
(e) Except as is otherwise provided in subsection (a) above:
(i) The Trustee shall be protected in acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram or
other paper or document believed to be genuine and correct and to
have been signed or sent by the proper person or persons. Any action
taken by the Trustee, pursuant hereto upon the request, authority or
consent of any person who at the time of making such request or
giving such authority or consent is the holder of any Bond, shad be
conclusive and binding upon all future holders of the same Bond and
upon Bonds issued in exchange therefor or in place thereof.
(ii) As to the existence or nonexistence of any fact or as to
the sufficiency or validity of any instrument, paper or proceeding,
the Trustee shall be entitled to rely upon a certificate signed on
behalf of the Issuer by its Chairman or Vice Chairman and attested
by its Secretary or Assistant Secretary under its seal as sufficient
evidence of the facts therein contained and prior to the occurrence
of a default or an Event of Default of which the Trustee has been
notified as provided in subsection (e)(iv) of this Section, or of
which by said subsection it is deemed to have notice, shall also be
at liberty to accept a similar certificate to the effect that any
particular dealing, transaction or action is necessary or expedient,
but may at its discretion secure such further evidence deemed
necessary or advisable, but shall in no case be bound to secure the
same. The Trustee may accept a certificate of the Secretary or
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Assistant Secretary of the Issuer under its seal to the effect that
a resolution in the form therein set forth has been adopted by the
Issuer as conclusive evidence that such resolution has been adopted
and is in full force and effect.
(iii) The right of the Trustee to do things enumerated herein
shall not be construed as a duty and the Trustee shall not be
answerable for other than its gross negligence or willful
misconduct.
(iv) The Trustee shall not be required to take notice or be
deemed to have notice of any default or Event of Default hereunder,
except Events of Default defined in subsection (a) of Section 6.1 of
the Agreement or subsections (a) or (b) of Section 1101 of this
Indenture, unless the Trustee shall be specifically notified in
writing of such default or Event of Default by the Bank, the Issuer
or by the holders of at least twenty-five per centum (25%) in
principal amount of the Bonds. All notices or other instruments
required to be delivered to the Trustee must, in order to be
effective, be delivered at the Principal Office of the Trustee, and
in the absence of such notice so delivered the Trustee may
conclusively assume there is no default or Event of Default except
as aforesaid. In the event that any payment required to be made
under the Agreement is not paid when due, the Trustee shall
immediately notify the Company by telephonic notice that such
payment has not been made and shall immediately confirm such notice
to the Company.
(f) At reasonable times and as often as reasonably requested in
connection with its rights under this Indenture, the Trustee and its duly
authorized agents who are acceptable to the Company shall have the right
to inspect all books, papers and records of the Issuer and the Company
pertaining to the Bonds and to make copies of such memoranda from and in
regard thereto as may be desired.
(g) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(h) Notwithstanding anything elsewhere herein contained, the Trustee
shall have the right, but shall not be required, to demand, respect of the
authentication of any Bonds, the withdrawal of any cash or any action
whatsoever within the purview hereof, any showings, certificates,
opinions, appraisals or other information, or corporate action or evidence
thereof, in addition to that required by the terms hereof as a condition
of such action by the Trustee which the Trustee deems desirable for the
purpose of establishing the right of the Issuer to the authentication of
any Bonds, the withdrawal of any cash, or the taking of any other action
by the Trustee.
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(i) Before taking such action at the direction of the bondholder
hereunder, the Trustee may require that a satisfactory indemnity bond be
furnished for the reimbursement of all expenses to which it may be put and
to protect it against all liability, except liability which is adjudicated
to have resulted from "the gross negligence or willful misconduct of the
Trustee by reason of any action so taken.
(j) All moneys received by the Trustee, the Paying Agent or the
Remarketing Agent for the Bonds shall, until used or applied or invested
as herein provided, be held in trust for the purposes for which they were
received but need not be segregated from other funds except to the extent
required herein or by law. Neither the Trustee, the Paying Agent nor the
Remarketing Agent shall be under any liability for interest on any moneys
received hereunder except such as may be agreed upon in writing signed by
such parties.
(k) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers hereunder.
(1) The Trustee agrees, for the benefit of the bondholders, to do
and perform all acts and things contemplated in the Agreement to be done
or performed by it.
Section 1202. FEES, CHARGES AND EXPENSES OF TRUSTEE. The Trustee
shall be entitled to payment or reimbursement for reasonable fees for its
Ordinary Services rendered hereunder and all advances, counsel fees and other
Ordinary Expenses reasonably and necessarily made or incurred by the Trustee in
connection with such services and, if it should become necessary that the
Trustee perform Extraordinary Services, it shall be entitled to reasonable extra
compensation therefor, and to reimbursement for reasonable and necessary
Extraordinary Expenses in connection therewith; provided, that if such
Extraordinary Services or Extraordinary Expenses are occasioned by its gross
negligence or willful misconduct, it shall not be entitled to compensation or
reimbursement therefor. The Trustee shall be entitled to payment and
reimbursement for the reasonable fees and charges of the Trustee as Paying Agent
and Bond Registrar for the Bonds as hereinabove provided. Upon the occurrence of
an Event of Default, but only upon such occurrence, the Trustee shall have a
first lien on the Trust Estate with right of payment prior to payment of, the
principal of, and the interest on, any Bond for the foregoing advances, fees,
costs and expenses incurred. Notwithstanding any provision hereof to the
contrary, the Trustee shall have no lien upon or right to receive payment of its
fees and expenses from amounts drawn under the Letter of Credit.
Section 1203. NOTICE TO BONDHOLDERS IF EVENT OF DEFAULT OCCURS. If
an Event of Default occurs of which the Trustee is by subsection (e)(iv) of
Section 1201 required to take notice or if notice of an Event of Default be
given as in said subsection (e)(iv) provided, then the Trustee shall give
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written notice thereof by first class mail to the holders of all Bonds then
outstanding.
Section 1204. INTERVENTION BY TRUSTEE. In any judicial proceeding to
which the Issuer is a party which, in the opinion of the Trustee and its
counsel, has a substantial bearing on the interest of the bondholders, the
Trustee may intervene on behalf of the bondholders and shall do so if requested
in writing by the holders of at least twenty-five per centum (25%) in principal
amount of the Bonds. The rights and obligations of the Trustee under this
Section are subject to the approval of a court of competent jurisdiction if such
approval is required by law as a condition to such intervention.
Section 1205. SUCCESSOR TRUSTEE. Any corporation or association into
which the Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, merger, consolidation, sale or transfer to
which it is a party, ipso facto, shall be and become successor Trustee hereunder
and be vested with all of the title to the Trust Estate and all the trusts,
powers, discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any, further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 1206. RESIGNATION BY THE TRUSTEE; JUDICIAL APPOINTMENT OF
SUCCESSOR TRUSTEE. The Trustee and any successor Trustee may at any time resign
from the trusts hereby created by giving sixty (60) days written notice to the
Issuer and the Company and by first class mail to each bondholder, and such
resignation shall take effect at the end of such sixty (60) day period, or upon
the earlier appointment of a successor Trustee by the bondholders or by the
Issuer as provided in Section 1208. Such notice to the issuer may be served
personally or sent by registered or certified mail.
In case at any time the Trustee shall resign and no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of this
Article XII prior to the date specified in the notice of resignation as the date
when such resignation is to take effect, the resigning Trustee may forthwith
apply to a court of competent jurisdiction for the appointment of a successor
Trustee. If no appointment of a successor Trustee shall be made pursuant to the
foregoing provisions of this Article XII within six (6) months after a vacancy
shall have occurred in the office of Trustee, any bondholder may apply to any
court of competent jurisdiction to appoint a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
Section 1207. REMOVAL OF THE TRUSTEE. The Trustee may be removed at
any time, by an instrument or concurrent instruments in writing delivered to the
Trustee and to the Issuer, the Company, the Remarketing Agent and the Bank and
signed by the holders of a majority in principal amount of the Bonds
outstanding.
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Section 1208. APPOINTMENT OF SUCCESSOR TRUSTEE BY THE BONDHOLDERS;
TEMPORARY TRUSTEE. If the Trustee shall resign, be removed, be dissolved, be in
course of dissolution or liquidation, or shall otherwise become incapable of
acting hereunder or in case it shall be taken under the control of any public
officer, officers or a receiver appointed by a court, a successor may be
appointed by the holders of a majority in principal amount of the Bonds, by an
instrument or concurrent instruments in writing signed by such holders, or by
their attorneys-in-fact, duly authorized; provided, nevertheless, that in case
of such vacancy the Issuer, by an instrument signed by the Chairman or Vice
Chairman of the Issuer and attested by the Secretary or Assistant Secretary of
the Issuer under its seal, may appoint a temporary Trustee to fill such vacancy
until a successor Trustee shall be appointed by the bondholders in the manner
above provided; and any such temporary Trustee shall immediately and without
further act be superseded by the Trustee so appointed by such bondholders;
provided further, however, that unless an Event of Default has occurred and is
continuing hereunder, no such appointment by the bondholders or the Issuer shall
be effective without the consent of the Company and the Bank which shall not be
unreasonably withheld. Every such Trustee appointed pursuant to the provisions
of this Section shall be a trust company or bank (having trust powers) in good
standing, shall be located within or outside the State and shall have an
unimpaired capital and surplus of not less than TWENTY-FIVE MILLION DOLLARS
($25,000,000), if there be such an institution willing, qualified and able to
accept the trusts upon reasonable or customary terms.
Section 1209. CONCERNING ANY SUCCESSOR TRUSTEE. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor and also to the Issuer an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor; but such
predecessor shall, nevertheless, on the written request of the Issuer, or of its
successor, execute and deliver an instrument transferring to such successor
Trustee all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as Trustee hereunder to its successor. Should
any instrument in writing from the Issuer be required by any successor Trustee
in order to more fully and certainly vest in such successor the estates,
properties, rights, powers and trusts hereby vested or intended to be vested in
the predecessor any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Issuer. The resignation of any
Trustee and the instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all other instruments provided for in this
Article, shall be filed or recorded by the successor Trustee in each recording
office where the Financing Statements shall have been filed or recorded.
Section 1210. TRUSTEE PROTECTED IN RELYING UPON RESOLUTIONS, ETC.
The resolutions, opinions, certificates and other instruments provided for
herein may be accepted by the Trustee as conclusive evidence of the facts
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and conclusions stated therein and shall be full warrant, protection and
authority to the Trustee for the withdrawal of moneys and for any other action
taken hereunder.
Section 1211. SUCCESSOR TRUSTEE AS CUSTODIAN OF FUNDS, PAYING AGENT
AND BOND REGISTRAR. Upon a change in the office of Trustee the predecessor
Trustee which has resigned or has been removed shall cease to be the holder of
the Bond Fund and the Paying Agent for the principal of, the redemption premium
(if any) and the interest on, the Bonds and Bond Registrar, and the successor
Trustee shall become such holder, Paying Agent and Bond Registrar.
Section 1212. TRUST ESTATE MAY BE VESTED IN CO-TRUSTEE. It is the
purpose hereof that there shall be no violation of any law of any jurisdiction
(including particularly the laws of the State) denying or restricting the right
of banking corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation hereunder and in
particular in case of the enforcement of this Indenture upon the occurrence of
an Event of Default, it may be necessary that the Trustee and the Issuer enter
into a supplemental indenture to appoint an additional individual or institution
as a separate Trustee or Co-Trustee as permitted in Section 1301(e). The
following provisions of this Section are adapted to these ends.
Upon the incapacity or lack of authority of the Trustee, by reason
of any present or future law of any jurisdiction, to exercise any of the rights,
powers and trusts herein granted to the Trustee or to hold the Trust Estate or
to take any other action which may be necessary or desirable in connection
therewith, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended to be exercised
by or vested in or conveyed to the Trustee with respect thereto shall be
exercisable by and vest in a separate Trustee or Co-Trustee appointed by the
Trustee but only to the extent necessary to enable the separate Trustee or
Co-Trustee to exercise such rights, powers and trusts, and every agreement and
obligation necessary to the exercise thereof by such separate Trustee or
Co-Trustee shall run to and be enforceable by either of them.
Should any deed, conveyance or instrument in writing from the Issuer
be required by the separate Trustee or Co-Trustee so appointed by the Trustee in
order to more fully and certainly vest in and confirm to him or it such
properties, rights, powers, trusts, duties and obligations, any and all such
deeds, conveyances and instruments shall, on request, be executed, acknowledged
and delivered by the Issuer. In case any separate Trustee or Co-Trustee, or a
successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate Trustee or Co-Trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.
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Section 1213. FILING OF CERTAIN CONTINUATION STATEMENTS. From time
to time, the Trustee shall file or cause to be filed continuation statements for
the purpose of continuing without lapse the effectiveness of (i) those Financing
Statements which shall have been filed at or prior to the issuance of the Bonds
in connection with the security for the Bonds pursuant to the authority of the
U.C.C., and (ii) any previously filed continuation statements which shall have
been filed as herein required. The Issuer shall sign and deliver to the Trustee
or its designee such continuation statements as may be requested of it from time
to time by the Trustee. Upon the filing of any such continuation statement the
Trustee shall immediately notify the Issuer that the same has been accomplished.
Section 1214. ADOPTION OF AUTHENTICATION. In case any of the Bonds
contemplated to be issued hereunder shall have been authenticated but not
delivered, any successor Trustee may adopt the certificate of authentication of
the original Trustee or of any successor of it as Trustee hereunder and deliver
the said Bonds so authenticated as hereinbefore provided; and in case any of
such Bonds shall not have been authenticated, any successor Trustee may
authenticate such Bonds in its own name. In all such cases such certificate of
authentication shall have the same force and effect as provided in the Bonds or
in this Indenture with respect to the certificate of authentication of the
Trustee.
Section 1215. SUCCESSION OF PAYING AGENTS. Any bank or trust company
with or into which any Paying Agent may be merged or consolidated, or to which
the assets and buisness of such Paying Agent may be sold, shall be deemed the
successor of such Paying Agent for the purposes of this Indenture. If the
position of Paying Agent shall become vacant for any reason. the Issuer shall,
within thirty (30) days thereafter, appoint a bank or trust company selected by
the Company (and, prior to the Expiration Date of the Letter of Credit, approved
by the Bank) and located in the same city as such Paying Agent to fill such
vacancy; provided, however, that if the Issuer shall fail to select such
successor within said period, the Trustee shall make such appointment.
The Paying Agents shall enjoy the same protective provisions in the
performance of their duties hereunder as are specified in Section 1201 with
respect to the Trustee, in so far as such provisions may be applicable.
Section 1216. RIGHT OF TRUSTEE TO PAY TAXES AND OTHER CHARGES. In
case any tax, assessment or governmental or other charge upon any part of the
Facilities, is not paid as required therein, the Trustee may, but shall not be
obligated to, pay such tax, assessment or governmental charge without prejudice,
however, to any rights of the Trustee or the holders of the Bonds hereunder
arising in consequence of such failure; and any amount at any time so paid under
this Section, with interest thereon from the date of payment at the Interest
Rate for Advances, shall become so much additional indebtedness secured by this
Indenture, and the same shall be given preference in payment over any of the
Bonds, and shall be paid out of the Revenues, if not otherwise caused to be
paid; provided, however, that such amounts shall not be paid with proceeds from
a draw on the Letter of Credit.
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Section 1217. SEVERAL CAPACITIES. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Paying Agent or a co-Paying Agent the Bond Registrar or a co-Bond Registrar,
the Remarketing Agent and in any other combination of such capacities, to the
extent permitted by law.
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ARTICLE XIII.
SUPPLEMENTAL INDENTURES
Section 1301. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF
BONDHOLDERS. Except as hereinafter set forth, the Issuer and the Trustee may
without the consent of, or notice to, any of the bondholders, enter into an
indenture or indentures supplemental to this Indenture for any one or more of
the following purposes, provided that in the opinion of Independent Counsel the
change effected thereby is not to the prejudice of the interests of the Trustee
or the bondholders:
(a) to cure any ambiguity or formal defect or omission in this
Indenture;
(b) to grant to or confer upon the Trustee for the benefit of the
bondholders any additional rights, remedies, power or authorities that may
lawfully be granted to or conferred upon the bondholders or the Trustee or
either of them;
(c) to subject to the pledge of this Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to permit the qualification hereof
and thereof under the Trust Indenture Act of 1939, as amended, or any
similar Federal statute hereafter in effect or to permit the qualification
of the Bonds for sale under the securities laws of any of the states of
the United States of America, and, if they so determine, to add hereto or
to any indenture supplemental hereto such other terms, conditions and
provisions as may be permitted by said Trust Indenture Act of 1939 or
similar Federal statute;
(e) to evidence the appointment of a separate Trustee or Co-Trustee
or the succession of a new Trustee or Paying Agent hereunder;
(f) to add to, delete or modify any provision required by Moody's or
S&P in order to assign a rating to the Bonds by either such agency; or
(g) to change the method for determining the Interest Index or the
Alternate Interest Index or to eliminate such indices or to implement the
Fixed Interest Rate; provided, however, no such supplemental indenture
shall be entered into in connection with this clause (g) unless the
Trustee shall have received an opinion of Independent Tax Counsel to the
effect that the execution of such supplemental indenture will not
adversely affect the exemption of the interest on the Bonds from Federal
income taxation.
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Section 1302. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF
BONDHOLDERS. Exclusive of supplemental indentures covered by Section 1301 and
subject to the terms and provisions contained in this Section, and not
otherwise, the owners of not less than a majority in principal amount of the
Bonds shall have the right, from time to time, anything contained in this
Indenture to the contrary notwithstanding, to consent to and approve of the
execution by the Issuer and the Trustee of such other indenture or indentures
supplemental hereto for the purpose of modifying, altering, amending, adding to
or rescinding, in any particular, any of the terms or provisions contained in
this Indenture or in any supplemental Indenture; provided, however, that nothing
in this Section contained shall permit, or be construed as permitting without
the approval of the holders of all the Bonds outstanding (a) an extension of the
maturity date on which the principal of or the interest on any Bond is, or is to
become, due and payable, (b) a reduction in the principal amount of any Bond,
the rate of interest thereon or any redemption premium, (c) a preference or
priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction
in the principal amount of the Bonds required for consent to such supplemental
indenture.
If the Issuer shall request the Trustee to enter into any such
supplemental indenture for any of the purposes of this Section, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
written notice of the proposed execution of such supplemental indenture together
with a copy of such proposed supplemental indenture to be given by first class
mail, postage prepaid, to the holders of the Bonds at their addresses shown on
the Trustee's books of registration. If, within sixty (60) days or such longer
period as shall be prescribed by the Issuer following the mailing of such
notice, the holders of not less than a majority in principal amount of the Bonds
shall have consented to and approved the execution of such supplemental
indenture as herein provided, no holder of any Bond shall have any right to
object to any of the terms and provisions contained therein, or the operation
thereof, or in any manner to question the propriety of the execution thereof, or
to enjoin or restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof. Upon the execution of any
such supplemental indenture as in this Section permitted and provided, this
Indenture shall be modified and amended in accordance therewith.
Anything herein to the contrary notwithstanding, a supplemental
indenture under this Article XIII which affects any right of the Company under
the Agreement shall not become effective unless and until the Company shall have
consented to the execution and delivery of such supplemental indenture. In this
regard, the Trustee shall cause notice of the proposed execution and delivery of
any such supplemental indenture together with a copy of the proposed
supplemental indenture to be mailed by certified or registered mail to the
Company at least fifteen (15) days prior to the proposed date of execution and
delivery of any such supplemental indenture. The Company shall be deemed to have
consented to the execution and delivery of any such supplemental indenture if
the Trustee does not receive written notice of protest or objection thereto
signed by or on behalf of the Company
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on or before 4:30 o'clock P.M., prevailing Eastern time, of the fifteenth (15th)
day after the mailing of said notice and a copy of the proposed supplemental
indenture.
This Indenture may not be amended, changed or modified except by the
execution and delivery of a supplemental indenture entered into in accordance
with the provisions of this Article XIII.
Section 1303. TRUSTEE AUTHORIZED TO JOIN IN SUPPLEMENTS; RELIANCE ON
COUNSEL. The Trustee is authorized to join with the Issuer in the execution and
delivery of any supplemental indenture permitted by this Article XIII and, in so
doing, shall be fully protected by an opinion of counsel that such supplemental
indenture is so permitted and has been duly authorized by the Issuer and that
all things necessary to make it a valid and binding supplemental indenture have
been done.
Section 1304. APPROVAL OF BANK. Anything contained in this Article
XIII to the contrary notwithstanding, so long as the Letter of Credit shall be
in effect there shall be entered into no indenture supplemental to this
Indenture without the prior written consent of the Bank.
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ARTICLE XIV.
AMENDMENT OF AGREEMENT
AND LETTER OF CREDIT
Section 1401. AMENDMENTS, ETC., TO AGREEMENT AND LETTER OF CREDIT
NOT REQUIRING CONSENT OF BONDHOLDERS. If required, the Trustee shall without the
consent of, or notice to, the bondholders consent to any amendment, change or
modification of the Agreement or the Letter of Credit as may be required
(a) by the provisions of the Agreement, the Letter of Credit or this
Indenture,
(b) for the purposes of curing any ambiguity or formal defect or
omission in the Agreement or the Letter of Credit,
(c) in connection with any other change therein which, in the
judgment of the Trustee, is not to the prejudice of the Trustee or the
bondholders, or
(d) to add to, delete or modify any provision required by Moody's or
S&P in order to assign a rating to the Bonds by either such rating agency.
Section 1402. AMENDMENTS, ETC., TO AGREEMENT AND LETTER OF CREDIT
REQUIRING CONSENT OF BONDHOLDERS. Except for the amendments, changes or
modifications as provided in Section 1401, neither the Issuer nor the Trustee
shall consent to any other amendment, change or modification of the Agreement or
the Letter of Credit without the giving of notice and the written approval or
consent of the holders of not less than a majority in principal amount of the
Bonds given and procured as in Section 1302; provided, however, that nothing
contained in this Article shall permit, or be construed as permitting, any
amendment change or modification of the Company's unconditional obligation to
make payments under the Agreement and the Company's covenants with respect to
the use and investment of the proceeds of the Bonds (except as specifically
provided for therein). If at any time the Issuer and the Company shall request
the consent of the Trustee to any such proposed amendment, change or
modification of the Agreement or the Letter of Credit, the Trustee shall, upon
being satisfactorily indemnified with respect to expenses, cause notice of such
proposed amendment, change or modification to be given in the same manner as
provided by Section 1302 with respect to proposed supplemental indentures. Such
notice shall briefly set forth the nature of such proposed amendment, change or
modification and shall state that copies of the instrument embodying the same
are on file at the Principal Office of the Trustee for inspection by
bondholders.
Section 1403. TRUSTEE AUTHORIZED TO JOIN IN AMENDMENTS; RELIANCE ON
COUNSEL. The Trustee is authorized to join with the Issuer in the
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execution and delivery of any amendment permitted by this Article XIV and, in so
doing, shall be fully protected by an opinion of counsel that such amendment is
so permitted and has been duly authorized by the Issuer and that all things
necessary to make it a valid and binding agreement have been done.
Section 1404. APPROVAL OF BANK. Anything contained in this Article
XIV to the contrary notwithstanding, so long as the Letter of Credit shall be in
effect, the Agreement may not be amended, changed or modified without the prior
written consent of the Bank.
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ARTICLE XV.
MEETINGS OF BONDHOLDERS
Section 1501. PURPOSES FOR WHICH BONDHOLDERS' MEETINGS MAY BE
CALLED. A meeting of bondholders may be called at any time and from time to time
for any of the following purposes:
(a) to give any notice to the Issuer, the Company, the Bank or the
Trustee, or to give any directions to the Trustee, or to consent to the
waiving of any default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by bondholders pursuant
to Section 1107;
(b) to remove the Trustee pursuant to Section 1207, and to appoint a
successor trustee pursuant to Section 1208;
(c) to consent to the execution of a supplemental indenture pursuant
to Section 1302, or to consent to the execution of an amendment, change or
modification of the Agreement pursuant to Section 1402; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified principal amount of the Bonds under any
other provision hereof or under applicable law.
Section 1502. PLACE OF MEETINGS OF BONDHOLDERS. Meetings of
bondholders may be held at such place or places as the Trustee or, in case of
its failure to act, the bondholders calling the meeting shall from time to time
determine.
Section 1503. CALL AND NOTICE OF BONDHOLDERS' MEETINGS.
(a) The Trustee may at any time call a meeting of bondholders to be
held at such time and at such place as the Trustee shall determine. Notice of
every meeting of bondholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be by first class mail postage prepaid, to the bondholders at the address
shown on the registration books.
(b) In case at any time the holders of at least ten per centum (10%)
in aggregate principal amount of the Bonds outstanding shall have requested the
Trustee to call a meeting of the bondholders by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have given the notice of such meeting within twenty (20) days
after receipt of such request, then such bondholders may determine the time and
the place for such meeting and may call such meeting to take any action
authorized in Section 1501 by giving notice thereof as provided in subsection
(a) of this Section.
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Section 1504. PERSONS ENTITLED TO VOTE AT BONDHOLDERS' MEETINGS. To
be entitled to vote at any meeting of bondholders, a person shall be a holder of
one or more Bonds outstanding, or a person appointed by an instrument in writing
as proxy for a bondholder by such bondholder. The only persons who shall be
entitled to be present or to speak at any meeting of bondholders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel and any representatives of the Issuer and its counsel.
Section 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND
ADJOURNMENT OF MEETINGS.
(a) Notwithstanding any other provisions hereof, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
bondholders in regard to proof of the holding of Bonds and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Bonds shall be proved in the manner specified in
Section 1601 and the appointment of any proxy shall be proved in the manner
specified in Section 1601 or by having the signature of the person executing the
proxy witnessed or guaranteed by any bank, banker or trust company authorized by
Section 1601 to certify to the holding of Bonds. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 1601 or other
proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
bondholders as provided in subsection (b) of Section 1503, in which case the
bondholders calling the meeting shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority of the Bonds represented at the
meeting and entitled to vote.
(c) At any meeting each bondholder or proxy shall be entitled to one
vote for each $5,000 principal amount of Bonds outstanding held or represented
by him; provided, however, that no vote shall be cast or counted at any meeting
in respect of any Bond challenged as not outstanding and ruled by the chairman
of the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote, except as a bondholder or proxy.
(d) At any meeting of bondholders, the presence of persons holding
or representing Bonds in an aggregate principal amount sufficient under the
appropriate provision hereof to take action upon the business for the
transaction of which such meeting was called shall constitute a quorum. Any
meeting of bondholders called pursuant In Section 1503 may be adjourned from
time to time by vote of the holders (or proxies for the holders) of a
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majority of the Bonds represented at the meeting and entitled to vote, whether
or not a quorum shall be present; and the meeting may be held as so adjourned
without further notice.
Section 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The
vote upon any resolution submitted to any meeting of bondholders shall be by
written ballots on which shall be subscribed the signatures of the bondholders
or of their representatives by proxy and the number or numbers of the Bonds
outstanding held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in triplicate, of the proceedings
of each meeting of bondholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was published or mailed as provided in
Section 1503. Each copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Issuer, another to the Company and another to the Trustee to be
preserved by the Trustee, which copy shall have attached thereto the ballots
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
Section 1507. REVOCATION BY BONDHOLDERS. At any time prior to (but
not after) the evidencing to the Trustee, in the manner provided in Section
1506, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Bonds specified herein in connection with such action,
any holder of a Bond the number of which is included in the Bonds the holders of
which have consented to such action may, by filing written notice with the
Trustee at its Principal Office and upon proof of holding as provided in Section
1601, revoke such consent so far as concerns such Bond. Except as aforesaid any
such consent given by the holder of any Bond shall be conclusive and binding
upon such holder and upon all future holders of such Bond and of any Bond issued
in exchange therefor or in lieu thereof, irrespective of whether or not any
notation in regard thereto is made upon such Bond. Any action taken by the
holders of the percentage in principal amount of the Bonds specified herein in
connection with such action shall be conclusively binding upon the Issuer, the
Company, the Trustee, the Bank and the holders of all the Bonds.
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<PAGE> 99
ARTICLE XVI.
MISCELLANEOUS
Section 1601. CONSENTS, ETC., OF BONDHOLDERS.
(a) Any request demand, authorization, direction, notice, consent,
waiver or other action provided to be given or taken by bondholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such bondholders in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Issuer and the
Company. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose hereof and conclusive in
favor of the Trustee, the Company and the Issuer, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution by the certificate of any notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership, on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Bonds shall be proved by the registration books
kept by the Trustee as Bond Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any bondholder shall bind every future holder of the
same Bond in respect of anything done or suffered to be done by the Trustee or
the Issuer in reliance thereon, whether or not notation of such action is made
upon such Bond.
Section 1602. ISSUER'S OBLIGATIONS LIMITED. No recourse under or
upon any obligation or agreement contained in this Indenture or in any Bond or
under any judgment obtained against the Issuer, or by the enforcement of any
assessment or by any legal or equitable proceeding by virtue of any constitution
or statute or otherwise or under any circumstances, under or independent of this
Indenture, shall be had against the Issuer.
Anything in this Indenture to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that (a) the Issuer may
rely conclusively on the truth and accuracy of any certificate, opinion, notice
or other instrument furnished to the Issuer by the Trustee or the
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<PAGE> 100
Company as to the existence of any fact or state of affairs required hereunder
to be noticed by the Issuer; (b) the Issuer shall not be under any obligation
hereunder to perform any record-keeping or to provide any legal services, it
being understood that such services shall be performed either by the Trustee or
the Company; and (c) none of the provisions of this Indenture shall require the
Issuer to expend or risk its own funds or to otherwise incur financial liability
in the performance of any of its duties or in the exercise of any of its rights
or powers hereunder, unless it shall first have been adequately indemnified to
its satisfaction against the cost, expenses and liability which may be incurred
thereby.
Notwithstanding anything herein contained to the contrary, any
obligation which the Issuer may incur under this Indenture or under any
instrument executed in connection herewith which shall entail the expenditure of
money shall not be a general obligation of the Issuer but shall be a limited
obligation payable solely from the Revenues.
Section 1603. IMMUNITY OF DIRECTORS, OFFICERS AND EMPLOYEES OF
ISSUER. No recourse shall be had for the enforcement of any obligation, promise
or agreement of the Issuer contained in the Agreement, this Indenture or in any
Bond issued hereunder for any claim based thereon or otherwise in respect
thereof, against any director, officer or employee, as such, in his individual
capacity, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor corporation,
whether by virtue of any constitutional provision, statute or rule of law, or by
the enforcement of any assignment or penalty or otherwise; it being expressly
agreed and understood that the Bonds, the Agreement and this Indenture are
solely corporate obligations, and that no personal liability whatsoever shall
attach to, or be incurred by, any director, officer or employee as such, past,
present or future, of the Issuer or of any successor corporation, either
directly or through the Issuer or any successor corporation, under or by reason
of any of the obligations, promises or agreements entered into between the
Issuer and the Company whether contained in the Agreement or to be implied
therefrom as being supplemental hereto or thereto, and that all personal
liability of that character against every such director, officer and employee
is, by the execution of the Agreement and this Indenture, and as a condition of,
and as part of the consideration for, the execution of the Agreement and this
Indenture, expressly waived and released.
Section 1604. LIMITATION OF RIGHTS. With the exception of rights
herein expressly conferred, nothing expressed or mentioned in or to be implied
herefrom or from the Bonds is intended or shall be construed to give to any
person other than the parties hereto, the Company, the Bank and the holders of
the Bonds, any legal or equitable right, remedy or claim under or in respect
hereto or any agreements, conditions and provisions herein contained; this
Indenture and all of the agreements, conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto, the Company, the Bank and the holders of the Bonds as herein provided.
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<PAGE> 101
Section 1605. SEVERABILITY. If any provision hereof shall be held or
deemed to be or shall, in fact, be inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provision in question invalid, inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever.
Section 1606. NOTICES. It shall be sufficient service of any notice,
approval, consent, request, complaint, demand or other communication if the same
shall be delivered or mailed by first class registered or certified mail, return
receipt requested, postage prepaid, and addressed, as follows:
(a) If to the Issuer: Development Authority of DeKalb
County
Attention: Chairman
6485 Peachtree Industrial Blvd.
Doraville, Georgia 30360
(b) If to the Company: Radiation Sterilizers, Incorporated
Attention: President
3000 Sand Hill Road
Menlo Park, California 94025
(c) If to the Trustee: Bank One Trust Company, N.A.
Attention: Corporate Trust
Administration
100 East Broad Street
Columbus, Ohio 43271-0181
(d) If to the Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
Attention: George Huxtable,
Vice President
2055 Gateway Plaza, Suite 200
San Jose, California 95110
A duplicate copy of each notice, approval, consent, request, complaint, demand
or other communication given hereunder by the Issuer, the Company, the Trustee
or the Bank to any one of the others shall also be given to all of the others.
The Issuer, the Company, the Trustee and the Bank may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, approvals, consents, requests, complaints, demands or other
communications shall be sent or persons to whose attention the same shall be
directed.
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<PAGE> 102
Section 1607. TRUSTEE AS PAYING AGENT AND BOND REGISTRAR. The
Trustee is hereby designated and agrees to act as Paying Agent and Bond
Registrar for and in respect to the Bonds.
Section 1608. PAYMENTS DUE ON DAYS OTHER THAN BUSINESS DAYS. After
the Conversion Date, in any case where the date of maturity of principal of
and/or interest on the Bonds or the date fixed for the redemption of any Bonds
shall not be a Business Day, then payment of principal, redemption premium (if
any) and/or interest need not be made on such date but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for the redemption, and if made on such next
succeeding Business Day no interest shall accrue for the period after such date.
Section 1609. COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
Section 1610. PRIORITY OVER OTHER LIENS. It is intended that this
Indenture shall be superior to any other lien which may be placed upon the
Revenues, the Bond Fund, the Construction Fund or any other funds or accounts
created pursuant to this Indenture.
Section 1611. BINDING EFFECT. This instrument shall inure to the
benefit of and shall be binding upon the Issuer and the Trustee and their
respective successors and assigns, subject, however, to the limitations
contained in this Indenture.
Section 1612. CAPTIONS. The captions or headings in this Indenture
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Indenture.
Section 1613. NOTICE TO S&P. The Trustee hereby agrees to notify S&P
in writing, signed by an authorized officer of the Trustee, with respect to: (a)
any change in the office of Trustee under the Indenture; (b) any amendment of or
supplement to the Indenture or the Agreement; (c) redemption, in full, of the
Bonds; (d) conversion of the interest rate borne by the Bonds to a Fixed
Interest Rate; (e) the expiration of the Letter of Credit; or (f) any amendment
to the Letter of Credit.
Section 1614. REFERENCES TO BANK. After the Letter of Credit is no
longer in effect and all amounts owing to the Bank under the Letter of Credit
Agreement and related documents have been paid, any provision of this Indenture
requiring notification to be given to the Bank, or requiring that the Bank
consent to any action, shall become ineffective.
Section 1615. LAWS GOVERNING INDENTURE. The effect and meaning
hereof and the rights of all parties hereunder shall be governed by, and
construed according to, the laws of the State of Georgia except that the duties,
responsibilities, obligations and powers of the Trustee hereunder
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<PAGE> 103
shall be governed by and construed according to the laws of the State of Ohio,
but it is the intention of the Issuer that the situs of the trust created by
this Indenture be in the state in which is located the principal office of the
Trustee from time to time acting under this Indenture. The word "Trustee" as
used in the preceding sentence shall not be deemed to include any additional
individual or institution appointed as a separate or Co-Trustee pursuant to
Section 1211 of this Indenture. It is the further intention of the Issuer that
the Trustee administer said trust in the state in which is located, from time to
time, the situs of said trust.
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<PAGE> 104
IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed in its
corporate name and its corporate seal to be affixed hereto and attested by its
authorized officers, and to evidence As acceptance of the trusts hereby created
the Trustee has caused these presents to be executed in its corporate name and
its corporate seal to be affixed hereto and attested by its authorized officers,
all as of the date first above written.
DEVELOPMENT AUTHORITY
OF DEKALB COUNTY
(CORPORATE SEAL)
By:[SIG]
-----------------------------
Chairman
Attest:
/s/ Nancy E. Nolan
- ------------------------------
Secretary
(Execution by the Trustee appears on the following page.)
<PAGE> 105
BANK ONE TRUST COMPANY, N.A.,
as Trustee
(CORPORATE SEAL)
By:[SIG]
-----------------------------
Title: Trust Administrator
Attest:
[SIG]
- ------------------------------
Title: Senior Trust Officer
(Acknowledgment and Consent of the Company
appears on the following page.)
<PAGE> 106
ACKNOWLEDGMENT AND CONSENT OF COMPANY
The undersigned, on behalf of RADIATION STERILIZERS, INCORPORATED, a
California corporation, HEREBY ACKNOWLEDGES NOTICE OF, AND HEREBY CONSENTS TO
(a) the assignment provisions contained within the Granting Clauses of the
foregoing Trust Indenture, and (b) all terms and conditions set forth in said
Trust Indenture, and intending to be legally bound, HEREBY AGREES with the
DEVELOPMENT AUTHORITY OF DEKALB COUNTY and BANK ONE TRUST COMPANY, N.A., as
Trustee, to perform, accept or be bound by any applicable terms and conditions
set forth in said Trust Indenture.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of March 1, 1985.
RADIATION STERILIZERS,
INCORPORATED
(CORPORATE SEAL) By:/s/ Allan Chin
-----------------------------
President
Attest:
[SIG]
- ------------------------------
Secretary
(END OF TRUST INDENTURE.)
<PAGE> 1
EXHIBIT 10.36
LETTER OF CREDIT
----------------
AGREEMENT
---------
Between
RADIATION STERILIZERS, INCORPORATED
and
WELLS FARGO BANK, N.A.
Dated as of March 1, 1985
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Definitions and Accounting Terms 1
1.1 Defined Terms 1
1.2 Use of Defined Terms 5
1.3 Accounting Terms 5
1.4 Exhibits 5
2. Bonds 5
3. Letter of Credit 5
4. Loan Documents 6
4.1 Guaranty 6
4.2 Security Documents 6
4.3 Pledge Agreement 6
4.4 Other Documents and Actions 7
4.5 Additional Security 7
5. Conditions to Issuance and Disbursements 7
5.1 Conditions to Issuance 7
5.2 Conditions to Disbursements 9
6. Reimbursement and Other Payments; Extension 10
6.1 Reimbursement 10
6.2 Fees 11
6.3 Increased Costs Due to Change in Law 11
6.4 Obligations Absolute 12
6.5 Extension of Letter of Credit 13
7. Representations and Warranties by Company 13
7.1 Formation of Company 13
7.2 Execution, Delivery and Performance of
Loan Documents and Bond Documents 13
7.3 Financial Statements 15
7.4 No Material Adverse Change 15
7.5 Tax Liability 15
7.6 Compliance with Laws 15
7.7 Litigation 16
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<PAGE> 3
Page
----
7.8 Official Statement 16
7.9 Conditions to Disbursement 16
8. Representations and Warranties by Bank 16
8.1 Formation of Bank 16
8.2 Authorization 16
8.3 No Conflict 17
8.4 Actions and Proceedings 17
9. Affirmative Covenants 17
9.1 Governmental Approvals 17
9.2 Continued Existence 17
9.3 Books and Records 17
9.4 Annual Operating Statements 18
9.5 Notice of Certain Events 18
9.6 Opinions 19
9.7 Defaults of Others 19
9.8 Tax Appeals 19
9.9 Surplus Construction Funds, 19
9.10 Notice Re Disbursement Conditions 19
10. Negative Covenants 19
10.1 Transfers of Project or Obligations 19
10.2 Liens on Project 20
10.3 Liens on Personal Property 20
11. Events of Default and Remedies Upon Default 20
11.1 Events of Default 20
11.2 Remedies Upon Default 22
11.3 Cumulative Remedies; No Waiver 23
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<PAGE> 4
Page
----
12. Miscellaneous 24
12.1 Actions 24
12.2 Nonliability of Bank 24
12.3 No Representations by Bank 25
12.4 No Third Parties Benefited 26
12.5 Indemnity by Company 26
12.6 Commissions 27
12.7 Binding Effect 27
12.8 Execution in Counterparts 27
12.9 Prior Agreements; Amendments; Consents 27
12.10 Survival of Representations and
Warranties 28
12.11 Notices 28
12.12 Further Assurances 29
12.13 Governing Law 29
12.14 Severability of Provisions 29
12.15 Inconsistency With Security Documents 29
12.16 Headings 30
12.17 Time of the Essence 30
12.18 No FDIC Insurance 30
13. Interest and Payment Terms 30
13.1 Manner of Payment 30
13.2 Interest 30
13.3 Waivers 31
EXHIBITS
- --------
"A" Letter of Credit 33
"B" Conditions to Disbursement,, 34
"C" Legal Descriptions of the Properties 35
"D" Permitted Title Exceptions 36
"E" Project Description 37
"F" Permitted Project Liens 38
-iii-
<PAGE> 5
LETTER OF CREDIT AGREEMENT
This Letter of Credit Agreement is entered into as of March 1, 1985,
by and between RADIATION STERILIZERS, INCORPORATED, a California corporation
("Company"), and WELLS FARGO BANK, N.A., a national banking association
("Bank").
1. Definitions And Accounting Terms.
1.1 Defined Terms. As used in this Letter of Credit Agreement, the
following terms shall have the meanings set forth respectively after each:
(a) "Agreement" means this Letter of Credit Agreement, either
as originally executed or as it may from time to time be supplemented,
modified or amended.
(b) "ALTA Policies" means the policies of title insurance
covering the Properties required pursuant to Section 5.1.3 of this
Agreement.
(c) "Bond Documents" means all of the instruments, documents
and agreements which may be executed from time to time by Issuer, Trustee,
the Original Purchaser and/or Company in connection with the Bonds,
including without limitation the following, each of which were executed as
of even date herewith unless otherwise indicated and in each case either
as originally executed or as the same may from time to time be
supplemented, modified or amended:
(1) Loan Agreement between Issuer and Company (the "Loan
Agreement");
(2) Trust Indenture between Issuer and Trustee (the
"Trust Indenture");
(3) Bond Purchase Agreement between Company, Issuer and
the Original Purchaser (the "Bond Purchase Agreement").
(d) "Bond Proceeds" means the proceeds of the Bonds, including
without limitation any insurance or condemnation proceeds or other assets
held by the Trustee in special funds established pursuant to the Bond
Documents or otherwise.
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<PAGE> 6
(e) "Bond Resolution" means the resolution adopted by the
Issuer authorizing the issuance of the Bonds.
(f) "Bonds" means the Development Authority of DeKalb County
Variable Rate Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985, to be issued pursuant to
the Trust Indenture.
(g) "Business Day" means any day of the year, other than a
Saturday or a Sunday, (a) on which banks located (i) in the cities in
which the principal corporate trust office of the Trustee and the
principal office of the Bank are located, and (ii) in New York, New York,
are not required or authorized by law to remain closed, and (b) on which
the New York Stock Exchange, Inc. is not closed.
(h) "Code" means the Internal Revenue Code of 1954, as
amended, and references to the Code and Sections of the Code shall include
relevant regulations and proposed regulations thereunder and any successor
provisions to such Sections, regulations or proposed regulations.
(i) "Company Bonds" means Bonds (a) purchased by Trustee or
the Remarketing Agent (as defined in the Trust Indenture) with moneys
furnished by Company pursuant to Section 4.11 of the Loan Agreement and
(b) delivered to Bank or its nominee pursuant to Section 401(j) or 401(k)
of the Trust Indenture as a result of the occurrence of an Event of
Default.
(j) "Conditions to Disbursement" means the conditions set
forth in Exhibit "B" hereto, either as now existing or as it may from time
to time be supplemented, modified or amended.
(k) "Deeds of Trust" means the deeds of trust covering the
Properties required pursuant to Section 4.2(a) of this Agreement, either
as originally executed or as any of them may from time to time be
supplemented, modified or amended.
(l) "Designated Representative" means either the "Authorized
Company Representative" under the Loan Agreement or, if Bank so requests,
a different Person, authorized by Company, with the approval of Bank, to
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<PAGE> 7
deliver certificates, requests for disbursements and other documents and
material to Bank pursuant to this Agreement.
(m) "Disbursement" means each of the disbursements by Trustee
of Bond Proceeds pursuant to this Agreement and the Bond Documents.
(n) "Documents" means, collectively, the Bond Documents and
the Loan Documents.
(o) "Drawing Bonds" means Bonds delivered or deemed delivered
to Bank or its nominee pursuant to the Trust Indenture as the result of a
"C Drawing," or a "C Drawing" and a "D Drawing," under the Letter of
Credit.
(p) "Event of Default" means each of those events so
designated in Article 11 of this Agreement.
(q) "Financing Statements" means the UCC-1 financing
statements required pursuant to Section 4.2(c) of this Agreement, either
as originally executed or as they may from time to time be supplemented,
modified or amended.
(r) "Fiscal Year" means Company's fiscal year, ending on March
31 of each calendar year.
(s) "Guarantor" means Charles King & Associates, a California
limited partnership.
(t) "Guaranty" means the guaranty required pursuant to Section
4.1 of this Agreement, either as originally executed or as it may from
time to time be supplemented, modified or amended.
(u) "Issuer" means the Development Authority of DeKalb County.
(v) "Letter of Credit" means the letter of credit to be issued
by Bank pursuant to this Agreement, either as originally executed or as it
may from time to time be supplemented, modified or amended.
(w) "Loan Documents" means, collectively, this Agreement and
the Security Documents, in each case either as originally executed or as
the same may from time to time be supplemented, modified or amended.
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<PAGE> 8
(x) "Original Purchaser" means Prudential-Bache Securities
Inc., a Delaware corporation.
(y) "Person" means any person or entity, whether an
individual, trustee, corporation, partnership, trust, unincorporated
organization or otherwise.
(z) "Personal Property" means all of Guarantor's right, title,
interest in and to all furniture, furnishings, fixtures, machinery,
equipment, inventory and personal property of every kind and nature,
whether tangible or intangible, now or hereafter located at, upon or about
any of the Properties, or used or to be used in connection with or
relating to or arising with respect to any Property.
(aa) "Pledge Agreement" means the pledge and security
agreement required pursuant to Section 4.3 of this Agreement, either as
originally executed or as it may from time to time be supplemented,
modified or amended.
(bb) "Project" means the construction and operation of the
industrial facility described in Exhibit "E" hereto for the sterilization
of packaged products using ionizing radiation, as provided in the Loan
Agreement.
(cc) "Project Costs" means all costs of any nature whatsoever
incurred by or on behalf of Company in connection with the Project.
(dd) "Properties" means, collectively, the parcels of real
property described in Exhibit "C" attached hereto.
(ee) "Remarketing Agent" means the Remarketing Agent appointed
in accordance with Section 403 of the Trust Indenture.
(ff) "Security Agreement" means the security agreement
covering the Personal Property required pursuant to Section 4.2(b) of this
Agreement, either as originally executed or as it may from time to time be
supplemented, modified or amended.
(gg) "Security Documents" means, collectively, the Deeds of
Trust, the Security Agreement, the Financing Statements, the Guaranty, the
Pledge Agreement, and any
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<PAGE> 9
other mortgage, deed of trust, security agreement, financing statement,
assignment or guaranty now, heretofore or hereafter executed to secure the
obligations of Company to Bank under this Agreement, the obligations of
Guarantor to Bank under the Guaranty or the obligations of Company to
Trustee under the Loan Agreement and other Documents, in each case either
as originally executed or as the same may from time to time be
supplemented, modified or amended.
(hh) "Trustee" means Bank One Trust Company, N.A., a national
banking association, or its successors as trustee under the Trust
Indenture.
1.2 Use of Defined Terms. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any number of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
generally accepted accounting principles applied on a consistent basis.
1.4 Exhibits. All Exhibits to this Agreement, either as now existing
or as the same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
2. Bonds. Company contemplates entry into the Bond Documents in order to
cause the issuance of the Bonds, so that the Bond Proceeds may be used to
finance the Project.
3. Letter of Credit. In order to enhance the marketability of the Bonds,
Company has requested Bank to issue an irrevocable letter of credit in the form
attached hereto as Exhibit "A" (such letter of credit and any successor or
substitute letter of credit issued pursuant to this Agreement being herein
individually and collectively referred to as the "Letter of Credit") in an
aggregate amount not exceeding $5,408,220.00, of which an amount not exceeding
$5,250,000.00 shall be available to pay the principal amount or purchase price
of the Bonds, and an amount not exceeding $158,220.00 shall be available to pay
for interest accrued on the Bonds, all as more particularly provided in the
Letter of Credit. Bank is willing to issue the Letter of Credit on the terms
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<PAGE> 10
and conditions contained in this Agreement and the other Loan Documents.
4. Loan Documents.
4.1 Guaranty. In consideration of Bank's entry into this Agreement
and the other Loan Documents, and in order to guarantee the prompt payment when
due of all sums of principal and interest advanced by Bank pursuant to the
Letter of Credit as well as the prompt payment when due of any other sums owing
pursuant to this Agreement or any of the other Loan Documents, Company shall, at
its sole expense, deliver or cause to be delivered to Bank a guaranty (the
"Guaranty") executed by Guarantor, in such form and content as Bank shall in its
sole discretion require.
4.2 Security Documents. In consideration of Bank's entry into this
Agreement and the other Loan Documents, and as security for (1) each and every
obligation of Guarantor under the Guaranty, and (2) each and every obligation of
Company to Trustee under the Loan Agreement and the other Documents, Company
shall, at its sole expense, deliver or cause to be delivered by Guarantor to
Bank, and record or cause to be recorded, if appropriate, the following
documents, each of which shall be in such form and content, and executed by such
persons and/or entities, as Bank shall in its sole discretion require, and all
of which, along with the Guaranty and the Pledge Agreement, are collectively
referred to in this Agreement as the "Security Documents":
(a) A deed of trust covering each of the Properties
(collectively, the "Deeds of Trust").
(b) A security agreement granting to Bank and Trustee a
security interest in the Personal Property (the "Security Agreement").
(c) Two financing statements covering the Personal Property,
the Drawing Bonds and the Company Bonds (the "Financing Statements").
4.3 Pledge Agreement. In consideration of Bank's entry into this
Agreement and the other Loan Documents, and as security for the prompt payment
when due of all sums of principal and interest advanced by Bank pursuant to the
Letter of Credit as well as for payment of any other sums owing pursuant to this
Agreement or any of the other Loan Documents, Company shall, at its sole
expense, deliver or cause to be delivered to Bank a pledge and security agree-
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<PAGE> 11
ment (the "Pledge Agreement") executed by Company, in such form and content as
Bank shall in its sole discretion require, assigning to Bank Company's right,
title and interest to the Drawing Bonds and the Company Bonds.
4.4 Other Documents and Actions. Company agrees to execute,
acknowledge and/or deliver or cause to be executed, acknowledged and/or
delivered to Bank such other instruments, agreements and other documents
(including without limitation such amendments to the Security Documents as may
be required by Bank in order to reflect amendments or supplements to this
Agreement), and to take such actions, upon request by Bank, as Bank may
reasonably request in order to carry out the purposes of this Agreement and the
other Loan Documents and the transactions contemplated thereby and to protect
and/or further the validity, priority and/or enforceability of the Security
Documents or subject to the Security Documents any property, together with any
renewals, additions, substitutions, replacements or betterments thereto,
intended by the terms of this Agreement or the other Loan Documents to be
covered by the Security Documents.
4.5 Additional Security. Bank shall not acquire any security for the
obligations of Company, Guarantor or Charles W. King, Jr. under this Agreement
or the other Loan Documents, other than the Pledge Agreement and the Guaranty,
unless Company shall have afforded to Trustee, for the benefit of the holders of
the Bonds, prior to or simultaneously with the taking by Bank of such security,
rights which shall, at the option of Bank, be either senior to the rights of
Bank or of equal priority with the rights of Bank in connection with such
security.
5. Conditions to Issuance and Disbursements.
5.1 Conditions to Issuance. The obligation of Bank to issue the
Letter of Credit is subject to the following conditions precedent:
5.1.1 Bank shall have received all of the following, each of
which shall be in form and substance satisfactory to Bank:
(a) the original Guaranty;
(b) the original Deeds of Trust;
(c) the original Security Agreement;
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(d) the original Financing Statements;
(e) the original Pledge Agreement;
(f) copies of the articles and by-laws of Company and any and
all supplements and amendments thereto, all certified to be true and
correct by the Secretary of Company;
(g) an original of each of the opinions, certificates, letters
and other documents specified in, Section 5(b) of the Bond Purchase
Agreement, in each case addressed to Bank;
(h) a written opinion of Company's counsel, in form and
substance satisfactory to Bank, covering such matters relating to Company
and the Loan Documents as may be required by Bank;
(i) a copy of the partnership agreement of Guarantor, a copy
of the certificate of limited partnership of Guarantor as recorded in San
Mateo County, California, a copy of the Form LP-1 filed for Borrower with
the California Secretary of State, and copies of any and all amendments to
such documents, all certified as true, complete and correct by Charles W.
King, Jr.;
(j) a written opinion of Guarantor's counsel, in form and
substance satisfactory to Bank, covering such matters relating to
Guarantor and the Loan Documents as may be required by Bank;
(k) the certificate required pursuant to Section 7.2.1, below;
(l) a copy of the Bond Resolution, certified by the Secretary
or an Assistant Secretary of Issuer (which certificate shall state that
the Bond Resolution is in full force and effect on the date of initial
authentication and delivery of the Bonds to the Original Purchaser);
(m) an executed copy (or a duplicate thereof) of the Trust
Indenture and the Loan Agreement;
(n) the financial statements of Company and Guarantor required
to be furnished hereunder and under
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the Guaranty, and the insurance policies required to be furnished by the
Guarantor under the Guaranty; and
(o) such other instruments, certificates, opinions, consents
and other documents as Bank may reasonably require.
5.1.2 The Deeds of Trust shall have been duly recorded.
5.1.3 Company shall, at its sole expense, have delivered or
caused to be delivered to Bank original ALTA form extended coverage lender's
policies of title insurance, or evidence of commitments therefor satisfactory to
Bank, in form and substance and issued by an insurer or insurers satisfactory to
Bank, together with such indorsements (including without limitation CLTA Form
100 and 116 endorsements) and binders thereto as may from time to time be
required by Bank, naming Bank and Trustee, as their interests appear, as
insured, in an aggregate policy amount of not less than $5,410,000.00, insuring
the Deeds of Trust to be valid liens upon the Properties, subordinate to no
prior mortgages, deeds of trust or like encumbrances other than the matters
listed in Exhibit "D" attached hereto (the "Permitted Encumbrances"), and
showing the Properties to be owned by Guarantor in fee simple.
5.1.4 The Financing Statements shall have been filed with the
California Secretary of State, and Bank shall have received a certificate of the
California Secretary of State, in form and substance satisfactory to Bank,
showing the Financing Statements to be subject to no prior filings other than
filings perfecting rights of other lenders with respect to security interests
("Permitted Liens") granted by Company in conjunction with any Permitted
Encumbrance.
5.1.5 The Bonds shall have been simultaneously duly executed
and delivered, all of the Bonds shall have been sold, and the full authorized
face amount of the Bonds (less such fees to the Original Purchaser as are paid
therefrom at the time of sale, as provided in the Bond Documents) shall have
been received by Trustee, as required pursuant to the Bond Documents.
5.2 Conditions to Disbursements. The conditions described in
"Exhibit B" attached hereto shall be conditions precedent to each Disbursement.
Following the initial purchase of the Bonds by the Original Purchaser, Bank
shall provide Trustee with a standing written approval of all Disbursements
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thereafter requested by the Authorized Company Representative (as defined in the
Loan Agreement); provided, however, that such standing approval shall
automatically be revoked as of the date on which any Event of Default (or event
which, with the giving of notice or the passage of time or both, would
constitute an Event of Default) occurs or on which any Condition to Disbursement
fails to be fulfilled. Following any such revocation, Bank's approval shall be
required at the time of each Disbursement unless and until Bank, in its sole
discretion, chooses to provide Trustee with another revocable standing approval.
6. Reimbursement and Other Payments; Extension.
6.1 Reimbursement. Company hereby agrees to pay to Bank at the times
indicated, in cash or by such other means as may be satisfactory to Bank in its
sole discretion, the following:
(a) on the date of any disbursement of funds by Bank under the
Letter of Credit, the entire amount of any and all funds disbursed by Bank
under the Letter of Credit;
(b) upon demand, all reasonable amounts expended, advanced or
incurred by Bank (i) in connection with the negotiation, preparation,
execution, delivery, issuance, administration and performance of the
Letter of Credit, this Agreement or any other Loan Document, or any matter
related thereto; (ii) to satisfy any obligation of Company or Guarantor
under this Agreement or any of the Loan Documents; and (iii) to collect
the Notes and to enforce the rights of the Bank under this Agreement or
any other Loan Document (including without limitation any costs incurred
by Bank in connection with any insolvency or bankruptcy proceeding
affecting Company or Guarantor or any other Person involved in the
Project), which amounts will include all court costs, appraisal fees,
reasonable attorneys' fees, fees of auditors and accountants and
investigation expenses reasonably incurred by Bank in connection with any
such matters;
(c) upon demand, all other amounts owing to Bank by Company
under this Agreement or any of the other Loan Documents.
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All sums owing pursuant to this Agreement and the other Loan Documents shall be
payable with interest as provided in Article 13.
6.2 Fees. Company hereby agrees to pay to Bank, in cash or by such
other means as may be satisfactory to Bank in its sole discretion (i) on or
before the date on which the Bonds are sold to the Original Purchaser pursuant
to the Bond Purchase Agreement, as a loan administration fee for the first year
of the term of the Letter of Credit, in advance, an amount equal to one percent
(1%) of the undrawn amount initially available to be drawn under the Letter of
Credit; and (ii) for each subsequent year that the Letter of Credit remains in
effect until the expiration of its three (3) year term, Company will pay to
Bank, in advance, on or before the anniversary of issuance of the Letter of
Credit, a loan administration fee in an amount equal to one percent (1%) of the
undrawn amount available to be drawn under the Letter of Credit as of the last
day of the preceding year of the term of the Letter of Credit (which amount will
take into account principal reductions of the Bonds). In no event shall Bank
have any obligation to make reimbursement or to otherwise account to Company in
respect of fees paid by Company as a result of any reduction in the undrawn
amount under the Letter of Credit.
6.3 Increased Costs Due to Change in Law. If any change in any law
or regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by Bank, or (ii)
impose on Bank any other condition regarding this Agreement or the Letter of
Credit (other than changes in the rates of income taxation generally applicable
to Bank), and the result of any such event shall be to increase the cost to Bank
of issuing or maintaining the Letter of Credit (which increase in cost shall be
determined by Bank's reasonable allocation of the aggregate of such cost
increases resulting from such events), and such requirement or cost shall remain
in effect for more than one hundred eighty (180) days after notice thereof from
Bank to Company, then (a) Bank shall so notify Company, and (b) upon receipt of
such notice from Bank, Company shall promptly pay to Bank, from time to time as
specified by Bank, additional amounts which shall be sufficient to compensate
Bank for such increased costs as accrue after the expiration of such one hundred
eighty (180) day period, together with interest on each such amount from the
date of such notice until payment in full thereof at the rate set forth in
Article 13. A certificate
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<PAGE> 16
as to such increased cost incurred by Bank as a result of any such event,
submitted by Bank to Company, shall be conclusive as to the amount thereof.
6.4 Obligations Absolute. The obligations of Company under the Loan
Documents shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit, or any of the Loan Documents or the Bond Documents or any other
agreement or instrument related thereto;
(b) any amendment or waiver of or any consent to departure
from the terms of the Letter of Credit or any of the Loan Documents or the
Bond Documents or any other agreement or instrument related thereto;
(c) the existence of any claim, set-off, defense or other
right which the Company, Guarantor or Issuer may have at any time against
Trustee, any beneficiary or any transferee of the Letter of Credit (or any
Person for whom Trustee, any such beneficiary or any such transferee may
be acting), Bank or any other Person, whether in connection with this
Agreement, the Letter of Credit, any of the other Loan Documents, the
Bonds or any other agreement or instrument related thereto, or in
connection with the Project or any unrelated transaction;
(d) any statement, draft or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) the surrender or impairment of any security for the
performance or observance of the terms of this Agreement, any of the other
Loan Documents or any other agreement related thereto; or
(f) any-other circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing.
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6.5 Extension of Letter of Credit. The term of the Letter of Credit
may be extended if, following Company's request, Bank and Company reach
agreement on the terms of such extension. Bank shall not be obligated to enter
into any such extension or to otherwise extend, modify or supplement the Letter
of Credit or any of the other Loan Documents.
7. Representations and Warranties by Company. As a material inducement to
Bank's entry into this Agreement and the transactions contemplated hereby,
Company represents and warrants to Bank that:
7.1 Formation of Company. Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, (b) has all requisite power and authority to conduct its business
and to own and lease its properties, and (c) is duly qualified to do business
in, and is in good standing in, every jurisdiction in which the nature of
business conducted by it makes such qualification necessary or where failure to
so qualify would have a material adverse effect on its business or financial
condition or its performance of its obligations under the Loan Documents or the
Bond Documents.
7.2 Execution, Delivery and Performance of Loan Documents and Bond
Documents.
7.2.1 Company and Guarantor have all requisite power and
authority to execute and deliver, and to perform all of their obligations under,
the Loan Documents and the Bond Documents, and shall execute and deliver to
Bank, prior to the issuance of the Letter of Credit and as a condition thereto,
a certificate evidencing the due authorization and consent of the board of
directors of Company and the partners in Guarantor to the execution of the Loan
Documents and Bond Documents and the entry by Company and Guarantor into the
transaction contemplated thereby.
7.2.2 The execution and delivery by Company and Guarantor of,
and the performance by Company and Guarantor of all of their obligations under,
each Loan Document and Bond Document have been duly authorized by all necessary
action and do not and will not:
(a) require any consent or approval not heretofore obtained of
any Person having any interest in Company or Guarantor;
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<PAGE> 18
(b) violate any provision of, or require any consent under the
articles or by-laws of Company or the partnership agreement or certificate
of partnership of Guarantor;
(c) result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge,
right of others, or other encumbrance of any nature (other than as
contemplated under the Loan Documents and the Bond Documents) upon or with
respect to any property now owned or leased or hereafter acquired by
Company or Guarantor;
(d) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to Company or Guarantor; or
(e) result in a breach of or constitute a default under, or
cause or permit the acceleration of any material obligation owed under,
any indenture or loan or credit agreement or any other agreement, lease,
or instrument to which Company or Guarantor is a party or by which Company
or Guarantor or any of their property is bound or affected.
7.2.3 At the time of execution of this Agreement, neither
Company nor Guarantor is in default in any respect that is materially adverse to
the interests of the holders of the Loan Documents or the Bond Documents or that
would have any material adverse effect on the financial condition of Company or
Guarantor or the conduct of their business under any law, rule, regulation,
order, writ, judgment, injunction, decree, determination, award, indenture,
agreement, lease or instrument described in Section 7.2.2(d) or Section
7.2.2(e), above.
7.2.4 No authorization, consent, approval, order, license,
exemption from, or filing or registration or qualification with, any court or
governmental department, public body, authority, commission, board, bureau,
agency, or instrumentality, is or will be required to authorize, or is otherwise
required (except for such authorizations, consents, approvals, orders, licenses,
exemptions or filings as may be required under the state securities or "Blue
Sky" laws in connection with the sale of the Bonds by the Original Purchaser
under the Bond Purchase Agreement, which shall be obtained to the extent
necessary by the Original Purchaser) in connection with the following:
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(a) the execution and delivery by Company and Guarantor of,
and the performance by Company and Guarantor of all of their respective
obligations under, the Loan Documents and the Bond Documents, or
(b) the creation of the liens, security interests, or other
charges or encumbrances described in the Loan Documents and the Bond
Documents.
7.2.5 Each of the Loan Documents and the Bond Documents, when
executed and delivered, will constitute the legal, valid, and binding
obligations of Company and Guarantor (to the extent each is a party thereto or
obligated thereunder), enforceable against Company and Guarantor in accordance
with its terms.
7.3 Financial Statements. Company and Guarantor have each furnished
to Bank their respective financial statements, and such statements and any other
financial statements or reports submitted by Company or Guarantor to Bank or to
the Original Purchaser accurately reflect the financial position of Company and
Guarantor as of the date thereof.
7.4 No Material Adverse Change. There has been no material adverse
change in the condition, financial or otherwise, of Company or Guarantor since
the dates of the financial statements described in Section 7.3 above.
7.5 Tax Liability. Company and Guarantor have each filed all tax
returns (federal, state and local) required to be filed and has paid all taxes
shown thereon to be due and all property taxes due, including interest and
penalties, if any; provided, however, that Company and Guarantor shall not be
required to pay and discharge any such tax so long as the legality thereof shall
be promptly and actively contested in good faith and by appropriate proceedings.
Company and Guarantor have each established and are maintaining adequate
reserves for tax liabilities, if any (including any tax liabilities contested
pursuant to this Section 7.5).
7.6 Compliance with Laws. Company and Guarantor are and shall remain
in compliance in all material respects with all laws, regulations and
requirements applicable to their respective businesses and have each obtained
all authorizations, consents, approvals, orders, licenses, exemptions from, and
have each accomplished all filings or registrations or qualifications with, any
court or governmental department.
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<PAGE> 20
public body, authority, commission, board, bureau, agency or instrumentality,
failure to obtain or comply with which would have a material and adverse effect
upon their respective businesses.
7.7 Litigation. There are no actions, suits or proceedings pending
or threatened against or affecting Company or Guarantor or the property of
Company or Guarantor before any court or governmental department, public body,
authority, commission, board, bureau, agency or instrumentality, except as
expressly disclosed to Bank in writing by Company or Guarantor prior to the
execution of this Agreement.
7.8 Official Statement. To the best of Company's knowledge, neither
the Official Statement nor the Preliminary Official Statement provided in
connection with the Bonds, nor any certificate or statement or any data
furnished by Company to Bank or to Trustee or any other person or entity in
connection with the negotiation of this Agreement or any of the other Loan
Documents or the Bond Documents or the transactions contemplated thereby (other
than statements contained in the Preliminary Official Statement which were
revised or corrected in the Official Statement) contains any untrue statement of
a material fact or omits a material fact necessary to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.
7.9 Conditions to Disbursement. All of the Conditions to
Disbursement have been fulfilled, except as expressly disclosed to Bank in
writing by Company prior to the execution of this Agreement.
8. Representations and Warranties by Bank. As a material inducement
to Company's entry into this Agreement and the transactions contemplated hereby,
Bank represents and warrants to Company that:
8.1 Formation of Bank. Bank is a national banking association, duly
organized, validly existing and in good standing; Bank has all requisite
corporate power to carry on its business as now being conducted, and has all
requisite corporate power and authority to enter into this Agreement, issue the
Letter of Credit, and perform its obligations hereunder and thereunder.
8.2 Authorization. The execution, delivery and performance of this
Agreement and the issuance of the Letter
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of Credit by the Bank have been duly authorized by all necessary corporate
action on the part of Bank.
8.3 No Conflict. The execution, delivery and performance of this
Agreement and the issuance of the Letter of Credit by Bank do not conflict with
or violate any provision of the articles of incorporation or by-laws of Bank and
do not, to the best of Bank's knowledge, conflict with, violate, result in a
breach of, or cause a default under (i) any provision of federal, state or local
law or regulation relating to the business or assets of Bank, (ii) any provision
of any consent, arbitration award, judgment or decree by which Bank is bound, or
(iii) any provision of any agreement or instrument to which Bank is a party or
by which Bank or its assets are bound or restricted.
8.4 Actions and Proceedings. There is no pending action or
proceeding before any court, governmental agency or arbitrator against Bank and,
to the best of Bank's knowledge, there is no threatened action or proceeding
against Bank before any court, governmental agency or arbitrator which would
materially and adversely affect the ability of the Bank to perform its
obligations under this Agreement or the Letter of Credit, subject to applicable
laws, principles and judicial decisions.
9. Affirmative Covenants. For so long as any obligation of Company
in connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall, unless Bank otherwise consents in writing:
9.1 Governmental Approvals. Deliver to Bank, from time to time at
Bank's request, evidence in form and substance satisfactory to Bank that Company
has complied with all applicable laws, ordinances, regulations and other
requirements relating thereto.
9.2 Continued Existence. Maintain its existence, and continue to be
a corporation in good standing in the State of California. In connection with
the covenants given pursuant to this Section 9.2, Company agrees that it will
not dissolve or otherwise dispose of all or substantially all of its assets.
9.3 Books and Records. Maintain full and complete books of account
and other records reflecting the results of its operations (in conjunction with
any other ventures as well as specifically with respect to the Project),
including without limitation all contributions of equity
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investment capital, and provide to Bank, promptly after request by Bank
therefor, such financial statements and other information pertaining to Company,
and the assets and operations of Company, as Bank may from time to time request.
9.4 Annual Operating Statements. Deliver to Bank the following: (a)
Promptly and in any event within ninety (90) days after the end of each Fiscal
Year, balance sheets and statements of income for Company's operations for such
Fiscal Year, accompanied with all supporting schedules and certificates of
Company's chief financial officer that the statements are true and correct.
(b) Upon request, copies of all such regular or periodic
financial statements or financial reports as Company shall send to its
shareholder(s).
(c) Upon request, copies of all such regular or periodic
reports which are available for public inspection which Company may be
required to file with any federal or state department, bureau, commission
or agency, including without limitation tax returns.
(d) Promptly and in any event within one hundred twenty (120)
days after the end of each Fiscal Year, a certification of a Designated
Representative that no Event of Default has occurred and Company is in
compliance with all covenants and agreements made by Company and contained
in this Agreement or any of the Loan Documents.
9.5 Notice of Certain Events. Promptly notify Bank if (a) Company
learns of the occurrence of any event which constitutes, or will, with the
passage of time or the giving of notice or both, constitute an Event of Default
or a default under this Agreement or any of the other Loan Documents or any of
the Bond Documents, together with a detailed statement by a responsible officer
of Company specifying the nature thereof and what action Company is taking or
proposes to take with respect thereto, or (b) Company receives any notice from,
or the taking of any other action by, the holder of any promissory note,
debenture or other evidence of indebtedness of Company or of any security (as
defined in the Securities Act of 1933, as amended) of Company with respect to a
claimed default, together with a detailed statement by a responsible officer of
Company specifying the
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notice given or other action taken by such holder and the nature of the claimed
default and what action Company is taking or proposes to take with respect
thereto, or (c) Company learns of the existence of any legal, judicial or
regulatory proceedings affecting Company or any property of Company in which the
amount involved is material and is not covered by insurance or which, if
adversely determined, would cause a material adverse change in the financial
condition of Company, or (d) there shall occur or exist any other event or
condition causing a material adverse change in the financial condition of
Company.
9.6 Opinions. Deliver to Bank, concurrently with the delivery
thereof to Trustee, a copy of each opinion of counsel required pursuant to the
Bond Documents, in each case addressed to Bank.
9.7 Defaults of Others. Use its best efforts to cure or cause to be
cured all defaults of Trustee or Issuer under the Bond Documents, if
economically practical and/or required in order to avoid an event of default
under the Bonds.
9.8 Tax Appeals. Bring, maintain and diligently prosecute any and
all actions, appeals and proceedings which are available to Company in order to
challenge, reverse or set aside a "Determination of Taxability," as that term is
defined in the Bond Documents.
9.9 Surplus Construction Funds. Subsections 3.3(h)(i) and (iv) of
the Loan Agreement notwithstanding, use moneys in the Construction Fund (as
defined in the Loan Agreement) remaining after the Project is complete and fully
paid for solely for the purposes described in Subsections 3.3(h)(ii) and (iii)
of the Loan Agreement.
9.10 Notice re Disbursement Conditions. Promptly notify Bank if
Company learns that any Condition to Disbursement was not on the date of this
Agreement, or has since ceased to be, fulfilled.
10. Negative Covenants. For so long as any obligation of Company in
connection with this Agreement or any of the other Loan Documents remains
outstanding, Company shall not, unless Bank otherwise consents in writing:
10.1 Transfers of Project or Obligations. Assign or delegate any
obligations under the Bonds, the Letter of Credit, this Agreement or any of the
other Loan Documents or
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Bond Documents, or sell, assign, convey, lease as a whole or otherwise transfer
the Project or any interest therein, without the express prior written consent
of Bank, which consent may be granted or withheld by Bank in its sole
discretion. In connection with the restrictions contained in this Section 10.1,
Company acknowledges that Bank has entered into the transaction contemplated by
this Agreement in reliance upon the financial strength, creditworthiness,
reputation and management expertise of Company and would not have entered into
such transaction but for such reliance.
10.2 Liens on Project. Create or cause or suffer to become effective
any mortgage, deed of trust or like lien or encumbrance affecting the Project or
any portion of the same, except for the lien of non-delinquent real property
taxes and those matters listed in Exhibit "F" hereto. In connection with the
restrictions contained in this Section 10.2 and in Section 10.3, below, Company
acknowledges that liens and encumbrances of the Project other than Permitted
Encumbrances will, in Bank's view, materially impair Company's financial
strength and creditworthiness.
10.3 Liens on Personal Property. Install in, or otherwise use in
connection with, the Project any personal property under any security agreements
or similar agreements however denominated whereby the right is reserved or
accrues to anyone to remove or repossess any such items or whereby any Person
other than Bank or Trustee reserves or acquires a lien upon such items.
11. Events of Default and Remedies Upon Default.
11.1 Events of Default. The occurrence of any one or more of the
following, whatever the reason therefor, shall constitute an Event of Default
hereunder:
(a) Company shall fail to pay any amount of principal or
interest owing under this Agreement or any of the Loan Documents, together
with interest thereon from the due date until payment at the rate provided
in Article 13, within ten (10) days after the date on which payment is
due; or
(b) Either Company or Guarantor shall fail to perform or
observe any term, covenant or agreement contained in any of the Loan
Documents on its part to be performed or observed the breach of which can
be cured by the payment of money, within ten (10) days after notice; or
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<PAGE> 25
(c) Either Company or Guarantor shall fail to perform or
observe any term, covenant or agreement contained in any of the Loan
Documents on its part to be performed or observed, other than terms,
covenants or agreements the breach of which can be cured by the payment of
money, within thirty (30) days after notice (provided, however, that if
cure cannot reasonably be effected within such thirty (30) day period
there shall be no Event of Default under this Section 11.1(c) so long as
Company or Guarantor commences cure within such thirty (30) day period and
thereafter diligently prosecutes such cure to completion); or
(d) Trustee declares any default in connection with the Bonds
or the Bond Documents or there is a Determination of Taxability (as
defined in the Trust Indenture); or
(e) Company shall fail to perform or observe any term,
covenant or agreement contained in any of the Bond Documents on its part
to be performed or observed; or
(f) Any representation or warranty in any of the Loan
Documents or Bond Documents or in any certificate, agreement, instrument
or other document made or delivered pursuant to or in connection with any
of the Loan Documents or Bond Documents proves to have been incorrect in
any material respect when made; or
(g) All or a substantial portion of any Property is condemned,
seized or appropriated by a governmental authority; or
(h) The dissolution or liquidation of Company or Guarantor or
failure by Company or Guarantor promptly to lift any execution,
garnishment or attachment of such consequence as will materially impair
its ability to make any payments under the Loan Documents, or the entry of
an order for relief by a court of competent jurisdiction in any proceeding
for the liquidation or reorganization of Company or Guarantor, or the
filing of a petition by or against Company or Guarantor under the
provisions of any bankruptcy act or under any similar act which may be
hereafter enacted, or an assignment by Company or Guarantor for the
benefit of its creditors, or the entry by Company or Guarantor into an
agreement of composition with its creditors or the appointment of
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a receiver, trustee, custodian, liquidator or similar officer for Company
or Guarantor; or
(i) Cessation of ownership or operation by Guarantor of any
Property (except as a result of damage, destruction or condemnation of the
Property, if Guarantor thereafter complies with the provisions of the Loan
Documents pertaining thereto) without the prior approval of Bank required
under Section 11.3 of the Guaranty.
11.2 Remedies Upon Default. Upon the occurrence of any Event of
Default, Bank may, at its option, do any or all of the following:
(a) Declare the principal of all amounts owing under this
Agreement and the other Loan Documents (including all obligations secured
by the Security Documents) and all other indebtedness of Company to Bank,
together with interest thereon, to be forthwith due and payable,
regardless of any other specified maturity or due date, without notice of
default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind or
character, and without the necessity of prior recourse to any security;
(b) Implement any remedies available to Bank under or in
connection with the Bond Documents;
(c) Terminate its consent to the disbursement or release of
the Bond Proceeds;
(d) If the Event of Default may be cured by Bank by taking
actions or making payments of money, Bank shall have the right (but not
the obligation) to take such actions (including without limitation the
retention of attorneys and the commencement or prosecution of actions on
its own behalf or on behalf of Company), or make such payments and pay for
the costs of such actions (including without limitation attorneys' fees
and court costs) from its own funds; provided, that the taking of such
actions at Bank's expense or the making of such payments by Bank out of
Bank's own funds shall not be deemed to cure such Event of Default, and
the same shall not be so cured unless and until Company shall have
reimbursed Bank for any costs incurred in taking such actions and for any
such payments, together with interest at the rate provided for in Article
13.
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<PAGE> 27
from the date of incurring such costs or making such payments until the
date of reimbursement. If Bank advances its own funds for such purposes,
such funds shall be secured by the Security Documents, notwithstanding
that such advances may cause the total amount advanced hereunder to exceed
the amount committed to be advanced pursuant to this Agreement, and
Company shall immediately upon demand reimburse Bank therefor with
interest at the rate provided for in Article 13, from the date of such
advance until the date of reimbursement; and
(e) Exercise any and all of its rights under the Loan
Documents or the Bond Documents or as provided by law including, without
limitation, making demand upon Guarantor and collecting upon the Guaranty
and foreclosing on any security, and exercise any other rights with
respect to any security for Company's obligations hereunder or for
Guarantor's obligations under the Guaranty, whether under the Security
Documents or any other agreement or as provided by law, all in such order
and in such manner as Bank in its sole discretion may determine.
11.3 Cumulative Remedies; No Waiver. All remedies of Bank provided
for herein are cumulative and shall be in addition to any and all other rights
and remedies provided in the Letter of Credit, the Security Documents, the Bond
Documents or any of the Loan Documents, or provided by law from time to time;
provided, however, that Bank hereby agrees to waive, during the pendency of any
proceeding by or against Company, Guarantor or Charles W. King, Jr. in
bankruptcy or reorganization, its right to set off any and all deposits (general
or special) at any time held and other indebtedness at any time owing by Bank to
or for the credit or the account of Company, Guarantor or Charles W. King, Jr.,
as applicable, against any and all of the obligations of Company, Guarantor or
Charles W, King, Jr., as applicable, now or hereafter existing under this
Agreement or in any of the other Loan Documents. The exercise of any right or
remedy by Bank hereunder shall not in any way constitute a cure or waiver of
default hereunder or under the Letter of Credit, the Security Documents, the
Bond Documents or any of the Loan Documents, nor invalidate any notice of
default or any act done pursuant to any such notice, nor prejudice Bank in the
exercise of any rights hereunder or under the Letter of Credit, the Security
Documents, the Bond Documents or the Loan Documents, unless in the exercise of
said rights, Bank and Trustee realize all amounts owed to either under the
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<PAGE> 28
Letter of Credit, this Agreement, the Security Documents, the Bond Documents and
the Loan Documents and all Events of Default are cured. No waiver by Bank of any
default or breach by Company or Guarantor hereunder shall be implied from any
omission by Bank to take action on account of such default if such default
persists or is repeated, and no express waiver shall affect any default other
than the default expressly made the subject of the waiver. Any such express
waiver shall be operative only for the time and to the extent therein stated.
Any waiver of any covenant, term or condition contained herein shall not be
construed as a waiver of any subsequent breach of the same covenant, term or
condition. The consent or approval by Bank to or of any act by Company or
Guarantor requiring further consent or approval shall not be deemed to waive or
render unnecessary consent or approval to or of any subsequent act.
12. Miscellaneous.
12.1 Actions. Bank shall have the right to commence, appear in and
defend any action or proceeding purporting to affect the rights or duties of
Bank, Company or Guarantor hereunder or under the Guaranty or the payment of any
funds hereunder or under the Guaranty, and in connection therewith Bank may pay
necessary expenses, employ counsel and pay reasonable attorneys' fees. Company
agrees to pay to Bank, on demand, all costs and expenses incurred by Bank in
connection therewith, including without limitation reasonable attorneys' fees,
together with interest from the date of expenditure at the rate provided in
Article 13. In the event that either Bank or Company shall bring an action
against the other to interpret or enforce the terms or provisions of the Letter
of Credit, this Agreement or any of the other Loan Documents, the prevailing
party in such action shall be entitled to recover its attorneys' fees and costs
(whether or not taxable) as awarded by a court of competent jurisdiction,
whether or not such action is prosecuted to final judgment.
12.2 Nonliability of Bank. Company acknowledges and agrees that:
(a) the relationship between Company and Bank is, and shall at
all times remain, solely that of borrower and lender, and Bank neither
undertakes nor assumes any responsibility or duty to Company to select,
review, inspect, supervise, pass judgment upon or inform Company of any
matter in connection with the Project, including without limitation
matters relating to the
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<PAGE> 29
adequacy or legal sufficiency of any of the documents, agreements or
arrangements pertaining to the Bonds, the Bond Documents or the rights or
obligations of any Person in connection therewith; and Company shall rely
entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or information
supplied to Company by Bank in connection with such matters is for the
protection of Bank only and neither Company nor any other Person is
entitled to rely thereon;
(b) Bank owes no duty of care to protect Company against
negligent, faulty, inadequate or defective building or construction;
(c) Bank shall not be responsible or liable to Company for any
loss, damage, liability or claim of any kind relating to injury or death
to persons or damage to property or negligent, faulty, inadequate or
defective building or construction and Company hereby indemnities and
holds Bank harmless from any such loss, damage, liability or claim.
(d) Bank shall not be responsible or liable to Company for use
which may be made of the Letter of Credit or for any acts or omissions of
Trustee and any beneficiary or transferee in connection therewith;
(e) Bank shall not be responsible or liable to Company for the
validity, sufficiency or genuineness of documents (except as to Bank's
signatures thereon), or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged (except to the extent Bank
is grossly negligent in accepting or relying upon such documents);
(f) Bank shall not be responsible or liable to Company as a
result of any circumstances in any way related to the making or failure to
make payment under the Letter of Credit, other than as a result of the
gross negligence or willful misconduct of Bank.
12.3 No Representations by Bank. By accepting or approving anything
required to be observed, performed or fulfilled, or to be given to Bank pursuant
to this Agreement or any of the other Loan Documents or Bond Documents,
including any certificate, statement of profit and loss or other financial
statement, survey, appraisal or insurance policy, Bank shall
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<PAGE> 30
not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation to anyone with respect thereto by
Bank. Bank may accept documents in connection with the Letter of Credit or any
of the other Loan Documents or Bond Documents which appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
12.4 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Company and Bank in connection with the Letter of Credit. It shall be deemed a
supplement to the Security Documents. It is made for the sole protection of
Company, Bank, and Bank's successors and assigns. No other Person shall have any
rights of any nature hereunder or by reason hereof, except to the extent that
Trustee is expressly granted rights hereunder.
12.5 Indemnity by Company. Company hereby indemnifies and holds
harmless Bank and its directors, officers, agents and employees (collectively
the "indemnitees") from and against:
(a) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person if the claim,
demand, action or cause of action directly or indirectly relates to a
claim, demand, action or cause of action that the Person has or asserts
against Company in connection with the issuance of the Letter of Credit,
the Bonds, any of the Bond Documents, or the transaction to which such
documents pertain;
(b) any and all claims, demands, actions or causes of action
that are asserted against any indemnitee by any Person and arise from or
in connection with (i) any statement or omission, actual or alleged, in
the Bond Documents, or (ii) any breach or default, actual or alleged, of
the representations, warranties, covenants, conditions or agreements
contained in this Agreement or any of the other Loan Documents or in any
of the Bond Documents; and
(c) any and all liabilities, losses, costs or expenses
(including court costs and attorneys' fees) that any indemnitee suffers or
incurs as a result of
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<PAGE> 31
the assertion of any claim, demand, action or cause of action specified in
Section 12.5(a) or Section 12.5(b), above.
The indemnity contained in this Section 12.5 shall not extend to any claims,
demands, actions, causes of action, liabilities, losses, costs or expenses which
result solely from the gross negligence or willful misconduct of Bank.
12.6 Commissions. Company hereby indemnities and holds Bank harmless
from any responsibility, cost and/or liability, including any attorneys' fees
incurred, in connection with any claim by any Person for the payment of any
commission, charge or brokerage fee in connection with the Bonds or any of the
other transactions contemplated in connection with this Agreement.
12.7 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of Company, Bank and their respective successors and assigns,
subject to the provisions of Section 10.1, above.
12.8 Execution in Counterparts. This Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, taken together will be deemed to
be but one and the same instrument. The execution of this Agreement or any other
Loan Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
12.9 Prior Agreements; Amendments; Consents. This Agreement,
together with the other Documents, contains the entire agreement between Bank
and Company with respect to the Letter of Credit, and all prior negotiations,
understandings and agreements with respect to the Letter of Credit are
superseded by this Agreement and the other Documents. No amendment,
modification, supplement, termination or waiver of any provision of this
Agreement or any of the other Loan Documents, and no consent to any departure by
Company therefrom, may in any event be effective unless in writing signed by
Bank, and then only in the specific instance and for the specific purpose given.
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<PAGE> 32
12.10 Survival of Representations and Warranties. All
representations and warranties of Company contained herein or in any other Loan
Document (qualified in each case by the facts and circumstances surrounding each
such document at the time such document was executed) will survive the delivery
of the Letter of Credit and are material and have been and will be relied upon
by Bank, notwithstanding any investigation made by Bank or on behalf of Bank.
For the purpose of the foregoing, all statements contained in any certificate,
agreement or other writing delivered by or on behalf of Company or Guarantor
pursuant hereto or pursuant to any other Loan Document or in connection with the
transactions contemplated hereby or thereby shall be deemed to be
representations and warranties of Company contained herein or in the other Loan
Documents, as the case may be.
12.11 Notices. All notices, requests, demands, directions and other
communications provided for in this Agreement and under any of the other Loan
Documents must be in writing and must be mailed, telegraphed, delivered or sent
by Telex or cable to the appropriate party at its address as follows:
If to Company:
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 245
Menlo Park, California 94025
Attention: Charles W. King, Jr.
with a copy to:
Gerald Wright, Esq.
General Counsel
Radiation Sterilizers, Incorporated
3000 Sand Hill Road, Building 4, Suite 24S
Menlo Park, California 94025
If to Bank:
Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: George Huxtable
Vice President
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<PAGE> 33
with a copy to:
Sheppard, Mullin, Richter & Hampton
333 South Hope Street 48th Floor
Los Angeles, California 90071
Attention: Robert E. Williams
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 12.11. Any
notice, request, demand, direction or other communication given by telegram,
Telex or cable must be confirmed within 48 hours by letter mailed or delivered
to the appropriate party at its respective address. If any notice, request,
demand, direction or other communication is given by mail it will be effective
upon the earlier of (a) 96 hours after deposit in the U.S. Mail, certified or
registered mail, return receipt requested postage prepaid or (b) actual receipt,
as indicated by the return receipt; if given by telegraph or cable, when
delivered to the telegraph company with charges prepaid; if given by Telex, when
sent; or if given by personal delivery, when delivered.
12.12 Further Assurances. Company shall, at its expense and without
expense to Bank, do, execute and deliver such further acts and documents as Bank
from time to time requires for the purpose of assuring and confirming unto Bank
the rights hereby created or intended now or hereafter so to be, or for carrying
out the intention or facilitating the performance of the terms of any Loan
Document, or for assuring the validity of any security interest or lien under
any Security Document.
12.13 Governing Law. All of the Loan Documents shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
12.14 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid shall be inoperative,
unenforceable or invalid without affecting the remaining provisions, and to this
end the provisions of all Loan Documents are declared to be severable.
12.15 Inconsistency With Security Documents. In the event that any
of the provisions of the Security Documents are inconsistent with the provisions
of this Agreement, the provisions of this Agreement shall prevail.
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<PAGE> 34
12.16 Headings. Article and section headings in this Agreement are
included for convenience of reference only and are not part of this Agreement
for any other purpose.
12.17 Time of the Essence. Time is of the essence.
12.18 No FDIC Insurance. Company and Bank hereby agree that the
transaction contemplated in this Agreement is not intended to and shall not
constitute a "deposit" within the meaning of 12 U.S.C. Sec 1813(l)(1). Neither
Company nor Bank nor any successor or assign of either shall make any claim
against the Federal Deposit Insurance Corporation in the event of any failure by
Bank, in whole or in part, to fulfill its obligations with respect to any draw
or draws under the Letter of Credit.
13. Interest and Payment Terms.
13.1 Manner of Payment. All amounts to be paid to Bank under this
Agreement and the other Loan Documents shall be paid to Bank at its banking
offices at 2055 Gateway Place, Suite 200, San Jose, California 95110, in coin or
currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts. All such payments shall be
in immediately available funds, and shall be timely only if received by Bank
before 1:00 p.m., San Francisco, California, time, on the date that such payment
is required to be made. Any payment received by Bank after such time shall be
considered for all purposes (including the calculation of interest, to the
extent permitted by law) as having been made on Bank's next following business
day. As used in this Article 13, the term "business day" shall mean a day other
than a Saturday, Sunday or a day upon which banking institutions in the State of
California are authorized or required by law to close. If the date for any
payment to Bank falls on a day that is not a business day, then for all purposes
of such payment the same shall be deemed to have fallen on the next following
business day, and such extension of time shall in such case be included in the
computation of payments of interest.
13.2 Interest. Interest shall accrue on all amounts owing to Bank
under this Agreement and the other Loan Documents and remaining from time to
time unpaid, from the date so paid by Bank or otherwise becoming owing under the
Loan Documents until payment thereof, at a varying rate per annum (based on an
actual day basis using a 360 day year) which is two percent (2%) above the
floating commercial loan rate announced by Bank from time to time as its
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<PAGE> 35
prime rate. Adjustments in the varying interest rate shall be made on the same
day as each change in the announced prime rate.
13.3 Waivers. Company and any and each co-maker, guarantor,
accommodation party, endorser or other person liable for the payment or
collection of any and all amounts owed to Bank under the Loan Documents
expressly waive demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, bringing of suit and diligence
in taking any action to collect such amounts and in the handling of any
collateral at any time existing as security in connection therewith, and shall
be directly and primarily liable for the payment of all sums owing and to be
owing, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any such amount or in connection with any lien
or security interest at any time had or existing as security for any such
amount.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
"Company":
RADIATION STERILIZERS, INCORPORATED
a California corporation
By Alan Chin
---------------------------------
Its President
-----------------------------
By Charles W. King Jr.
---------------------------------
Its Secretary
-----------------------------
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<PAGE> 36
"Bank":
WELLS FARGO BANK, N.A.
a national banking association
By /s/ George Huxtable
---------------------------------
George Huxtable V.P.
-----------------------------
Printed Name And title
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<PAGE> 37
LETTER OF CREDIT
Irrevocable Letter of
Credit No. _______________
Dated as of __________, 19__
Bank one Trust Company, N.A.
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your favor for
the account of Radiation Sterilizers, Incorporated, a California corporation
("Company"), its Irrevocable Letter of Credit No. _____________ ("Letter of
Credit") in a maximum amount of up to $5,408,220.00 (as more fully described
below) effective immediately and expiring at Bank's counters by 4:00 P.M., San
Francisco time, on April 15, 1988, unless extended by Bank (the "Expiration
Date").
This Letter of Credit is being issued in connection with that
certain Trust Indenture (the "Trust Indenture") dated as of March 1, 1985,
between you, as Trustee, and the Development Authority of DeKalb County (the
"Issuer"), pursuant to which the Issuer has agreed to authorize and issue and
sell certain Development Authority of DeKalb County Variable Rate Demand
Industrial Development Revenue Bonds (Radiation Sterilizers, Incorporated
Project), Series 1985, (the "Bonds") in the aggregate principal amount of
$5,250,000.00, the payment of which Bonds is secured by, among other things,
this Letter of Credit.
As used in this Letter of Credit, he term "business day" shall mean
a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon which banking
institutions in the State of California or the City of New York are authorized
or required by law to close, or (iv) a day on which the New York Stock Exchange,
Inc, is closed.
You, as Trustee and Paying Agent, pursuant to the Trust Indenture,
are hereby irrevocably authorized to draw on Bank, for the account of Company,
in accordance with the terms and conditions hereof and subject to reductions in
amounts as hereinafter set forth, an aggregate amount not exceeding
$5,408,220.00 (Five Million Four Hundred Eight
-1-
EXHIBIT "A"
<PAGE> 38
Thousand Two Hundred Twenty Dollars) (the "Stated Amount"), of which (A) an
aggregate amount not exceeding $5,250,000.00 may be drawn upon with respect to
"A Drawings" and "C Drawings", as defined below, to cover principal of the
Bonds, and (B) an aggregate amount not exceeding $158,220.00 may be drawn upon
with respect to "B Drawings," "D Drawings" and E Drawings", as defined below, to
cover 55 days of interest on the Bonds.
Funds under this Letter of Credit are only available to you against
your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face: "Drawn
under Wells Fargo Bank, N.A. Irrevocable Letter of Credit No. ____________" and
upon your presenting to Wells Fargo Bank, N.A. one or more of the following
written certificates:
(A) Your written certificate signed by you in the form of Exhibit A
attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of Exhibit B
attached hereto appropriately completed (a "B Drawing");
(C) Your written certificate signed by you in the form of Exhibit C
attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of Exhibit D
attached hereto appropriately completed (a "D Drawing");
(E) Your written certificate signed by you in the form of Exhibit E
attached hereto appropriately completed (an E Drawing").
All documents presented to Bank in connection with any demand for
payment hereunder, as well as all notices and other communications to Bank with
respect to this Letter of Credit, shall be in writing and addressed and
presented to Bank at its offices at 475 Sansome Street, San Francisco,
California 94111, Attention: Letter of Credit Operations AU 1175, or any other
place in the United States which may be designated by Bank by written notice
delivered to you. Such documents, notices and other communications shall be
personally delivered to Bank, or may be sent to Bank by tested Telex in which
case draft requirements are waived.
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<PAGE> 39
If Bank receives any of your drafts drawn hereunder at such office,
all in strict conformity with the terms and conditions of this Letter of Credit,
on or prior to the Expiration Date, Bank will honor the same and make payment
hereunder. Payments to you under this Letter of Credit shall be made by wire
transfer of immediately available funds to Bank One, Columbus, N.A., Columbus,
Ohio, for your Account No. 04-0178-7, Attn: Corporate Trust Administration, or
into such other account as you designate to Bank in writing from time to time.
If a proper draft and certificate are presented by 11:30 A.M., New York time,
payment will be made that same business day; otherwise payment will be made the
next business day:
Upon a Drawing hereunder, the total amount of this Letter of Credit
shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount of this
Letter of Credit shall be reduced by the amount of such Drawing;
(B) With respect to any C or D Drawing, the total amount of this
Letter of Credit shall be reduced by the amount of such Drawing, provided
that Bank shall reinstate the amount of such drawing if such amount is
paid to Bank by Company prior to default under that certain Letter of
Credit Agreement, dated as of March 1, 1985 (the "Reimbursement
Agreement"), by and between Company and Bank. In addition, in the event
Bank transfers any Drawing Bonds (as defined in the Reimbursement
Agreement) in its possession following any C Drawing to any person or
entity (other than to you, as Trustee, for cancellation), an amount equal
to the amount of such C Drawing (and any corresponding D Drawing) which
was applied to pay principal and interest on the Bonds being so
transferred shall automatically be reinstated hereunder. Bank will send
notice of any such reinstatement to you, as Trustee, in the form attached
hereto as Exhibit F; and
(C) With respect to any E Drawing, the total amount of this Letter
of Credit shall be reduced by the amount of such Drawing and such amount
shall then be immediately and automatically reinstated, and Bank will send
notice of such reinstatement to you, as Trustee, in the form attached
hereto as Exhibit F.
Only you, as Trustee and Paying Agent, may make a drawing under this
Letter of Credit. Upon the payment to you, as Trustee and Paying Agent, of the
amount specified in
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<PAGE> 40
a draft drawn hereunder, Bank will be fully discharged on its obligation under
this Letter of Credit with respect to such draft and shall not thereafter be
obligated to make any further payments under this Letter of Credit in respect to
such draft to you or any other person who may have made to you or makes to you a
demand for payment of principal of, purchase price of or interest on any Bond.
By paying to you an amount demanded in such draft(s) we make no representation
as to the correctness of the amount demanded in such draft(s).
Upon the earliest of (i) 15 days after the making by you of an A
Drawing (and any associated B Drawing) hereunder (other than an A Drawing for
partial redemption); (ii) Bank's receipt of a certificate signed by your officer
and an officer of Company stating (a) that no Bonds are Outstanding within the
meaning of the Trust Indenture and (b) that such officers are duly authorized to
sign such certificate on behalf of you and Company; (iii) Bank's receipt of a
certificate signed by your officer and an officer of Company stating (a) that an
Alternate Letter of Credit (as defined in the Trust Indenture) has been accepted
by you as Trustee under the Trust Indenture and (b) that such officers are duly
authorized to sign such certificate on behalf of you and on behalf of Company;
(iv) Bank's receipt of a certificate signed by your officer and an officer of
Company stating (a) that no less than 15 days prior to the date of such
certificate, the interest rate on the Bonds was converted to a Fixed Interest
Rate (as defined in the Trust Indenture), (b) that you have not received written
notification from both Company and Bank stating that this Letter of Credit is
not to be cancelled, and (c) that such officers are duly authorized to sign such
certificate on behalf of you and on behalf of Company; or (v) the Expiration
Date, this Letter of Credit shall automatically terminate and be delivered to
Bank for cancellation.
This Letter of Credit shall be governed by (i) the Uniform Customs
and Practice for Documentary Credit as fixed by the Congress of the
International Chamber of Commerce from time to time (the "Uniform Customs") and
(ii) the laws of the State of California, including the Uniform Commercial Code
as in effect in the State of California. In the event of a conflict between the
Uniform Customs and the laws of the State of California, the Uniform Customs
shall prevail. Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to Bank at its offices at 475 Sansome Street, San
Francisco, California 94111, Attention: Letter of Credit Operations - AU 1175,
specifically referring to the number of this Letter of Credit.
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<PAGE> 41
This Letter of Credit is transferable in its entirety to any
transferee who has succeeded you as Trustee under the Trust Indenture. Each
letter of credit issued upon any such transfer may be successively transferred.
Transfer of the available balance under this Letter of Credit to such transferee
shall be effected by the presentation to Bank of this Letter of Credit
accompanied by a certificate substantially in the form of Exhibit G attached
hereto. Following such presentation, and as soon as this original Letter of
Credit is returned to the Bank and the Bank has been paid its customary transfer
fee, Bank shall forthwith transfer the same to your transferee or, if so
requested by your transferee, issue an irrevocable letter of credit to your
transferee with provisions therein consistent with those of this Letter of
Credit.
This Letter of Credit sets forth in full Bank's undertaking, and
such undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds and the Trust Indenture), except only
the certificate(s) and the draft(s) referred to herein; and any such reference
shall not be deemed to incorporate herein by reference any document, instrument
or agreement except for such certificate(s) and such draft(s).
In the event of any failure by Bank, in whole or in part, to fulfill
its obligations with respect to any draw or draws under this Letter of Credit,
no person or entity shall have the right to make any claim against the Federal
Deposit Insurance Corporation in connection with such failure. By its signature
below, Bank One Trust Company, N.A., as Trustee and Paying Agent, acknowledges
receipt of this Letter of Credit and agrees that the terms of this paragraph
shall bind itself and its successors and assigns.
Very truly yours,
WELLS FARGO BANK, N.A.
By _______________________________
Its ______________________________
-5-
<PAGE> 42
ACCEPTED AND AGREED TO
THIS ____ DAY OF MARCH, 1985:
BANK ONE TRUST COMPANY, N.A.
By _________________________
Its ________________________
-6-
<PAGE> 43
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
(PRINCIPAL UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. __________ (the "Letter of Credit," the capitalized terms defined therein
and not defined herein being used as therein defined) issued by Bank in favor of
Trustee and paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) The undersigned is making a drawing under the Letter of Credit
with respect to the payment of principal upon acceleration, partial redemption,
full redemption or maturity of the Bonds.
(3) The undersigned presently holds $_____________ in the Bond Fund.
The undersigned presently holds no other amounts in the Bond Fund, holds no
amounts in the Construction Fund, and holds no other funds in its capacity as
Trustee or Paying Agent under the Trust Indenture.
(4) Of the total funds presently held in the Bond Fund,
$_________________is the total of all funds (the "Available Funds"") that have
not been delivered to the undersigned by Company within the past 123 days. Of
the Available Funds, $___________ is needed by the undersigned to pay current
interest on the Outstanding Bonds.
(5) The amount of principal of the Bonds which is due and payable
for which the undersigned does not have Available Funds is $ ______________, and
the amount of the draft accompanying this certificate does not exceed such
amount.
(6) The amount of the draft accompanying this certificate, together
with the aggregate of all prior payments made pursuant to A Drawings, and C
Drawings under the Letter of Credit (other than reinstated amounts) for the
A-1
<PAGE> 44
payment of the principal amount or purchase price of the Bonds, does not exceed
$5,250,000.00.
(7) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
(8) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of principal owing on account of the Bonds pursuant to the
Trust Indenture, (b) no portion of it shall be applied by the undersigned for
any other purpose, and (c) no portion of it shall be commingled with other funds
held by the undersigned. This drawing is made in accordance with the provisions
of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _____ day of ________________, 19____.
BANK ONE TRUST COMPANY, N.A.
a national banking association,
as Trustee and Paying Agent
By _______________________________
Title__________________________
A-2
<PAGE> 45
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
(ACCRUED INTEREST UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. ___________ (the "Letter of Credit," the capitalized terms defined therein
and not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) The undersigned is making a drawing under the Letter of Credit
with respect to the payment of accrued and unpaid interest upon acceleration,
partial redemption, full redemption, or maturity of the Bonds.
(3) Interest on the Bonds is due and payable and the amount of the
draft accompanying this certificate does not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of payment of
interest accrued on the Bonds on or prior to their stated maturity date.
(4) The total of all funds presently held by the undersigned in the
Bond Fund that have not been delivered to the undersigned by Company within the
past 123 days is $___________. This amount, together with the amount of the
accompanying draft, equals the accrued interest which is due and payable on the
Bonds.
(5) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Letter of Credit
(other than reinstated amounts), does not exceed $158,220.00.
(6) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
B-1
<PAGE> 46
(7) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest owing on account of the Bonds pursuant to the
Trust Indenture, (b) no portion of it shall be applied by the undersigned for
any other purpose, and (c) no portion of it shall be commingled with other funds
held by the undersigned. This drawing is made in accordance with the provisions
of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ___ day of ________________, 19____.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Trustee and Paying Agent
By _____________________________
Title _______________________
B-2
<PAGE> 47
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
(PRINCIPAL OF BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee"), and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. _____________ (the "Letter of Credit," the capitalized terms defined therein
and not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) Paying Agent is making a drawing under the Letter of Credit (a)
at the written request (or oral request to be immediately followed in writing)
of the Remarketing Agent (as defined in the Reimbursement Agreement) to pay,
pursuant to Section 401(g) of the Trust Indenture, the principal amount of the
purchase price of those repurchased Bonds which the Remarketing Agent has been
unable to remarket, the principal amount of which is equal to the amount of the
draft accompanying this certificate, and which Bonds (i) are now held by either
the Remarketing Agent pursuant to its representation to Paying Agent, which
representation Paying Agent has not independently verified, or are held by
Paying Agent and (ii) shall be re-registered in the name of Bank, or its agent,
as pledgee, and delivered to Bank, or such agent, within 5 business days
following receipt by Paying Agent of the amount demanded hereby; or (b) to pay,
pursuant to Section 401(h) of the Trust Indenture, the portion of the purchase
price of the Bonds delivered to Paying Agent for purchase equal to the principal
amount of such Bonds, and Paying Agent shall deliver to Bank, or its agent, as
pledgee, within 5 business days following receipt by Paying Agent of the amount
demanded hereby, a principal amount of Bonds equal to the amount of the draft
accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior payments made pursuant to A Drawings and C
Drawings under the Letter
C-1
<PAGE> 48
of Credit (other than reinstated amounts) does not exceed $5,250,000.00.
(4) Upon receipt of the amount demanded hereby, (a) Paying Agent
will either (i) deliver it to the Remarketing Agent or use the same only for the
purpose of purchase of the Bonds referenced in Paragraph 2(a) hereof, or (ii)
use it for the purpose of purchase of the Bonds referred to in Paragraph 2(b)
hereof; (b) no portion of it shall be applied by Paying Agent for any other
purpose; and (c) no portion of it shall be commingled with other funds held by
Paying Agent. This drawing is made in accordance with the provisions of the
Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the _____ day of ___________, 19____.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Trustee and Paying Agent
By _____________________________
Title _______________________
C-2
<PAGE> 49
EXHIBIT D
CERTIFICATE FOR "D DRAWING"
(ACCRUED INTEREST ON BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No.______________ (the "Letter of Credit," the capitalized terms defined therein
and not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) Paying Agent is making a drawing under the Letter of Credit (a)
at the written request (or oral request to be immediately followed in writing)
of the Remarketing Agent (as defined in the Reimbursement Agreement), to pay,
pursuant to Section 401(g) of the Trust Indenture, the amount of accrued
interest on those Bonds that the Remarketing Agent has been unable to remarket,
which amount of accrued interest is equal to the amount of the draft
accompanying this certificate; or (b) to pay, pursuant to Section 401(h) of the
Trust Indenture, the portion of the purchase price of the Bonds delivered to
Paying Agent for purchase equal to the amount of accrued and unpaid interest on
such Bonds to the date of purchase thereof, which amount of accrued interest is
equal to the amount of the draft accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Letter of Credit
(other than reinstated amounts), does not exceed $158,220.00.
(4) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
(5) Upon receipt by Paying Agent of the amount demanded hereby, (a)
Paying Agent will either (i) deliver it to the Remarketing Agent or use the same
only for the purpose of reimbursement or payment of accrued interest referenced
D-1
<PAGE> 50
in Paragraph 2(a) hereof, or (ii) use it for the purpose of reimbursement or
payment of accrued interest referenced in Paragraph 2(b) hereof; (b) no portion
of it shall be applied by Paying Agent for any other purpose; and (c) no portion
of it shall be commingled with other funds held by Paying Agent. This drawing is
made in accordance with the provisions of the Trust Indenture.
(6) To the extent that the payment demanded hereby is to be made in
accordance with the Letter of Credit on a date between a Record Date and the
corresponding Interest Payment Date (as those terms are defined in the Trust
Indenture), Paying Agent now holds and shall, within 5 business days following
receipt by Paying Agent of the payment demanded hereby, deliver to Bank,
due-bill checks that, in the aggregate, are in the amount and in the form
required by the Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the ______ day of ___________________, 19___.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Paying Agent
By_____________________________
Title_______________________
D-2
<PAGE> 51
EXHIBIT E
CERTIFICATE FOR A DRAWING"
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. __________ (the "Letter of Credit," the capitalized terms defined therein
and not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) The undersigned is making a drawing under the Letter of Credit
with respect to the payment of accrued and unpaid interest upon an Interest
Payment Date during the continuance of an Event of Default under the
Reimbursement Agreement for which Bank has not yet exercised its right to demand
that the undersigned accelerate the Bonds.
(3) Interest on the Bonds is due and payable and the amount of the
draft accompanying this certificate does not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of payment of
interest accrued on the Bonds on or prior to their stated maturity date.
(4) The total of all funds presently held by the undersigned in the
Bond Fund that have not been delivered to the undersigned by Company within the
past 123 days is $____________. This amount, together with the amount of the
accompanying draft, equals the accrued interest which is due and payable on the
Bonds (exclusive of Drawing Bonds).
(5) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Letter of Credit
(other than reinstated amounts), does not exceed $158,220.00.
(6) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
E-1
<PAGE> 52
(7) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest owing on account of the Bonds pursuant to the
Trust Indenture, (b) no portion of it shall be applied by the undersigned for
any other purpose, and (c) no portion of it shall be commingled with other funds
held by the undersigned. This drawing is made in accordance with the provisions
of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _____ day of __________________, 19___.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Trustee and Paying Agent
By____________________________
Title______________________
E-2
<PAGE> 53
EXHIBIT F
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. __________
DATED AS OF _______________, 19___
The undersigned, a duly authorized officer of Wells Fargo Bank, N.A.
("Bank"), hereby certifies to the Trustee under the Trust Indenture dated as of
March 1, 1985, between the Development Authority of DeKalb County and Bank One
Trust Company, N.A., a national banking association ("Trustee"), with reference
to Irrevocable Letter of Credit No. _______ (the "Letter of Credit") issued by
Bank in favor of Trustee, that the amount drawn by Trustee pursuant to its
_________ Drawing dated as of _______________, has been reinstated as of
________________ and is available for draw subject to the terms of the Letter of
Credit.
In witness whereof, Bank has executed and delivered this Certificate
this _____ day of ______________, 19___.
WELLS FARGO BANK, N.A.
By:_________________________
Its______________________
F-1
<PAGE> 54
EXHIBIT G
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Letter of Credit Operations
AU 1175
Re: Wells Fargo Bank, N.A..
Irrevocable Letter of Credit No.
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in and
to such Letter of Credit are transferred to the transferee and the transferee
shall have sole rights as beneficiary thereof, including sole rights relating to
any amendments, whether increases or extensions or other amendments and whether
now existing or hereafter made. All amendments are to be advised direct to the
transferee without necessity of any consent of or notice to the undersigned
beneficiary.
The advice of such Letter of Credit is returned herewith, along with
your customary transfer fee, and we ask
G-1
<PAGE> 55
you to endorse the transfer on the reverse thereof and forward it direct to the
transferee with your customary notice of transfer.
Very truly yours,
----------------------------------
Signature of Beneficiary
SIGNATURE AUTHENTICATED
- ---------------------------
(Bank)
- ---------------------------
(Authorized Signature)
G-2
<PAGE> 56
EXHIBIT "B"
CONDITIONS TO DISBURSEMENT
1. Conditions to All Disbursements. Bank shall not be obligated to approve
any disbursement of Bond proceeds under Section 3.3 of the Loan Agreement unless
each of the following conditions are fulfilled:
1.1 Completion of Project. The acquisition and construction of the
Project shall have been completed in accordance with the plans and
specifications therefor.
1.2 Permits, Etc. All required governmental inspections, reports and
certifications shall have been made, and all occupancy, use and other permits
required by all applicable governmental regulatory authorities and public
utility companies shall have been issued, for the full operation of the Project.
EXHIBIT "B"
Page 1 of 1
<PAGE> 57
EXHIBIT "C"
(14300-14390 Catalina Street)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
San Leandro, County of Alameda, State of California, and described as follows:
PARCEL ONE:
PARCEL A, PARCEL MAP NO. 2181, FILED JULY 29, 1977, BOOK 97 OF PARCEL MAPS, PAGE
72, ALAMEDA COUNTY RECORDS, AND BEING THE NORTHWESTERLY 415 FEET, RIGHT ANGLE
MEASUREMENTS AS MEASURED ALONG CATALINA STREET, OF PARCEL 2, OF PARCEL MAP NO.
2044, FILED DECEMBER 16, 1976, BOOK 94 OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY
RECORDS
RESERVING FROM PARCEL ONE:
A. NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWESTERN LINE THEREOF BEING THE
NORTHWESTERLY LINE OF SAID PARCEL TWO OF PARCEL MAP NO. 2044.
B. A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHEASTERN LINE THEREOF LYING SOUTHEASTERLY
415 FEET, RIGHT ANGLE MEASUREMENTS, AS MEASURED ALONG CATALINA STREET, FROM THE
NORTHWESTERLY LINE OF SAID PARCEL TWO, OF PARCEL NO, 2044.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHERLY LINE THEREOF BEING THE NORTHWESTERN
LINE OF PARCEL TWO, PARCEL MAP NO. 2044 FILED DECEMBER l6, 1976, BOOK 94 OF
PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF LYING SOUTHEASTERLY
415 FEET, RIGHT ANGLE MEASUREMENTS AS MEASURED ALONG CATALINA STREET, FROM THE
NORTHWESTERLY LINE OF PARCEL TWO, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976,
BOOK 94 OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO, 080G-0932-030
EXHIBIT "C"
Page 1 of 5
<PAGE> 58
EXHIBIT "C"
(2354 Davis Avenue)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
PARCEL 1:
LOT 7, AS SHOWN ON THE MAP OF TRACT 3110, FILED JUNE 10, 1969 IN BOOK 62 OF
MAPS, PAGE 14, ALAMEDA COUNTY RECORDS.
PARCEL 2:
AN EASEMENT FOR RAILWAY PURPOSES IN, ON, OVER, UNDER AND ALONG A PORTION OF LOT
6, AS SHOWN ON THE MAP OF TRACT 3110, FILED JUNE 10, 1969 IN BOOK 62 OF MAPS,
PAGE 14, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF SAID LOT 6, DISTANT THEREON NORTH 0
degrees 38' 41" WEST 40 FEET FROM THE SOUTHWEST CORNER THEREOF; THENCE FROM SAID
POINT OF BEGINNING EASTERLY ALONG A LINE PARALLEL WITH AND PERPENDICULARLY
DISTANT NORTHERLY 40 FEET FROM THE SOUTHERN LINE OF SAID LOT 6, NORTH 89 degrees
21' 19" EAST 90 FEET TO A POINT THEREON; THENCE LEAVING SAID PARALLEL LINE NORTH
81 degrees 10' 57" WEST 91.241 FEET TO A POINT ON THE SAID WESTERN LINE OF LOT
6; THENCE SOUTHERLY ALONG LAST SAID LINE SOUTH 0 degrees 38' 41" EAST 15 FEET TO
THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NOS. 439-0058-015-02
439-0058-015-01
EXHIBIT "C"
Page 2 Of 5
<PAGE> 59
EXHIBIT "C"
(2376 Davis Avenue)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
LOT 8, AS SHOWN ON THE MAP OF "TRACT 3110, C. C. & F. HAYWARD INDUSTRIAL CENTER,
CITY OF HAYWARD, ALAMEDA COUNTY, CALIFORNIA" FILED JUNE 10, 1969, IN MAP BOOK
62, PAGES 14 AND 15 ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 439-0058-016-02
EXHIBIT "C"
Page 3 of 5
<PAGE> 60
EXHIBIT "C"
(20389 Corsair Boulevard)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
LOTS 3 AND 4, AS SAID LOTS ARE SHOWN ON THE MAP OF "TRACT 3046, C. C. & F.
INDUSTRIAL CENTER, HAYWARD AIR TERMINAL, UNIT NO. 3, CITY OF HAYWARD, ALAMEDA
COUNTY, CALIFORNIA," FILED AUGUST 14, 1969, IN BOOK 63 OF MAPS, PAGES 8 THROUGH
l4, INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY.
ASSESSOR'S PARCEL NO. 432-0114-019
EXHIBIT "C"
Page 4 of 5
<PAGE> 61
EXHIBIT "C"
(21118 Cabot Boulevard)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
PARCEL l, PARCEL MAP NO. 2360, FILED JANUARY 17, 1978, BOOK 101, OF PARCEL MAPS,
PAGE 13, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NOS. 439-0035-027-01
439-0035-027-02
EXHIBIT "C"
Page 5 of 5
<PAGE> 62
ORDER NO. 16088
14300-14390 CATALINA STREET
l. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $6,297.04 OPEN
2ND INSTALLMENT: $6,297,04 OPEN
LAND $151,000.00
IMPROVEMENTS $999,737.00
A.P. NO. 080G-0932-030
CODE AREA 10-057
3. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED PURSUANT TO
CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA, WHICH CHAPTER
BECAME LAW ON JULY 29TH, 1983.
4. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS CREATED
IN THAT CERTAIN INSTRUMENT
RECORDED : SEPTEMBER 25, 1959, BOOK 9162, PAGE 181, OFFICIAL
RECORDS
GRANTED TO : PACIFIC GAS & ELECTRIC COMPANY
PURPOSE : PUBLIC UTILITIES
EFFECTS : NORTHEASTERLY 90.22 FEET
THE RIGHT TO THIN AND REMOVE TREES AS RESERVED IN THE ABOVE MENTIONED
INSTRUMENT.
SAID EASEMENT WAS ALSO RECORDED IN BOOK 2053 OF DEEDS, PAGE 245.
5. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF ANY,
BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN THE
DECLARATION
BY : WINDSOR LAND COMPANY, A PARTNERSHIP
RECORDED : JUNE 20, 1966, REEL 1790, IMAGE 422, OFFICIAL RECORDS
CONTAINS NO REVERSIONARY CLAUSE.
CONTAINS NO MORTGAGEE PROTECTION CLAUSE.
MODIFICATION AND/OR AMENDMENT THEREOF, RECORDED NOVEMBER 14, 1966, REEL
1872, IMAGE 60, OFFICIAL RECORDS, BUT DELETING RESTRICTIONS, IF ANY, BASED
ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
MODIFICATION AND/OR AMENDMENT THEREOF, RECORDED AUGUST 7, 1974, REEL 3747,
IMAGE 4899 OFFICIAL RECORDS, BUT DELETING RESTRICTIONS, IF ANY, BASED ON
RACE, COLOR, RELIGION OR NATIONAL ORIGIN.
EXHIBIT "D"
Page 1 of 16
<PAGE> 63
ORDER NO. 16088
6. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF ANY,
BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN THE
DECLARATION
BY : WINDSOR LAND COMPANY
RECORDED : NOVEMBER 29, 1968, REEL 2301, IMAGE 419, OFFICIAL
RECORDS
7. DECLARATION OF COVENANT TO PROVIDE RECIPROCAL EASEMENTS MADE BY CHARLES
KING AND ASSOCIATES, A LIMITED PARTNERSHIPS RECORDED MAY 6, 1976, REEL
4356, IMAGE 513, OFFICIAL RECORDS.
8. EASEMENT FOR OPEN SPACE AND ACCESS, AS SHOWN UPON THE FILED MAP.
AFFECTS: NORTHWESTERLY 30' AND THE SOUTHEASTERLY 30' OF SAID LAND
9. UNRECORDED LEASE UPON THE TERMS, COVENANTS, AND CONDITIONS PROVIDED
THEREIN
LESSOR : CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP
LESSEE : PRUDENTIAL INSURANCE COMPANY OF ALAMEDA, A NEW JERSEY
CORPORATION
DISCLOSED BY : ASSIGNMENT OF LEASE OF AGREEMENT
RECORDED : DECEMBER 2, 1977, REEL 5163, IMAGE 18, OFFICIAL
RECORDS, SERIES NO. 77-23874
10. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF $l,050,000.00.
DATED : NOVEMBER 28, 1977
TRUSTOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 555 CALIFORNIA ST., 24TH FL., SAN FRANCISCO, CALIF.
94104
LOAN NO. : 2 169 512
RECORDED : DECEMBER 2, 1977, REEL 5163, IMAGE 12, OFFICIAL
RECORDS, SERIES NO. 77-238373
AS ADDITIONAL SECURITY FOR SUCH DEED OF TRUST THE LESSOR'S INTEREST UNDER
THE LEASE REFERRED TO IN ITEM NO. 9 ABOVE WERE ASSIGNED TO THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA BY INSTRUMENT RECORDED DECEMBER 2, 1977, REEL
5163, IMAGE 18, ALAMEDA COUNTY RECORDS.
EXHIBIT "D"
Page 2 of 16
<PAGE> 64
ORDER NO, 16088
11. EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS AND THE INCIDENTS THERETO,
WHICH ENCUMBERS THE LAND DESCRIBED HEREIN, AS CREATED IN THAT CERTAIN DEED
OF TRUST
EXECUTED BY : CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP
RECORDED : DECEMBER 2, 1977, REEL 5163, IMAGE 12, OFFICIAL
RECORDS
AFFECTS : NORTHWESTERLY AND SOUTHEASTERLY 30 FEET
UPON RECONVEYANCE OF SAID DEED OF TRUST THIS EASEMENT WILL BE EXTINGUISHED
OF RECORD.
INQUIRY OF THE VESTEE SHOULD BE HAD AS TO ITS DESIRE TO PERMANENTLY CREATE
THIS SERVITUDE.
EXHIBIT "D"
Page 3 of 16
<PAGE> 65
2354 DAVIS AVENUE
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT : $10,209.56 OPEN
2ND INSTALLMENT : $10,209.56 OPEN
LAND : $290,887.00
IMPROVEMENTS : $l,347,896.00
PERSONAL PPTY. : $13,381.00
A.P. NO. : 439-0058-015-02
CODE AREA : 25-005
2. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT : NO TAXES DUE
2ND INSTALLMENT : NO TAXES DUE
LAND : NONE
IMPROVEMENTS : NONE
PERSONAL PPTY. : NONE
A.P. NO. : 439-0058-015-01
CODE AREA : 25-005
4. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED PURSUANT TO
CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA, WHICH CHAPTER
BECAME LAW ON JULY 29TH, 1983.
5. COVENANTS, CONDITIONS AND RESTRICTIONS OF THE RUSSELL CITY REDEVELOPMENT
PROJECT, APPROVED ON FEBRUARY 5, 1956, AND ADOPTED BY ORDINANCE NO. 775 ON
APRIL 9, 1963, BY THE BOARD OF SUPERVISORS OF ALAMEDA COUNTY. THE
STATEMENT OF INSTITUTION OF PROCEEDINGS THEREFORE WAS RECORDED APRIL 24,
1963, REEL 864, IMAGE 68, OFFICIAL RECORDS, INSTRUMENT NO. AU-69404. SAID
COVENANTS, CONDITION AND RESTRICTIONS WERE CONTAINED IN AN INSTRUMENT
JANUARY 23, 1967, REEL 1905, IMAGE 425, OFFICIAL RECORDS.
6. COVENANTS, CONDITIONS AND RESTRICTIONS AS SET FORTH IN A DECLARATION OF
RESTRICTIONS, BY DELETING THEREFROM ANY RESTRICTIONS WHICH ARE BASED UPON
RACE, COLOR, RELIGION, SEX OR NATIONAL ORIGIN, RECORDED JANUARY 21, 1969,
REEL 2331, IMAGE 228, OFFICIAL RECORDS.
SAID RESTRICTIONS WERE IMPOSED UPON PREMISES BY INSTRUMENT RECORDED APRIL
25, 1969, REEL 2390, IMAGE 183, SERIES NO. 69-45885, ALAMEDA COUNTY
RECORDS.
EXHIBIT "D"
Page 4 of 16
<PAGE> 66
ORDER NO. 16082
7. EASEMENT FOR PUBLIC UTILITY PURPOSE, AS SHOWN UPON THE FILED MAP.
AFFECTS : THE SOUTHERN 10 FEET AND THE NORTHERN 5 FEET OF
PARCEL 1 OF PREMISES.
8. EASEMENT FOR RAILROAD PURPOSES, AS SHOWN UPON THE FILED MAP.
AFFECTS : THE NORTHERN 30 FEET OF THE SOUTHERN 40 FEET OF
PARCEL 1 OF PREMISES.
9. EASEMENT FOR STORM DRAINAGE PURPOSES, AS SHOWN UPON THE FILED MAP.
AFFECTS : THE EASTERN 10 FEET OF PARCEL 1 OF PREMISES.
10. EASEMENT FOR STORM DRAINAGE PURPOSES AND INCIDENTAL PURPOSES, AS CONVEYED
TO CITY OF HAYWARD, BY INSTRUMENT RECORDED MARCH 11, 1970, REEL 2580,
IMAGE 105, INSTRUMENT NO. 25482, OF OFFICIAL RECORDS.
AFFECTS : THE WESTERN 5 FEET OF THE EASTERN 15 FEET OF PARCEL 1
OF PREMISES
1l. EASEMENT FOR STORM DRAINAGE PURPOSES AND INCIDENTAL PURPOSES, AS RESERVED
IN THE DEED FROM CABOT, CABOT & FORBES HAYWARD PROPERTIES, INC., RECORDED
MARCH 16, 1970, REEL 2582, IMAGE 576 INSTRUMENT NO. 27209 OF OFFICIAL
RECORDS.
AFFECTS : THE WESTERN 5 FEET OF THE EASTERN 15 FEET OF PARCEL 1
OF PREMISES.
12. EASEMENT FOR RAILROAD PURPOSES AND INCIDENTAL PURPOSES, AS RESERVED IN THE
DEED FROM CABOT, CABOT & FORBES HAYWARD PROPERTIES, INC., RECORDED MARCH
16, 1970 REEL 2582, IMAGE 576 INSTRUMENT NO. 27209, OF OFFICIAL RECORDS.
AFFECTS : THE NORTHERN 30 FEET OF THE SOUTHERN 40 FEET OF
PARCEL 1 OF PREMISES.
13. UNRECORDED LEASE UPON THE TERMS, COVENANTS, AND CONDITIONS PROVIDED
THEREIN,
LESSOR : CHARLES KING & ASSOCIATES, A GENERAL PARTNERSHIP
LESSEE : ANCHOR HOCKING CORPORATION, A DELAWARE CORPORATION
DISCLOSED BY : ASSIGNMENT OF LEASE AND AGREEMENT
RECORDED : SEPTEMBER 27, 1971, REEL 2958, IMAGE 248, OFFICIAL
RECORDS.
EXHIBIT "D"
Page 5 of 16
<PAGE> 67
ORDER NO. 16082
15. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF $1275,000.00.
DATED : SEPTEMBER 2, 1971
TRUSTOR : CHARLES KING AND ASSOCIATES, A GENERAL PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 555 CALIFORNIA ST., 24TH FL., SAN FRANCISCO,
CALIFORNIA 94104
LOAN NO. : NOT SHOWN
RECORDED : SEPTEMBER 27, 1971, REEL 2958, IMAGE 242, OFFICIAL
RECORDS.
SAID DEED OF TRUST HAS BEEN SUBORDINATED TO THE LEASE IN EXCEPTION NO. 17,
HEREIN BY INSTRUMENT RECORDED AUGUST 17, 1973, REEL 3491, IMAGE 31,
OFFICIAL RECORDS.
AS ADDITIONAL SECURITY FOR SUCH DEED OF TRUST, THE LESSOR'S INTEREST UNDER
THE LEASES REFERRED TO IN ITEMS NO. 13 AND 14 ABOVE WERE ASSIGNED TO THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA BY INSTRUMENTS RECORDED SEPTEMBER
27, 1971, IN REEL 2958, IMAGE 248 AND REEL 2958, IMAGE 252, OFFICIAL
RECORDS.
16. EASEMENT FOR RAILROAD, TRANSPORTATION AND COMMUNICATION PURPOSES AND
INCIDENTAL PURPOSES, AS CONVEYED TO SOUTHERN PACIFIC TRANSPORTATION
COMPANY, A CORPORATION, BY INSTRUMENT RECORDED JULY 3, 1973, REEL 3455,
IMAGE 337, OF OFFICIAL RECORDS.
AFFECTS : THE SOUTHERLY PORTION OF PREMISES..
17. LEASE FOR THE TERM AND UPON THE TERMS AND CONDITIONS CONTAINED THEREIN
DATED : AUGUST 4, 1973
LESSOR : CHARLES KING AND ASSOCIATES, A CALIFORNIA GENERAL
PARTNERSHIP
LESSEE : UNITED GROCERS, LTD., A CALIFORNIA CORPORATION
TERM : 5 YEARS
AS DISCLOSED BY THAT CERTAIN SHORT FORM LEASE, MADE BY AND BETWEEN SAID
PARTIES, RECORDED AUGUST 17, 1973, REEL 3491, IMAGE 26, OFFICIAL RECORDS.
SAID LEASE CONTAINS PROVISIONS FOR RENEWALS.
EXHIBIT "D"
Page 6 of 16
<PAGE> 68
ORDER NO. 16085
2376 DAVIS AVENUE
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT : $8,688,06 OPEN
2ND INSTALLMENT : $8,688.06 OPEN
LAND : $234,195.00
IMPROVEMENTS : $1,160,915.00
PERSONAL PPTY. : $13,38l.00
A.P. NO. : 439-0058-016-02
CODE AREA : 25-005
2. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT : NO TAXES DUE
2ND INSTALLMENT : NO TAXES DUE
LAND : NONE
IMPROVEMENTS : NONE
PERSONAL PPTY. : NONE
A.P. NO. : 439-0058-016-0l
CODE AREA : 25-005
4. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED PURSUANT TO
CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA, WHICH CHAPTER
BECAME LAW ON JULY 29TH, 1983.
5. COVENANTS, CONDITIONS AND RESTRICTIONS OF THE RUSSELL CITY REDEVELOPMENT
PROJECT, APPROVED ON FEBRUARY 5, 1956, AND ADOPTED BY ORDINANCE NO. 775 ON
APRIL 9, 1963, BY THE BOARD OF SUPERVISORS OF ALAMEDA COUNTY. THE
STATEMENT OF INSTITUTION OF PROCEEDINGS THEREFORE WAS RECORDED APRIL 24,
1963, REEL 864, IMAGE 68, OFFICIAL RECORDS, INSTRUMENT NO. AU/69404. SAID
COVENANTS, CONDITION AND RESTRICTIONS WERE CONTAINED IN AN INSTRUMENT
JANUARY 23, 1967, REEL 1905, IMAGE 425, OFFICIAL RECORDS.
6. COVENANTS, CONDITIONS AND RESTRICTIONS AS SET FORTH IN A DECLARATION OF
RESTRICTIONS, BUT DELETING THEREFROM ANY RESTRICTIONS WHICH ARE BASED UPON
RACE, COLOR, RELIGION, SEX OR NATIONAL ORIGIN, RECORDED JANUARY 21, 1969,
REEL 2331, IMAGE 2289, OF OFFICIAL RECORDS.
SAID RESTRICTIONS WERE IMPOSED UPON PREMISES BY INSTRUMENT RECORDED APRIL
25, 1969, ON REEL 2390, IMAGE 183, INSTRUMENT NO. 45885 ALAMEDA COUNTY
RECORDS.
EXHIBIT "D"
Page 7 of 16
<PAGE> 69
ORDER NO. 16085
7. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : PUBLIC UTILITIES
AFFECTS : THE SOUTHERN 10 FEET, THE WESTERN 5 FEET AND THE
NORTHERN 5 FEET OF PREMISES
8. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : RAILROAD PURPOSES
AFFECTS : THE NORTHERN 30 FEET OF THE SOUTHERN 40 FEET OF
PREMISES
9. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF ANY,
BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN THE
DECLARATION
BY : CABOT, CABOT AND FORBES, HAYWARD PROPERTIES, INC., A
DELAWARE CORPORATION
RECORDED : MARCH 31, 1971, REEL 2819, IMAGE 88, OFFICIAL
RECORDS
10. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $1,225,000.00
DATED : MARCH 7, 1972
TRUSTOR : CHARLES KING & ASSOCIATES, A GENERAL PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 555 CALIFORNIA ST., 24TH FLOOR, SAN FRANCISCO, CALIF.
94104
LOAN NO. : 2 166 405
RECORDED : MARCH 21, 1972, REEL 3086, IMAGE 605, SERIES NO.
72-36003, OFFICIAL RECORDS
AS ADDITIONAL SECURITY FOR THE OBLIGATION SECURED BY SAID INSTRUMENT, THE
LESSOR'S INTEREST IN THE LEASE REFERRED TO IN EXCEPTION NO. 11 HEREIN WAS
ASSIGNED TO SAID BENEFICIARY BY INSTRUMENT RECORDED MARCH 21, 1972, REEL
3086, IMAGE 610, SERIES NO. 72-36004, OFFICIAL RECORDS.
SAID DEED OF TRUST WAS MODIFIED BY INSTRUMENT RECORDED MARCH 16, 1973,
REEL 3365, IMAGE 515, OFFICIAL RECORDS.
ll. UNRECORDED LEASE UPON THE TERMS AND CONDITIONS CONTAINED THEREIN
LESSOR : CHARLES KING & ASSOCIATES, A GENERAL PARTNERSHIP
LESSEE : CHARLES W. KING, JR. AND CAROL ANNE KING, HIS WIFE
DISCLOSED BY : ASSIGNMENT OF LEASE AND AGREEMENT
RECORDED : MARCH 21, 1972, REEL 3086, IMAGE 610, OFFICIAL
RECORDS.
EXHIBIT "D"
Page 8 of 16
<PAGE> 70
ORDER NO. 16085
12. EASEMENT FOR RAILROAD, TRANSPORTATION AND COMMUNICATION PURPOSES AND
INCIDENTAL PURPOSES, AS CONVEYED TO SOUTHERN PACIFIC TRANSPORTATION
COMPANY, A CORPORATION, BY INSTRUMENT RECORDED JULY 3, 1973, REEL 3455,
IMAGE 337, OF OFFICIAL RECORDS.
AFFECTS : THE SOUTHERLY PORTION OF PREMISES..
EXHIBIT "D"
Page 9 of 16
<PAGE> 71
ORDER No. 16089
20389 CORSAIR BOULEVARD
1A. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $7,375.98 OPEN
2ND INSTALLMENT: $7,375.98 OPEN
LAND : $166,451.00
IMPROVEMENTS : $804,279,00
A.P. No. : 432-0114-019
CODE AREA : 25-060
1B. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $4,623.24 OPEN
2ND INSTALLMENT: $4,623.24 OPEN
LAND : -$41.00
IMPROVEMENTS : $788,520.00
A.P. NO. : 432-0114-019
CODE AREA : 25-060
REASON : ESCAPED ASSESSMENT
ACTION : ESCAPED ASSESSMENT 1983
lC. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $4,615.80 OPEN
2ND INSTALLMENT: $4,615.80 OPEN
LAND : -$28.00
IMPROVEMENTS : $780,716.00
A.P. NO. : 432-0114-019
CODE AREA : 25-060
REASON : ESCAPED ASSESSMENT
ACTION : ESCAPED ASSESSMENT 1982
1D. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $4,509.59 OPEN
2ND INSTALLMENT: $4,509.59 OPEN
LAND : -$31.00
IMPROVEMENTS : $765,408.00
A.P. NO. : 432-0114-019
CODE AREA : 23-060
REASON : ESCAPED ASSESSMENT
ACTION : ESCAPED ASSESSMENT 1981
1E. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT: $4,814.93 OPEN
2ND INSTALLMENT: $4,814.93 OPEN
IMPROVEMENTS : $750,400.00
A.P. NO. : 432-0114-019
CODE AREA : 25-060
REASON : ESCAPED ASSESSMENT
ACTION : ESCAPED ASSESSMENT 1980
EXHIBIT "D"
Page 10 of 16
<PAGE> 72
ORDER NO. 16089
3. ASSESSMENT FOR HAYWARD AIR TERMINAL UNDER ACT 1915
ASSESSMENT NO. 62, SERIES J
ISSUED JANUARY 1, 1970 FOR (NOT SHOWN) PAYABLE IN 50 INSTALLMENTS WITH
COUNTY TAXES. ALL AMOUNTS PAID TO AND INCLUDING 2ND INSTALLMENT OF 1983 -
1984 TAXES. AMOUNT TO PAY IN FULL (NOT INCLUDING AMOUNTS PAYABLE WITH 1984
- 1985 TAX INSTALLMENTS) (SEE ASST.#61) WHICH INCLUDES (NOT SHOWN)
PRINCIPAL AND (NOT SHOWN) INTEREST IF PAID PRIOR TO AUGUST 1, 1985. SAID
BOND PAYABLE TO CITY OF HAYWARD.
4. ASSESSMENT FOR HAYWARD AIR TERMINAL UNDER ACT 1915
ASSESSMENT NO. 6l (SEE NOTE), SERIES J
ISSUED JANUARY 1, 1970 FOR $46,150.52 PAYABLE IN 50 INSTALLMENTS WITH
COUNTY TAXES. ALL AMOUNTS PAID TO AND INCLUDING 2ND INSTALLMENT OF 1983 -
1984 TAXES. AMOUNT TO PAY IN FULL (NOT INCLUDING AMOUNTS PAYABLE WITH 1984
- 1985 TAX INSTALLMENTS) $23,517,84 WHICH INCLUDES $18,674.46 PRINCIPAL
AND $4,843.38 INTEREST IF PAID PRIOR TO AUGUST 1, 1985. SAID BOND PAYABLE
TO CITY OF HAYWARD.
NOTE: ASST. #61 AND 62 ARE COMBINED.
5. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED PURSUANT TO
CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA, WHICH CHAPTER
BECAME LAW ON JULY 29TH, 1983.
6. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF ANY,
BASED ON RACE, COLOR, RELIGION, SEX OR NATIONAL ORIGIN, CONTAINED IN THE
DEED
EXECUTED BY : CITY OF HAYWARD, A MUNICIPAL CORPORATION
RECORDED : JANUARY 16, 1967, REEL 1902, IMAGE 397, SERIES NO.
AZ-4478, OFFICIAL RECORDS
7. EASEMENT AS CONTAINED IN THE DECLARATION ABOVE REFERRED TO AS FOLLOWS:
FOR : RIGHT OF FLIGHT FOR PASSAGE OF AIRCRAFT
AFFECTS : PORTION OF AIRSPACE
EXHIBIT "D"
Page 11 of 16
<PAGE> 73
ORDER NO. 16089
8. COVENANTS, CONDITIONS AND RESTRICTIONS IN THE DECLARATION OF RESTRICTIONS
EXECUTED BY : CABOT, CABOT & FORBES HAYWARD, PROPERTIES, INC.
RECORDED : JUNE 6, 1967, REEL 1975, IMAGE 605, SERIES NO.
AZ-52801, OFFICIAL RECORDS
RESTRICTIONS, IF ANY, BASED UPON RACE, COLOR, RELIGION OR NATIONAL ORIGIN
ARE DELETED.
AND RE-RECORDED: JUNE 14, 1967, REEL 1980, IMAGE 934, SERIES NO. AZ-56218,
OFFICIAL RECORDS
SAID COVENANTS, CONDITIONS AND RESTRICTIONS WERE IMPOSED UPON PREMISES BY
INSTRUMENT RECORDED MAY 15, 1969, ON REEL 2402, IMAGE 690, SERIES NO.
54120, ALAMEDA COUNTY RECORDS.
SAID COVENANTS, CONDITIONS AND RESTRICTIONS HAVE BEEN INCORPORATED BY
REFERENCE THERETO IN A DEED
EXECUTED BY : CABOT, CABOT & FORBES HAYWARD PROPERTIES, INC., A
DELAWARE CORPORATION
RECORDED : DECEMBER 26, 1969, REEL 2539, IMAGE 25, SERIES NO.
69-15699, OFFICIAL RECORDS
9. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : PUBLIC UTILITIES
AFFECTS : NORTHEASTERLY, EASTERLY AND SOUTHEASTERLY 5 FEET OF
PREMISES
10. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $805,000.00
DATED : AUGUST 2, 1978
TRUSTOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 533 CALIFORNIA ST., 24TH FL., SAN FRANCISCO, CALIF.
94104
LOAN NO. : 2 169 653
RECORDED : AUGUST 9, 1978, REEL 5524, IMAGE 433, SERIES NO.
78-152841, OFFICIAL RECORDS
EXHIBIT "D"
Page 12 of 16
<PAGE> 74
ORDER NO. 16089
AS ADDITIONAL SECURITY FOR THE OBLIGATION SECURED BY SAID INSTRUMENT, THE
LESSORS INTEREST IN THE LEASE(S) REFERRED TO IN EXCEPTION NO. 11 HEREIN
WAS ASSIGNED TO SAID BENEFICIARY BY INSTRUMENT RECORDED AUGUST 9, 1978,
REEL 5524, IMAGE 438, OFFICIAL RECORDS.
11. UNRECORDED LEASE UPON THE TERMS AND CONDITIONS CONTAINED THEREIN
LESSOR : CHARLES KING & ASSOCIATES, A LIMITED PARTNERSHIP
LESSEE : SHAKLEE CORPORATION, A CALIFORNIA CORPORATION
DISCLOSED BY : ASSIGNMENT OF LEASE AND AGREEMENT
RECORDED : AUGUST 9, 1978, REEL 5524, IMAGE 438, SERIES NO.
78-152842, OFFICIAL RECORDS
EXHIBIT "D"
Page 13 of 16
<PAGE> 75
ORDER NO. 16090
21118 CABOT BOULEVARD
1. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT : $13,432.13 OPEN
2ND INSTALLMENT : $13,432.13 OPEN
LAND : $243,127.00
IMPROVEMENTS : S1,442,280.00
PERSONAL PPTY. : $30,739.00
A.P. NO. : 439-0035-027-02
CODE AREA : 25-028
2. COUNTY AND CITY TAXES FOR THE FISCAL YEAR 1984 - 1985
1ST INSTALLMENT : NO TAXES DUE
2ND INSTALLMENT : NO TAXES DUE
A.P. NO. : 439-0035-027-01
CODE AREA : 25-028
4. THE LIEN OF SUPPLEMENTAL REAL PROPERTY TAXES, IF ANY, ASSESSED PURSUANT TO
CHAPTER 498, 1983 STATUTES OF THE STATE OF CALIFORNIA, WHICH CHAPTER
BECAME LAW ON JULY 29TH, 1983.
5. ASSESSMENT FOR LOC. IMP. DIST. #9 UNDER ACT OF 1915 ASSESSMENT NO. 4
(RE-SEGREGATED) SERIES CC PH.I ISSUED JULY 25, 1977 FOR $49,926.90 PAYABLE
IN 40 INSTALLMENTS WITH COUNTY TAXES. SAID BOND PAYABLE TO CITY OF
HAYWARD. PAID THROUGH 1978 - 1979 TAXES AMOUNT TO PAY IN FULL S46,126.15
WHICH INCLUDES $45,776.91 PRINCIPAL AND 20.39 INTEREST IF PAID PRIOR TO
AUGUST 1, 1982. PREPAYMENT PENALTY $228.85 BOND CALL CHARGE $100.00
(UPDATED BOND INFORMATION TO FOLLOW)
6. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : PUBLIC UTILITIES
AFFECTS : WESTERLY 10 FEET OF PREMISES
7. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS CREATED
IN THAT CERTAIN INSTRUMENT
RECORDED : OCTOBER 19, 1977, REEL 5098, IMAGE 746, OFFICIAL
RECORDS
GRANTED TO : THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY
PURPOSE : UNDERGROUND CONDUITS, PIPES
AFFECTS : WESTERLY 10 FEET OF PREMISES
EXHIBIT "D"
Page 14 of 16
<PAGE> 76
ORDER NO. 16090
8. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : RAILROAD
AFFECTS : SOUTHEAST 15 FEET OF PREMISES
9. EASEMENT AS FOLLOWS AS SHOWN ON THE FILED MAP
FOR : BUILDING SETBACK
AFFECTS : THE SOUTHEAST 30 FEET OF PREMISES
10. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS CREATED
IN THAT CERTAIN INSTRUMENT
RECORDED : MAY 2, 1978, REEL 5373, IMAGE 294, OFFICIAL
RECORDS
GRANTED TO : SOUTHERN PACIFIC TRANSPORTATION COMPANY, A
DELAWARE CORPORATION
PURPOSE : RAILROAD, TRANSPORTATION AND COMMUNICATION
PURPOSES
AFFECTS : EASTERN PORTION OF PREMISES
TERMS AND CONDITIONS CONTAINED IN THE INSTRUMENT LAST ABOVE REFERRED TO
11. COVENANTS, CONDITIONS AND RESTRICTIONS, BUT DELETING RESTRICTIONS, IF ANY,
BASED ON RACE, COLOR, RELIGION OR NATIONAL ORIGIN, CONTAINED IN THE
DECLARATION
BY : CROCKER LAND COMPANY, A CALIFORNIA CORPORATION
RECORDED : JULY 7, 1978, SERIES NO. 78-129034, OFFICIAL RECORDS
CONTAINS NO REVERSIONARY CLAUSE.
CONTAINS A MORTGAGEE PROTECTION CLAUSE.
12. EASEMENT FOR THE PURPOSES STATED HEREIN AND INCIDENTAL PURPOSES AS CREATED
IN THAT CERTAIN INSTRUMENT
RECORDED : JULY 7, 1978, SERIES NO. 78-129035, OFFICIAL RECORDS
RESERVED BY : CROCKER LAND COMPANY, A CORPORATION
PURPOSE : A STORM DRAINAGE PIPE LINE
AFFECTS : SOUTHERLY PORTION OF PREMISES
TERMS AND CONDITIONS CONTAINED IN THE INSTRUMENT LAST ABOVE REFERRED TO.
13. DEED OF TRUST TO SECURE AN INDEBTEDNESS OF
AMOUNT : $1,300,000.00
DATED : JULY 5, 1978
TRUSTOR : CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP
TRUSTEE : TITLE INSURANCE AND TRUST COMPANY, A CALIFORNIA
CORPORATION
BENEFICIARY : THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, A
CORPORATION
ADDRESS : 745 BROAD STREET, NEWARK, NEW JERSEY
LOAN NO. : 2 169 643
RECORDED : JULY 7, 1978, REEL 5475, IMAGE 120, SERIES NO.
78-129036, OFFICIAL RECORDS
EXHIBIT "D"
Page 15 of 16
<PAGE> 77
ORDER NO. 16090
AS ADDITIONAL SECURITY FOR THE OBLIGATION SECURED BY SAID INSTRUMENT, THE
LESSORS INTEREST IN THE LEASE REFERRED TO IN EXCEPTION NO. 14 HEREIN WAS
ASSIGNED TO SAID BENEFICIARY BY INSTRUMENT RECORDED JULY 7, 1978, REEL
5475, IMAGE 125, OFFICIAL RECORDS
14. UNRECORDED LEASE UPON THE TERMS AND CONDITIONS CONTAINED THEREIN
LESSOR : CHARLES KING AND ASSOCIATES, A LIMITED PARTNERSHIP
LESSEE : CLASS CONTAINERS CORPORATION
DISCLOSED BY : ASSIGNMENT OF LEASE AND AGREEMENT
RECORDED : JULY 79 1978, REEL 3475, IMAGE 125, SERIES NO.
78-129037, OFFICIAL RECORDS
EXHIBIT "D"
Page 16 of 16
<PAGE> 78
EXHIBIT "E"
DESCRIPTION OF FACILITIES
The Facilities consist of a 21,185 square foot building located on a
1.445 acre site. The building is of reinforced masonry and steel frame
construction with a brick exterior. It includes 1,500 square feet of
air-conditioned office area and a radiation cell comprising 3,000 square
feet. The radiation cell is a monolithically poured, reinforced concrete
structure, with walls and roof being six feet thick, covering a 23-foot
deep, stainless steel lined, water pool. The balance of the building is
used for storage, loading and shipping materials.
The building site includes ample on-site parking and a loading dock
to the rear of the building. There are 9,000 feet of contoured landscaping
in front of the building, and four to twenty feet of landscaping along the
sides of the site.
The principal installed equipment consists of a computer-controlled
conveyor system and a quantity of Cobalt-60. The business of the Company
is to utilize the Cobalt-60 to sterilize materials--primarily medical
supplies--manufactured by other companies. The process also has potential
applications for sterilizing foodstuffs.
EXHIBIT "E"
Page 1 of 1
<PAGE> 79
EXHIBIT "F"
a. All taxes for years subsequent to 1983.
b. Protective Covenants for Snapfinger Woods Industrial Park as contained in
instrument dated December 13, 1973, recorded in Deed Book 3147, Page 235,
DeKalb County, Georgia, records.
c. 75 foot front building line restriction as shown on plat of survey by
Tri-County Land Surveying and Boggus & Associates, Engineers, dated
October 7, 1983, and last revised October 31, 1983.
d. All zoning ordinances affecting the property.
e. General utility, sewer and drainage easements affecting the property.
EXHIBIT "F"
Page 1 of 1
<PAGE> 80
[WELLS FARGO BANK LETTERHEAD]
REVOCABLE STANDING APPROVAL
OF BOND PROCEED DISBURSEMENTS
March 20, 1985
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
Re: $5,250,000 Development Authority of DeKalb County Variable Rate
Demand Industrial Development Revenue Bonds (Radiation
Sterilizers, Incorporated Project), Series 1985
Ladies and Gentlemen:
Pursuant to Section 3.3 of that certain Loan Agreement, dated March 1,
1985 (the "Loan Agreement"), between the Development Authority of DeKalb County
("Issuer") and Radiation Sterilizers, Incorporated ("Borrower"), relating to the
disbursement (collectively, "Disbursements") of the sale proceeds of the
above-referenced bonds, our approval is required for each Disbursement. Pursuant
to that certain Letter of Credit Agreement dated March 1, 1985 (the
"Reimbursement Agreement"), between Borrower and us, Borrower has represented
and warranted that each of the conditions to disbursement set forth in Exhibit
"B" to the Reimbursement Agreement (the "Conditions to Disbursement" has been
fulfilled.
This letter shall constitute our standing approval to all Disbursements
requested by Borrower, as required pursuant to Section 5.2 of the Reimbursement
Agreement, This approval shall be revoked (a) automatically, without notice, in
the event that you learn, or (b) upon written or telephonic notice to you that
we have learned, that any Condition to Disbursement was not on the date of this
Agreement, or has since ceased to be, fulfilled.
Very truly yours,
WELLS FARGO BANK, N.A.
/s/ George Huxtable
--------------------------
George Huxtable
Vice President
<PAGE> 1
EXHIBIT 10.37
PLEDGE AND SECURITY AGREEMENT
by
RADIATION STERILIZES, INCORPORATED
in favor of
WELLS FARGO BANK, N.A.
Dated as of March 1, 1985
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Section 1 Defined Terms 1
Section 2 Pledge 2
Section 3 Interest on Bonds 2
Section 4 Collateral 2
Section 5 Release of Drawing Bonds 2
Section 6 Rights of Bank 3
Section 7 Remedies 3
Section 8 Representations, Warranties, and
Covenants of Pledgor 4
Section 9 No Disposition, Etc. 5
Section 10 Sale of Collateral 6
Section 11 Limitation on Disposition 7
Section 12 Further Assurances 7
Section 13 Severability 7
Section 14 No Waiver; Cumulative Remedies 7
Section 15 Waivers; Amendments; Applicable Law 7
</TABLE>
<PAGE> 3
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement, dated as of March 1, 1985, is
made by RADIATION STERILIZES, INCORPORATED, a California corporation
("Pledgor"), to WELLS FARGO BANK, N.A., a national banking association ("Bank")
pursuant to a Letter of Credit Agreement, dated as of even date herewith,
between Pledgor and Bank (such Letter of Credit Agreement hereafter, as the same
may from time to time be amended or supplemented, called the "Agreement").
WHEREAS, the Development Authority of DeKalb County ("Issuer") has
agreed with Pledgor to issue its Development Authority of DeKalb County Variable
Rate Demand Industrial Development Revenue Bonds (Radiation Sterilizers,
Incorporated Project), Series 1985, (the "Bonds") pursuant to that certain Trust
Indenture, dated as of even date herewith (the "Trust Indenture") between Issuer
and Bank One Trust Company, N.A., a national banking association (the
"Trustee"); and
WHEREAS, the Trust Indenture provides for the purchase of certain
Bonds and for their delivery to Bank, or its nominee, in accordance with
Sections 401(j) and 401(k) of the Trust Indenture (defined in the Agreement, and
herein, as the "Drawing Bonds" and the "Company Bonds"); and
WHEREAS, in connection with the issuance of the Bonds, Pledgor has
agreed to enter into the Agreement in order to cause Bank to issue the Letter of
Credit thereunder which may be used, inter alia, to pay the purchase price of
the Drawing Bonds; and
WHEREAS, it is a condition precedent to the obligations of Bank to
enter into the Agreement that Pledgor shall have executed and delivered this
Pledge and Security Agreement to Bank;
NOW, THEREFORE, in consideration of the promises and in order to
induce Bank to enter into the Agreement and issue the Letter of Credit
thereunder and for other good and valuable consideration, receipt of which is
hereby acknowledged, Pledgor hereby agrees with Bank as follows:
1. Defined Terms. Capitalized terms used and not otherwise defined
herein shall have the same meanings as set forth in the Agreement.
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<PAGE> 4
2. Pledge. Pledgor hereby pledges, assigns, hypothecates, transfers
and delivers to Bank all its right, title and interest to the Drawing Bonds and
the Company Bonds (collectively, the "Pledged Bonds") as the same may from time
to time be delivered to the Remarketing Agent or the Paying Agent by the owners
thereof, and hereby grants to Bank a first lien on, and security interest in,
its right, title and interest in and to the Pledged Bonds, including without
limitation all interest thereon and other proceeds thereof, and any related due
bills, as security for the prompt and complete payment and performance by
Pledgor of all obligations and indebtedness to Bank under the Agreement and the
other Loan Documents, whether such obligations and indebtedness (i) are now
existing or owing or are hereafter incurred or (ii) are absolute or contingent
(collectively, the "Obligations").
3. Interest on Bonds. If, while this Pledge and Security Agreement
is in effect, Pledgor shall become entitled to receive or shall receive any
interest payment in respect of the Pledged Bonds, Pledgor agrees to accept the
same as Bank's agent and to hold the same in trust on behalf of Bank and to
deliver the same forthwith to Bank. All interest payments in respect of the
Drawing Bonds which are received by Bank shall be credited against the
obligation of Pledgor to pay interest to Bank set forth in Article 13 of the
Agreement.
4. Collateral. All property at any time pledged with Bank hereunder
(whether described herein or not) and all income therefrom and proceeds thereof,
are herein collectively sometimes called the "Collateral." Bank shall not
acquire a security interest hereunder in any property other than the Drawing
Bonds and the Company Bonds unless Company shall have afforded to Trustee, for
the benefit of the holders of the Bonds, prior to or simultaneously with the
taking by Bank of such security, rights which shall, at the option of Bank, be
either senior to the rights of Bank or of equal priority with the rights of Bank
in connection with such security,
5. Release of Drawing Bonds. If Pledgor fulfills its reimbursement
obligation with respect to the principal and interest paid by Bank under the
Letter of Credit (and interest thereon under the Agreement) in connection with
the repurchase of any Bond pursuant to Section 401(g) or 401(h) of the Trust
Indenture, or if Bank transfers any Drawing Bond held by Bank to any Person
other than Pledgor in consideration for payment of the principal
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<PAGE> 5
amount of the Drawing Bond so purchased, then in either case Bank agrees to
release any such Drawing Bond from the lien of this Pledge and Security
Agreement. All Bonds so released shall be delivered, without recourse,
representation or warranty, express or implied, to Pledgor or the purchaser, as
applicable.
6. Rights of Bank. Bank shall not be liable for failure to collect
or realize upon the Obligations or any collateral security (including, but not
limited to the Pledged Bonds) or guaranty therefor, or any part thereof, or for
any delay in so doing, nor shall Bank be under any obligation to take any action
whatsoever with regard thereto. If an Event of Default has occurred and is
continuing, Bank may thereafter, without notice (except the notice specified in
Section 7 below of time and place of public or private sale), exercise all
rights, privileges or options pertaining to any Pledged Bonds as if it were the
absolute owner thereof, upon such terms and conditions as it may determine, all
without liability except to account for property actually received by it, but
Bank shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
7. Remedies. In the event that any portion of the Obligations has
been declared due and payable, 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 Pledgor 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 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 or any credit risk, with the right to 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 Pledgor, which
right or equity is hereby expressly waived or released. Bank shall pay over the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred
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<PAGE> 6
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 Bank hereunder, including
reasonable attorney's fees and legal expenses, and the payment in whole or in
part of the Obligations in such order as Bank may elect, Pledgor remaining
liable for any deficiency remaining unpaid after such application, and only
after so paying over such net proceeds and after the payment by Bank of any
other amount required by any provision of the law, including, without
limitation, Section 9-504(l)(c) of the Uniform Commercial Code, need Bank
account for the surplus, if any, to Pledgor. Pledgor agrees that Bank need not
give more than 10 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. No
notification need be given to Pledgor 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 Pledge
and Security Agreement and in any other instrument or agreement securing,
evidencing or relating to any of the Obligations, Bank shall have all the rights
and remedies of a secured party under the Uniform Commercial Code of the State
of California. Pledgor further agrees to waive and agrees not to assert any
rights or privileges which it may acquire under Section 9-112 of the Uniform
Commercial Code and Pledgor shall be liable for the deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay all
amounts to which Bank is entitled, and the fees of any attorneys employed by
Bank to collect such deficiency.
8. Representations, Warranties and Covenants of Pledgor. Pledgor
represents and warrants that: (a) on the date of delivery to Bank (or the
Trustee on Bank's behalf) of any Pledged Bonds described herein, neither Issuer,
the Remarketing Agent nor the Paying Agent will have any right, title or
interest in or to the Pledged Bonds; (b) it has, and on the date of delivery to
Bank (or the Trustee on Bank's behalf) of any Pledged Bonds will have, full
power, authority and legal right to pledge all of its right, title and interest
in and to the Pledged Bonds pursuant to this Pledge and Security Agreement; (c)
this Pledge and Security Agreement has been duly authorized, executed and
delivered by Pledgor and constitutes a legal, valid and binding obligation of
Pledgor enforceable in accordance with its terms; (d) no consent of any other
party (including, without limitation, stockholders or creditors of Pledgor) and
no consent, license, permit, approval or authorization of,
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<PAGE> 7
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority, domestic or foreign, is required to be obtained by
Pledgor in connection with the execution, delivery and performance of this
Pledge and Security Agreement; (e) the execution, delivery and performance of
this Pledge and Security Agreement will not violate any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or foreign, or of the
certificate of incorporation or bylaws of Pledgor or of any securities issued by
Pledgor or any company under common ownership with Pledgor, or of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which Pledgor or any company under common ownership with Pledgor is a party or
which purports to be binding upon Pledgor or any company under common ownership
with Pledgor or upon any of their respective assets and will not result in the
creation or imposition of any lien, charge or encumbrance on or security
interest in any of the assets of Pledgor or any company under common ownership
with Pledgor except as contemplated by this Pledge and Security Agreement; and
(f) the pledge, assignment and delivery of such Pledged Bonds pursuant to this
Pledge and Security Agreement will create a valid first lien on and a first
perfected security interest in, all right, title or interest of Pledgor in or to
such Pledged Bonds, 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 Pledgor which would include the Pledged Bonds. Pledgor
covenants and agrees that it will defend Bank's right, title and security
interest in and to the Pledged Bonds and the proceeds thereof against the claims
and demands of all persons whomsoever; and covenants and agrees that it will
have like title to and right to pledge any other property at any time hereafter
pledged to Bank as Collateral hereunder and will likewise defend Bank's right
thereto and security interest therein.
9. No Dispositions, Etc. Without the prior written consent of Bank,
Pledgor agrees that it will not sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, the Collateral, nor will it
create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any
of the Collateral, or any interest therein, or any proceeds thereof, except for
the lien and security interest provided for by this Pledge and Security
Agreement.
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<PAGE> 8
10. Sale of Collateral. (a) Pledgor recognizes that Bank may be
unable to effect a public sale of any or all of the Pledged Bonds by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who may be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Pledgor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner. Bank shall be
under no obligation to delay a sale of any of the Pledged Bonds for the period
of time necessary to permit the issuer of such securities to register such
securities for public sale under applicable Federal securities laws, or under
applicable state securities laws, even if the issuer would agree to do so.
(b) Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion or
all of the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at Pledgor's
expense. Pledgor further agrees that a breach of any of the covenants contained
in this Section 10 will cause irreparable injury to Bank, that -- Bank has no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section shall be specifically
enforceable against Pledgor and Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Agreement. Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Bank by reason of a breach of any of such covenants
and, consequently, agrees that, if Bank shall sue for damages for breach, it
shall pay, as liquidated damages and not as a penalty, an amount equal to the
par value plus accrued interest on the Pledged Bonds on the date Bank shall
demand compliance with this Section. Upon such payment, Bank will release its
interest in such Pledged Bonds.
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<PAGE> 9
11. Limitation on Disposition. Notwithstanding the rights and
remedies given to Bank in Section 7 and otherwise herein to dispose of Pledged
Bonds, Pledgor consents that upon an Event of Default under the Agreement, Bank
may tender any Pledged Bonds to the Trustee for cancellation, and Pledgor agrees
that such tender shall not constitute a disposition of collateral for purposes
of UCC Section 9-504, but shall constitute a simple reduction in the contingent
obligations of Pledgor to Bank.
12. Further Assurances. Pledgor agrees that at any time and from
time to time upon the written request of Bank, Pledgor will execute and deliver
such further documents and do such further acts and things as Bank may
reasonably request in order to effect the purposes of this Pledge and Security
Agreement.
13. Severability. Any provision of this Pledge and Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
14. No Waiver; Cumulative Remedies. Bank shall not, by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by
Bank, and then only to the extent therein set forth. A waiver by Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Bank would otherwise have on any future occasion. No
failure to exercise nor any delay in exercising on the part of Bank, any right,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
15. Waivers; Amendments; Applicable Law. None of the terms or
provisions of this Pledge and Security Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by Bank.
This Pledge and Security Agreement and all obligations of Pledgor
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<PAGE> 10
hereunder shall be binding upon the successors and assigns of Pledgor, and
shall, together with the rights and remedies of Bank hereunder, inure to the
benefit of Bank and its respective successors and assigns. This Pledge and
Security Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of California.
IN WITNESS WHEREOF, Pledgor has caused this Pledge and Security
Agreement to be duly executed as of the date first written above.
RADIATION STERILIZERS, INCORPORATED
a California corporation
By /s/ Allan Chin
---------------------------------
Its PRESIDENT
-----------------------------
By /s/ Charles W. King Jr.
---------------------------------
Its SECRETARY
-----------------------------
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<PAGE> 1
EXHIBIT 10.38
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
Bank One Trust Company, N.A.
as Trustee and Paying Agent
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Wells Fargo Bank, N.A. ("Bank") hereby establishes in your favor for
the account of Radiation Sterilizers, Incorporated, a California corporation
("Company"), its Irrevocable Letter of Credit I-80694 ("Letter of Credit") in a
maximum amount of up to $5,408,220.00 (as more fully described below) effective
immediately and expiring at Bank's counters by 4:00 P.M., San Francisco time, on
April 15, 1988, unless extended by Bank (the "Expiration Date").
This Letter of Credit is being issued in connection with that certain
Trust Indenture (the "Trust Indenture") dated as of March 1, 1985, between you,
as Trustee, and the Development Authority of DeKalb County (the "Issuer"),
pursuant to which the Issuer has agreed to authorize and issue and sell certain
Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985, (the "Bonds") in the aggregate principal amount of $5,250,000.00, the
payment of which Bonds is secured by, among other things, this Letter of
Credit.
As Used In this Letter of Credit, the term, "business day" shall
mean a day other than (i) a Saturday, (ii) a Sunday, (iii) a day upon which
banking institutions In the State of California or the City of New York are
authorized or required by law to close, or (i) a day on which the New York Stock
Exchange, Inc. is closed,
You, as Trustee and Paying Agent, pursuant to the Trust Indenture,
are hereby irrevocably authorized to draw on Bank, for the account of Company,
in accordance with the terms and conditions hereof and subject to reductions In
amounts as hereinafter set forth, an aggregate amount not, exceeding
$5,408,220.00 (Five Million Four Hundred Eight
page 1 of 6
<PAGE> 2
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
Thousand Two Hundred Twenty Dollars) (the "Stated Amount") of which (A) an
aggregate amount not exceeding $5,250.00.00 may be drawn upon with respect to "A
Drawings" and "C Drawings", as defined below, to cover principal of the Bonds,
and (B) an aggregate amount net exceeding $158,220.00 may be drawn upon with
respect to "B Drawings", "D Drawings" and "E Drawings", as defined below, to
cover 55 days of interest on the Bonds.
Funds under this Letter of Credit are only available to you against
your draft(s) drawn on Wells Fargo Bank, N.A., stating on their face: "Drawn
under Wells Fargo Bank, N.A. Irrevocable Letter of Credit I-80694" and upon your
presenting to Wells Fargo Bank, N.A. one or more of the following written
certificates:
(A) Your written certificate signed by you In the form of Exhibit A
attached hereto appropriately completed (an "A Drawing");
(B) Your written certificate signed by you in the form of Exhibit B
attached hereto appropriately completed (a "B Drawing";
(C) Your written certificate signed by you in the form of Exhibit C
attached hereto appropriately completed (a "C Drawing");
(D) Your written certificate signed by you in the form of Exhibit D
attached hereto appropriately completed (a "D Drawing");
(E) Your written certificate signed by you in the form of Exhibit E
attached hereto appropriately completed (an "E Drawing");
All documents presented to Bank in connection with any demand for
payment hereunder, as well as all notices and other communications to Bank with
respect to this Letter of Credit, shall be in writing and addressed and
presented to Bank at its offices at 4T5 Sansome Street, San Francisco,
California 94111, Attention: Letter of Credit Operations AU 1175, or any other
place in the United States which may be designated by Bank by written notice
delivered to you. Such documents, notices and other communications shall be
personally delivered to Bank, or may be sent to Bank by tested Telex in which
case draft requirements are waived.
page 2 of 6
<PAGE> 3
[Company Letterhead
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
If Bank receives any of your drafts drawn hereunder at such office,
all in strict conformity with the terms and conditions of this Letter of Credit,
on or prior to the Expiration Date, Bank will honor the same and make payment
hereunder. Payments to you under this Letter of Credit shall be made by wire
transfer of immediately available funds to Bank One, Columbus, N.A., Columbus,
Ohio, for your Account No. 04-0178-7orporate Trust Administration, or into such
other account as you designate to Bank in writing from time to time. If a proper
draft and certificate are presented by 11:30 A.M., New York time, payment will
be made that same business day; otherwise payment will be made the next business
day.
Upon a Drawing hereunder, the total amount of this Letter of Credit
shall be reduced as follows:
(A) With respect to any A or B Drawing, the total amount of this
Letter of Credit shall be reduced by the amount of such Drawing;
(B) With respect to any C or D Drawing, the total amount of this
Letter of Credit shall be reduced by the amount of such Drawing, provided
that Bank shall reinstate the amount of such drawing if such amount is
paid to Bank by Company prior to default under that certain Letter of
Credit Agreement, dated as of March 1, 1985 (the "Reimbursement
Agreement"), by and between Company and Bank. In addition, in the event
Bank transfers any Drawing Bonds (as defined in the Reimbursement
Agreement) in its possession following any C Drawing to any person or
entity (other than to you, as Trustee, for cancellation), an amount equal
to the amount of such C Drawing (and any corresponding D Drawing) which
was applied to pay principal and interest on the Bonds being so
transferred shall automatically be reinstated hereunder Bank will send
notice of any such reinstatement to you, as Trustee, in the form attached
hereto as Exhibit F; and
(C) With respect to any E Drawing, the total amount of this Letter
of Credit shall be reduced by the amount of such Drawing and such amount
shall then be immediately and automatically reinstated, and Bank will send
notice of such reinstatement to you, as Trustee, in the form attached
hereto as Exhibit F.
page 3 of 6
<PAGE> 4
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
Only you, as Trustee and Paying Agent, way make a drawing under this
Letter of Credit. Upon the payment to you, as Trustee and Paying Agent, of the
amount specified in a draft drawn hereunder, Bank will be fully discharged on
its obligation under this Letter of Credit with respect to such draft and shall
not thereafter be obligated to make any further payments under this Letter of
Credit in respect to such draft to you or any other person who may have made to
you or makes to you a demand for payment of principal of purchase price of or
interest on any bond. By paying to you an amount demanded in such draft(s) we
make no representation as to the correctness of the amount demanded in such
draft(s).
Upon the earliest of (i) 15 days after the making by you of an A
Drawing (and any associated B Drawing) hereunder (other than an A Drawing for
partial redemption); (ii) Bank's receipt of a certificate signed by your officer
and an officer of Company stating (a) that no Bonds are Outstanding within the
meaning of the Trust Indenture and (b) that such officers are duly authorized to
sign such certificate on behalf of you and Company; (iii) Bank's receipt of a
certificate sighed by your officer and an officer of Company stating (a) that an
Alternate Letter of Credit (as defined in the Trust Indenture) has been accepted
by you as Trustee under the Trust Indenture and (b) that such officers are duly
authorized to sign such certificate on behalf of you and on behalf of Company;
(iv) bank's receipt of a certificate signed by your officer and an officer of
Company stating (a) that no less then 15 days prior to the date of such
certificate, the interest rate on the Bonds was converted to a Fixed Interest
Rate (as defined in the Trust Indenture), (b) that you have not received written
notification from both Company and Bank stating that this Letter of Credit is
not to be cancelled, and (c) that such officers are duly authorized to sign such
certificate on behalf of you and an behalf of Company; or (v) the Expiration
Date, this Letter of Credit shall automatically terminate and be delivered to
Bank for cancellation.
This Letter of Credit shall be governed by (i) the Uniform Customs
and Practice for Documentary Credit as fixed by the Congress of the
International Chamber of Commerce from time to time (the "Uniform Customs") and
(ii) the laws of the State of California, including the Uniform Commercial Code
as in effect in the State of California. In the event of a conflict between the
Uniform Customs and the laws of the State of California, the Uniform Customs
shall prevail. Communications with respect to this Letter of Credit shall
page 4 of 6
<PAGE> 5
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
be in writing and shall be addressed to Bank at its offices at 475 Sansome
Street, San Francisco, California 94111, Attention: Letter of Credit Operations
- - AU 1175, specifically referring to the number of this Letter of Credit.
This Letter of Credit is transferable in its entirety to any
transferee who has succeeded you as Trustee under the Trust Indenture. Each
letter of credit issued upon any such transfer may be successively transferred,
Transfer of the available balance under this Letter of Credit to such transferee
shall be effected by the presentation to Bank of this Letter of Credit
accompanied by a certificate substantially in the form of Exhibit G attached
hereto. Following such presentation, and as soon as this original Letter of
Credit is returned to the Bank and the Bank has been paid its customary transfer
fee, Bank shall forthwith transfer the same to your transferee or, if so
requested by your transferee, issue an irrevocable letter of credit to your
transferee with provisions therein consistent with those of this Letter of
Credit.
This Letter of Credit sets forth in full Bank's undertaking, and
such undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds and the Trust Indenture), except only
the certificates) and the draft(s) 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) and such draft(s).
In the event of any failure by Bank, in whole or in part, to fulfill
its obligations with respect to any draw or draws under this Letter of Credit,
no person or entity shall have the right to make any claim against the Federal
Deposit Insurance Corporation in connection with such failure. By its signature
below, Bank One Trust Company, N.A., as Trustee and Paying Agent, acknowledges
receipt of this Letter of Credit and agrees that the terms of this paragraph
shall bind itself and its successors and assigns
Very truly yours,
WELLS FARGO BANK, N.A.
page 5 of 6
<PAGE> 6
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
By /s/ Signature Unreadable
--------------------------------
Its Asst. Vice President
----------------------------
ACCEPTED AND AGREED TO
THIS _____________ DAY OF MARCH, 1985:
BANK ONE TRUST COMPANY, N.A.
By ____________________
Its ________________
page 6 of 6
<PAGE> 7
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
(PRINCIPAL UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION, OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying, Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. I-80694 (the "Letter of Credit", the capitalized terms defined therein and
not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) The undersigned is making a drawing under the Letter of Credit
with respect to the payment of principal upon acceleration, partial redemption,
full redemption or maturity of the Bonds.
(3) The undersigned presently holds $ _____________ in the Bond
Fund. The undersigned presently holds no other amounts in the Bond Fund, holds
no amounts in the Construction Fund, and holds no other funds in its capacity as
Trustee or Paying Agent under the Trust Indenture.
(4) Of the total funds presently held in the Bond Fund, $ ________
is the total of all funds (the "Available Funds") that have not been delivered
to the undersigned by Company within the past 123 days. Of the Available Funds,
$ _________ is needed by the undersigned to pay current interest on the
outstanding Bonds.
(5) The amount of principal of the Bonds which is due account
payable for which the undersigned does not have available Funds is $
____________ and the amount of the draft accompanying this certificate does not
exceed such amount.
(6) The amount of the draft accompanying this certificate, together
with the aggregate of all prior payments made pursuant to A Drawings and C
Drawings under
A-1
<PAGE> 8
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT A
the Letter of Credit (other than reinstated amounts) for the payment of the
principal amount or purchase price of the Bonds does not exceed $5,250,000.00,
(7) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
(8) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of principal owing on account of the Bonds pursuant to the
Trust Indenture, (b) no portion of it shall be applied by the undersigned for
any other purpose, and (c) no portion of it shall be commingled with other funds
held by the undersigned. This drawing is made in accordance with the provisions
of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the ________ day of ____________, 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Trustee and Paying Agent
BY ________________________
Title __________________
A-2
<PAGE> 9
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
(ACCRUED INTEREST UPON ACCELERATION, PARTIAL REDEMPTION,
FULL REDEMPTION OR MATURITY)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. I-80694 (the "Letter of Credit", the capitalized terms defined therein and
not defined herein being used as therein defined) issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned Is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) The undersigned is making a drawing, under the Letter of Credit
with respect to the payment of accrued and unpaid interest upon acceleration,
partial redemption, full redemption, or maturity of the Bonds.
(3) Interest on the Bonds is due and payable and the amount of the
draft accompanying this certificate does not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of payment of
Interest accrued on the Bonds on or prior to their stated maturity date.
(4) The total of all funds presently held by the undersigned in the
Bond Fund that have not been delivered to the undersigned by Company within the
past 123 days is $ ____________. This amount, together with the amount of the
accompanying drift, equals the accrued Interest which is due and payable on the
Bonds.
(5) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B.D and E Drawings under the Letter of Credit
(other than reinstated amounts), does not exceed $158,220.00
(6) The amount of the draft accompanying this certificate was
computed In accordance with the terms and conditions of the Bonds and the Trust
Indenture.
B-1
<PAGE> 10
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT B
(7) Upon receipt by the undersigned of the amount hereby, (a) the
undersigned will apply it directly of the payment when due of the appropriate
amount of interest owing on account of the Bonds pursuant to the Trust
Indenture, (b) no portion of it shall be applied by the undersigned for any
other purpose, and (c) no portion of it shall be commingled with any other funds
held by the undersigned. This drawing is made in accordance with the provisions
of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _________ day of _________, 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association,
as Trustee and Paying Agent
By ________________________
Title __________________
B-2
<PAGE> 11
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
(PRINCIPAL OF BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. I-80694 (the "Letter of Credit", the capitalized terms defined therein and
not defined herein being used as therein defined) Issued by Bank in favor of
Trustee and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) Paying Agent is making a drawing under the Letter of Credit (a)
at the written request (or oral request to be immediately followed In writing)
of the Remarketing Agent (as defined in the Reimbursement Agreement) to pay,
pursuant to Section 401(g) of the Trust Indenture, the principal amount of the
purchase price of those repurchased Bonds which the Remarketing Agent has been
unable to remarket, the principal amount of which is equal to the amount of the
draft accompanying this certificate, and which Bonds (i) are now held by the
either the Remarketing Agent pursuant to its representation to Paying Agent,
which representation Paying Agent has not Independently verified, or are held by
Paying Agent and (ii) shall be re-registered in the name of Bank, or its agent,
as pledgee, and delivered to Bank, or such agent, within 5 business days
following receipt by Paying Agent of the amount demanded hereby; or (b) to pay,
pursuant to Section 401(h) of the Trust Indenture, the portion of the purchase
price of the Bonds delivered to Paying Agent for purchase equal to the principal
amount of such Bonds, and Paying Agent shall deliver to Bank, or its agent, as
pledgee, within 5 business days following receipt by Paying Agent of the amount
demanded hereby, a principal amount of Bonds equal to the amount of the draft
accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior payments made pursuant to A Drawings and C
Drawings under the Letter
C-1
<PAGE> 12
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT C
of Credit (other than reinstated amounts) does not exceed $5,250,000.00
(4) Upon receipt of the amount demanded hereby, (a) Paying Agent
will either (i) deliver it to the Remarketing Agent or use the same only for the
purpose of purchase of the Bonds referenced in Paragraph 2(a) hereof, or (ii)
use it for the purpose of purchase of the Bonds referred to in Paragraph 2(b)
hereof; (b) no portion of it shall be applied by Paying Agent for any other
purpose; and (c) no portion of it shall be commingled with other funds held by
Paying Agent. This drawing is made in accordance with the provisions of the
Trust Indenture.
IN WITNESS WHEREOF, Paying Agent has executed and delivered this
certificate as of the __________________ day of _____________, 19__.
BANK ONE TRUST COMPANY, N.A.
a national banking association
as Paying Agent
BY ________________________
Title ___________________
C-2
<PAGE> 13
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT D
CERTIFICATE FOR "D DRAWING"
(ACCRUED INTEREST ON BONDS DELIVERED
TO REMARKETING AGENT OR PAYING AGENT)
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. I-80694 (the "Letter of Credit", the capitalized terms defining and not
defined herein being used as therein defined) issued by Bank in favor of Trustee
and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) Paying Agent is making a drawing under the Letter of Credit (a)
at the written request (or oral request to be immediately followed in writing)
of the Remarketing Agent (as defined in the Reimbursement Agreement), to pay,
pursuant to Section 401(g) of the Trust Indenture, the amount of accrued
interest on those Bonds that the Remarketing Agent has been unable to remarket,
which amount of accrued interest is equal to the amount of the draft
accompanying this certificate; or (b) to pay, pursuant to Section 401(h) of the
Trust Indenture, the portion of the purchase price of the Bonds delivered to
Paying Agent for purchase equal to the amount of accrued and unpaid interest on
such Bonds to the date of purchase thereof, which amount of accrued Interest is
equal to the amount of the draft accompanying this certificate.
(3) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Letter of Credit
to (1) other than reinstated amounts), does not exceed $158,220.00
(4) The amount of the draft accompanying this certificate was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
(5) Upon receipt by Paying Agent of the amount demanded hereby, (a)
Paying Agent will either deliver it to the Remarketing Agent or use the same
only for the purpose of reimbursement or payment of accrued interest referenced
D-1
<PAGE> 14
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT D
in Paragraph 2(a) hereof, or (ii) use it for the purpose of reimbursement or
payment of accrued interest referenced in Paragraph 2(b) hereof; (b) no portion
of it shall be applied by Paying Agent for any other purpose; and (c) no portion
of it shall be commingled with other funds held by Paying Agent, This drawing is
made in accordance with the provisions of the Trust Indenture.
(6) To the extent that the payment demanded hereby is to be made in
accordance with the Letter of Credit on a date between a Record Date and the
corresponding Interest Payment Date (as those terms are defined in the Trust
Indenture), Paying Agent now holds and shall, within 5 business days following
receipt by Paying Agent of the payment demanded hereby, deliver to Bank, due
bill checks that, in the aggregate, are in the amount and in the form required
by the Trust Indenture.
IN WITNESS, WHEREOF, Paying Agent has executed and delivered this
certificate as of the ________ day of ________, 19__.
BANK ONE TRUST COMPANY, N.A.
as national banking association,
as Paying Agent
By _______________________
Title _________________
D-2
<PAGE> 15
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT E
CERTIFICATE FOR "E DRAWING"
(ACCRUED INTEREST UPON INTEREST PAYMENT DATE
The undersigned, a duly authorized officer of Bank One Trust
Company, N.A., a national banking association, as Trustee ("Trustee") and as
Paying Agent ("Paying Agent") hereby certifies to Wells Fargo Bank, N.A.
("Bank"), with reference to Wells Fargo Bank, N.A. Irrevocable Letter of Credit
No. I-8096 (the "Letter of Credit", the capitalized terms deferring and not
defined herein being used as therein defined) issued by Bank in favor of Trustee
and Paying Agent, that:
(1) The undersigned is Trustee and Paying Agent under the Trust
Indenture for the holders of the Bonds.
(2) The undersigned is making a drawing under the Letter of Credit
with respect to-the payment of accrued and unpaid Interest upon an Interest
Payment Date during the continuance of an Event of Default under the
Reimbursement Agreement for which Bank has not yet exercised its right to demand
that the undersigned accelerate the Bonds.
(3) Interest on the Bonds is due and payable and the amount of the
draft accompanying this certificate does not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of payment of
interest accrued on the Bonds on or prior to their stated maturity date.
(4) The total of all funds presently held by the undersigned in the
Bond Fund that have not been delivered to the undersigned by Company within the
past 123 days is $ ___________. This amount, together with the amount of the
accompanying draft, equals the accrued interest which is due and payable on the
Bonds (exclusive of Drawing Bonds).
(5) The amount of the draft accompanying this certificate, together
with the aggregate of all prior B, D and E Drawings under the Letter of Credit
(other than reinstated amounts), does not exceed $158,220.00.
(6) The amount of the draft accompanying this certificate, was
computed in accordance with the terms and conditions of the Bonds and the Trust
Indenture.
E-l
<PAGE> 16
[Company Letterhead ]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT E
(7) Upon receipt by the undersigned of the amount demanded hereby,
(a) the undersigned will apply it directly to the payment when due of the
appropriate amount of interest owing on account of the Bonds pursuant to the
Trust Indenture, (b) no portion of it shall be applied by the undersigned for
any other purpose, and (c) no portion of it shall be commingled with other funds
held by the undersigned. This drawing is made in accordance with the provisions
of the Trust Indenture.
IN WITNESS WHEREOF, Trustee and Paying Agent has executed and
delivered this certificate as of the _________ day of __________, 19__.
BANK ONE TRUST COMPANY, N.A.
as national banking association
as Trustee and Paying Agent
By _______________________
Title _________________
E-2
<PAGE> 17
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT F
NOTICE OF AUTOMATIC REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. I-80694
DATED AS OF March 21, 1985
The undersigned, a duly authorized officer of Wells Fargo Bank, N.A.
("Bank"), hereby certifies to the Trustee under the Trust Indenture dated as of
March 1, 1985, between the Development Authority of DeKalb County and Bank One
Trust Company, N.A., a national banking association ("Trustee"), with reference
to Irrevocable Letter of Credit No. I-80694 (the "Letter of Credit") issued by
Bank in favor of Trustee, that the amount drawn by Trustee pursuant to its
_______________ Drawing dated as of _______________, has been reinstated as of
_________________ and is available for draw subject to the terms of the Letter
of Credit.
In witness whereof, Bank has executed and delivered this Certificate
this _______ day of __________, 19__.
WELLS FARGO BANK, N.A.
By: __________________
Its ______________
F-1
<PAGE> 18
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT G
Wells Fargo Bank, N.A.
475 Sansome Street
San Francisco, California 94111
Attention: Letter of Credit Operations
AU 1175
Re: Wells Fargo Bank, N.A.
Irrevocable Letter of Credit No. I-80694.
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in
and to such Letter of Credit are transferred to the transferee and the
transferee shall have sole rights as beneficiary thereof, including sole rights
relating to any amendments, whether Increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned beneficiary.
The advice of such Letter of Credit is returned herewith,
along with your customary transfer fee, and we ask
G-1
<PAGE> 19
[Company Letterhead]
Irrevocable Letter of
Credit I-80694
Dated as of March 21, 1985
EXHIBIT G
you to endorse the transfer on the reverse side thereof and forward it direct to
the transferee with your customary notice of transfer.
Very truly yours,
-----------------------------
Signature of Beneficiary
SIGNATURE AUTHENTICATED
- -------------------------
(Bank)
- -------------------------
(Authorized Signature)
G-2
<PAGE> 1
EXHIBIT 10.39
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of March 1, 1985 ("Security Agreement"),
is executed by CHARLES KING & ASSOCIATES, a California limited partnership
("Debtor"), for the benefit of WELLS FARGO BANK, N.A., a national banking
association ("Bank"), and BANK ONE TRUST COMPANY, N.A., a national banking
association ("Trustee"), Bank and Trustee being collectively referred to herein
as "Secured Party."
WHEREAS, the Development Authority of DeKalb County (the "Issuer") and
Radiation Sterilizers, Incorporated, a California corporation ("RSI"), have
entered into a Loan Agreement as of even date herewith (the "Loan Agreement")
whereby the Issuer has agreed to issue bonds (the "Bonds") in the aggregate
principal amount of $5,250,000.00 and to lend the proceeds thereof to RSI to
finance the construction and operation of an industrial facility in DeKalb
County, Georgia, for the sterilization of packaged products using ionizing
radiation; and
WHEREAS, Bank is issuing a Letter of Credit (the "Letter of Credit") as
security for the obligations of RSI with regard to the Bonds and RSI is
executing, in connection therewith, a Letter of Credit Agreement (the
"Reimbursement Agreement") and various other documents defined in the
Reimbursement Agreement (and herein) as the "Loan Documents"; and
WHEREAS, Debtor has executed a General Continuing Guaranty of even date
herewith (the "Guaranty") pursuant to which Debtor has guaranteed all of the
obligations of RSI to Bank arising from or in connection with the Letter of
Credit, the Reimbursement Agreement or the other Loan Documents; and
WHEREAS, Debtor, pursuant to those certain deeds of trust dated as of even
date herewith (the "Deeds of Trust"), executed by Debtor, as trustor, in favor
of Secured Party, as beneficiary, has granted liens on the parcels of real
property described in Exhibit "A" hereto (the "Properties"), as security for
Debtor's obligations under the Guaranty; and
WHEREAS, in order to induce Bank to issue its Letter of Credit, Debtor has
agreed to enter into this Security Agreement in order to secure the payment and
performance required under the Guaranty;
-1-
<PAGE> 2
NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein, Debtor hereby agrees as follows:
1. Grant of Security Interest. To secure the payment and performance by
RSI of all obligations and indebtedness to Trustee under the Loan Agreement and
all related agreements, the Deeds of Trust and this Security Agreement, and the
payment and performance by Debtor of all obligations and indebtedness to Bank
under the Guaranty, the Deeds of Trust and this Security Agreement, whether such
obligations and indebtedness are now existing or owing or are hereafter incurred
or are absolute or contingent (the "Obligations"), Debtor hereby grants, assigns
and transfers to Secured Party a continuing security interest in all of its
right, title and interest in and to the following described property (the
"Collateral"):
(a) All Debtor's present and future accounts, instruments, chattel
paper, notes, drafts, contract rights, governmental permits, rights to
payment of any kind, any insurance proceeds, condemnation proceeds, and
any general intangibles and inventory arising from or relating to any
Property;
(b) All Debtor's present and future equipment, machinery, tools,
furniture and furnishings, whether owned or leased by Debtor, now or
hereafter located at any Property or relating to any Property;
(c) All fixtures located upon or within any Property or now or
hereafter attached to, or installed in, or used in connection with any
Property including, but not limited to, any and all partitions;
generators; screens; awnings; motors; engines; boilers; furnaces; pipes;
plumbing; elevators; cleaning, call and sprinkler systems; fire
extinguishing apparatus and equipment; water tanks; heating, ventilating,
air-conditioning and air-cooling equipment; built-in refrigerated rooms
and gas and electric machinery, appurtenances and equipment; in each case
whether or not permanently affixed to that Property; together with all
present and future attachments, accessories, replacements, equipment,
additions and any proceeds thereof;
(d) All water stock, if any, relating to any Property and all shares
of stock or other evidence of ownership of any part of or interest in any
Property that is owned by Debtor in common with others;
-2-
<PAGE> 3
(e) All present and future trade marks and trade names, and all
present and future books and records pertaining to any Property or the
collateral described in subparagraphs (a) through (d) above, and the
equipment containing such books and records; and
(f) All proceeds and products of any of the foregoing, including
without limitation all monies, deposit accounts, insurance proceeds and
other tangible or intangible property received upon a sale or other
disposition of any of the foregoing.
2. Representations and Warranties of Debtor. Debtor hereby represents to
Secured Party that:
(a) Debtor is the true and lawful owner of and has good and clear
title to the Collateral, subject only to the rights of Secured Party
hereunder and to the rights of other lenders with respect to each security
interest ("Permitted Lien") granted by Debtor in conjunction with any lien
on the related Property that is described in the Reimbursement Agreement
as a "Permitted Encumbrance."
(b) This Security Agreement creates a valid security interest in
favor of Secured Party in the Collateral as it shall exist from time to
time, which security interest will, when perfected, be superior and prior
in right to all claims of creditors of Debtor and to all other security
interests, liens and encumbrances in respect thereof except the Permitted
Liens.
(c) There is no financing statement covering the Collateral on file
in any public office except those perfecting the Permitted Liens, and,
except for the Permitted Liens and the security interests which inure to
the benefit of Secured Party pursuant to this Security Agreement, there is
no adverse lien, security interest or encumbrance in or upon the
Collateral.
(d) Debtor's principal place of business and chief executive and
accounting offices are located at 3000 Sand Hill Road, Building 4, Suite
245, Menlo Park, California 94025.
3. Covenant by Debtor. Debtor hereby covenants in favor of Secured Party
that:
-3-
<PAGE> 4
(a) Prior to or simultaneously with Debtor's execution of the
Guaranty, Debtor will execute and cause to be filed in accordance with the
Commercial Code of the State of California, financing statements in form
and substance satisfactory to Secured Party, and thereafter will execute
and deliver such other documents (including but not limited to
continuation statements) as Secured Party may reasonably require in order
to perfect or maintain as perfected such security interests and, to the
extent so required by Secured Party, will give public notice of all such
transactions.
(b) Debtor shall notify Secured Party prior to changing its
principal place of business and chief executive and accounting offices
from the location set forth in Section 2(d) of this Security Agreement.
(c) Debtor shall at all times maintain the Collateral in good
repair, working order and condition and will from time to time make or
cause to be made all needed and proper replacements, repairs, renewals and
improvements so that the efficiency and value of the Collateral shall not
be impaired.
(d) Debtor will at all times keep accurate and complete records with
respect to the Collateral and agrees that the representatives of Secured
Party shall have the right, at any time during normal business hours or at
any other reasonable time, and from time to time, to call at Debtor's
place or places of business where the Collateral or any part thereof may
be held or located or the records pertaining to the Collateral may be kept
and to inspect the Collateral and/or examine or cause to be examined such
records and to make abstracts therefrom or copies thereof; in addition,
Debtor shall furnish Secured Party with periodic reports as to the
Collateral, in such form and detail and at such times as Secured Party may
require.
(e) Monies received because of any court or arbitration award or
settlement or insurance payment, for any loss or damage to the Collateral,
and proceeds from any condemnation award or settlement relating to the
Collateral shall be treated as provided in the Deed of Trust with regard
to the related Property.
-4-
<PAGE> 5
4. Notice to Secured Party.
(a) Debtor covenants that, as soon as practicable, and in any event
within 10 days, it shall notify Secured Party of:
(i) The occurrence or non-occurrence of any event which
constitutes, or which with the passage of time would constitute, an
Event of Default under this Security Agreement;
(ii) Any attachment or other legal process levied against any
of the Collateral; and
(iii) Any information received by Debtor relevant to the
Collateral which may in any manner materially and adversely affect
the value of the Collateral or the rights and remedies of Secured
Party in respect thereto.
Any notice delivered pursuant to this Section 4(a) shall set forth the
nature of such event or non-event and the action which Debtor proposes to
take with respect thereto.
(b) Debtor covenants that it shall immediately notify Secured Party
of the removal of any of the Collateral to a new location and of each
office of Debtor at which records of Debtor relating to the Collateral are
kept.
5. Events of Default. The term Event of Default when used in this Security
Agreement shall mean any one or more of the following events:
(a) Any statement, representation or warranty made by Debtor
hereunder or in the Guaranty shall prove to be false, inaccurate or
incorrect in any material respect when made.
(b) Debtor shall fail to pay any amount owing under the Guaranty,
this Security Agreement or any Deed of Trust, within ten (10) days after
notice.
(c) Debtor shall fail to perform or observe any term, covenant or
agreement contained in the Guaranty, this Security Agreement or any Deed
of Trust the breach of which can be cured by the payment of money, within
ten (10) days after notice.
-5-
<PAGE> 6
(d) Debtor shall fail to perform or observe any term, covenant or
agreement contained in the Guaranty, this Security Agreement or any Deed
of Trust (other than terms, covenants or agreements the breach of which
can be cured by the payment of money) within thirty (30) days after
notice; provided, however, that if cure cannot reasonably be effected
within such thirty (30) day period there shall be no Event of Default
under this Section 5(d) so long as Debtor promptly (in any event, within
such thirty (30) day period) commences cure and thereafter diligently
prosecutes such cure to completion.
(e) Any statement, representation or warranty made by RSI for the
benefit of Trustee in the Loan Agreement or any related document shall
prove to be false, inaccurate or incorrect in any material respect when
made.
(f) RSI shall fail to pay any amount owing to Trustee under the Loan
Agreement or any related document within ten (10) days after notice.
(g) RSI shall fail to perform or observe any term, covenant or
agreement contained in the Loan Agreement or any related document the
breach of which can be cured by the payment of money, within ten (10) days
after notice.
(h) RSI shall fail to perform or observe any term, covenant or
agreement contained in the Loan Agreement or any related document (other
than terms, covenants or agreements the breach of which can be cured by
the payment of money) within thirty (30) days after notice; provided,
however, that if cure cannot reasonably be effected within such thirty
(30) day period there shall be no Event of Default under this Section 5(h)
so long as RSI promptly (in any event, within such thirty (30) day period)
commences cure and thereafter diligently prosecutes cure to completion.
6. Remedies on Default. Secured Party shall have the following remedies if
an Event of Default shall have occurred:
(a) Secured Party shall have the right to exercise all remedies and
powers provided to Secured Party in the Deeds of Trust.
-6-
<PAGE> 7
(b) Secured Party shall have the right to take whatever legal action
may appear necessary or desirable to collect the payments declared due
under this Security Agreement or the Guaranty.
(c) Secured Party shall have the right to exercise any remedies
granted to a secured party under the Commercial Code of the State of
California and the general laws of the State of California with respect to
the enforcement of the security interests granted or reserved hereunder.
(d) Secured Party may require Debtor to assemble all or any part of
the Collateral and make it available to Secured Party at any reasonably
convenient location.
(e) Secured Party shall have the right to exercise any and all other
rights and remedies which may be available at law or in equity.
Secured Party shall have the right to enforce one or more remedies
provided by this Section 6 successively or concurrently, and such action shall
not stop or prevent Secured Party from pursuing any further remedy which it may
have under this Section 6 or which is - described under said laws. Debtor shall
reimburse Secured Party for any and all legal costs, including reasonable
attorneys' fees, and other expenses incurred in collecting any sums payable by
Debtor pursuant to any Obligation secured hereunder, enforcing any term or
provision of this Security Agreement, checking, handling, preparing for sale,
collecting or selling the Collateral or in preparing or enforcing any agreement
relating thereto. If a sufficient sum is not realized from the disposition of
the Collateral to pay all of the Obligations, Debtor hereby promises and agrees
to pay Secured Party any deficiency.
7. Obligation of Debtor Unconditional. Debtor's requirements to perform
and observe the agreements and covenants on its part contained herein shall be
absolute and unconditional. Until such time as all payments under the Deeds of
Trust, this Security Agreement, the Guaranty and the Loan Agreement shall have
been made, Debtor (i) shall perform and observe all of its agreements and
covenants contained in this Security Agreement; and (ii) shall not terminate
this Security Agreement for any cause, including without limitation any acts or
circumstances that may constitute failure of consideration, destruction of, or
damage to, the Collateral, commercial frustration of purpose, any change in the
laws of the
-7-
<PAGE> 8
United States of America or of the State of California or any political
subdivision of either, or any failure of Secured Party to perform or observe any
agreement, whether express or implied, or any duty, liability or obligation,
arising out of or connected with this Security Agreement.
8. Entire Agreement; Waiver. This Security Agreement, together with those
provisions of the Guaranty and the Deeds of Trust alluded to herein, constitutes
the entire agreement between Debtor and Secured Party pertaining to the subject
matter contained herein. This Security Agreement may not be amended, changed,
modified, altered or terminated except by a written instrument signed by Secured
Party and Debtor.
9. Notices. All notices or communications herein required or permitted to
be given shall be in writing and shall be governed in all respects pursuant to
Section 16 of the Guaranty, except that notices to Trustee shall be governed by
the Loan Agreement,
10. Severability. In the event any provision of this Security Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
11. Section Headings. The subject headings and the sections and
subsections of this Security Agreement are included for purposes of convenience
only and shall not affect the construction or interpretation of any such
provisions.
12. Governing Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the State of California.
13. Definitions. Unless otherwise defined, words used herein have the
meanings given them in the Commercial Code of California,
14. Execution of Counterparts. This Security Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original, and all of which shall constitute but one and the same instrument.
-8-
<PAGE> 9
IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be
duly executed as of the date first written above.
"Debtor":
CHARLES KING & ASSOCIATES
a California limited partnership
By /s/ CHARLES W. KING JR.
-----------------------------------
Charles W. King, Jr.,
its sole general partner
-9-
<PAGE> 10
EXHIBIT "A"
(14300-14390 Catalina Street)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
San Leandro, County of Alameda, State of California, and described as follows:
PARCEL ONE:
PARCEL A, PARCEL MAP NO. 2181, FILED JULY 29, 1977, BOOK 97 OF PARCEL MAPS, PAGE
72, ALAMEDA COUNTY RECORDS, AND BEING THE NORTHWESTERLY 415 FEET, RIGHT ANGLE
MEASUREMENTS AS MEASURED ALONG CATALINA STREET, OF PARCEL 2, OF PARCEL MAP NO.
2044, FILED DECEMBER l6, 1976, BOOK 94 OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY
RECORDS.
RESERVING FROM PARCEL ONE:
A. NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF BEING THE
NORTHWESTERLY LINE OF SAID PARCEL TWO OF PARCEL MAP NO. 2044.
B. A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHEASTERLY LINE THEREOF LYING SOUTHEASTERLY
415 FEET, RIGHT ANGLE MEASUREMENTS AS MEASURED ALONG CATALINA STREET, FROM THE
NORTHWESTERLY LINE OF SAID PARCEL TWO, OF PARCEL NO, 2044,
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHERLY LINE THEREOF BEING THE NORTHWESTERN
LINE OF PARCEL TWO, PARCEL MAP NO. 2044 FILED DECEMBER 16, 1976, BOOK 94 OF
PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF LYING SOUTHEASTERLY
415 FEET, RIGHT ANGLE MEASUREMENTS AS MEASURED ALONG CATALINA STREET, FROM THE
NORTHWESTERLY LINE OF PARCEL TWO, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976,
BOOK 94 OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 080G-0932-030
EXHIBIT "A"
PAGE 1 OF 5
<PAGE> 11
EXHIBIT "A"
(2354 Davis Avenue)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
PARCEL 1:
LOT 7, AS SHOWN ON THE MAP OF TRACT 3110, FILED JUNE 10, 1969 IN BOOK 62 OF
MAPS, PAGE 14, ALAMEDA COUNTY RECORDS.
PARCEL 2:
AN EASEMENT FOR RAILWAY PURPOSES IN, ON, OVER, UNDER AND ALONG A PORTION OF LOT
6, AS SHOWN ON THE MAP OF TRACT 3110, FILED JUNE 10, 1969 IN BOOK 62 OF MAPS
PAGE 14, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF SAID LOT 6, DISTANT THEREON NORTH 0
degrees 38' 41" WEST 40 FEET FROM THE SOUTHWEST CORNER THEREOF; THENCE FROM SAID
POINT OF BEGINNING EASTERLY ALONG A LINE PARALLEL WITH AND PERPENDICULARLY
DISTANT NORTHERLY 40 FEET FROM THE SOUTHERN LINE OF SAID LOT 6, NORTH 89 degrees
21' 19" EAST 90 FEET TO A POINT THEREON; THENCE LEAVING SAID PARALLEL LINE NORTH
81 degrees 10' 57" WEST 91.241 FEET TO A POINT ON THE SAID WESTERN LINE OF LOT
6; THENCE SOUTHERLY ALONG LAST SAID LINE SOUTH 0 degrees 38' 41" EAST 15 FEET TO
THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NOS. 439-0058-015-02
439-0058-015-01
EXHIBIT "A"
PAGE 2 OF 5
<PAGE> 12
EXHIBIT "A"
(2376 Davis Avenue)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
LOT 8, AS SHOWN ON THE MAP OF "TRACT 3110, C.C.&F. HAYWARD INDUSTRIAL CENTER,
CITY OF HAYWARD, ALAMEDA COUNTY, CALIFORNIA" FILED JUNE 10, 1969, IN MAP BOOK
62, PAGES 14 AND 15 ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 439-0058-016-02
EXHIBIT "A"
PAGE 3 OF 5
<PAGE> 13
EXHIBIT "A"
(20389 Corsair Boulevard)
All that certain real property together with all appurtenances thereto and
all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
LOTS 3 AND 4, AS SAID LOTS ARE SHOWN ON THE MAP OF "TRACT 3046, C. C. & F.
INDUSTRIAL CENTER, HAYWARD AIR TERMINAL, UNIT NO. 3, CITY OF HAYWARD, ALAMEDA
COUNTY, CALIFORNIA," FILED AUGUST 14, 1969, IN BOOK 63 OF MAPS, PAGES 8 THROUGH
14, INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY.
ASSESSOR'S PARCEL NO. 432-0114-019
EXHIBIT "A"
PAGE 4 OF 5
<PAGE> 14
EXHIBIT "A"
(21118 Cabot Boulevard)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
PARCEL 1, PARCEL MAP NO. 2360, FILED JANUARY 17, 1978, BOOK 101, OF PARCEL MAPS,
PAGE l3, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NOS. 439-0035-027-01
439-0035-027-02
EXHIBIT "A"
PAGE 5 OF 5
<PAGE> 15
STATE OF CALIFORNIA
DEBTOR
Radiation Sterilizers, Incorporated
3000 Sand Hill Road
Menlo Park, California 94025
SECURED PARTY
Wells Fargo Bank, N.A. Attn: George Huxtable
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
For description of collateral see Rider A attached hereto and incorporated
herein by this reference
7. [X] CHECK IF APPLICABLE 7A. [XX] PRODUCTS OF COLLATERAL ARE ALSO COVERED
8. [X] CHECK IF APPLICABLE
SEE RIDER B ATTACHED HERETO AND INCORPORATED HEREIN BY THIS REFERENCE
DATE 3/1/85
SIGNATURE(S) OF DEBTOR (S)
Wells Fargo Bank, N.A.
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES)
Return copy to:
SHEPPARD, MULLIN, RICHTER & HAMPTON
333 South Hope Street, 48th Floor
Los Angeles, California 90071
Attention: Steve Ross, Esq
<PAGE> 16
RIDER A TO FINANCING STATEMENT
This financing statement covers the following types of items of property:
All of Debtor's right, title and interest in and to the Drawing Bonds and
the Company Bonds (as those terms are defined in that certain Letter of Credit
Agreement, dated as of March 1, 1985, between Debtor and Secured Party and
relating to bonds in the amount of $5,250,000.00 designated Development
Authority of DeKalb County Variable Rate Demand Industrial Development Revenue
Bonds (Radiation Sterilizers, Incorporated Project), Series 1985), including
without limitation all interest thereon and other proceeds thereof, and any
related due-bills.
RIDER A
PAGE 1 OF 1
<PAGE> 17
RIDER B TO FINANCING STATEMENT
"DEBTOR"
RADIATION STERILIZERS, INCORPORATED
a California corporation
By /s/ Allan Chin
------------------------------------
Its President
--------------------------------
By /s/ Charles W. King Jr.
------------------------------------
Its SECRETARY
--------------------------------
RIDER B
PAGE 1 OF 1
<PAGE> 18
This FINANCING STATEMENT is presented for filing pursuant to the California
Uniform Commercial Code.
DEBTOR
Charles King & Associates
MAILING ADDRESS
C/O Radiation Sterilizers, Incorporated
3000 Sand Hill Road
Menlo Park, California 94025
SECURED PARTY
Wells Fargo Bank, N.A. Attn: George Huxtable
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
For description of collateral see Rider "A" attached hereto and incorporated
herein by this reference
7. [X] CHECK IF APPLICABLE 7A. [X] PRODUCTS OF COLLATERAL ARE ALSO COVERED
8. [X] CHICK IF APPLICABLE
9. CHARLES KING & ASSOCIATES
by Charles W. King Jr.
DATE: 3/1/85
CHARLES KING & ASSOCIATES
TYPE OR PRINT NAME(S) OF DEBTOR(S)
Wells Fargo Bank, N.A.
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES)
Return copy to: SHEPPARD, MULLIN, RICHTER & HAMPTON 333 South Hope Street, 48th
Floor Los Angeles, California 90071
Attention: Steve Ross
<PAGE> 19
RIDER A TO FINANCING STATEMENT
This financing statement covers the following types or items of property:
(a) All Debtor's present and future accounts, instruments, chattel
paper, notes, drafts, contract rights, governmental permits, rights to
payment of any kind, any insurance proceeds, condemnation proceeds, and
any general intangibles and inventory arising from or relating to any of
the parcels of real property described in Exhibit "A" hereto
(collectively, the "Properties");
(b) All Debtor's present and future equipment, machinery, tools,
furniture and furnishings, whether owned or leased by Debtor, now or
hereafter located at any Property or relating to any Property;
(c) All fixtures located upon or within any Property or now or
hereafter attached to, or installed in, or used in connection with any
Property including, but not limited to, any and all partitions;
generators; screens; awnings; motors; engines; boilers; furnaces; pipes;
plumbing; elevators; cleaning, call and sprinkler systems; fire
extinguishing apparatus and equipment; water tanks; heating, ventilating,
air-conditioning and air-cooling equipment; built-in refrigerated rooms
and gas and electric machinery, appurtenances and equipment; in each case
whether or not permanently affixed to that Property; together with all
present and future attachments, accessories, replacements, equipment,
additions and any proceeds thereof;
(d) All water stock, if any, relating to any Property and all shares
of stock or other evidence of ownership of any part of or interest in any
Property that is owned by Debtor in common with others;
(e) All present and future trade marks and trade names, and all
present and future books and records on pertaining to any Property or the
collateral described in subparagraphs (a) through (d) above, and the
equipment containing such books and records; and
(f) All proceeds and products of any of the foregoing, including
without limitation all monies, deposit accounts, insurance proceeds and
other tangible or intangible property received upon a sale or other
disposition of any of the foregoing.
RIDER A
PAGE 1 OF 1
<PAGE> 20
EXHIBIT "A"
(14300-14390 Catalina Street)
All that certain real property together with all appurtenances thereto and
all improvements now or hereafter located thereon, situated in the City of San
Leandro, County of Alameda, State of California, and described as follows:
PARCEL ONE:
PARCEL A, PARCEL MAP NO. 2181, FILED JULY 29, 1977, BOOK 97 OF PARCEL MAPS, PAGE
72, ALAMEDA COUNTY RECORDS, AND BEING THE NORTHWESTERLY 415 FEET, RIGHT ANGLE
MEASUREMENTS AS MEASURED ALONG CATALINA STREET, OF PARCEL 2, OF PARCEL MAP NO.
2044, FILED DECEMBER 16 1976, BOOK 94 OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY
RECORDS.
RESERVING FROM PARCEL ONE:
A. NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWEST LINE THEREOF BEING THE NORTHWESTERLY
LINE OF SAID PARCEL TWO OF PARCEL MAP NO. 2044.
B. A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHEASTERLY LINE THEREOF LYING SOUTHEASTERLY
415 FEET, RIGHT ANGLE MEASUREMENT AS MEASURED ALONG CATALINA STREET, FROM THE
NORTHWESTERLY LINE OF SAID PARCEL TWO, OF PARCEL NO, 2044.
PARCEL TWO:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE SOUTHERLY LINE THEREOF BEING THE NORTHWESTERN
LINE OF PARCEL TWO, PARCEL MAP NO. 2044 FILED DECEMBER 16, 1976, BOOK 94 OF
PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
PARCEL THREE:
A NON-EXCLUSIVE EASEMENT FOR OPEN SPACE AND VEHICULAR ACCESS PURPOSES OVER A
STRIP OF LAND 30 FEET WIDE, THE NORTHWESTERLY LINE THEREOF LYING SOUTHEASTERLY
415 FEET, RIGHT ANGLE MEASUREMENT AS MEASURED ALONG CATALINA STREET, FROM THE
NORTHWESTERLY LINE OF PARCEL TWO, PARCEL MAP NO. 2044, FILED DECEMBER 16, 1976,
BOOK 94 OF PARCEL MAPS, PAGE 21, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 080G-0932-030
EXHIBIT "A"
PAGE 1 OF 5
<PAGE> 21
EXHIBIT "A"
(2354 Davis Avenue)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
PARCEL 1:
LOT 7, AS SHOWN ON THE MAP OF TRACT 311O, FILED JUNE 10, 1969 IN BOOK 62 OF
MAPS, PAGE 14, ALAMEDA COUNTY RECORDS,
PARCEL 2:
AN EASEMENT FOR RAILWAY PURPOSES IN, ON, OVER, UNDER AND ALONG A PORTION OF LOT
6, AS SHOWN ON THE MAP OF TRACT 3110, FILED JUNE 10, L969 IN BOOK 62 OF MAPS,
PAGE 14, ALAMEDA COUNTY RECORDS, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE WESTERN LINE OF SAID LOT 6, DISTANT THEREON NORTH 0
degrees 38' 41" WEST 40 FEET FROM THE SOUTHWEST CORNER THEREOF; THENCE FROM SAID
POINT OF BEGINNING EASTERLY ALONG A LINE PARALLEL WITH AND PERPENDICULARLY
DISTANT NORTHERLY 40 FEET FROM THE SOUTHERN LINE OF SAID LOT 6, NORTH 89 degrees
21' 19" EAST 90 FEET TO A POINT THEREON; THENCE LEAVING SAID PARALLEL LINE NORTH
81 degrees 10' 57" WEST 91.241 FEET TO A POINT ON THE SAID WESTERN LINE OF LOT
6; THENCE SOUTHERLY ALONG LAST SAID LINE SOUTH 0 degrees 38' 41" EAST 15 FEET TO
THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NOS., 439-0058-015-02
439-0058-015-01
EXHIBIT "A
PAGE 2 OF 5
<PAGE> 22
EXHIBIT "A"
(2376 Davis Avenue)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
LOT 8 AS SHOWN ON THE MAP OF "TRACT 3110, C.C.&F. HAYWARD INDUSTRIAL CENTER,
CITY OF HAYWARD, ALAMEDA COUNTY, CALIFORNIA" FILED JUNE 10, 1969, IN MAP BOOK
62, PAGES 14 AND 15 ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 439-0058-016-02
EXHIBIT "A"
PAGE 3 OF 5
<PAGE> 23
EXHIBIT "A"
(20389 Corsair Boulevard)
All that certain real property together with all appurtenances thereto and
all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
LOTS 3 AND 4, AS SAID LOTS ARE SHOWN ON THE MAP OF "TRACT 3046, C.C.&F.
INDUSTRIAL CENTER, HAYWARD AIR TERMINAL, UNIT NO. 3, CITY OF HAYWARD, ALAMEDA
COUNTY, CALIFORNIA," FILED AUGUST 14, 1969, IN BOOK 63 OF MAPS, PAGES 8 THROUGH
14, INCLUSIVE, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY.
ASSESSOR'S PARCEL NO, 432-0114-019
EXHIBIT "A"
PAGE 4 OF 5
<PAGE> 24
EXHIBIT "A"
(21118 Cabot Boulevard)
All that certain real property, together with all appurtenances thereto
and all improvements now or hereafter located thereon, situated in the City of
Hayward, County of Alameda, State of California, and described as follows:
PARCEL 1, PARCEL MAP NO. 2360, FILED JANUARY 17, 1978, BOOK 101, OF PARCEL MAPS,
PAGE 13, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NOS. 439-0035-027-01
439-0035-027-02
EXHIBIT "A"
PAGE 5 OF 5
<PAGE> 1
EXHIBIT 10.40
AGREEMENT RE: LETTER OF CREDIT
------------------------------
AND ASSIGNMENT OF COLLATERAL
----------------------------
This Agreement Re: Letter of Credit and Assignment of Collateral
("Agreement") is executed as of March 1, 1985, by and between WELLS FARGO BANK,
N.A. ("Bank") and BANK ONE TRUST COMPANY, N.A. ("Trustee").
1. Recitals.
1.1 The Bonds. The Development Authority of DeKalb County
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and Issuer (the "Trust Indenture"), agreed to issue its
certain Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985 (the "Bonds"). The proceeds of the Bonds are to be lent to Radiation
Sterilizers, Incorporated, a California corporation ("Company"). Trustee is the
trustee for the Bonds.
1.2 The Reimbursement Agreement. Pursuant to the terms of that
certain Letter of Credit Agreement executed between Company and Bank as of even
date herewith (the "Reimbursement Agreement"), Bank has agreed to issue a letter
of credit in the face amount of $5,408,220.00 (the "Letter of Credit").
Capitalized terms used and not otherwise defined herein shall have the same
meanings as are set forth in the Reimbursement Agreement. Trustee is empowered
to draw upon the Letter of Credit for the benefit of the purchasers of the Bonds
as provided in the Letter of Credit. The obligations of the Company to Bank
under the Reimbursement Agreement and notes and other documents executed in
connection therewith have been guaranteed by Charles King & Associates, a
California limited partnership ("Guarantor") pursuant to that certain Payment
Guaranty, executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Security Documents. The obligations of Company to Trustee in
connection with the Bonds and in connection with other documents and agreements
pertaining to the Bonds, and the obligations of Guarantor to Bank under the
Guaranty are secured by the following documents (collectively, the "Security
Documents"):
-1-
<PAGE> 2
a. Five Deeds of Trust with Assignments of Rents executed as of
even date herewith by Guarantor as trustor naming Trustee and Bank, as
their interests appear, as beneficiary and American Securities Company
as trustee (the "Deeds of Trust"), covering five parcels of improved
real property (collectively, the "Properties") in the Cities of San
Leandro and Hayward, County of Alameda, California; and
b. That certain Security Agreement executed as of even date
herewith by Company as debtor naming Trustee and Bank, as their
interests appear, as secured party (the "Security Agreement").
1.4 Agreement. Bank and Trustee wish to enter into this Agreement so as
to clarify their respective rights in the event of a draw by Trustee upon the
Letter of Credit.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement to Company
or to any other person or entity of all or any portion of the proceeds of the
Bonds or any other funds held from time to time by Trustee under the Trust
Indenture without the approval of Bank (subject to certain pre-approvals of
disbursements by Bank).
3. Bank Rights on Default.
Trustee hereby acknowledges and agrees that Bank shall have the
following rights in the event of the occurrence of an Event of Default under the
Reimbursement Agreement:
(a) The right to implement any or all of its rights under the
Reimbursement Agreement and the other Loan Documents other than
foreclosure on the Security Documents, including without limitation
commencement of actions against Company to recover sums owing under the
Loan Documents and/or to obtain injunctive relief and making demand
upon Guarantor for the performance of its obligations under the
Guaranty, without giving notice to Trustee of Bank's intention to cause
a default to be declared under the Trust Indenture; in such event,
there shall be no declaration by Trustee of a default under the Trust
Indenture notwithstanding any such action by Bank unless there are
grounds for such default other than by reason of the occurrence of an
Event of Default under the Reimbursement Agreement; or
-2-
<PAGE> 3
(b) The right, with or without implementation of any or
all of its rights under the Reimbursement Agreement and the other
Loan Documents, to give notice to Trustee of Bank's intention to
cause a default to be declared under the Trust Indenture; in such
event, Trustee shall immediately declare such a default and make
an A Drawing under the Letter of Credit.
4. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by Trustee
of any payment under the Letter of Credit which has the effect of retiring in
full the obligation of Bank thereunder, Trustee will do the following:
4.1 Subject to Section 1105 of the Trust Indenture, use all funds
in its possession pursuant to the Trust Indenture and all funds paid under the
Letter of Credit as may be necessary to promptly redeem and retire all
outstanding Bonds at their face amount plus any accrued interest.
4.2 At the option of Bank, either reconvey, release and cancel,
or assign to Bank, all of its right, title and interest under the Deeds of Trust
and the Security Agreement and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with such
reconveyance, release, cancellation or assignment.
4.3 Subject to Section 1105 of the Trust Indenture, deliver to
Bank, in good funds and to such account as Bank shall designate, the entire
balance of undisbursed proceeds of the Bonds and any other funds then held by
Trustee under the Trust Indenture, together with any interest and other sums
accrued on all such sums, as of the date of payment by Bank on the Letter of
Credit, subject to prior payment of any unpaid fees and expenses (not to include
any fees or expenses of outside legal counsel) of Trustee described in Section
1202 of the Trust Indenture.
4.4 Assign to Bank all of its right, title and interest under or
in connection with the Trust Indenture, including without limitation all sums in
which Trustee has an interest pursuant to the provisions of the Indenture and
all causes of action and other rights which have accrued or may accrue
thereafter; provided, however, that Bank shall not be subject to any of the
trust obligations of Trustee with regard to such sums, causes of action and
other rights.
-3-
<PAGE> 4
5. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by Trustee
of written assurances (from bond counsel or otherwise) satisfactory to Trustee
that Trustee is not required, for purposes of maintenance of the rating of the
Bonds or otherwise, to hold a shared interest in the Security Documents, Trustee
will, at the option of Bank, either reconvey, release and cancel, or assign to
Bank, all of its right, title and interest under the Security Documents, and
will execute, acknowledge and deliver to Bank such instruments and documents as
may be reasonably necessary in connection with such reconveyance, release,
cancellation or assignment.
6. Notices.
6.1 Trustee shall, as soon as reasonably practicable, give Bank
notice of the occurrence of any default or event which, with the giving of
notice or the passage of time, or both, would constitute a default under the
Trust Indenture or any other instrument, document or agreement pertaining to the
Bonds, regardless of whether Trustee has elected or may elect to exercise its
rights, under the Indenture or otherwise, as a result of such default or other
event. Trustee shall also immediately give Bank notice of any action which
Trustee takes or decides to take as a result of any such default or other event.
6.2 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the identity of
Trustee, whether pursuant to the Trust Indenture or otherwise, and (b) any
actual or planned amendment of the Trust Indenture or any supplement thereto, or
any request by any person or entity for the same.
6.3 Trustee shall deliver to Bank copies of any reports to be
delivered by Trustee pursuant to the Trust Indenture, as it may be amended from
time to time, such delivery to be concurrent with Trustee's delivery of such
reports pursuant to the Trust Indenture.
6.4 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be in writing
and must be mailed or personally delivered to the appropriate party at its
address as follows:
-4-
<PAGE> 5
If to Trustee: Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Administration
If to Bank: Wells Fargo Bank, N.A.
Real Estate Industries Group
2055 Gateway Place, Suite 200
San Jose, California 95110
Attention: Mr. George Huxtable
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 6.4. If any notice, request, demand, direction
or other communication is given by mail it will be effective upon the earlier of
(a) 96 hours after deposit in the U.S. Mail, certified or registered mail,
return receipt requested postage prepaid or (b) actual receipt, as indicated by
the return receipt; if given by personal delivery, when delivered.
7. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
8. Amendments; Governing Law.
This Agreement may be amended only by a written agreement signed
by both Bank and Trustee. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, Bank and Trustee have caused this Agreement
to be duly executed as of the date first written above.
"Bank":
WELLS FARGO BANK,
By /s/ Signature Unreadable
-------------------------------
Its Vice President
-5-
<PAGE> 6
"Trustee":
BANK ONE TRUST COMPANY, N.A.
By /s/ [SIG]
-------------------------------
Its Trust Administrator
-6-
<PAGE> 1
EXHIBIT 10.41
Execution Copy
LOAN AGREEMENT
BETWEEN
VILLAGE OF GURNEE, ILLINOIS
AND
STERIGENICS GROWTH INTERNATIONAL
Dated as of
April, 1996
Relating to the Issuance of:
7,750,000.
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Certain rights of Village of Gurnee, Illinois (the "Issuer") under this
Loan Agreement have been assigned and pledged to, and are subject to a security
interest in favor of Bank One, Columbus, N.A., Columbus, Ohio, as trustee (the
"Trustee") under the Indenture of Trust, dated as of even date herewith, as
amended or supplemented from time to time, between the Issuer and the Trustee,
which secures $7,750,000 in aggregate principal amount of the Issuer's
Industrial Development Revenue Bonds (SteriGenics International Project), Series
1996.
<PAGE> 2
LOAN AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Loan Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Loan Agreement.)
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION .................................................... 2
Section 1.1. Definitions .................................................................... 2
Section 1.2. Certain Rules of Interpretation ................................................ 4
Section 1.3. Other Defined Terms ............................................................ 4
ARTICLE II
REPRESENTATIONS .................................................................................... 5
Section 2.1. Representations by the Issuer .................................................. 5
Section 2.2. No Representation or Warranty by Issuer as to Project .......................... 6
Section 2.3. Representations by the Company ................................................. 6
Section 2.4. Modification and Termination of Special Tax Covenants .......................... 8
Section 2.5. Purchase of Bonds by Issuer and Company ........................................ 8
Section 2.6. Further Assurances ............................................................. 8
ARTICLE III
ISSUANCE OF THE BONDS; ACQUISITION, CONSTRUCTION,
INSTALLATION AND FINANCING OF PROJECT .............................................................. 9
Section 3.1. Agreement to Acquire, Construct and Equip the Project .......................... 9
Section 3.2. Agreement to Issue Bonds; Application of Proceeds;
Construction Fund .............................................................. 9
Section 3.3. Limitation of Issuer's Liability ............................................... 9
Section 3.4. Disclaimer of Warranties ....................................................... 9
Section 3.5. Cost of Project ................................................................ 10
Section 3.6. Establishment of Completion Date; Obligation of
Company to Complete ............................................................ 10
Section 3.7 Operation of the Project ....................................................... 11
Section 3.8. Investment of Funds ............................................................ 12
Section 3.9. Special Arbitrage Certifications ............................................... 12
Section 3.10. Depositories of Moneys and Security for Deposit ................................ 12
ARTICLE IV
PROVISIONS FOR PAYMENT ............................................................................. 13
Section 4.1. Tide to the Project. ........................................................... 13
Section 4.2. Payment Obligations of the Company ............................................. 13
Section 4.3. Credit Facility; Alternate Credit Facility; Confirmation
Letter; Substitute Confirmation Letter ......................................... 14
Section 4.4. Administrative Expenses ........................................................ 15
Section 4.5. Obligations of the Company Absolute and Unconditional .......................... 15
Section 4.6. Company Consent to Assignment of Loan Agreement
and Execution of Indenture ..................................................... 16
Section 4.7. Company's Performance Under Indenture .......................................... 16
ARTICLE V
PARTICULAR AGREEMENTS .............................................................................. 17
Section 5.1. Maintenance, Operation and Insuring of Project;
Taxes; No Operation of Project by Issuer ....................................... 17
</TABLE>
<PAGE> 3
<TABLE>
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Section 5.2. Issuer's, Trustee's and Paying Agent's Expenses;
Release and Indemnification Provisions ........................................... 17
Section 5.3. Maintenance of Existence ......................................................... 15
Section 5.4. Agreement of Issuer Not to Assign or Pledge ...................................... 18
Section 5.5. Redemption of Bonds .............................................................. 18
Section 5.6. Reference to Bonds Ineffective After Bonds Paid .................................. 19
Section 5.7. Assignment, Sale or Lease of Project ............................................. 19
Section 5.8. Non-Arbitrage Covenant ........................................................... 19
Section 5.9. Financing Statements ............................................................. 19
Section 5.10. Compliance with Reimbursement Agreement ......................................... 19
Section 5.11. Inspection of Project ........................................................... 20
Section 5.12. Project List .................................................................... 20
Section 5.13. No Warranty of Condition or Suitability by Issuer ............................... 20
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES ....................................................................... 21
Section 6.1. Events of Default Defined ........................................................ 21
Section 6.2. Remedies ......................................................................... 22
Section 6.3. No Remedy Exclusive .............................................................. 23
Section 6.4. Agreement to Pay Counsel Fees and Expenses ....................................... 23
Section 6.5. Waiver of Events of Default and Rescission of Acceleration ....................... 23
ARTICLE VII
PREPAYMENT UNDER LOAN AGREEMENT ...................................................................... 24
Section 7.1. Option to Prepay in Full ......................................................... 24
Section 7.2. Mandatory Prepayment ............................................................ 24
Section 7.3. Option to Prepay in Part ......................................................... 24
Section 7.4. Relation of Options to Indenture ................................................. 24
Section 7.5. Obligations After Payment of Now and Termination
of Ivan Agreement ................................................................ 24
ARTICLE VIII
MISCELLANEOUS ........................................................................................ 25
Section 8.1. Term of Loan Agreement ........................................................... 25
Section 8.2. Notices .......................................................................... 25
Section 8.3. Binding Effect ................................................................... 26
Section 8.4. Severability ..................................................................... 26
Section 8.5. Amounts Remaining in Bond Fund ................................................... 26
Section 8.6. Reliance by Issuer ............................................................... 26
Section 8.7. Issuer's Obligations Limited ..................................................... 26
Section 8.8. Immunity of Directors, Officers and Employees of Issuer .......................... 27
Section 8.9. Payments by Credit Provider; Confirming Bank ..................................... 27
Section 8.10. Amendments, Changes and Modifications ........................................... 27
Section 8.11. Counterparts .................................................................... 27
Section 8.12. Captions ........................................................................ 27
Section 8.13. Amendment of Loan Agreement ..................................................... 27
Section 8.14. Law Governing Construction of Loan Agreement .................................... 28
Section 8.15. No Third Party Beneficiary ...................................................... 28
EXHIBIT A DESCRIPTION OF PROJECT
EXHIBIT B PROMISSORY NOTE
</TABLE>
<PAGE> 4
LOAN AGREEMENT
This LOAN AGREEMENT (the "Loan Agreement") is entered into as of April
1, 1996, between the VILLAGE OF GURNEE,ILLINOIS (the "Issuer"), a municipal
corporation and a body politic and corporate, duly organized and validly exiting
under the laws of the State of Illinois, and STERIGENCIS INTERNATIONAL, a
California corporation (the "Company");
PREAMBLES
WHEREAS, the Issuer is a municipal corporation and a body politic and
corporate, duly organized and validly existing under the laws of the State of
Illinois;
WHEREAS, the Issuer has full lawful power and authority to enter into
this Loan Agreement by and through its governing-body pursuant to the provisions
of The Industrial Project Revenue Bond Act, 65 ILCS 5/11-74-1, et. seq., as
supplemented and amended (the "Act");
WHEREAS, the Issuer is authorized by the provisions of the Act to issue
its revenue bonds from time to time and lend the proceeds thereof to a private
corporation as provided in the Act for the purpose of paying for all or any part
of the cost of capital projects for use by a manufacturing, industrial,
research, transportation or commercial enterprise, including a capital project
such as the Project (as hereinafter defined) authorized under the Act;
WHEREAS, the Issuer is further authorized by the provisions of the Act
to mortgage and pledge any or all of such facilities, whether then owned or
thereafter acquired, as security for the payment of the principal of, premium,
if any, and interest on any such revenue bonds issued thereunder and any
agreements made in connection therewith and to pledge or assign the revenues and
receipts from such facilities or loan or from any other source to the payment of
such bonds;
WHEREAS, by resolution adopted pursuant to and in accordance with the
provisions of the Act, the Issuer has determined that the financing of (i) the
acquisition of an approximately 11 acre site at 1003 Lakeside Drive, Gurnee,
Illinois, (ii) the acquisition, construction and equipping of an approximately
78,000 square foot contract radiation sterilization processing facility thereon
and (iii) the acquisition and installation of machinery, equipment and other
personal property to be used in connection therewith, to be used primarily for
the sterilization of health care, laboratory, pharmaceutical and packaging
products (collectively, the "Project"), which constitutes an "industrial
project" under the Act, is in the public interest and has authorized and
undertaken to finance the Project and to obtain the funds therefor by the
issuance of its $7,750,000 Industrial Development Revenue Bonds (SteriGenics
International Project), Series 1996 (the "Bonds") under an Indenture of Trust
dated as of April 1, 1996 securing such Bonds, between the Issuer and Bank One,
Columbus, N.A., as trustee (the "Trustee"), dated as of the date hereof (the
"Indenture");
WHEREAS, the Issuer proposes to loan the proceeds for the sale of the
Bonds to the Company to finance the costs of the Project upon the terms and
conditions hereinafter set forth;
WHEREAS, the Company has agreed under this Loan Agreement to make, or
cause to be made, payments sufficient to pay when due (whether at stated
maturity, upon redemption, by acceleration, upon purchase or otherwise) the
principal of, premium, if any, and interest on the Bonds; and
<PAGE> 5
WHEREAS, in order to further secure the Company's obligation to make
the payments due under this Loan Agreement and to provide for the purchase of
Bonds, the Company and Comerica Bank-California (the "Credit Provider") have
entered into the Reimbursement Agreement (as defined below) pursuant to which
the Credit Provider will issue its irrevocable, direct pay letter of credit in
an amount not to exceed $7,880,000 in favor of the Trustee at the request and
for the account of the Company upon the terms set forth in the Reimbursement
Agreement, and which will be confirmed by Comerica Bank, a Michigan state
banking corporation (the "Confirming Bank"), through the issuance of its
confirmation letter (the "Confirmation Letter") providing for the Confirming
Bank to honor conforming drawings under the Credit Facility to the extent that
such drawings are not honored by the Credit Provider in accordance with the
terms and conditions of the Credit Facility.
NOW THEREFORE, for and in consideration of the premises and the
respective representations and agreements and mutual covenants contained in this
Loan Agreement, the Issuer and the Company covenant and agree as follows:
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1. DEFINITIONS. In addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent
"CLERK" means the Village Clerk or Assistant Village Clerk of the
Issuer.
"COMPANY DOCUMENTS" means this Loan Agreement, the Note, the Placement
and Remarketing Agreement and the Credit Provider Documents.
"COST OF PROJECT" with respect to the Project shall be deemed to
include the cost of all items permitted to be financed under the provisions of
the Act, including those items set forth in Section 3.5.
"COUNTY" means the County of Lake, Illinois, a political subdivision of
the State.
"CREDIT PROVIDER DOCUMENTS" means the Reimbursement Agreement, the
Environmental Indemnity, the Mortgage, the Security Agreement and the Guaranty.
"CREDIT PROVIDER REPRESENTATIVE" means each person at the time
designated to act on behalf of the Credit Provider by written certificate
furnished to the Company and the Trustee containing the specimen signature of
each such person and signed on behalf of the Credit Provider by a Vice President
or its President. Such Certificate may designate an alternate or alternates.
"DEFAULT" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default hereunder.
"EVENT OF DEFAULT" means one of the events so denominated and described
in Section 6.1 hereof.
"ENVIRONMENTAL INDEMNITY" means the unsecured environmental indemnity
agreement dated as of April 1, 1996 by and between the Company and the Credit
Provider.
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<PAGE> 6
"GUARANTY" means the unsecured guaranty dated as of April 1, 1996 from
Charles W. King, Jr. and The Charles W. King, Jr. Trust for the benefit of the
Credit Provider.
"INDENTURE" means the Indenture of Trust, of even date herewith,
between the Issuer and the Trustee, pursuant to which the Bonds are to be issued
and secured, including any amendments, supplements, alterations or modifications
thereto from time to time.
"INDEPENDENT ARCHITECT" means an architect, engineer or firm of
architects or engineers selected by the Company, which architect, engineer or
firm of architects or engineers must have no specific interest, direct or
indirect, in the Company, and, in the case of individual, must not be a
director, officer or employee of the Company and, in the case of a firm, must
not have a partner, director, officer or employee who is a director, officer or
employee of the Company.
"INDEPENDENT COUNSEL" means an attorney, or firm thereof, admitted to
practice law before the highest court of any state in the United States of
America or the District of Columbia and not an employee on a full-time basis of
either the Issuer, the Trustee, the Credit Provider or the Company (but who or
which may be regularly retained by any one or more of them).
"INDEPENDENT ENGINEER" means an engineer or engineering firm registered
and qualified to practice the profession of engineering under the laws of the
State and not an employee on a full-time basis of either the Issuer or the
Company (but who or which may be regularly retained by either).
"LOAN AGREEMENT" means this Loan Agreement as it now exists and as it
may hereafter be amended, modified or supplemented from time to time pursuant to
Article CXII of the Indenture.
"MORTGAGE" means the Mortgage dated as of April 1, 1996, executed and
delivered by the Company to the Credit Provider, as amended, modified or
supplemented from time to time.
"NET PROCEEDS OF SALE OF THE BONDS" means those proceeds of the sale of
the Bonds remaining after payment of all expenses in connection with the
issuance of the Bonds and the deposit of all accrued interest (if any) received
from the sale of the Bonds in the Bond Fund.
"NOTE" means the promissory note of the Company in the principal amount
of $7,750,000, dated as of April 19, 1996, in the form attached hereto as
Exhibit B, issued pursuant hereto and delivered to the Issuer as consideration
for the loan of the proceeds of the Bonds for the acquisition, construction and
equipping of the Project, and any amendment or supplement thereto or
substitution therefor.
"OWNER" or "OWNERS" means the registered owner of any Bond shown on the
bond registration books kept by the Paying Agent as Registrar.
"PAYMENT IN FULL OF THE BONDS" specifically encompasses the situations
referred to in Article XI of the Indenture.
"PLEDGED REVENUES" means and shall include:
(a) the payments required to be made by or on behalf of the
Company under this Loan Agreement except payments to (i) the Trustee
and the Paying Agent for services rendered as Trustee under the
Indenture and as Paying Agent for the Bonds and payments to be made to
any Co-Trustee for services rendered under the Indenture and (ii)
expenses, indemnification and other payments required to be made
pursuant to Sections 5.2 and 6.4 hereof;
3
<PAGE> 7
(b) all moneys and securities from time to time held by the
Trustee under the Indenture in any fund or account (other than the
Rebate Fund) and any proceeds which arise with respect to any
disposition of any of the property, money, securities and interests
granted by the Issuer to the Trustee under the Granting Clause of the
Indenture; and
(c) all moneys received by the Trustee from time to time as a
result of a draw under the Credit Facility or the Confirmation Letter,
if applicable.
"President" means the Village President of the Issuer.
"PROJECT" means (i) the acquisition of an approximately 11 acre site at
1003 Lakeside Drive, Gurnee, Illinois, (ii) the acquisition, construction and
equipping of an approximately 78,000 square foot contract radiation
sterilization processing facility thereon and (iii) the acquisition and
installation of machinery, equipment and other personal property to be used in
connection therewith, to be used primarily for the sterilization of health care,
laboratory, pharmaceutical and packaging products, as more fully described on
Exhibit A hereto.
"SECURITY AGREEMENT" means the Pledge and Security Agreement dated as
of April 1, 1996 from the Company in favor of the Credit Provider, as amended,
modified or supplemented from time to time.
"TAX REGULATORY AGREEMENT" means the Tax Exemption Certificate and
Agreement dated April 19, 1996 executed among the Issuer, the Company and the
Trustee.
"TRUSTEE FEES" means the periodic fees and expenses charged by the
Trustee in order to serve as Trustee under the Indenture.
"U.C.C." means the Uniform Commercial Code of the State, as now or
hereafter amended.
Section 1.2. CERTAIN RULES OF INTERPRETATION. The definitions set forth
in Section 1.1 shall be equally applicable to both the singular and plural forms
of the terms therein defined and shall cover all genders.
"HEREIN " HEREINBY," "HEREUNDER," "HEREOF," "HEREINBEFORE,"
"HEREINAFTER" and other equivalent words refer to this Loan Agreement and not
solely to the particular Article, Section or subdivision hereof in which such
word is used.
Reference herein to an Article number (e.g., Article IV) or a Section
number (e.g., Section 6.2) shall be construed to be a reference to the
designated Article number or Section in this Loan Agreement unless the context
or use clearly indicates another or different meaning or intent.
Section 1.3. OTHER DEFINED TERMS. Capitalized terms used herein and not
otherwise defined in this Loan Agreement shall have the meanings given such
terms in the Indenture.
[End of Article 1]
<PAGE> 8
ARTICLE II
REPRESENTATIONS
Section 2.1 REPRESENTATIONS BY THE ISSUER. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) ORGANIZATION AND AUTHORITY. The Issuer is a municipal
corporation and a body politic and corporate, duly organized and
validly existing under the laws of the State of Illinois. The Issuer
has all requisite power and authority under the Act to (i) issue the
Bonds, (ii) lend the proceeds thereof to the Company to reimburse the
Company for certain costs incurred in acquiring, constructing and
equipping the Project, and (iii) enter into, and perform its
obligations under this Loan Agreement, the Placement and Remarketing
Agreement and the Indenture.
(b) PENDING LITIGATION. To the knowledge of the Issuer, there
are no actions, suits, proceedings, inquiries or investigations
pending, or to the knowledge of the Issuer threatened, against or
affecting the Issuer in any court or before any governmental authority
or arbitration board or tribunal, which involve the possibility of
materially and adversely affecting the transactions contemplated by
this Loan Agreement, the Placement and Remarketing Agreement or the
Indenture or which, in any way, would materially and adversely affect
the validity or enforceability of the Bonds, the Indenture, the
Placement and Remarketing Agreement, this Loan Agreement or any
agreement or instrument to which the Issuer is a party and which is
used or contemplated for use in the consummation of the transactions
contemplated hereby or thereby.
(c) ISSUE, SALE AND OTHER TRANSACTIONS ARE LEGAL AND
AUTHORIZED. The issuance and sale of the Bonds and the execution and
delivery by the Issuer of this Loan Agreement, the Placement and
Remarketing Agreement and the Indenture, and the compliance by the
Issuer with all of the provisions of each thereof and of the Bonds (i)
are within the purposes, powers and authority of the Issuer, (ii) have
been done in full compliance with the provisions of the Act, are legal
and will not conflict with or constitute on the part of the Issuer a
violation of or a breach of or default under, or result in me creation
of any lien, charge or encumbrance upon any property of the Issuer
(other than as contemplated in the Indenture) under the provisions of,
any activating resolution, by-law, indenture, mortgage, deed of trust,
note agreement or other agreement or instrument to which the Issuer is
a party or by which the Issuer is bound, or to the best of Issuer's
knowledge any license, judgment, decree, law, statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Issuer or any of its activities or properties,
and (iii) have been duly authorized by all necessary corporate action
on the part of the Issuer.
(d) GOVERNMENTAL CONSENTS; COMPLIANCE WITH LAWS. No further
approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any regulatory or
governmental body, federal, State or local, is required in connection
with (1) the execution, issuance, sale and delivery of the Bonds by the
Issuer, (2) the execution or delivery of or compliance by the Issuer
with the terms and conditions of this Loan Agreement, the Placement and
Remarketing Agreement and the Indenture, or (3) the assignment by the
Issuer of its rights under the Loan Agreement and the Note. The
consummation by the Issuer of the transactions set forth in the manner
and under the terms and conditions as provided herein will comply with
all applicable State, local and federal laws and any rules and
regulations promulgated thereunder by any regulatory authority or
agency.
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<PAGE> 9
(e) NO DEFAULTS; NO CONFLICTS. To the best of the Issuer's
knowledge, no event has occurred and no condition exists with respect
to the Issuer which would constitute an "event of default" as defined
in this Loan Agreement, the Placement and Remarketing Agreement or the
Indenture or which, with the lapse of time or with the giving of notice
or both, would become such an "event of default." To the best of the
Issuer's knowledge, the Issuer is not in default in the payment of
principal of or interest on any of its indebtedness for borrowed money
and, to the best of the Issuer's knowledge, is not in default under any
instrument under or subject to which any indebtedness for borrowed
money has been incurred, and no event has occurred and is continuing
under the provisions of any such instrument that with the lapse of time
or the giving of notice, or both, would constitute an event of default
thereunder. The Issuer is not (1) in violation of the resolution
creating it or any existing law, rule or regulation applicable to it or
(2) to the best of the Issuer's knowledge, in default under any
indenture, mortgage, deed of trust, lien, lease, contract, note, order
judgment decree or other agreement instrument or restriction of any
kind by which it or any of its assets are or may be bound or affected.
The execution and delivery by the Issuer of this Loan Agreement, the
Indenture and the issuance of the Bonds and compliance with the terms
and conditions hereof and thereof will not conflict with or result in
the breach of or constitute a default under any of the above described
instruments or other restrictions.
(f) NO PRIOR PLEDGE. Neither this Loan Agreement nor any of
the Pledged Revenues have been pledged or hypothecated in any manner or
for any purpose other than as provided in the Indenture as security for
the payment of the Bonds.
(g) NATURE AND LOCATION OF PROJECT. The financing of the Cost
of Project is authorized under the Act and is in furtherance of the
public purpose for which the Issuer was created. The Issuer authorizes
the Company, subject to the terms and conditions set forth in this Loan
Agreement, which terms and conditions the Issuer determines to be
necessary, desirable and proper, to provide for the acquisition,
construction and equipping of the Project by such means as shall be
available to the Company and in the manner determined by the Company.
The Project is wholly located within the corporate limits of the
Village of Gurnee, Illinois.
(h) NO INTEREST OF TRUSTEES OF THE ISSUER. No trustee of the
Issuer nor any officer, employee or agent thereof is, in his or her own
name or in the name of a nominee, a director, officer or holder of an
ownership interest in any person, association, trust, corporation,
partnership or other entity which is, in its own name or in the name of
a nominee, a party to any contract or agreement related to the
transactions contemplated by this Loan Agreement or the Indenture.
Section 2.2. NO REPRESENTATION OR WARRANTY BY ISSUER AS TO PROJECT. The
Issuer makes no representation or warranty concerning the suitability of the
Project for the purpose for which it is being undertaken by the Company. The
Issuer has not made any independent investigation as to the feasibility or
creditworthiness of the Company, and any bond purchaser, assignee of the Loan
Agreement or any other party with any interest in this transaction, shall make
its own independent investigation as to the creditworthiness and feasibility of
the Project, independent of any representation or warranties of the Issuer.
Section 2.3. REPRESENTATIONS BY THE COMPANY. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Organization and Power. The Company (a) is a corporation
(i) duly organized, validly existing and in good standing under the
laws of the State of California and (ii) duly qualified as a foreign
corporation, validly existing and in good standing under the laws of
the State
6
<PAGE> 10
of Illinois and (b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties and to
carry on its business as now being conducted and as presently proposed
to be conducted except where failure to obtain or retain a license or
permit would not have a materially adverse effect on the Company's
business.
(b) PENDING LITIGATION. There are no proceedings pending, or
to the knowledge of the Company threatened, against or affecting the
Company in any court or before any governmental authority, arbitration
board or tribunal which if adversely determined, would materially and
adversely affect the transactions contemplated by this Loan Agreement,
the Place and Remarketing Agreement or the Indenture or which, in any
way, would materially and adversely affect the properties, business,
prospects, profits or condition (financial or otherwise) of the
Company, or the ability of the Company to perform its obligations under
the Company Documents. The Company is not in default with respect to an
order of any court, governmental authority, arbitration board or
tribunal.
(c) AGREEMENTS ARE LEGAL AND AUTHORIZED. The execution and
delivery by the Company of each of the Company Documents and the
compliance by the Company with all of the provisions hereof and thereof
(i) are within the corporate power of the Company, (ii) will not
conflict with or result in any breach of any of the provisions of, or
constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any property of the Company under the
provisions of, any agreement, articles of incorporation, by-laws or
other instrument to which the Company is a party or by which it may be
bound, or any license, judgment, decree, law, statute, order, rule or
regulation of any court or government agency or body having
jurisdiction over the Company or any of its activities or properties,
(iii) will not result in a violation of any constitutional or statutory
provision or order, rule, regulation, decree or ordinance of any court,
government or governmental authority having jurisdiction over the
Company or its property, and (iv) have been duly authorized by all
necessary corporate action on the part of the Company.
(d) GOVERNMENTAL CONSENT. Neither the Company nor any of its
businesses or properties nor any relationship) between the Company and
any other person, nor any circumstances in connection with the
execution, delivery and performance by the Company of the Company
Documents or the offer, issue, sale or delivery by the Issuer of the
Bonds, is such as to require the consent, approval or authorization of,
or the filing, registration or qualification with, any governmental
authority on the part of the Company other than those already obtained;
provided, however, that no representation is made as to any consents,
approvals or authorizations required in connection with the
construction or occupancy of the Project.
(e) NO DEFAULTS. No event has occurred and no condition exists
with respect to the Company that would constitute an "event of default"
under any of the Company Documents or which, with the lapse of time or
with the giving of notice or both, would become such an "event of
default." The Company is not in violation in any material respect of
any agreement, articles of incorporation, by-laws or other instrument
to which it is a party or by which it may be bound. The Company is not
in default in the payment of principal of or interest on any of its
indebtedness for borrowed money and is not in default under any
instrument under and subject to which any indebtedness has been
incurred, and no event has occurred and is continuing under the
provisions of any such instrument that with the lapse of time or the
giving of notice, or both, would constitute an event of default
thereunder.
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<PAGE> 11
(f) COMPLIANCE WITH LAW. The Company is not in violation in
any material way of any laws, ordinances, governmental rules or
regulations to which it is subject and has not failed to obtain any
licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
business, which violation or failure to obtain might materially and
adversely affect the properties, business, prospects, profits or
conditions (financial or otherwise) of the Company.
(g) RESTRICTIONS ON THE COMPANY. The Company is not a party to
any contract or agreement that materially and adversely affects the
business of the Company.
(h) LOCATION OF PROJECT. The Project is located entirely
within the geographical boundaries of the Village of Gurnee, County of
Lake, Illinois.
Section 2.4. MODIFICATION AND TERMINATION OF SPECIAL TAX COVENANTS.
Subsequent to the issuance of the Bonds and prior to their payment in full (or
provision for the payment thereof having been made in accordance with the
provisions of the Indenture), neither this Loan Agreement nor the Note may be
amended, changed, modified, altered or terminated except as permitted herein and
by the Indenture and with the written consent of the Company, the Trustee and
the Credit Provider. Subject to Article X11 of the Indenture, the Issuer, the
Trustee, and the Company hereby agree to amend this Loan Agreement to the extent
required or permitted, in the opinion of Bond Counsel, in order for interest on
the Bonds to be excluded from gross income of the Owners thereof for federal
income tax purposes under Section 103(a) of the Code. The party requesting such
amendment shall notify the other party to this Loan Agreement and the Trustee of
the proposed amendment, with a copy of such requested amendment to Bond Counsel.
After review of such proposed amendment, Bond Counsel shall render to the
Trustee an opinion as to the effect of such proposed amendment upon the
includability of interest on the Bonds in the gross income of the recipient
thereof for federal income tax purposes.
Section 2.5. PURCHASE OF BONDS BY ISSUER AND COMPANY. Except for
purchases to pay the Purchase Price of Bonds tendered or deemed tendered under
the Indenture, the Issuer and the Company agree that they shall not purchase any
Bonds, directly or indirectly.
Section 2.6. FURTHER ASSURANCES. The Company will execute and deliver
such other documents, instruments, agreements and certificates, and do such
further acts, as the Trustee under the Indenture may reasonably require for the
better assuring, assigning and confirming to the Trustee the amounts assigned
under the Indenture for the payment of the Bonds.
[End of Article II]
8
<PAGE> 12
ARTICLE III
ISSUANCE OF THE BONDS; ACQUISITION, CONSTRUCTION,
INSTALLATION AND FINANCING OF PROJECT
Section 3.1. AGREEMENT TO ACQUIRE, CONSTRUCT AND EQUIP THE PROJECT. The
Company shall cause the acquisition, construction and equipping of the Project
to be completed as described in Exhibit A attached hereto, as such Exhibit A may
be amended from time to time by the Company; provided, that in the case of a
material change in such Exhibit A there shall be filed with the Issuer and the
Trustee the written approving opinion of Bond Counsel to the effect that such
change will not impair the exclusion of the interest on any of the Bonds from
the gross income of the Owners thereof for federal income tax purposes. The
Company agrees to obtain all licenses, permits and consents required for the
acquisition, construction and installation of the Project, and the Issuer shall
have no responsibility therefor. The Company will not take any action or fail to
take any action which would adversely affect the qualification of the Project
under the Act or the exclusion of the interest on the Bonds from gross income of
the Owners thereof for federal income tax purposes.
Section 3.2. AGREEMENT TO ISSUE BONDS; APPLICATION OF PROCEEDS;
CONSTRUCTION FUND. In order to provide funds to make a loan to the Company for
the payment of a portion of the cost of acquiring, constructing and equipping
the Project, the Issuer agrees that as soon as possible it will authorize,
validate, sell and cause to be delivered to the initial purchaser or purchasers
thereof, the Bonds, bearing interest and maturing as set forth in Article II of
the Indenture, at a price to be approved by the Company and Credit Provider, and
it will thereupon make the loan of the proceeds of the Bonds received from the
sale thereof by depositing the sale proceeds in the Construction Fund created
under the Indenture. The moneys in the Construction Fund shall be used to
finance the acquisition, construction and equipping the Project and for paying
certain of the costs of issuing the Bonds.
Section 3.3. LIMITATION OF ISSUER'S LIABILITY. ANYTHING CONTAINED IN
THIS LOAN AGREEMENT TO THE CONTRARY NOTWITHSTANDING, ANY OBLIGATION THE ISSUER
MAY INCUR IN CONNECTION WITH THE UNDERTAKING OF THE PROJECT FOR THE PAYMENT OF
MONEY SHALL NOT BE DEEMED TO CONSTITUTIONAL AN INDEBTEDNESS NOR A LOAN OF THE
CREDIT OF THE ISSUE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION, BUT SHALL BE PAYABLE
SOLELY FROM THE REVENUES AND RECEIPTS DERIVED BY IT FROM THIS LOAN AGREEMENT AND
THE NOTE, INCLUDING PAYMENTS RECEIVED UNDER THE NOTE, AND FROM PAYMENTS MADE
PURSUANT TO THE CREDIT FACILITY OR THE CONFIRMATION LETTER. NO OWNER OF THE
BONDS WILL HAVE THE RIGHT TO COMPEL ANY EXERCISE OF TAXING POWER OF THE ISSUER,
THE STATE OR ANY POLITICAL SUBDIVISION[ THEREOF TO PAY THE BONDS OR THE INTEREST
THEREON, AND THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS NOR A LOAN OF THE
CREDIT OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE
MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION. NO OFFICER OR MEMBER OF
THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF SHALL BE PERSONALLY
LIABLE ON CTHIS LOAN AGREEMENT OR THE NOTE.
Section 3.4. DISCLAIMER OF WARRANTIES. The Company recognizes that
since the Project has been acquired, constructed and equipped by the Company and
by contractors and suppliers selected by the Company, NETHER THE ISSUER NOR THE
TRUSTEE MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR RAPLIED, WITH RESPECT
TO THE MERCHANTABILITY, CONDITION OR WORKMANSHIP OF ANY PART OF THE PROJECT OR
ITS SUITABILITY FOR THE PURPOSES OF THE COMPANY OR THE EXTENT TO WHICH PROCEEDS
DERIVED FROM THE SALE OF THE BONDS WILL PAY THE COST TO BE INCURRED IN
CONNECTION THEREWITH.
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<PAGE> 13
Section 3.5 COST OF PROJECT. The Company covenant sand agrees that it
will cause at least: 95% of the moneys in the Construction Fund (including any
earnings on investment of such moneys) to be disbursed for Qualified Costs of
Construction (as defined below) and all of such proceeds to be disbursed for
costs permitted by the Act. The Company further covenants that no more than
$155,000 of the moneys in the Construction Fund will be disbursed for payment of
issuance costs within the meaning of the Code. The Company covenants that none
of the moneys in the Construction Fund will be disbursed for the payment of any
costs incurred or paid prior to October 18, 1995. Further, the Company covenants
to comply with all provisions of the Project Certificate which are hereby
incorporated by reference herein.
"Qualified Cogs of Construction" means that portion of the cost of the
Project which is chargeable to the Project's capital account Or Federal income
tax purposes or which would be so chargeable either with a proper election by
the Company under the Code or but for a proper election by the company to deduct
such amount and which were incurred and paid, or are to be incurred and paid, on
or after October 18, 1995.
Section 3.6 ESTABLISHMENT OF COMPLETION DATE; OBLIGATION OF COMPANY TO
COMPLETE. The completion of the acquisition, construction and equipping of the
Project shall be evidenced to the Trustee by a certificate signed by the Company
Representative stating such date (the "Completion Date") and the cost of the
Project and stating that (i) the acquisition, construction and equipping of the
Project has been completed substantially in accordance with the plans,
specifications and work orders therefor and all labor, services, materials and
supplies used in such acquisition, construction and equipping have been paid for
(other than costs and expenses for which payment has been withheld), (ii) all
other facilities necessary in connection with the Project have been constructed,
acquired and installed in accordance with the plans, specifications and work
orders therefor and all costs and expenses incurred in connection therewith
(other than costs and expenses for which payment has been withheld) have been
paid and (iii) (a) at least 95% of the costs previously disbursed and to be
disbursed from the Construction Fund (including moneys to be disbursed in
accordance with the next succeeding paragraph of this Section 3.6) are Qualified
Costs of Construction (as defined in Section 3.5 above), (b) all costs disbursed
from the Construction Fund are costs permitted by the Act, (c) no more than
$155,000 of the moneys on deposit in the Construction Fund will be disbtirsed Or
the payment of issuance cost within the meaning of the Code, and (d) none of the
moneys in the Construction Fund will be disbursed for the payment of any costs
incurred or paid prior to October 18,1995. The Company may withhold payment and
direct the Trustee to retain in the Construction Fund an amount to pay any Cost
of the Project which has been incurred; such retained moneys shall be disbursed
after the Completion Date in the manner provided herein and in the Indenture. If
the Company withholds the payment of any such cost or expense of the Project the
certificate shall state the amount of such withholding and the reason therefor.
Notwithstanding the foregoing, such certificate may state that it is given
without prejudice to any rights against third parties which exist at the date of
such certificate or which may be subsequently come into being. It shall be the
duty of the Company to cause such certificate to be furnished to the Trustee
within 60 days after the Project shall have been completed.
Moneys (including investment proceeds) remaining in the Construction
Fund on the date of such certificate may be used, at the direction of the
Company Representative to the extent indicated, for one or more of the following
purposes:
(1) for the payment, in accordance with the provisions of this
Agreement, if any cost of the Project not theretofore paid, as
specified in the above-mentioned completion certificate; or
(2) for transfer to the Bond Fund, but only if, and to the
extent that, the Trustee has been furnished with an opinion of Bond
Counsel to the effect that such transfer is lawful under the Act and
does not adversely affect the exclusion from federal gross income of
interest on any of the Bonds.
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<PAGE> 14
Any moneys (including investment proceeds) remaining in the
Construction Fund on the date of the aforesaid certificate and not set aside for
the payment of costs of the Project as specified in (1) above or transferred to
the Bond Fund pursuant to (2) above shall on such date be deposited by the
Trustee in a separate escrow account and used to pay all or part of the
redemption price of Bonds at the earliest redemption date or dates on which
Bonds may be redeemed without the payment of a premium or, at the option of the
Company, at an earlier redemption date or dates; provided that, until so used
such moneys may also be used, at the direction of the Company Representative,
for one or more of the following purposes:
(a) to pay all or part of the price of purchasing Bonds on tender, in
the open market or at private sale, at a purchase price not in excess of 100% of
the principal amount of such Bonds plus accrued interest to the date of such
purchase for the purpose of cancellation;
(b) for the payment of qualifying costs of any additional improvements
to be installed or constructed on the Project site, provided that such use of
funds is permitted under the Act; or
(c) for any other purpose permitted by the Act;
provided, that the earnings on the investment of me moneys on deposit in such
escrow account shall be transferred on each interest payment date on the Bonds
to the Bond Fund and shall be used to pay interest on the Bonds coming due on
each interest payment date on the Bonds (or to reimburse the Credit Provider for
draws under the redit Facility to pay interest on the Bonds), but no moneys
(including, earnings on the investment of such moneys) on deposit in such escrow
account may be used for any of the purposes specified in this paragraph
(including the redemption of Bonds) unless and until the Trustee has been
furnished with an opinion of Bond Counsel to the effect that such use is lawful
under the Act and does not adversely affect the exclusion from gross income for
Federal income tax purposes of the interest on any of the Bonds; and provided
further that, until used for one or more of the foregoing purposes, moneys on
deposit in such escrow account may be invested in investments authorized by this
Agreement and the Indenture, but may not be invested to produce a yield on such
moneys (computed from the Completion Dam and taking into account any investment
of such moneys during the period from the Completion Date until such moneys were
deposited in such escrow account) greater than the yield on the Bonds from which
such proceeds were derived, all as such terms are used in and determined in
accordance with the Code and regulations promulgated thereunder.
In the event the moneys in the Construction Fund available for payment
of the costs of the Project should not be sufficient to pay the costs thereof in
full, the Company agrees to pay directly, or to deposit in the Construction Fund
moneys sufficient to pay, the costs of completing the Project as may be in
excess of the moneys available therefor in the Construction fund. The Issuer
does not make any warranty, either express or implied, that the moneys which
will be paid into the Construction Fund and which, under the provisions of this
Agreement, will be available for payment of the costs of the Project, will be
sufficient to pay all the costs which will be incurred in that connection. The
Company agrees that if after exhaustion of the moneys in the Construction Fund
the Company should pay, or deposit moneys in the Construction Fund for the
payment of any portion of the said costs of the Project pursuant to the
provisions of this Section it shall not be entitled to any reimbursement
therefor from the Issuer or from the Trustee or form the owners of any of the
Bonds, nor shall it be entitled to any diminution of the amounts payable under
Article IV hereof.
Section 3.7 OPERATION OF THE PROJECT. The Company will not, nor will it
allow any lessee or other user of the Project to, make any material change in
its use of the Project unless the Trustee and the Issuer receive an opinion of
Bond Counsel to the effect that such change will not impair the exclusion of
interest on the Bonds from the gross income of holders of the Bonds for federal
income tax purposes.
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<PAGE> 15
The Company will operate the Project, or cause any lessee or other user
of the Project to operate the Project, as an "industrial project" as
contemplated by the Act and in such a manner that it will not impair the
exclusion of interest on the Bonds from the gross income of the holders of the
Bonds for federal income tax purposes.
Upon a sale or law of all or any portion of the Company's interest in
the Project (to the extent permitted hereunder), the Company will obtain the
agreement of the purchaser or lessee of the Project or any interest therein to
comply with the provisions of this Section 3.7, regardless of whether such
purchaser or lessee assures the obligations of the Company under this Agreement
generally.
Section 3.8. INVESTMENT OF FUNDS. Except for amounts on deposit in the
Rebate Fund, any moneys held in the Bond Fund or the Construction Fund or any
other fund created under the Indenture shall be invested or reinvested by the
Trustee as set forth in Article X of the Indenture, to the extent permitted by
law, in the Permitted Investments (as defined in the Indenture), at the
telephonic or oral direction (confirmed in writing) of the Company
Representative. All such investments shall at all times be a part of the fund
(the Construction Fund, the Bond Fund or such other fund created under the
Indenture, as the case may be) from where the moneys used to acquire such
investments shall have come, and all income and profits on such investments
shall be credited to, and losses thereon shall be charged against, such fund.
Section 3.9. SPECIAL ARBITRAGE CERTIFICATIONS. The Company covenants
with the Issuer, the Trustee and the Owners from time to time of the Bonds that
so long as any Bond remains Outstanding, moneys on deposit in any fund or
account in connection with the Bonds, whether or not such moneys were derived
from the proceeds of the sale of the Bonds or from any other sources, will not
be used in a manner which will cause the Bonds to be "arbitrage bonds," within
the meaning of Section 148 of the Code and any lawful regulations promulgated or
proposed thereunder. The Issuer and the Company each covenant and agree on their
own behalf that they shall not take any action, cause any action to be taken,
omit to take any action or cause any omission to occur which would cause the
interest on the Bonds to become includible in the gross income of the Owners
thereof for federal income tax purposes.
Section 3.10. DEPOSITORIES OF MONEYS AND SECURITY FOR DEPOSIT. All
moneys received by the Issuer in connection with the issuance of the Bonds
(other than for its fees and expenses) shall be deposited in accordance with the
Indenture in the Construction Fund created under the Indenture. All such moneys
deposited shall be applied in accordance with the terms and for the purposes
herein set forth and shall not be subject to lien or attachment by any creditor
of the Issuer.
The Issuer and the Company agree for the benefit of each other and for
the benefit of the Trustee and the Owners of the Bonds that the Net Proceeds of
the sale of me Bonds will not be used in any manner which would affect the
exclusion from gross income for federal income tax purposes of the interest on
the Bonds.
[End of Article III]
12
<PAGE> 16
ARTICLE IV
PROVISIONS FOR PAYMENT
Section 4.1. TITLE TO THE PROJECT. The Issuer acknowledges that (i) the
Issuer will not be vested with any interest in the Project as a result of its
authorization, sale, or issuance of the Bonds to finance the cost of the
acquisition, construction and equipping thereof, and (ii) that the only security
for the Bonds will be the Credit Facility or the Confirmation Letter, if
applicable, the moneys deposited in the funds and accounts (other than the
Rebate Fund) created under the Indenture and the other property and rights
constituting the Trust Estate.
Section 4.2. PAYMENT OBLIGATIONS OF THE COMPANY.
(a) As consideration for the issuance of the Bonds and the
lending of the Bond proceeds to the Company by the Issuer in accordance
with tile provisions of this Loan Agreement, the Company agrees to
execute and deliver the Note to the Issuer. In addition, the Company
agrees to (i) except as provided in subsection (b) of this Section,
make prompt payment to the Trustee, as assignee and pledgee of the
Issuer, for deposit in the Bond Fund, of all payments on the Note as
and when the same shall be due and payable, and (ii) pay pursuant
hereto and the Note sums sufficient to pay the principal and purchase
price of, premium, if any, and interest on the Bonds (whether at
maturity, upon redemption or acceleration, upon any Purchase Date or
otherwise) when and as the same shall be due and payable. All such
payments shall be made to the Trustee at its Principal Office in lawful
money of the United States of America, except as may be otherwise
agreed to by the Trustee.
(b) In order to provide for the payments required in
subsection (a) of this Section, the Company shall cause the Credit
Provider to deliver the Credit Facility and the Confirming Bank to
deliver the Confirmation Letter to the Trustee simultaneously with the
original issuance and delivery of the Bonds, and hereby authorizes and
directs the Trustee to draw moneys under the Credit Facility and the
Confirmation Letter in accordance with the provisions of the Indenture
to the extent necessary to make any payments of principal and purchase
price of, and interest on the Bonds as and when the same become due.
The Company shall receive as a credit against its obligations to make
the payments described in subsection (a) of this Section all payments
made by the Credit Provider under the Credit Facility and the
Confirmation Letter and all other amounts described in Section 3.02 or
6.06 of the Indenture.
(c) If to Company should fail to make any of the payments
required in subsection (a) and (b) above, the item or installment which
the Company has failed to make shall continue as an obligation of the
Company until the same shall have been fully paid, and the Company
agrees to pay the same with interest thereon at the rate per annum
borne by the Bonds until paid in full.
(d) In addition, the "Company agrees to pay the costs of
issuing the Bonds which are not paid with the proceeds from the sale of
the Bonds.
(e) Anything herein, in the Indenture or in the Bonds to the
contrary notwithstanding, the obligations of 9 the Company hereunder
shall be subject to the limitation that payments
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<PAGE> 17
constituting interest under this Section shall not be required to the
extent that the receipt of such payment by the Owner of any Bond would
be contrary to the provisions of law applicable to such Owner which
limit the maximum rate of interest which may be charged or collected by
such Owner.
Section 4.3. CREDIT FACILITY ALTERNATE CREDIT FACILITY CONFIRMATION
LETTER; SUBSTITUTE CONFIRMATION LETTER.
(a) The Credit Facility delivered to the Trustee
simultaneously with the original issuance and delivery of the Bonds
constitutes an irrevocable obligation of the Credit Provider to pay to
the Trustee, upon request and in accordance with the terms thereof, up
to an amount equal to the principal amount of Bonds Outstanding plus
(i) if the Bonds initially bear interest at a Variable Rate, during any
Variable Raw Period, 50 days' interest on the Bonds, computed at a rate
per annum equal to the Maximum Rate and on the basis of the actual
number of days elapsed during a 365 day or 366 day year, as
appropriate, or (ii) if the Bonds initially bear interest at a Term
Rate, during any Term Rate Period, 204 days' interest on the Bonds (or,
if the Term Rate Period to be established will consist of fewer than 6
months, the number of days' interest on the Bonds obtained by adding 20
days to the number of days in such Term Rate Period) computed at a rate
per annum equal to the Maximum Rate and on the basis of a 360 day year
of twelve 30 day months.
(b) The Company shall have the option from time to time to
provide the Trustee with an Alternate Credit Facility in accordance
with the provisions of Section 6.13 of the Indenture. If at any time
there shall have been delivered to the Trustee an Alternate Credit
Facility, together with the other documents and opinions required by
Section 6.13 of the Indenture, then the Trustee shall accept such
Alternate Credit Facility and promptly surrender the previously held
Credit Facility to the issuer thereof for cancellation, in accordance
with the terms of such Credit Facility. Notwithstanding anything to the
contrary contained herein, the Company shall at all times cause a
Credit Facility to be in effect with respect to any Bonds bearing
interest at (i) a Variable Rate and (ii) a Term Rate provided the
applicable Term Rate Period ends prior to the final stated maturity
date of the Bonds. A Credit Facility need not be in effect at all times
with respect to Term Rate Bonds provided the applicable Term Rate
Period ends on the final stated maturity date of the Bonds. If at any
time there shall cease to be any Bonds Outstanding under the Indenture,
the Trustee shall promptly surrender the Credit Facility, if any, to
the Credit Provider, in accordance with the terms of such Credit
Facility, for cancellation. The Trustee shall comply with the
procedures set forth in the Credit Facility relating to the termination
thereof.
(c) The Confirmation Letter delivered to the Trustee
simultaneously with the original issuance and delivery of the Bonds
constitutes an irrevocable obligation of the Confirming Bank to pay to
the Trustee, upon request and in accordance with the terms thereof, up
to an amount equal to the principal amount of Bonds Outstanding plus
(i) if the Bonds initially bear interest at a Variable Rate during any
Variable Rate Period, 50 days' interest on the Bonds, computed at a
rate per annum equal to the Maximum Rate and on the basis of the actual
number of days elapsed during a 365 day or 366 day year, as
appropriate, or (ii) if the Bonds initially bear interest at a Term
Rate, during any Term Rate Period, 204 days' interest on the Bonds (or,
if the Term Rate Period to be established will consist of fewer than 6
months, the number of days' interest on the Bonds obtained by adding 20
days to the number of days in such Term Rate Period) computed at a rate
per annum equal to the Maximum Rate and on the basis of a 360 day year
of twelve 30 day months.
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<PAGE> 18
(d) The Company shall have the option from time to time to
provide the Trustee with a Substitute Confirmation :Letter in
accordance with the provisions of Section 6.13 of the Indenture. If at
any time there shall have been delivered to the Trustee a Substitute
Confirmation Letter, together with the other documents and opinions
required by Section 6.13 of the Indenture, then the Trustee shall
accept such Substitute Confirmation Letter and promptly surrender the
previously held Confirmation Letter to the issuer thereof for
cancellation, in accordance with the terms of such Confirmation Letter.
If at any time there shall cease to be any Bonds outstanding under the
Indenture, the Trustee shall promptly surrender the Confirmation Letter
to the Confirming Bank, it accordance, with the terms of such
Confirmation Letter, for cancellation. The Trustee shall comply with
the procedures set forth in the Confirmation Letter relating to the
termination thereof.
Section 4.4 ADMINISTRATIVE EXPENSES. The Company shall pay, or cause to
be paid, an amount equal to (i) the fees and charges of the Trustee incurred in
connection with the rendering of its ordinary and extraordinary services as
Trustee under the Indenture, as and when the same become due, including die
reasonable fees of in Counsel, (ii) the fees and charges of the Paying Agent for
acting as Paying Agent for the Bonds, including the fees and expenses of its
Counsel, (iii) the fees and expenses of the Placement Agent for serving as
Placement Agent for the Bonds, including the fees and expenses of its Counsel,
and any other amounts due and payable to the Placement Agent under the Placement
and Remarketing Agreement, (iv) the fees and expenses of the Remarketing Agent
for serving as Remarketing Agent for the Bonds, including the fees and expenses
of its Counsel, and any other amounts due and payable to the Remarketing Agent
under the Placement and Remarketing Agreement, (v) the fees and expenses of the
Rating Agency for issuing and maintaining its securities rating on the Bonds and
(vi) the out-of-pocket expenses, administrative expenses and Counsel fees of the
Issuer. The Company may, without constituting grounds for an Event of Default
hereunder, withhold payment of any such fees and charges of the Trustee or the
Paying Agent, to contest in good faith the necessity for any extraordinary
services of the Trustee and the reasonableness of any extraordinary expenses of
the Trustee, or to contest in good faith the necessity for any services
performed and expenses paid or incurred by, and the: reasonableness of any fees,
charges or expenses of, the Paying Agent. If the Company should fail to make any
of the payments required in this Section, the item or installment which the
Company has failed to make shall continue as an obligation of the Company until
the same shall have been fully paid, with interest thereon at the rate per annum
borne by the Bonds until paid in full.
Section 4.5 OBLIGATIONS IF THE COMPANY ABSOLUTE AND UNCONDITIONAL.
Subject to the provisions of Section 6.5 hereof the obligations of the Company
to make or to cause (pursuant to the Credit Facility) to be made the payments
required in Sections 4.2 and 4.4 and to perform and observe the other agreement
on its part contained herein shall be absolute and unconditional and shall not
be subject to diminution by set-off, counterclaim, abatement or otherwise by
reason of any action or inaction of the Trustee, the Issuer or any third party.
Until such time as the principal of, and the interest on, the Bonds shall have
been paid in full, the Company (a) will not suspend or discontinue any payments
provided for in Sections 4.2 and 4.4 except to the extent the same have been
prepaid, (b) will perform and observe all its other agreements contained herein,
and (c) except as provided in Article VII hereof, will not terminate this Loan
Agreement for any cause, including, without limiting the generality of the
foregoing, any acts or circumstances that may constitute failure of
consideration, sale, loss, eviction or constructive eviction, destruction of or
damage to the Project, condemnation, commercial frustration of purpose, any
change in the tax or other laws of the United States of America or of the State
or any political subdivision of either, or any failure of the Issuer to perform
and observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection herewith or with the Indenture.
Notwithstanding the foregoing, the obligation of the Company to make payments
hereunder shall be satisfied and discharged to the extent moneys are received by
the Trustee pursuant to the Credit Facility or the Confirmation Letter, if
applicable, remarketing proceeds (with respect to the Purchase Price) or other
available sources under the
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<PAGE> 19
Indenture. Nothing contained in this Section shall be construed to release the
Issuer from the performance of any of the agreements on its part herein
contained; and if the Issuer should fail to perform any such agreement, the
Company may institute such action against the Issuer as the Company may deem
necessary to compel performance so long as such action shall not impair the
agreements on the part of the Company hereunder.
Nothing contained herein shall be construed as a waiver of any rights
which the Company may have against the Issuer under this Loan Agreement, or
against any person under this Loan Agreement, the Indenture or otherwise, or
under any provision of law; provided, however, that the Company shall pursue any
rights or remedies against the Issuer, the Trustee, any Owner or any third party
in connection herewith, or in connection with the Indenture, the Company
Documents or otherwise relating to the Bonds and security therefor only in a
separate action, and not b- way of any set-off, counterclaim, cross-claim or
third parry action in any suit brought to enforce the rights of the Owners, the
Trustee or the Issuer under this Loan Agreement, the Indenture, the Company
Documents or otherwise in connection herewith; and provided further, that in
order to preserve the right of the Company to raise such issues in any separate
suit, any claim of the Company which, but for this Section 4.5, would be a
compulsory counterclaim, shall be identified as such in the first responsive
pleading filed by the Company to any action brought by the Issuer, Trustee, any
Owner or any person.
Section 4.6. COMPANY CONSENT TO ASSIGNMENT OF WAN AGREEMENT AND
EXECUTION OF INDENTURE. The Company understands that the Issuer will, pursuant
to the Indenture and as security for the payment of the principal of, premium,
if any, and the interest on the Bonds, assign and pledge to the Trustee, and
create a security interest in favor of the Trustee in certain of its rights,
title and interest in and to this Loan Agreement (including all Pledged
Revenues) reserving, however, the Unassigned Rights; and the Company hereby
agrees and consents to such assignment and pledge. The Company acknowledges that
it has received a copy of the Indenture and consents to the execution of the
same by the Issuer; provided, however, such consent does not constitute a
representation as to the accuracy of any representations or warranties made
thereunder.
Section 4.7. COMPANY'S PER PERFORMANCE UNDER INDENTURE. The Company
agrees, for the benefit of the Owners, to do and perform all acts and things
contemplated in the Indenture to be done or performed by it.
[End of Article IV]
16
<PAGE> 20
ARTICLE V
PARTICULAR AGREEMENTS
Section 5.1. MAINTENANCE, OPERATION AND INSURING OF PROJECTS TAXES; NO
OPERATION OF PROJECT BY ISSUER. The Company hereby agrees that it will at its
own expense maintain and operate all portions of the Project during their useful
lives or until they are replaced with facilities necessary to the operation of
the Project. This Loan Agreement does not prevent the Company from merging or
consolidating with another entity as permitted by Section 5.3. The Company
further agrees that, except for taxes contested in good faith, it will pay all
taxes levied with respect to the Project and the income therefrom and that it
will at its own expense keep the Project properly insured against loss or damage
from such perils usually insured against by businesses operating -or owning like
properties and maintain public liability insurance and all such worker's
compensation or other similar insurance as may be required by law. Evidence of
such insurance will be furnished to the Trustee, the Issuer and the Credit
Provider upon request. Nothing contained in this Loan Agreement shall be deemed
to authorize or require the Issuer to operate the Project or to conduct any
business enterprise in connection therewith.
Section 5.2. ISSUER'S, TRUSTEE'S AND PAYING AGENT'S EXPENSES, RELEASE
AND INDEMNIFICATION PROVISIONS. The Company agrees, whether or not the
transactions contemplated by the Company Documents and the Indenture shall be
consummated, to indemnify and hold harmless the Issuer and its officers,
trustees, officials, employees and agents, including the Trustee, the Paying
Agent and Counsel to the Issuer (any and all of the foregoing being hereinafter
referred to as the "Indemnified Persons"), from and against any and all claims,
actions, suits, proceedings, expenses, judgments, damages, penalties, firtes,
assessments, liabilities, charges or other costs (including, without limitation,
all attorneys' fees and expenses incurred in connection with enforcing this Loan
Agreement or collecting any sums due hereunder and any claim or proceeding or
any investigation in connection therewith) relating to, resulting from or in
connection with (a) any cause whatsoever in connection with the Project,
including, without limitation, the acquisition, design, construction,
installation, equipping, operation, maintenance or use thereof or the financing
thereof including any expenses arising from the failure to make payment of
principal and interest on the Bonds; (b) any act or omission of the Company or
any of its agents, contractors, servants, employees or licensees, in connection
with the Project; (c) the issuance and sale of the Bonds; and (d) a
misrepresentation or breach of warranty by the Company hereunder or under any of
the Company Documents, or any violation by the Company of any of its covenants
hereunder or under any of the other Company Documents. In addition, the Trustee
shall be indemnified for (i) any actions taken or omitted by the Trustee in
accordance with the terms of this Loan Agreement, the Bonds, the Placement and
Remarketing Agreement, the Credit Facility, the Note, the Tax Regulatory
Agreement or the Indenture and (ii) any actions taken at the request of or with
the consent of the Company. The foregoing indemnities are effective only with
respect to any loss incurred by the Indemnified Persons not due to willful
misconduct, gross negligence, or bad faith on the part of such Indemnified
Persons. In case any action or proceeding shall be brought against one or more
of the Indemnified Persons and in respect of which indemnity may be sought as
provided herein, such Indemnified Person or Indemnified Persons shall promptly
notify the Company in writing and the Company shall promptly assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Person or Indemnified Persons, payment of all expenses and the right
to negotiate and consent to settlement; but the failure to notify the Company as
provided herein shall not relieve the Company from any liability that it may
have (i) under this Section, so long as the Company is given the reasonable
opportunity to defend such claim, and (ii) otherwise than under this Section.
Any one or more of the Indemnified Persons shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the reasonable fees and expenses of such counsel shall be at the expense of
such Indemnified Persons or Indemnified
17
<PAGE> 21
persons unless (1) the employment of such counsel has been specifically
authorized in writing by the Company, (2) the named parties to any such action
(including any impleaded parties) include both the Company and such Indemnified
Person or Indemnified Persons and representation of both the Company and such
Indemnified Person or Indemnified Persons by the same counsel would be
inappropriate due to actual or potential differing interests between them, or
(3) the Indemnified Person or Indemnified Persons have been advised that one or
more legal defenses may be available to any or all of them which may not be
available to the Company in which case the Company shall not be entitled to
assume the defense of such suit notwithstanding its obligation to bear the fees
and expenses of such counsel. The Company shall not be liable for any settlement
of any such action effected Without its consent, but if settled with such
consent or if there: is a final judgment in any such action with or without
consent, the Company agrees a) indemnify and hold harmless the Indemnified
Person or Indemnified Persons from and against any loss by reason of such
settlement or judgment.
The provisions of this Section shall survive the termination of this
Loan Agreement.
Section 5.3 MAINTENANCE OF EXISTENCE. The Company agrees that so long
as any Bonds remain outstanding it shall maintain its existence as a corporation
organized under the laws of the State of California and shall not merge or
consolidate with any other entity and shall not transfer or convey all or
substantially all of its property, assets and licenses; provided, however, the
Company may, without violating any provision hereof, consolidate with or merge
into another domestic entity (i.e., an entity existing under the laws of one of
the states of the United States of America or the District of Columbia) or
permit one or more other domestic entities to consolidate with or merge into it,
or transfer all or substantially all of its assets to another domestic entity,
but only on the condition that:
(a) the assignee entity or the entity resulting from or
surviving such merger (if other than the Company) or consolidation or
the entity to which such transfer is made expressly assumes in writing
and agrees to perform all of the Company's obligations hereunder and
under the other Company Documents;
(b) in connection with any such consolidation, merger or
transfer, the Credit Provider shall expressly ratify and affirm that
the Credit Facility remains in full force and effect;
(c) the surviving entity shall preserve and keep in full force
and effect all licenses and permits necessary to the proper conduct of
its business; and
(d) the Company obtains and delivers to the Issuer, the
Trustee, and the Credit Provider an opinion of Bond Counsel to the
effect that the proposed transaction will not adversely affect the
exclusion from gross income of interest on the Bonds of the Owners
thereof for federal income tax purposes
Section 5.4. AGREEMENT OF ISSUER NOT TO ASSIGN OR PLEDGE. Except for
the assignment and pledge of the Trust Estate in the Indenture, the Issuer
agrees that it will not attempt to further assign, pledge, transfer or convey
its interest in or create any assignment, pledge, lien, charge or encumbrance of
any form or nature with respect to any of the property, moneys, securities and
rights granted by the Issuer to the Trustee under the Granting Clauses of the
Indenture.
Section 5.5. REDEMPTION OF BONDS. The Issuer or the Trustee, at the
request at any time of the Company and if the same are then redeemable, shall
forthwith take all steps that may be necessary under the applicable redemption
provisions of the Indenture to effect redemption of all or any portion of the
Bonds, as may be specified by the Company, on the earliest redemption date on
which such redemption may be made under such applicable provisions or upon the
date set for the redemption by the Company
18
<PAGE> 22
pursuant to Article VII hereof. As long as no Event of Default on behalf of the
Company exists hereunder and the Issuer is not obligated to call Bonds pursuant
to the terms of the Indenture, neither the Issuer nor the Trustee shall redeem
any Bond prior to its stated maturity unless requested to do so in writing by
the Company.
Section 5.6. REFERENCE IS BONDS INEFFECTIVE BONDS PAID. Upon Payment in
Full of the Bonds and all fees and charges of the Issuer, the Trustee and the
Paying Agent, all references herein to the Bonds, the Paying Agent and the
Trustee shall be ineffective and neither the Issuer, the Paying Agent, the
Trustee nor the Owners of any of the Bonds shall thereafter have any rights
hereunder and the Company shall have no further obligation hereunder, saving and
excepting those that shall have theretofore vested and any right of any
Indemnified Person (as defined in Section 5.2) to indemnification under Section
5.2, which right shall survive the payment of the Bonds and the termination of
this Loan Agreement. Reference is hereby made to Article XI of the Indenture
which sets forth the conditions upon the existence or occurrence of which
Payment in Full of the Bonds shall be deemed to have been made.
Section 5.7. ASSIGNMENT, SALE OR LEASE OF PROJECT. The Company may
assign its interest in this loan Agreement and may sell, lease or otherwise
dispose of the Project, in whole or in part, provided that (i) the purchaser,
lessee or transferee in such transaction shall be bound by the terms and
provisions of this Loan Agreement, (ii) such transaction shall not affect the
liability of the Credit Provider under the Credit Facility then in effect, and
(iii) an opinion of Bond Counsel is provided to the Issuer, the Trustee, and the
Credit Provider (if the Credit Facility is then in effect) to the effect that
such transaction will not adversely affect the exclusion of the interest on the
Bonds from gross income of the Owners thereof for federal income tax purposes.
Notwithstanding the foregoing, the Company will remain primarily liable for its
obligations hereunder until provision has been made for Payment in Full of the
Bonds.
Section 5.8. NON-ARBITRAGE COVENANT. The Company hereby covenants and
agrees with the Issuer and the Trustee for the benefit of the Owners of any
Bonds, present and future, that it will not make, or permit, any use of the
proceeds of the Bonds which will cause the Bonds to be "arbitrage bonds" within
the meaning of Section 148 of the Code. Toward that end, the Company and the
Issuer covenant for the benefit of the holders of the Bonds to comply with the
provisions of the Tax Regulatory Agreement. The covenants contained in this
Section are in addition to, and not in limitation of, the covenants contained in
Sections 2.4 and 3.9 hereof.
Section 5.9. FINANCING STATEMENTS. The Company hereby covenants and
agrees with the Issuer and the Trustee that it shall furnish to the Credit
Provider (if the Credit Facility is then in effect) and the Trustee,
quinquennially on or before the 1st day of April of each fifth year (commencing
April 1, 2001), an Opinion of Counsel in a form acceptable to the Credit
Provider, to the effect that all financing or continuation statements have been
filed, and all other action has been taken, to perfect and validate continuously
from the date hereof the security interests granted by the Indenture. The cost
of preparing and filing all such financing statements and continuation
statements shall be paid by the Company.
Section 5.10. COMPLIANCE WITH REIMBURSEMENT AGREEMENT. The Company
hereby covenants and agrees that it will comply with all covenants and
obligations applicable to it in the Reimbursement Agreement from time to time in
effect or, if the Reimbursement Agreement is terminated prior to the termination
of this Loan Agreement, the Company agrees to comply with all covenants and
obligations applicable to it in the Reimbursement Agreement as in effect
immediately prior to the termination thereof until the termination of this Loan
Agreement and the payment of the Company's obligation hereunder.
19
<PAGE> 23
Section 5.11. INSPECTION OF PROJECT. The Issuer, the Trustee and their
duly authorized agents shall have the right at all reasonable times to enter
upon any part of the premises of the Company at which the project is located and
examine and inspect the same as may be reasonably necessary for the purpose of
determining whether the Company is in compliance with its obligations under
Section 5.1, and the Issuer, the Trustee and their duly authorized agents shall
also have the right at all reasonable times to examine the books and records of
the Company insofar as such books and records relate to the acquisition,
construction, installation and maintenance of the Project.
Section 5.12. PROJECT LIST. The Company shall maintain at the Project
site a list setting forth in reasonable detail all items constituting the
Project, and, to the extent applicable, all plans and specifications relating to
the Project.
Section 5.13. NO WARRANTY OF CONDITION OR SUITABILITY BY ISSUSER. The
Company recognizes that the Issuer does not deal in goods of the kind comprising
components of the Project or otherwise hold itself out as having knowledge or
skill peculiar to the practices or goods involved in the Project, and that the
Issuer is not one to whom such knowledge or skill may be attributed by its
employment of an agent or broker or other intermediary who by his occupation
holds himself out as having such knowledge or skill. The Company further
recognizes that since the components of the Project have been designated and
selected by the Company, THE ISSUER HAS NOT MADE AN INSPECTION OF THE PROJECT OR
OF ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, AND, EXCEPT AS
OTHERWISE PROVIDED HEREIN, THE ISSUER MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR TO THE LOCATION,
USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR
PURPOSE, CONDITION OR DURABILITY THEREOF, TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE
BORNE BY THE COMPANY. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN
THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER
PATENT OR LATENT, THE ISSUER SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH
RESPECT THERETO. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED AND ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES OR
REPRESENTATIONS BY THE ISSUER, EXPRESS OR IMPLIED (TO THE EXTENT PERMITTED BY
APPLICABLE LAW), WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE U.C.C. OR
ANOTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
[End of Article V]
20
<PAGE> 24
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. EVENTS OF DEFAULT DEFINED. The following shall be "Events
of Default" hereunder and the term "Event of Default" shall mean, whenever it is
used herein, any one or more of the following events:
(a) failure by the Company to make any payment required to be
made under the Note or Section 4.2(a) when the same becomes due and
payable.
(b) failure by the Company to comply with the provisions of
Section 7.2;
(c) failure by the Company to observe or perform any agreement
hereunder or on its for a period of thirty (30) days after written
notice, specifying such failure and requesting that it be remedied,
given to the Company and to the Credit Provider by the Issuer or the
Trustee, unless the Issuer and the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, if
the failure stated in the notice cannot be corrected within the
applicable period, the Issuer and the Trustee will not unreasonably
withhold their consent to an extension of such time if it is possible
to correct such failure and corrective action is instituted by the
Company or the Credit Provider within the applicable period and
diligently pursued until the failure is corrected; or in the case of
any such default which can be cured with due diligence but not within
such thirty-day period, the Company's or Credit Provider's failure to
proceed promptly to cure such default and thereafter prosecute the
curing of such default with due diligence;
(d) any representation by or on behalf of the Company
contained in this Loan Agreement or in any instrument furnished in
compliance with or in reference to this Loan Agreement the Indenture or
the Reimbursement Agreement proves false or misleading in any material
respect as of the date of the making or furnishing thereof,
(e) an "Event of Default" occurs and is continuing under the
Indenture;
(f) an "Event of Default" occurs and is continuing under the
Reimbursement Agreement; provided, however, that the occurrence of an
event described in Section 6.1(d) shall not constitute an "Event of
Default" hereunder, without the prior written consent of the Credit
Provider.
Upon the occurrence of an Event of Default hereunder, the Trustee shall
promptly notify in writing the Issuer, the Paying Agent, the Remarketing Agent
and the Credit Provider of such occurrence.
The Company and the Issuer hereby authorize the Credit Provider to do
any and all things necessary to correct any Event of Default described in
subsection (c) above on behalf of the Company.
The foregoing provisions of subsection (c) of this Section are subject
to the following limitations: If by reason of force majeure, the Company is
unable in whole or in part to carry out the agreements on its part therein
referred to, the failure to perform such agreements due to such inability shall
not constitute an Event of Default nor shall it become an Event of Default upon
appropriate notification to the Company
21
<PAGE> 25
or the passage of the stated period of time. The term "force majeure" as used
herein shall mean, without limitation, the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders of any
kind of the government of the United States of America or of the State or any of
their departments, agencies, political subdivisions or officials, or any civil
or military authority; insurrections; riots; epidemics; landslides; lightning;
earthquakes; fires; hurricanes; tornadoes; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances; explosions;
breakage or accident to machinery, transmission pipes or canals; partial or
entire failure of utilities; or any other cause or event not reasonably within
the control of the Company. The Company agrees, however, to remedy with all
reasonable dispatch the cause or causes preventing the Company from carrying out
its agreements; provided, that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of the Company,
and the Company shall not be required to make settlement of strikes, lockouts
and other industrial disturbances by acceding to the demands of the opposing
party or parties when such course is, in the judgment of the Company,
unfavorable to the Company.
Section 6.2. REMEDIES. Whenever an Event of Default has occurred and is
continuing, the Trustee, as the assignee and pledgee of the Issuer under the
Indenture, may take any one or more of the following remedial steps:
(a) The Trustee may declare all payments of principal and
accrued interest required to be made under Section 4.2(a) and the Note
to be immediately due and payable, whereupon the same shall become
immediately due and payable. If the Trustee elects to exercise the
remedy afforded in this subsection (a) and accelerates all payments
required to be made under Section 4.2(a) and the Note, the Trustee must
accelerate the payment of the Bonds under Section 7.02 of the Indenture
and amount ten due and payable by the Company as accelerated payments
hereunder shall be the sum of (i) the aggregate principal amount of the
outstanding Bonds, (ii) all interest on the Bonds then due and to
become due to the date of payment of the principal of the Bonds, and
(iii) all other amounts due and payable to the Issuer, if any, to the
Owners or to the Trustee with respect to the payment of the Bonds,
including Counsel fees actually incurred; or
(b) Subject to the provisions of Section 6.5 hereof, the
Trustee may take whatever action at law or in equity may appear
necessary or desirable to collect any sums then due and thereafter to
become due hereunder or to enforce performance and the observance of
any agreement of the Company hereunder or under the Note; or
(c) The Trustee may exercise any remedies provided in the
Indenture.
Any amounts collected pursuant to any action taken under this Section
shall be paid into the Bond Fund and applied in accordance with be provisions of
me Indenture and after Payment in Full of the Bonds and the payment of any costs
occasioned by an Event of Default hereunder, any excess moneys in the Bond Fund
shall be returned to the Company.
The Company hereby authorizes the Trustee to draw moneys under the
Credit Facility in accordance with the Indenture upon a declaration of
acceleration of payment of the Bonds in an amount equal to (i) the aggregate
principal amount of all outstanding Bonds and (ii) all interest on the Bonds due
and to become due to the date of payment. The obligation of the Company to
accelerate payment of all payments required to be made by the Company pursuant
to Section 4.2 upon a declaration of acceleration of payment of the Bonds shall
be deemed satisfied and discharged by a corresponding drawing and payment under
the Credit Facility.
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<PAGE> 26
Section 6.3. NO REMEDY EXCLUSIVE. Subject to the provisions of Section
6.5, no remedy herein conferred upon or reserved to the Trustee is intended to
be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy hereunder or now or
hereafter existing at law, in equity or by statute. No delay or omission to
exercise any right or power accruing upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. The Trustee and the Owners of the Bonds,
subject to the provisions of the Indenture, shall be entitled to the benefit of
all agreements herein contained.
Section 6.4. AGREEMENT TO PAY COUNSEL FEES AND EXPENSES. If there
should occur a default or an event of default hereunder and the Trustee or the
Issuer should employ Counsel or incur other expenses for the collection of sums
due hereunder or the enforcement of performance or observance of any agreement
on the part of the Company herein contained, the Company agrees that it will on
demand therefor pay to the Trustee or the Issuer the reasonable fee of such
Counsel and such other reasonable expenses so incurred by the Trustee or the
Issuer.
If the Company should fail to make any payments required in this
Section, such item shall continue as an obligation of the company until the same
shall have been paid in full, with interest thereon from the date such payment
was due at the rate per annum borne by the Bonds until paid in full.
Section 6.5. WAIVER OF EVENTS AF DEFAULT AND RESCISSION OF
ACCELERATION. If, in compliance with the requirements of Section 7.09 of the
Indenture, the Trustee waives any event of default as therein defined with the
written consent of the Credit Provider (if such consent is required by the
Indenture) and its consequences or rescind any declaration of acceleration of
payments of the principal of, premium, if any, and interest on the Bonds, such
waiver shall also waive any event of default hereunder and its consequences and
such rescission of a declaration of acceleration of the principal of, premium,
if any, and interest on the Bonds shall also rescind any declaration of any
acceleration of all payments required to be made under Section 4.2. In case of
any such waiver or rescission, or in case any proceeding taken by the Trustee on
account of any such event of default shall have been discontinued or abandoned
or determined adversely, then and in every such case the Issuer, the Company,
the Trustee, the Credit Provider and the Owners of the Bonds shall be restored
to their former positions and rights hereunder, but no such waiver or rescission
shall extend to any subsequent or other event of default or impair any right
consequent thereon.
[End of Article VI]
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<PAGE> 27
ARTICLE VII
PREPAYMENT UNDER LOAN AGREEMENT
Section 7.1. OPTION TO PREPAY IN FULL. Unless there has been a
determination which could result in a Determination of Taxability described in
Section 7.2, and subject to requirements under the Indenture for Available
Moneys in certain instances, the Company shall have the option to prepay in full
the Note and terminate this Loan Agreement prior to Payment in Full of the Bonds
by (a) paying to the Trustee an amount of cash or Federal Securities which,
together with existing investments in the Bond Fund, will provide the Bond Fund
with cash or Federal Securities, the principal of and interest on which will be
sufficient, in the opinion of the Trustee, (1) to redeem in accordance with the
relevant section of the Indenture all Bonds then outstanding and to pay all
amounts, if any, required by Section 4.01 of the Indenture on the date on which
the Bonds are to be redeemed, (2) to pay at maturity all Bonds maturing prior to
or simultaneously with such redemption, (3) to pay interest on all Bonds
outstanding prior to their redemption or payment at maturity, and (4) to pay the
reasonable fees and expenses of the Trustee and any other expenses for which the
Company may be responsible under this Loan Agreement, the Note or the Indenture,
and (b) by making arrangements satisfactory to the Trustee for giving the
required notice of redemption.
Section 7.2. MANDATORY PREPAYMENT. The Company shall be obligated to
prepay the Note in full (a) upon the occurrence of a Determination of Taxability
as defined in the Indenture, or (b) as otherwise provided in Section 3.01 of the
Indenture.
Section 7.3. OPTION TO PREPAY IN PART. The Company shall have the
option to prepay the Note in part, and the Issuer agrees that the Trustee may
accept such payments to be paid to the Trustee for deposit in the Bond Fund and
used for redemption or, at the election of the Company, purchase of Outstanding
Bonds in the manner and to the extent provided in the Indenture. The principal
amount of each Bond so purchased, delivered or credited shall be appropriately
credited by the Trustee against the obligation of the Company to make future
payments on the Note.
Section 7.4. RELATION OF OPTIONS TO INDENTURE. The options granted to
the Company in this Article shall be prior and superior to the Indenture and may
be exercised whether or not the Company is in default under this Loan Agreement,
provided that any such default will not result in the non-fulfillment of any
condition to the exercise of any such option.
Section 7.5 OBLIGATIONS AFTER PAYMENT OF NOTE AND TERMINATION OF LOAN
AGREEMENT. Anything contained herein to the contrary notwithstanding, the
obligations of the Company contained in Sections 4.2(c), 4.4, 5.2 and 6.4 shall
continue after payment of the Note and termination of this Loan Agreement.
[End of Article VII]
24
<PAGE> 28
ARTICLE VII
MISCELLANEOUS
Section 8.1. TERM OF LOAN AGREEMENT. Except as provided in Section 7.5,
this Loan Agreement shall terminate when Payment in Full of the Bonds shall have
been made.
Section 8.2. NOTICES. All notices, approvals, consents, requests and
other communications hereunder shall be in writing and shall be deemed to have
been given when delivered by hand or mailed by first class registered or
certified mail, return receipt requested, postage prepaid, and addressed as
follows or (unless specifically prohibited) when telexed or telecopied to the
telex or telecopy numbers as follows:
<TABLE>
<S> <C>
(a) If to the Issuer: Village of Gurnee, Illinois
325 North O'Plaine
Gurnee, Illinois 60031
Attention: Village President
(b) If to the Company: SteriGenics International
4020 Clipper Court
Fremont, California 94538
Attention: President
Facsimile Transmission Number: (510) 770-1499
(c) If to the Trustee: Bank One, Columbus, N.A.,
in care of Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Department
Facsimile Transmission Number: (614) 248-5195
(d) If to the
Credit Provider: Comerica Bank-California
333 W. Santa Clara Street
San Jose, CA 95113
Attention: Michael J. Archer
Facsimile Transmission Number: (408) 556-5396
(e) If to the
Remarketing Agent: Wheat, First Securities, Inc.
901 East Byrd Street
Richmond, Virginia 23219
Attention: Money Market Trading
Facsimile Transmission Number: (804) 782-3440
</TABLE>
25
<PAGE> 29
<TABLE>
<S> <C>
(f) If to the
Paying Agent Bank One, Columbus, N.A.
in care of Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Corporate Trust Department
Facsimile Transmission Number: (614) 248-5195
</TABLE>
A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by the issuer, the Company, the Trustee, the
Remarketing Agent or the Credit Provider to any one of the others shall also be
given to all of the others. The Issuer, the Company, the Trustee, the Credit
Provider, the Remarketing Agent and the Paying Agent may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, approvals, consents, requests or other communications shall be sent or
persons to whose attention the same shall be directed.
Section 8.3. BINDING EFFECT. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Company and their
respective successors and assigns.
Section 8.4. SEVERABILTY. If any provision hereof shall be held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 8.5. AMOUNTS REMAINING IN BOND FUND. It is agreed by the
parties hereto that any amounts remaining in the Bond Fund and Construction Fund
upon expiration or sooner termination of this Loan Agreement, after Payment in
Full of the Bonds, payment of the fees, charges and expenses of the Trustee, the
Remarketing Agent, the Paying Agent and the Credit Provider (including, without
limitation, the fees and expenses of their respective Counsel), and payment of
all other amounts required to be paid under the Indenture and under the
Reimbursement Agreement, including payment of rebatable arbitrage, shall be paid
immediately to the Company by the Trustee.
Section 8.6. RELIANCE BY ISSUER. The Issuer shall have the right at all
times to act in reliance upon the authorization, representation or certification
of the Company Representative or the Trustee.
Section 8.7 ISSUER'S OBLIGATIONS LIMITED. Except as otherwise expressly
herein provided, no recourse under or upon any obligation or agreement contained
in this Loan Agreement or in any Bond or under any judgment obtained against the
Issuer, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise or under any
circumstances, under or independent of the Indenture, shall be had against the
Issuer.
Anything in this Loan Agreement to the contrary notwithstanding, it is
expressly understood and agreed by the parties hereto that (a) the: Issuer may
rely conclusively on the truth and accuracy of any certificate, opinion, notice
or other instrument furnished to the Issuer by the Trustee or the Company as to
the existence of any fact or state of affairs required hereunder to be noticed
by the Issuer; (b) the Issuer shall not be under any obligation hereunder to
perform any record-keeping or to provide any legal services, it being understood
that such services shall be performed either by the Trustee or the Company; and
(c) none of the provisions of this Loan Agreement shall require the Issuer to
expend or risk its own funds or to otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers hereunder, unless it shall first have been adequately indemnified to its
satisfaction against the cost, expenses and liability which may be incurred
thereby.
26
<PAGE> 30
Notwithstanding anything herein contained to the contrary, any
obligation which the Issuer may incur under this Loan Agreement or under any
instrument executed in connection herewith which shall entail the expenditure of
money shall not be a general obligation of the Issuer but shall be a limited
obligation payable solely from the Pledged Revenues.
Section 8.8 IMMUNITY OF DIRECTORS, OFFICER AND EMPLOYEES OF ISSUER. No
recourse shall be had for the enforcement of any obligation, promise or
agreement of the Issuer contained in the Indenture, this Loan Agreement or in
any Bond issued under the Indenture for any claim based thereon or otherwise in
respect thereof, against any officer, trustee, employee or agent, as such, in
his individual capacity, past, present or future, of the Issuer, either directly
or through the Issuer, whether by virtue of any constitutional provision,
statute or rule of law, or by the enforcement of any assignment or penalty or
otherwise; it being expressly agreed and understood that the Bonds, the
Indenture and this Loan Agreement are solely corporate obligations, and that no
personal liability whatsoever shall attach to, or be incurred by, any officer,
trustee, employee or agent, as such, past, present or future, of the Issuer,
either directly or through the Issuer, under or by reason of any of the
obligations, promises or agreements entered into between the Issuer and the
Company whether contained in this Loan Agreement or to be implied therefrom as
being supplemental hereto or thereto, and that all personal liability of that
character against every such director, officer, employee or agent is, by the
execution of this Loan Agreement and the Indenture, and as a condition of, and
as part of the consideration for, the execution of this Loan Agreement and the
Indenture, expressly waived and released.
Section 8.9. PAYMENTS BY CREDIT PROVIDER, CONFIRMING BANK. The Credit
Provider and the Confirming Bank shall, to the extent of any payments made by it
or the Confirming Bank pursuant to the Credit Facility or the Confirmation
Letter, if applicable, be subrogated to all rights of the Issuer or its assigns
(including, without limitation, the Trustee) as to all obligations of the
Company with respect to which such payments shall be made by the Credit Provider
or the Confirming Bank, but, so long as any of the Bonds remain outstanding
under the terms of the Indenture, such right of subrogation on the part of the
Credit Provider shall be in all respects subordinate to all rights and claims of
the Issuer for all payments which are then due and payable under the Indenture
or otherwise arising under this Loan Agreement, the Indenture or the Bonds. The
Trustee will, upon request, execute and deliver any instrument reasonably
requested by the Credit Provider or the Confirming Bank, if applicable, to
evidence such subrogation and the Trustee shall assign to the Credit Provider or
the Confirming Bank, if applicable, its rights in any obligations of the Company
with respect to which payment of the entire principal balance and accrued
interest thereon shall be made by the Credit Provider or the Confirming Bank, if
applicable.
Section 8.10. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided herein or in the Indenture, subsequent to the date of
issuance and delivery of the Bonds and prior to their payment in full, this Loan
Agreement and the Note may not be effectively amended or terminated without the
written consent of the Company, the Trustee and the Credit Provider.
Section 8.11. COUNTERPARTS. This Loan Agreement may be executed in any
number of Counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
Section 8.12. CAPTIONS. The captions and headings herein are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions hereof.
Section 8.13. AMENDMENT OF LOAN AGREEMENT. This Loan Agreement may not
be effectively modified, altered, amended or supplemented without the prior
written consent of the Company, the Trustee and the Credit Provider and in
accordance with the provisions of the Indenture.
27
<PAGE> 31
Section 8.14. LAW GOVERNING CONSTRUCTION OF LOAN AGREEMENT. This Loan
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State.
Section 8.15 NO THIRD PARTY BENEFICIARY. It is specifically agreed between the
parties executing this Loan Agreement that neither this Loan Agreement nor any
of the provisions hereof are intended to establish in favor of the public or any
member thereof, other than as expressly provided herein, including the
assignment of the Issuer's rights under this Loan Agreement to the Trustee
pursuant to the Indenture, the rights of a third party beneficiary hereunder, as
to authorize any one not a party to this Loan Agreement to maintain a suit for
personal injuries or property damage pursuant to the terms or provisions of this
Loan Agreement. The duties, obligations and responsibilities of the parties to
this Loan Agreement with respect to third parties shall remain as imposed by
law.
[End of Article VIII]
28
<PAGE> 32
IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan
Agreement to be executed in their respective corporate names and their
respective corporate seals to be affixed hereto and attested by their authorized
officers, all as of the date first above written.
VILLAGE OF GURNEE, ILLINOIS
By: /s/
------------------------------
Village President
(SEAL)
Attest:
By: /s/ Norman C. Balliet
-------------------------------
Village Clerk
[SIGNATURE PAGES CONTINUED ON THE FOLLOWING PAGE.)
29
<PAGE> 33
[COUNTERPART SIGNATURE PAGE TO LOAN AGREEMENT]
STERIGENICS INTERNATIONAL
By /s/
----------------------------
Vice President
30
<PAGE> 34
EXHIBIT A
to
LOAN AGREEMENT
DESCRIPTION OF PROJECT
The Project consists of the acquisition of an approximately 11 acre
site at 1003 Lakeside Drive, Gurnee, Lake County, Illinois, and the acquisition,
construction and equipping of an approximately 78,000 square foot facility
thereon and the acquisition and installation of machinery, equipment and other
personal property to be used in connection therewith, to be owned and operated
initially by the Company for the sterilization of health care, laboratory,
pharmaceutical and packaging products.
<PAGE> 35
EXHIBIT B
to
LOAN AGREEMENT
PROMISSORY NOTE
STERIGENICS INTERNATIONAL
$7,750,000 April 19, 1996
SteriGenics International, a California corporation (the "Company"),
for value received, hereby promises to pay to the Village of Gurnee, Illinois
(the "Issuer"), or assigns, on April 1, 2016, the principal sum of Seven Million
Seven Hundred Fifty Thousand Dollars ($7,750,000), subject to prior payment,
with interest on the unpaid principal sum, from April 19, 1996, until said
principal sum shall be paid, and to the extent permitted by law, interest on
overdue installments of such interest, at the then interest rate provided in the
Bonds, as hereinafter defined. Interest shall be payable at the interest rates
payable on the Bonds, and the principal of, premium, if any, and interest on
this Note shall be payable at the times as set forth in more detail in the Loan
Agreement and the Indenture (as such terms are defined below).
Payments shall be made in lawful money of the United States of America
in immediately available funds on the date payment is due, at the principal
corporate trust office of Bank One, Columbus, N.A., as Paying Agent (the "Paying
Agent"), in Columbus, Ohio, or at such other place as the Trustee may direct in
writing.
Anything herein to the contrary notwithstanding, any amount held by
Bank One, Columbus, N.A., as trustee (the "Trustee"), in the Bond Fund referred
to in the Indenture, which is available to be used to pay the principal of,
premium, if any or interest on the Bonds, shall, at the request of the Company,
be credited against the next succeeding payment hereunder and shall reduce the
payment to be made by the Company, provided that at any time during which a
Credit Facility, as defined in the Indenture, is in effect, such amounts shall
be in Available Moneys, as defined in the Indenture, before such credit shall be
made. If the amount held by the Trustee in the Bond Fund should be sufficient to
pay at the times required the principal of, premium, if any, and interest on the
Bonds then remaining unpaid and to pay all fees and expenses of the Trustee, the
Issuer and the Paying Agent accrued and to accrue through final payment of the
Bonds (provided that at any time during which a Credit Facility is in effect
such amounts constitute Available Moneys), then the Company shall not be
obligated to make any further payments hereunder, except to the extent losses
may be incurred in connection with investment of moneys in the Bond Fund.
The Issuer, by the execution of the Indenture, as hereinafter defined,
and the assignment form attached to this Note, is assigning this Note and the
payments thereon to the Trustee acting pursuant to the Indenture of Trust dated
as of April 1996 (the "Indenture"), between the Issuer and the Trustee as
security for the Issuer's $7,750,000 in aggregate principal amount of the
Village of Gurnee, Illinois Industrial Development Revenue Bonds (SteriGenics
International Project), Series 1996 (the "Bonds"), as issued pursuant to the
Indenture. Payments of principal of, premium, if any, and interest on this Note
shall
<PAGE> 36
be made directly to the Trustee for the account of the Issuer pursuant to such
assignment and applied only to the principal of, premium, if any, and interest
on the Bonds. All obligations of the Company hereunder shall terminate when all
sums due and to become due pursuant to the Indenture, this Note, the Loan
Agreement, as hereinafter defined, and the Bonds have been paid.
In addition to the payments of principal, premium, if any, and interest
specified in the first paragraph hereof, the Company shall also pay such
additional amounts, if any, which, together with other moneys available therefor
pursuant to the Indenture, may be necessary to provide for payment when due
(whether at maturity, by acceleration or call for redemption, mandatory
purchase, purchase upon optional tenders, sinking fund redemption or otherwise)
of principal and purchase price of, premium, if any, and interest on the Bonds.
The Company shall have the option or may be required to prepay this
Note in whole or in part upon we terms and conditions and in the manner
specified in the Loan Agreement, dated as of April 1, 1996 (the "Loan
Agreement"), between the Issuer and the Company.
This Note is issued pursuant to the Loan Agreement in satisfaction of
the Company's payment obligation in Section 4.2(a) thereof and is entitled to
the benefits and subject to the conditions thereof, including the provisions of
Section 4.5 thereof that the Company's obligations thereunder and hereunder
shall be unconditional as provided in such Section 4.5. All the terms,
conditions and provisions of the Loan Agreement and the applicable provisions of
the Bonds and the Indenture are, by this reference thereto, incorporated herein
as a part of this Note, including, without limitation, the provisions of Section
8 of the loan Agreement entitled "Immunity of Directors, Officers and Employees
of Issuer."
In case an Event of Default, as defined in the Loan Agreement, shall
occur, the principal of, premium, if any, and interest on this Note may be
declared immediately due and payable as provided in the Loan Agreement. This
Note shall be governed by, and construed in accordance with, the laws of the
State of Illinois.
[SIGNATURE PAGE CONTINUED ON THE FOLLOWING PAGE]
<PAGE> 37
IN WITNESS WHEREOF the Company has caused this Note to be executed in
its corporate name by its duly authorized officer, all as of the date first
above written.
STERIGENCIS INTERNATIONAL
By: ____________________
Vice President
<PAGE> 38
ASSIGNMENT
The Village of Gurnee, Illinois (die "Issuer"), hereby irrevocably
assigns, without recourse, the foregoing Note to Bank One, Columbus, N.A., as
trustee (the "Trustee"), under the Indenture of Trust, dated as of April 1, 1996
(the "Indenture"), between the Issuer and the Trustee and hereby directs
SteriGenics International, a California corporation, as the maker of the Note to
make all payments of principal of, premium, if any, and interest thereon
directly to the Trustee at its principal corporate trust office in Columbus,
Ohio, or at such other place as the Trustee may direct in writing. Such
assignment is made as security for the payment of $7,750,000 in aggregate
principal amount of the issuer's Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996, issued pursuant to the
Indenture.
VILLAGE OF GURNEE, ILLINOIS
By:____________________
Village President
<PAGE> 1
EXHIBIT 10.42
Execution Copy
INDENTURE OF TRUST
BETWEEN
VILLAGE OF GURNEE, ILLINOIS
AND
BANK ONE, COLUMBUS, N.A.,
as Trustee
Dated as of
April 1, 1996
Relating to The Issuance of
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project)
Series 1996
This instrument has been entered into between the Village of Gurnee,
Illinois and Bank One, Columbus, N.A., as Trustee, in order to secure the
Village of Gurnee, Illinois Industrial Development Revenue Bonds (SteriGenics
International Project), Series 1996 issued in the original aggregate principal
amount of $7,750,000, as more fully described herein.
<PAGE> 2
INDENTURE OF TRUST
TABLE OF CONTENTS
(This Table of Contents is not a part of this Indenture of Trust and is
only for convenience of reference.)
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATIONS .................................................................................. 3
Section 1.01. Definitions .............................................................................. 3
Section 1.02. Interpretations .......................................................................... 11
ARTICLE II
AUTHORIZATION, TERMS, ISSUANCE OF BONDS .......................................................................... 14
Section 2.01. Authorized Amount of Bonds; Issuance ..................................................... 14
Section 2.02. Details of Bonds; Payment ................................................................ 14
Section 2.03. Interest Rate and Interest Payment Provisions ............................................ 15
Section 2.04. Failure to Compute Interest Rates; Ineffective Interest Rates ............................ 16
Section 2.05. Conversion of Interest Rate .............................................................. 16
Section 2.06. Issuance of the Bonds .................................................................... 19
Section 2.07. Authentication ........................................................................... 19
Section 2.08. Limited Obligation ....................................................................... 19
Section 2.09. Delivery of the Bonds .................................................................... 20
Section 2.10. Mutilated, Lost, Stolen, or Destroyed Bonds .............................................. 20
Section 2.11. Registration of Bonds; Persons Treated as Owners;
Transfer of Bonds ........................................................................ 20
Section 2.12. Cancellation of Bonds .................................................................... 21
Section 2.13. Temporary Bonds .......................................................................... 21
Section 2.14. Book-Entry System ........................................................................ 22
ARTICLE III
PURCHASE AND REMARKETING OF BONDS ................................................................................ 24
Section 3.01. Optional Demand Purchase; Mandatory Purchase ............................................. 24
Section 3.02. Source of Funds for Purchase of Bonds .................................................... 26
Section 3.03. Delivery of Bonds; Delivery of Proceeds of Sale;
Payments From Credit Facility ............................................................ 26
Section 3.04. Bonds Deemed Tendered for Purchase ....................................................... 27
Section 3.05. Remarketing of Tendered and Purchased Bonds .............................................. 27
Section 3.06. Limits of Remarketing .................................................................... 28
Section 3.17. Mandatory Tenders and Purchases in Accordance with Procedures
of Depository ............................................................................ 28
ARTICLE IV
REDEMPTION OF BONDS .............................................................................................. 29
Section 4.01. Optional Redemption ...................................................................... 29
Section 4.02. Sinking Fund Redemption .................................................................. 30
Section 4.03. Mandatory Redemption Upon Determination of Taxability .................................... 30
Section 4.04. Notice of Redemption ..................................................................... 31
Section 4.05. Selection of Bonds to be Redeemed ........................................................ 31
Section 4.06. No Partial Redemption After Default ...................................................... 32
Section 4.07. Payment of Redemption Price .............................................................. 32
Section 4.08. Redemption in Accordance with Procedures of Depository ................................... 32
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
GENERAL COVENANTS ................................................................................................ 33
Section 5.01. Payment of Principal and Interest, Pledge of Trust Estate;
Limited Liability ........................................................................ 33
Section 5.02. Performance of Covenants by Issuer; Authority; Due Execution ............................. 33
Section 5.03. Recording and Filing; Instruments of Further Assurance ................................... 33
Section 5.04. Recording and Filing; Further Instruments ................................................ 33
Section 5.05. No Disposition of Trust Estate ........................................................... 34
Section 5.06. Access to Books .......................................................................... 34
Section 5.07. Arbitrage and Tax Covenants .............................................................. 34
Section 5.08. Notification of Rating Agency ............................................................ 34
ARTICLE VI
DEPOSIT OF BOND PROCEEDS; FUNDS AND ACCOUNTS; CREDIT FACILITY .................................................... 35
Section 6.01. Creation of Funds ........................................................................ 35
Section 6.02. Deposit of Bond Proceeds ................................................................. 35
Section 6.03 Deposit of Receipts and Revenues ......................................................... 35
Section 6.04. [Intentionally Omitted] .................................................................. 35
Section 6.05. Rebate Fund .............................................................................. 36
Section 6.06. Bond Fund ................................................................................ 36
Section 6.07. Construction Fund ........................................................................ 36
Section 6.08. Payments from Construction Fund .......................................................... 37
Section 6.09. Items of Cost ............................................................................ 37
Section 6.10. Requisitions for Payment from Construction Fund .......................................... 38
Section 6.11. Establishment of Completion Date ......................................................... 39
Section 6.12. Balance in Construction Fund ............................................................. 39
Section 6.13. Credit Facility; Alternate Credit Facility; Confirmation
Letter; Substitute Confirmation Letter ................................................... 39
Section 6.14. Bonds not Presented for Payment .......................................................... 41
Section 6.15. Refunding of Bonds ....................................................................... 41
Section 6.16. Payment to the Company ................................................................... 41
Section 6.17. Bond Purchase Fund ....................................................................... 42
Section 6.18. Custody of Funds and Accounts ............................................................ 42
ARTICLE VII
DEFAULTS AND REMEDIES 43
Section 7.01. Events of Default ........................................................................ 43
Section 7.02. Remedies on Default ...................................................................... 43
Section 7.03. Credit Provider's or Owners' Right to Direct Proceedings ................................. 45
Section 7.04. Rights and Remedies of Owners ............................................................ 45
Section 7.05. Trustee May Enforce Rights Without Bonds ................................................. 45
Section 7.06. Delay or Omission No Waiver .............................................................. 46
Section 7.07. No Waiver of One Default to Affect Another ............................................... 46
Section 7.08. Discontinuance of Proceedings on Default;
Position of Parties Restored ............................................................. 46
Section 7.09. Waivers of Events of Default ............................................................. 46
Section 7.10. Application of Moneys .................................................................... 46
Section 7.11. Assignment to Credit Provider ............................................................ 48
Section 7.12. Recognition of Credit Provider or its Assignee as Company ................................ 48
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII
TRUSTEE; PAYING AGENT; REMARKETING AGENT ........................................................................ 49
Section 8.01. Acceptance of Trusts .................................................................... 49
Section 8.02. No Responsibility for Recitals .......................................................... 49
Section 8.03. Limitations on Liability ................................................................ 49
Section 8.04. Compensation, Expenses and Advances ..................................................... 49
Section 8.05. Notice of Events of Default and other Events or Facts ................................... 50
Section 8.06. Action by Trustee ....................................................................... 50
Section 8.07. Good-Faith Reliance ..................................................................... 50
Section 8.08. Dealings in Bonds and with Issuer ....................................................... 51
Section 8.09. Construction of Indenture ............................................................... 51
Section 8.10. Resignation of Trustee .................................................................. 51
Section 8.11. Removal of Trustee ...................................................................... 51
Section 8.12. Appointment of Successor Trustee ........................................................ 51
Section 8.13. Qualifications of Trustee ............................................................... 52
Section 8.14. Judicial Appointment of Successor Trustee ............................................... 52
Section 8.15. Acceptance of Trusts by Successor Trustee ............................................... 52
Section 8.16. Successor by Merger or Consolidation .................................................... 52
Section 8.17. Standard of Care ........................................................................ 53
Section 8.18. Intervention in Litigation of Issuer .................................................... 53
Section 8.19. Reliance on Certificate of Issuer ....................................................... 53
Section 8.20. Paying Agent ............................................................................ 53
Section 8.21. Qualifications of Paying Agent; Resignation; Removal .................................... 54
Section 8.22. Remarketing Agent ....................................................................... 54
Section 8.23. Qualifications of Remarketing Agent ..................................................... 55
Section 8.24. Several Capacities ...................................................................... 55
Section 8.25. Appointment of Co-Trustee ............................................................... 55
ARTICLE IX
EXECUTION OF INSTRUMENTS BY OWNERS
AND PROOF OF OWNERSHIP OF BONDS ................................................................................. 57
ARTICLE X
INVESTMENTS ..................................................................................................... 58
ARTICLE XII
DEFEASANCE ...................................................................................................... 59
ARTICLE XII
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF
THE LOAN AGREEMENT .............................................................................................. 61
Section 12.01. Supplemental Indentures Not Requiring Consent of Owners ................................. 61
Section 12.02. Supplemental Indentures Requiring Consent of Owners ..................................... 61
Section 12.03. Execution of Supplemental Indenture ..................................................... 62
Section 12.04. Amendments of the Loan Agreement Not Requiring
Consent of Owners ....................................................................... 62
Section 12.05. Amendments of the Loan Agreement Requiring Consent of Owners ............................ 62
Section 12.06. Modifications of Credit Facility ........................................................ 63
Section 12.07. Notice to Owners ........................................................................ 63
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE XIII
MISCELLANEOUS .................................................................................................. 64
Section 13.01. Covenants of Issuer .................................................................... 64
Section 13.02. Parties Interested Herein .............................................................. 64
Section 13.03. Titles, Headings, Captions, Etc. ....................................................... 64
Section 13.04. No Personal Liability of Issuer Officials .............................................. 64
Section 13.05. Bonds Owned by Issuer or Company ....................................................... 64
Section 13.06. Severability ........................................................................... 65
Section 13.07. Governing law .......................................................................... 65
Section 13.08. Execution in Counterparts .............................................................. 65
Section 13.09. Notices ................................................................................ 65
Section 13.10. Payments Due on Holidays ............................................................... 65
Section 13.11. Issuer, Company and Trustee Representatives ............................................ 65
</TABLE>
EXHIBIT A - FORM OF BOND
iv
<PAGE> 6
INDENTURE OF TRUST
This INDENTURE OF TRUST dated as of April 1, 1996 (together with any
amendments; hereto made in accordance herewith, this "Indenture"), by and
between the VILLAGE OF GURNEE, ILLINOIS (the "Issuer"), a municipal corporation
and a body politic and corporate duly created and validly existing under the
laws of the State of Illinois, and BANK ONE, COLUMBUS, N.A., as trustee (the
"Trustee"), having an office and principal place of business in Columbus, Ohio,
duly organized and existing under the laws of the United States of America,
being authorized to accept and execute trusts of the character herein set out
under and by virtue of the laws of the State of Illinois;
PREAMBLES
WHEREAS, the Issuer is a municipal corporation and a body politic and
corporate, duly organized and validly exiting under the laws of the State of
Illinois;
WHEREAS, pursuant to the provisions of The Industrial Project Revenue
Bond Act, 65 ILCS 5/11-74-1, et seq. , as supplemented and amended (the "Act"),
the Issuer has the power to issue its revenue bonds from time to time and lend
the proceeds thereof to a private corporation as provided in the Act for the
purpose of paying for all or any part of the cost of capital projects for use by
a manufacturing, industrial, research, transportation or commercial enterprise,
including a capital project such as the Project (as hereinafter defined)
authorized under the Act, and of all other costs incident to or necessary and
appropriate to achieve the foregoing;
WHEREAS, SteriGenics International, a California corporation qualified
to do business in the State of Illinois (the "Company"), has requested the
Issuer issue and sell a series of industrial development revenue bonds for the
purpose of financing the cost of (i) the acquisition of an approximately 11 acre
site at 1003 Lakeside Drive, Gurnee, Illinois, (ii) the acquisition,
construction and equipping of an approximately 78,000 square foot contract
radiation sterilization processing facility thereon and (iii) the acquisition
and installation of machinery, equipment and other personal property to be used
in connection therewith, to be used primarily for the sterilization of health
care, laboratory, pharmaceutical and packaging products (collectively, the
"Project");
WHEREAS, by resolution adopted pursuant to and in accordance with the
provisions of the Act, the Issuer has determined that the financing of the
Project, which constitutes an "industrial project" under the Act, is in the
public interest;
WHEREAS, the Issuer has authorized the issuance and sale of $7,750,000
in aggregate principal amount of the Village of Gurnee, Illinois Industrial
Development Revenue Bonds (SteriGenics International Project), Series 1996 (the
"Bonds"), the proceeds of which will be used to finance the cost of the Project;
WHEREAS, the Issuer has entered into a Loan Agreement, dated as of
April 1, 1996 (the "Loan Agreement", with the Company under the terms of which
the Issuer has agreed to loan the proceeds from the sale of the Bonds to the
Company and, in consideration thereof, the Company has agreed to pay or to cause
to be paid to the Issuer moneys sufficient to pay the principal of, purchase
price of, premium, if any, and interest on the Bonds as the same become due and
payable and to pay certain administrative expenses in connection with the Bonds;
WHEREAS, as security for the payment of the Bonds, the Issuer has
agreed to assign and pledge to the Trustee all right, title, and interest of the
Issuer in and to the Trust Estate (as hereinafter defined);
<PAGE> 7
WHEREAS, contemporaneously with the issuance of the Bonds, Comerica
Bank-California (the "Credit Provider") will issue its irrevocable, direct-pay
letter of credit (the "Credit Facility"), in favor of the Trustee for the
account of the Company, obligating the Credit Provider to pay to the Trustee, in
accordance with the terms thereof upon presentation of drafts and certificates
as required therein, certain amounts specified therein for payment of the
principal, purchase price of and interest on the Bonds;
WHEREAS in connection with the issuance of the Credit Facility,
Comerica Bank, a state banking corporation organized under the laws of the State
of Michigan (the "Confirming Bank"), will confirm the Credit Facility by issuing
its confirmation letter (the "Confirmation Letter") and will undertake to honor
conforming drawings under the Credit Facility to the extent that such drawings
are not honored by the credit Provider in accordance with the terms and
conditions of the Credit Facility;
WHEREAS, the Credit Provider and the Company have entered into the
Reimbursement Agreement dated as of April 1, 1996 (the "Reimbursement
Agreement"), under the terms of which the Company has agreed to reimburse the
Credit Provider for all amounts drawn by the Trustee under the Credit Facility,
together with interest on all such amounts, and to pay to the Credit Provider
certain fees and certain periodic charges and other amounts specified therein
for issuing the Credit Facility; and
WHEREAS, all things necessary to make the Bond, when authenticated by
the Trustee and issued and delivered as provided in this Indenture, the valid,
binding and legal obligations of the Issuer, and to create a valid assignment
and pledge of the securities, property, moneys and rights in order to secure the
payment of the principal, redemption premium, if any, and interest on the Bonds
and a valid assignment of certain of the rights, title and interest of the
Issuer in the Loan Agreement, have been done and performed, and the execution
and delivery of this Indenture and the execution, issuance and delivery of the
Bonds, subject to the terms hereof, have in all respects been authorized.
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSSETH:
That the Issuer, in consideration of the premises and the mutual
covenants herein contained and for the benefit of the owners of the Bonds and
the sum of $1.00 to it duly paid by the Trustee at or before the execution of
these presents, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, in order to secure the payment of the principal
of, premium, if any, and interest on all Bonds at any time outstanding under
this Indenture, according to their tenor and effect, and to secure the
performance and observance of all the covenants and conditions in the Bonds and
herein contained, and, on a subordinate basis, to secure the Company's
obligation to reimburse the Credit Provider amounts due and owing under the
Reimbursement Agreement, and to declare the terms and conditions on and subject
to which the Bonds are issued and secured, has executed and delivered this
Indenture and has granted, warranted, remised, released, conveyed, assigned,
pledged, set over and confirmed, and by these presents does grant, warrant,
remise, release, convey, assign, sell, set over and confirm unto Bank One,
Columbus, N.A., as the Trustee, and to its successors and assigns forever, all
and singular the following described property, franchises and income:
(a) All right, title and interest of the Issuer in and to the
Loan Agreement, including any right to delivery of the Credit Facility
and the Confirmation Letter, if any, the receipts and revenues of the
Issuer from the Loan Agreement, the Note, any right to bring actions
and proceedings under the Loan Agreement or the Note or for the
enforcement of the Loan Agreement and the Note and to do all things
that the Issuer is entitled to do under the Loan Agreement or the Note,
but excluding the Unassigned Rights (as hereinafter defined) and the
right to enforce the Unassigned Rights;
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(b) All moneys and securities from time to time held by the
Trustee under this Indenture in any fund or account other than the
Rebate Fund and any and all other personal property of every name and
nature from time to time hereafter by delivery or by writing of any
kind, pledged or hypothecated, as and for additional security
hereunder, by the Issuer, or by anyone on its behalf, in favor of the
Trustee, which is hereby authorized to receive any and all such
property at any and all times and to hold and apply the same subject to
the terms hereof.
TO HAVE AND TO HOLD the same with all privileges and appurtenances
hereby conveyed and assigned, or agreed or intended to be, to the Trustee and
its successors in said trust and assigns forever;
IN TRUST, NEVERTHELESS, on the terms herein set forth for the equal and
proportionate benefit, security and protection of all present and future owners
of the Bonds issued under and secured by this Indenture, without privilege,
priority or distinction as to the lien or otherwise of any of the Bonds over any
other of the Bonds and, subject to the prior interest of the holders of the
Bonds, for the benefit, security and protection of the Credit Provider to the
extent of amounts owned to the Credit Provider under the Reimbursement
Agreement;
PROVIDED, HOWEVER, that if the Issuer pays or causes to be paid the
principal of, premium, if any, and interest due and payable on all Outstanding
Bonds, pays or causes to be paid all other sums payable by the Issuer, including
all fees, expenses and other amounts payable to the Trustee, the Paying Agent,
the Credit Provider and the Remarketing Agent, then, and in that case, the
right, title and interest of the Trustee in and to the Trust Estate will then
cease, terminate and become void and this Indenture and the rights hereby
granted shall cease, determine and be void; otherwise this Indenture to be and
remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH and it is expressly declared, that
all Bonds issued and secured hereunder are to be issued, authenticated and
delivered and all said property, rights, interests, revenues and receipts hereby
pledged, assigned and mortgaged are to be dealt with and disposed of under, on
and subject to the terms, conditions, stipulations, covenants, agreements,
trusts, uses and purposes as hereinafter expressed, and the Issuer has agreed
and covenanted, and does hereby agree and covenant, with the Trustee for the
benefit of the Owners of the Bonds or any part thereof and the Credit Provider,
as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.01. DEFINITIONS. The terms defined in this Article I have the
meanings provided herein for all purposes of this Indenture, unless the context
or use clearly requires otherwise. All capitalized, undefined terms used herein
have the meanings ascribed to them in the Loan Agreement.
"ACT" means The Industrial Project Revenue Bond Act, 65 ILCS 5/11-74-1,
et. seq., as supplemented and amended.
"ALTERNATE CREDIT FACILITY" means an instrument, such as an irrevocable
letter of credit or guarantee by a financial institution or insurance company,
delivered to the Trustee pursuant to Section 6.13 to replace the Credit Facility
then in effect, which provides for the payment of the principal of, interest on
and Purchase Price of Bonds, is issued for a term of not less than one year and
is for the Coverage Amount.
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"ALTERNATE RATE " means the alternate interest rate set forth in
Section 2.05(d).
"AUTHORIZED DENOMINATION" means, (i) with respect to any Bond bearing
interest at a Variable Rate $100,000 or any integral multiple of $5,000 in
excess thereof, (ii) with respect to any Bond bearing interest at a Term Rate
during a Term Rate Period that does not extend to the maturity of the Bonds,
$100,000 or any integral multiple of $5,000 in excess thereof, and (iii) with
respect to any Bond bearing interest at a Term Rate during a Term Rate Period
that extends to the maturity of the Bonds, $5,000 or any integral multiple
thereof
"AVAILABLE MONEYS" means (a) during any period the Credit Facility is
in effect, moneys which are continuously on deposit with the Trustee, the Paying
Agent or the Remarketing Agent in trust for the benefit of the Owners in a
separate and segregated account in which only Available Moneys are held and
which constitute (i) proceeds of the Bonds received contemporaneously with the
initial issuance and sale of the Bonds, (ii) other moneys held in any fund
created under the Indenture that has been continuously on deposit in trust with
the Trustee, the Paying Agent or the Remarketing Agent for the benefit of the
Owners for a period of 366 consecutive days during and prior to which no
petition in bankruptcy under the United States Bankruptcy Code has been filed by
or against the Company or the Issuer and any guarantor of the Company and no
similar proceedings have been instituted under State insolvency or other laws
affecting creditors' rights generally, (iii) funds for which the Trustee has
received a written opinion of counsel nationally recognized in bankruptcy
matters and acceptable to the Trustee to the effect that payment of such moneys
to the Owners would not constitute an avoidable preference under Section 547 of
the United States Bankruptcy Code which is recoverable from the Owners under
Section 550 of the United States Bankruptcy Code or under applicable State law
if the Issuer or the Company or any guarantor of the Company were to become a
debtor under the United States Bankruptcy Code or under applicable State law,
(iv) a drawing under the Credit Facility or the Confirmation Letter, if
applicable, or payments otherwise made under an Alternate Credit Facility, or
(v) the investment of funds qualifying as Available Moneys under the foregoing
clauses and (b) during any period the Credit Facility is not in effect, any
moneys held by the Trustee in any fund or account under this Indenture and
available, pursuant to the provisions hereof, to be used to pay the principal
of, premium, if any, or interest on, or the purchase price of, the Bonds.
"BENEFICIAL OWNER" shall have the meaning set forth in Section 2.14.
"BOND COUNSEL" means Chapman & Cutler, Chicago, Illinois or any firm of
nationally recognized bond counsel familiar with the transactions contemplated
under this Indenture which firm is appointed by the Company, and acceptable to
the Issuer, the Trustee, the Remarketing Agent and the Credit Provider.
"BOND DOCUMENTS" means this Indenture, the Bonds, the Loan Agreement,
the Note, and the Placement and Remarketing Agreement.
"BOND FUND" means the trust fund by that name established pursuant to
Section 6.0%.
"BOND PAYMENT DATE" means any Interest Payment Date and any other date
on which the principal of or interest on the Bonds is to be paid to the Owners
thereof, whether on redemption, at maturity or on acceleration of maturity of
the Bonds.
"BOND PURCHASE FUND" means the trust fund by that name established
pursuant to Section 6.01.
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"BONDS" means $7,750,000 in aggregate principal amount of the Village
of Gurnee, Illinois Industrial Development Revenue Bonds (SteriGenics
International Project), Series 1996, issued pursuant to this Indenture.
"BOOK-ENTRY FORM" or "Book-Entry System" means a form or system, as
applicable, under which (i) the Ownership of beneficial interests in the Bonds
may be transferred only through a book entry and (ii) physical bond certificates
in fully registered form are registered only in the name of a Depository or its
nominee as holder, with the physical bond certificates "immobilized" in the
custody of the Depository.
"BUSINESS DAY" means any day other than (i) a day on which banking
institutions in New York, New York or the cities in which the Trustee, the
Paying Agent, the Remarketing Agent, the Credit provider or the Confirming Bank
have their respective principal offices are authorized to close or (ii) a day on
which the New York Stock Exchange is closed.
"CLOSING DATE" means the date of delivery of the Bonds to the initial
purchaser or purchasers thereof in accordance with this Indenture.
"CODE" means the Internal Revenue Code of 1986, as amended. Each
reference to a section of the Code herein will be deemed to include the United
States Treasury Regulations proposed or in effect with respect thereto and
applicable to the Bonds or the use of the proceeds thereof.
"COMPANY" means SteriGenics International, a California corporation, or
any successor or successors to the Company's obligations under the Loan
Agreement as permitted by Section 5.3 of the Loan Agreement
"COMPANY REPRESENTATIVE" means a person at the time designated to act
on behalf of the Company by a written instrument furnished to the Trustee
containing the specimen signature of such person and signed on behalf of the
Company by its President, any Vice President or the Chairman of the Company's
Board of Directors, or in the case of a Person other than a corporation, the
person or persons having comparable positions or roles. The certificate may
designate an alternate or alternates.
"CONFIRMATION LETTER" means the confirmation of the Credit Facility by
the Confirming Bank as evidenced by the Confirmation Letter dated April 19,
1996, pursuant to which the Confirming Bank will undertake to honor conforming
drawings under the Credit Facility to the extent that such drawings are not
honored by the Credit Provider in accordance with the terms and conditions of
the Credit Facility and any extensions, amendments or supplements thereto, and
any Substitute Confirmation Letter in effect from time to time as provided in
this Indenture and any extensions, amendments, or supplements thereto.
"CONFIRMING BANK" means Comerica Bank, a state banking corporation
organized under the laws of the State of Michigan, and its successors and
assigns and, if a Substitute Confirmation Letter is issued, the issuer thereof.
"CONSTRUCTION FUND" means the trust fund by that name established
pursuant to Section 6.01.
"CONVERSION " means the conversion of the interest rate on the Bonds
from one interest rate mode to another interest rate mode in accordance with the
provisions hereof.
"CONVERSION DATE" means the Interest Payment Date which is the
effective date of any Conversion.
"COST OF ISSUANCE FUND" means the trust fund by that name created
pursuant to Section 6.01.
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"COSTS OF ISSUANCE" means all fees, costs and expenses payable or
reimbursable directly or indirectly by the Company and related to the
authorization, issuance, sale and delivery of the Bonds.
"COUNSEL" means an attorney, or firm thereof, admitted to practice law
before the highest court of any state in the United States of America or the
District of Columbia.
"COVERAGE AMOUNT" means, as of any given date, an amount equal to the
principal amount of Bonds Outstanding plus (i) during any Variable Rate Period,
50 days' interest on the Bonds, computed at a rate per year equal to the Maximum
Rate and on the basis of the actual number of days elapsed during a 365 day year
or a 366 day year, as applicable, or (ii) during any Term Rate Period, 204 days'
interest on the Bonds (or, if the Term Rate Period to be established will
consist of fewer than 6 months, the number of days' interest on the Bonds
obtained by adding 20 days to the number of days in such Term Rate Period)
computed at a rate per annum equal to the rate on the Bonds to be in effect
during such Term Rate Period (but not exceeding the Maximum Rate) and on the
basis of a 360 day year of twelve 30 day months.
"CREDIT EXPIRATION DATE" means, during any Variable Rate Period and any
Term Rate Period, the date which is 15 calendar days before the Credit Facility
or the Confirmation Letter, if applicable and then in effect, is to terminate,
including any extension of such date, without provision being made at least 60
days prior to such termination date in accordance with Section 6.13 for the
delivery of an Alternate Credit Facility or Substitute Confirmation Letter, as
applicable, which does not result in the ratings, if any, then in effect on the
Bonds being reduced or withdrawn, but not including any early termination
because of the occurrence of any event of default thereunder.
"CREDIT FACILITY" means, initially, the Letter of Credit dated April
19, 1996 issued by the Credit Provider to the Trustee on behalf of the Company,
and all extensions, amendments and supplements thereto, or if an Alternate
Credit Facility is delivered pursuant to Section 6.13, such Alternate Credit
Facility and all extensions, amendments and supplements thereto. All references
to "Credit Facility" shall be of no effect at any time that no Credit Facility
secures the Bonds, except with respect to the rights of any Credit Provider
created under this Indenture which do not, by their terms, expire upon the
expiration or termination of the Credit Facility issued by such Credit Provider.
"CREDIT PROVIDER" means Comerica Bank-California, in its capacity as
the issuer of the Credit Facility, and its successors in such capacity and their
assigns, and if an Alternate Credit Facility is issued, the issuer thereof. All
references to "Credit Provider' shall be of no effect at any time that no Credit
Facility secures the Bonds, except with respect to the rights of any Credit
Provider created under this Indenture which do not, by their terms, expire upon
the expiration or termination of the Credit Facility issued by such Credit
Provider.
"CREDIT PROVIDER BONDS" means any Bonds purchased pursuant to Section
3.03(c) or (d) by the Credit Provider which are purchased with the proceeds of a
draw on the Credit Facility or the Confirmation Letter, if applicable, and are
held for the benefit of the Credit Provider in the name of the Credit Provider
as provided in the Reimbursement Agreement until such time as such purchased
bonds are released from the security interest created by the Reimbursement
Agreement in accordance with the provisions thereof.
"CREDIT PROVIDER RATE" means the rate borne by the Credit Provider
Bonds, as set forth in the Reimbursement Agreement.
"DEFAULT" and "Event of Default" mean any occurrence or event specified
in Section 7.01.
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"DEPOSITORY" means any securities depository that is a "clearing
corporation' within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, operating and maintaining, with its
participants of or otherwise, a Book-Entry System to record ownership of
beneficial interests in municipal bonds, and to effect transfers of municipal
bonds, in Book-Entry Form, and includes and means initially DTC.
"DETERMINATION OF TAXABILITY" means a final determination by the
Internal Revenue Service or a court of competent jurisdiction that the interest
paid or to be paid on any Bond (except to a "substantial user" of the Project or
a "related person" within the meaning of Section 147(a) of the Code) is or was
includable in the gross income of the Bond's Owner for federal income tax
purposes.
"DTC" means The Depository Trust Company, New York, New York and its
successors.
"FEDERAL SECURITIES" means (a) direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged; (b) obligations issued by any agency controlled or
supervised by and acting as an instrumentality of the United States of America,
the payment of the principal of and interest on which is fully guaranteed as
full faith and credit obligations of the United States of America (including any
securities described in (a) or (b) issued or held in the name of the Trustee in
book entry form on the books of the Department of Treasury of the United States
of America), which obligations, in either case, are held in the name of the
Trustee and are not subject to redemption or purchase prior to maturity at the
option of anyone other than the holder; (c) any bonds or other obligations of
any state of the United States of America or of any agency, instrumentality or
local governmental unit of any such state which are (i) not callable prior to
maturity or (ii) as to which irrevocable instructions have been given to the
trustee or escrow agent of such bonds or other obligations by the obligor to
give due notice of redemption and to call such bonds for redemption on the date
or dates specified, and which are rated by Moody's, if the Bonds are rated by
Moody's, and S&P, if the Bonds are rated by S&P with a rating equal to or
greater than the then current rating on the Bonds and which are secured as to
principal, redemption premium, if any, and interest by a fund consisting only of
cash or bonds or other obligations of the character described in clause (a)
hereof which fund may be applied only to the payment of such principal of and
interest and redemption premium, if any, on such bonds or other obligations on
the maturity date or dates thereof or the specified redemption date or dates
pursuant to such irrevocable instructions, as appropriate; or (d) direct
evidences of ownership of proportionate interests in future interest and
principal payments that are part of the United States Treasury program on
specified obligations described in (a) held by a bank or trust company as
custodian, under which the owner of the investment is the real party in interest
and has the right to proceed directly and individually against the obligor on
the underlying obligations described in (a), and which underlying obligations
are not available to satisfy any claim of the custodian or any person claiming
through the custodian or to whom the custodian may be obligated.
"INDENTURE" means this Indenture of Trust dated as of April 1, 1996
between the Issuer and the Trustee, as amended or supplemented in accordance
with the terms hereof from time to time.
"INTEREST ACCOUNT" means the trust account by that name established in
the Bond Fund pursuant to Section 6.01.
"INTEREST PAYMENT DATE " means (i) for all Variable Rate Bonds, the
first Wednesday (or if not a Business Day, the next succeeding Business Day) of
each calendar month; (ii) for Term Rate Bonds with a Term Rate Period of six
months or fewer, the calendar day after the last day of each Term Rate Period;
and (iii) for Term Rate Bonds with a Term Rate Period of greater than six
months, the first calendar day of the month that is the sixth month after the
month in which such Term Rate Period begins and each sixth
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<PAGE> 13
month anniversary of such first calendar day described above and the calendar
day after the last day of the month Term Rate Period; (iv) for any Term Rate
Period that extends to the maturity of the Bonds, May 1 and November 1 of each
year and (v) for all Bonds, any mandatory purchase date pursuant to Sections
3.01(b) or (c).
"INTEREST PERIOD" means (i) initially, that period beginning on the
date of issuance of the Bonds through and including April 23, 1996, and (ii)
thereafter, (A) with respect to each Variable Rate Bond, the Variable Rate
Period applicable thereto or (B) with respect to each Term Rate Bond, that
period beginning on an Interest Payment Date or a Conversion Date through and
including the date preceding the next Interest Payment Date.
"ISSUER" means the Village of Gurnee, Illinois, a municipal corporation
and a body politic and corporate created under the laws of the State, and any
successor to its functions.
"ISSUER REPRESENTATIVE" means any of the following: (i) the President
or Vice President of the Board of Trustees of the Issuer; (ii) the Clerk or any
Assistant Clerk of the Issuer; or (iii) any other person or persons at the time
designed to act on behalf of the Issuer for purposes of performing any act on
behalf of the Issuer under the Loan Agreement or this Indenture by a written
certificate furnished to the Company and the Trustee containing the specimen
signature of such person or persons and signed on behalf of the Issuer by the
President or Vice President of the Board of Trustees of the Issuer.
"LOAN AGREEMENT" means the Loan Agreement dated as of April 1, 1996,
between do: Issuer and the company, and any permitted amendments or supplements
thereto.
"LOAN AGREEMENT EXPIRATION DATE" means the effective date of
termination of the Loan Agreement whether at maturity, upon prepayment pursuant
to Article VII of the Loan Agreement or upon defeasance of all of the Bonds
pursuant to Article XI hereof.
"MAIL" means United States mail, by first-class postage.
"MAXIMUM RATE" means the lesser of 12.00% per annum or the maximum
interest rate applicable to the Bonds permitted by the laws of the State.
"MIDPOINT DATE" means, with respect to any Term Rate Period, the first
Interest Payment Date which is at least one-half of the number of days into such
Term Rate Period.
"MOODY'S" means Moody's Investors Service, a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, and, if such corporation for any reason no longer performs the
functions of a securities rating agency, "Moody's" will be deemed to refer to
any nationally recognized rating agency other than S&P designated by the Company
with the approval of the Credit Provider.
"NET PROCEEDS" means, with respect to any condemnation award or
insurance proceeds allocable to the Project (including, without limitation,
title insurance), the gross proceeds from a condemnation award or insurance
proceeds (including, without limitation, the proceeds of title insurance) so
allocable, remaining after the payment of all expenses (including attorneys'
fees and expenses) incurred in the collection of such proceeds.
"OPINION OF COUNSEL" means an opinion in writing of legal Counsel, who
may be counsel to the Trustee, the Company, the Paying Agent, the Remarketing
Agent, the Credit Provider or the Issuer.
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<PAGE> 14
"OUTSTANDING" or "BONDS OUTSTANDING" means all Bonds which have been
issued under this Indentures except:
(a) Bonds canceled or which have been surrendered to the
Trustee for cancellation;
(b) Bonds in lieu of which other Bonds have been authenticated
under Section 2.10 or 2.11;
(c) Bonds which have been redeemed as provided in Article IV
(including Bonds redeemed on a partial payment as provided in Section
4.05); and
(d) Bonds which are deemed to have been paid under Article X1.
"OWNER" means any person in whose name any Bond is registered on the
books maintained by the Paying Agent, as registrar.
"PAYING AGENT" means the Trustee or any other or additional paying
agent designated pursuant to Section 8.21.
"PERMITTED INVESTMENTS" means (i) Federal Securities; (ii) obligations
of the Federal Land Bank; (iii) obligations of the Federal Home Loan Bank; (iv)
obligations of the Federal Intermediate Credit Bank; (v) obligations of the
Central Bank for Cooperatives; (vi) certificates of deposit of national or state
banks located within the State which have deposits insured by the Federal
Deposit Insurance Corporation (including the certificates of deposit of any bank
acting as a depository, custodian or trustee for any proceeds of the Bonds);
provided however, that the portion of such certificates of deposit in excess of
the amount insured by the Federal Deposit Insurance Corporation, if any, shall
be secured by deposit with the Federal Reserve Bank of Charlotte, North
Carolina, or with any national or state bank located within the State, of any of
the obligations included in (i), (ii), (iii), (iv) or (v) above; (vii) any bonds
or other obligations of any state of the United States or of any agency,
instrumentality or local governmental unit of such state which are rated "A" or
better by Moody's, if the Bonds are rated by Moody's, and S&P, if the Bonds are
rated by S&P; (viii) shares of a tax exempt money market fund which is
restricted by its terms to investment in obligations which and which carry the
highest short-term rating of Moody's, if the Bonds are rated by Moody's, and
S&P, if the Bonds are rated by S&P; and (ix) money market funds, the assets of
which are obligations of or guaranteed by the United States of America or
repurchase agreement secured by such obligations and which funds are rated "AM'
or "AM-G" or higher by S&P at the time of purchase; provided, however, that each
of the investments listed in (i) through (viii) above must be permitted by the
laws of the State.
"PERSON" or "PERSON" means natural persons, firms, associations,
corporations and public bodies.
"PLACEMENT AGENT" means Wheat, First Securities, Inc.
"PLACEMENT AND REMARKETING AGREEMENT" means the Placement and
Remarketing Agreement dated as of April 1, 1996, among the Placement Agent, the
Remarketing Agent, the Company and the Issuer, as amended or supplemented from
time to time.
"PRINCIPAL ACCOUNT" means the trust account by that name established in
the Bond Fund pursuant to Section 6.01.
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<PAGE> 15
"PROJECT" means (i) the acquisition of an approximately 1 1 acre site at 1003
Lakeside Drive, Gurnee, Illinois, (ii) the acquisition, construction and
equipping of an approximately 78,000 square foot contract radiation
sterilization processing facility thereon and (iii) the acquisition and
installation of machinery, equipment and other personal property to be used in
connection therewith, to be used primarily for the sterilization of health care,
laboratory, pharmaceutical and packaging products.
"PROJECT CERTIFICATE" means the Certificate Re: Use of Proceeds of
Bonds and the Project of the Company dated the date of the initial issuance and
delivery of the Bonds.
"PURCHASE DATE" means, (i) for a Variable Rate Bonds, the Business Day
as set forth in Section 3.01(a) and (ii) for all Bonds, any Business Day on
which Bonds are subject to mandatory purchase pursuant to Section 3.01(b) or
(c).
"PURCHASE PRICE" means an amount equal to the aggregate principal
amount of Bonds tendered for purchase plus, if the Purchase Date is not an
Interest Payment Date, accrued interest to the Purchase Date.
"REBATE DEPOSIT" means the amount required to be deposited into the
Rebate Fund as a result of the computation made pursuant to the Tax Regulatory
Agreement.
"REBATE FUND" means the trust fund by that name established pursuant to
the Tax Regulatory Agreement.
"RECORD DATE" means, (i) while the Bonds bear interest at a Variable
Rate, the Business Day preceding each Interest Payment Date applicable to such
Bond and (ii) while the Bonds bear interest at a Term Rate, the 15th calendar
day (whether or not a Business Day) of the month immediately preceding such
Interest Payment Date.
"REGISTRAR" means the entity from time to time serving as Paying Agent
under this Indenture.
"REIMBURSEMENT AGREEMENT" means the agreement between the Company and
the Credit Provider pursuant to which the Credit Facility is issued by the
Credit Provider and delivered to the Trustee, and any and all modifications,
alterations, amendments and supplements thereto, and initially the Reimbursement
Agreement dated as of April 1, 1996 between the Company and the Credit Provider,
as amended, supplemented or modified from time to time.
"REMARKETING AGENT" means the Remarketing Agent appointed in accordance
with Section 8.22, initially Wheat, First Securities, Inc.
"REMARKETING PROCEEDS" means proceeds of the remarketing of Bonds
tendered or deemed tendered for purchase pursuant to Section 3.01 other than to
the Issuer or the Company or any guarantor of the Company.
"S&P" means Standard & Poor's, a Division of The McGraw Hill Companies,
Inc., a corporation organized and existing under the laws of the State of New
York, its successors and their assigns, and, if such corporation for any reason
no longer performs the function of a securities rating agency, "S&P" will be
deemed to refer to any nationally recognized securities rating agency other than
Moody's designated by the Company with the approval of the Credit Provider.
"STATE" means the State of Illinois.
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<PAGE> 16
"SUBSTITUTE CONFIRMATION LETTER" means any subsequent Confirmation
Letter delivered to the Trustee from time to time to replace the Confirmation
Letter then in effect, and any amendments, extensions or supplements thereto.
"TERM RATE" means a fixed, nonvariable rate of interest on the Bonds
established in accordance with Section 2.03(b)(ii).
"TERM RATE BONDS" means Bonds bearing interest at a Term Rate.
"TERM RATE COMMISSION DATE" means the effective date of a Term Rate
established in accordance with the terms of Section 2.03(b)(ii).
"TERM RATE PERIOD" means the period during which the Bonds bear
interest at the Term Rate.
"TRUSTEE" means Bank One, Columbus, N.A., a national banking
association, organized and existing pursuant to the laws of the United States,
as trustee, and any successor trustee at the time serving as such hereunder.
"TRUSTEE REPRESENTATIVE" means the person or persons at the time
designated to act on behalf of the Trustee for purposes of performing any act on
behalf of the Trustee under the Indenture by a written certificate furnished to
the Company and the Issuer containing the specimen signature of such person or
persons and signed on behalf of the Trustee by any duly authorized officer of
the Trustee.
"TRUST ESTATE" means all property and rights conveyed by the Issuer
under the Granting Clauses of this Indenture.
"UNASSIGNED RIGHTS" means the rights of the Issuer under Section 4.4
(relating to the payment of administrative fees and expenses), Section 5.2
(relating to indemnification), Section 6.4 (relating to the payment of counsel
fees and expenses) and Section 8.13 (relating to the right to amend the Loan
Agreement) of the Loan Agreement and the rights of the Issuer to receive
documentation and notices, to give or withhold consents in connection with this
Indenture and the Loan Agreement and the right to enforce any of the foregoing.
"VARIABLE RATE BONDS" means Bonds bearing interest at the Variable
Rate.
"VARIABLE RATE" means the interest determined in accordance with
Section 2.03(b)(i).
"VARIABLE RATE PERIOD" means the period beginning on, and including any
Wednesday (or, if not a Business Day, on the next succeeding Business Day) and
ending on, and including, the then next Tuesday (or the day immediately
preceding the first day of the next Variable Rate Period), except that in the
event of Conversion to Variable Rate Bonds, the first "Variable Rate Period"
means the period beginning on the Conversion Date and ending on, and including,
the second succeeding Tuesday (or the day immediately preceding the first day of
the next Variable Rate Period) unless the Conversion Date is a Tuesday or
Wednesday, in which case it will end on and include the first succeeding
Tuesday.
Section 1.02. INTERPRETATIONS. For purposes of this Indenture:
(a) SUCCESSORS. References to specific persons, positions or
officers include those who or which succeed to or perform their
respective functions, duties or responsibilities.
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<PAGE> 17
(b) LAWS. References to the Code, or to the laws or Constitution of the
State, or rules or regulations thereunder, or to a section, division, paragraph
or other provision thereof, include those laws and rules and regulations, and
that section, division, paragraph or other provision thereof as from time to
time amended, modified, supplemented, revised or superseded, provided that no
such amendment, modification, supplementation, revision or suppression shall be
applied (i) to alter the obligation to pay the principal, premium, if any, or
interest due and owing on the Bonds Outstanding in the amount and manner, at the
times, and from the sources provided in this Indenture or (ii) to alter the
times at which or amounts in which the Trustee is to receive payments in respect
of the Credit Facility, except as otherwise herein permitted.
(c) SINGULAR/PLURAL. Unless the context otherwise indicates, words
importing the singular number include the plural number and words importing the
plural number include the singular number.
(d) COMPUTATIONS. Unless otherwise provided in this Indenture or the
facts are then otherwise, all computations required for the purposes of this
Indenture shall be made on the assumptions that: (i) all payments required to be
made by or on behalf of the Company under the Loan Agreement shall be paid as
and when the same become due; and (ii) all credits required by this Indenture to
be made to any fund or account shall be made in the amounts and at the times
required.
(e) EXCLUSION OF BONDS HELD BY OR FOR THE COMPANY OR THE ISSUER. In
determining whether the registered owners of the requisite principal amount of
Bonds Outstanding have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Bonds owned by the Company and the Issuer
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Bonds
which the Trustee knows to be so owned shall be disregarded.
(f) BONDS AND OPINIONS. Except as otherwise specifically provided in
this Indenture, each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture includes an identification
of any certificates or opinions relied on in such certificate or opinion, and a
statement: (i) that the person making the certificate or opinion has read the
covenant or condition and the definitions herein relating thereto; (ii) as to
the nature and scope of the examination or investigation upon which the
statements or opinions contained in the certificate or opinion are based; (iii)
that in the opinion of such person, he or she has made such examination and
investigation as is necessary to enable him or her to express an informed
opinion as to whether the covenant or condition has been complied with; and (iv)
as to whether, in the opinion of such person, the condition or covenant has been
complied with.
(g) COUNSEL OPINIONS. Any Opinion of Counsel may be qualified by
reference to the constitutional powers of the United States of America and the
State, the police and sovereign powers of the State, judicial discretion, and
bankruptcy, insolvency, reorganization moratorium and other laws affecting
creditors' rights and similar matters.
(h) CONSOLIDATED CERTIFICATIONS, OPINIONS AND INSTRUMENTS. When several
matters are required to be certified by, or covered by an opinion of, any
specified person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such person, or that they be so certified or
covered by only one document, but one such person may certify or give an opinion
with respect to some matters and one or more other such persons as to other
matters, and any such person may certify or give an opinion as to such matters
in one or several documents. When any person is required to make, give or
execute two or more applications,
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requests, consents, certificates, statements, opinions or other instruments
under this Indenture, such instruments may, but need not, be consolidated and
form one instrument.
(i) OPINIONS AND CERTIFICATIONS OF THE COMPANY AND THE ISSUER. Any
certificate or opinion of an officer of the Company or the Issuer may be based,
insofar as it relates to legal matters, on a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate or opinion may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Issuer or the Company stating that the
information with respect to such factual matters is in the possession of the
Company or the Issuer, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such factual matters are erroneous.
(j) REFERENCES TO INDENTURE. The terms "herein," "hereunder," "hereby,"
"hereto, "hereof' and any similar terms refer to this Indenture as a whole and
not to any particular article, section or subdivision hereof; and the term
"heretofore" means before the date of execution of this Indenture, the term
"now" means at the date of execution of this Indenture, and the term "hereafter"
means after the date of execution of this Indenture.
(k) SECTION AND ARTICLE REFERENCES. References in this Indenture to
Section or Article numbers, without added references to other documents, are to
the indicated Sections or Articles in this Indenture.
(1) Gender. Words of the masculine gender include correlative words of
the feminine and neuter genders.
(m) CAPTIONS. The captions or headings of this Indenture and the table
of contents appended to copies hereof are for convenience only and in no way
define, limit or describe the scope or intent of any provisions, articles or
sections of this Indenture.
(n) CONSENT. If one person becomes the registered owner of all of the
Outstanding Bonds and this Indenture requires the consent of the Trustee for a
particular purpose, then the consent of that person will be required in lieu of
the consent of the Trustee for that purpose.
(o) REMEDIES. Nothing expressed or implied in this Indenture is
intended or shall be construed to confer on or to give any Person, other than
the Company, the Trustee, the Paying Agent, the Remarketing Agent, the Issuer,
the Credit Provider, the Confirming Bank, if any, and the Owners, any right,
remedy or claim under or by reason of this Indenture or any covenant, agreement,
condition or stipulation hereof.
[End of Article I]
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ARTICLE II
AUTHORIZATION, TERMS, ISSUANCE OF BONDS
Section 2.01. AUTHORIZED AMOUNT OF BONDS; ISSUANCE. No Bonds
may be issued hereunder except in accordance with this Article II. There is
hereby created for issuance under this Indenture an issue of bonds limited in
aggregate principal amount to $7,750,000, and designated "Village of Gurnee,
Illinois Industrial Development Revenue Bonds (SteriGenics International
Project), Series 1996." The aggregate principal amount of Bonds that may be
issued shall be $7,750,000.
The Bonds shall be delivered in fully registered form without coupons
in Authorized Denominations only, in substantially the form as provided in
Exhibit A to this Indenture. The Bonds will be lettered "R-," and will be
numbered separately from 1 consecutively upward. The Bonds shall mature (subject
to the right to purchase and of prior redemption as hereinafter set forth) on
May 1, 2016.
Section 2.02. DETAILS OF BONDS; PAYMENT.
(a) The Bonds will initially all be (dated their date of
initial authentication and delivery, and Bonds issued in exchange for
or on the registration of transfer of Bonds will be dated as of the
Interest Payment Date preceding the day of authentication thereof,
unless the date of such authentication is an Interest Payment Date to
which interest on the Bonds has been paid in full or duly provided for
in accordance with the terms of this Indenture, in which case they will
be dated as of such Interest Payment Date; except that if, as shown by
the records of the Paying Agent, interest on the Bonds is in default,
Bonds issued in exchange for or upon registration of transfer of Bonds
will be dated as of the date to which interest on the Bonds has been
paid in full. If no interest has been paid on the Bonds, Bonds issued
in exchange for or upon the registration or transfer of Bonds will be
dated the date of initial authentication and delivery thereof.
(b) Principal of and premium, if any, on the Bonds will be
payable in lawful currency of the United States at the principal office
of the Paying Agent. Payment of the principal of and premium, if any,
on the Bonds will be made on the presentation and surrender of such
Bonds as the same become due and payable. Payment of the interest on
each Bond will be made by the Paying Agent on each Interest Payment
Date to the person appearing as the Owner thereof as of the close of
business on the Record Date preceding the Interest Payment Date, by
check mailed to such Owner at his address as it appears on the
registration books maintained by the Registrar or at such other address
as is furnished in writing by such Owner to the Registrar; provided,
however, if the Bonds are registered in the name of a Depository or its
nominee as registered owner, payment will be made by wire transfer
pursuant to the wire instruction received by the Paying Agent from such
registered owner.
(c) Notwithstanding anything provided above, (i) payment of
interest on the Bonds may (except as otherwise provided for Credit
Provider Bonds), at the option of any Owner of Bonds in an aggregate
principal amount of at least $1,000,000, be transmitted by wire
transfer to such Owner, on written request therefor delivered to the
Paying Agent, to the bank account number on file with the Registrar as
of the relevant Record Date and (ii) all payments of principal or
redemption price of and interest on Credit Provider Bonds will be by
wire transfer in immediately available funds; provided, however, if the
Bonds are registered in the name of a Depository or its nominee as
registered owner, payment will be made by wire transfer pursuant to the
wire instruction received by the Paying Agent from such registered
owner.
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Section 2.03. INTEREST RATE AND INTEREST PAYMENT PROVISIONS.
(a) General. Each Bond will evidence the right to receive
interest, at a Variable Rate, determined from time to time, or at a
Term Rate, determined from time to time, from and including the date of
such Bond until conversion to a Variable Rate or a successive Term Rate
or until payment of the principal or redemption price thereof has been
made or provided for in accordance with the provisions of this
Indenture, whether at maturity, on redemption or otherwise. Interest
for each Interest Period will be paid on the next succeeding Interest
Payment Date, and (i) while the Bonds pay interest at a Variable Rate,
will be computed on the basis of a year of 365 or 366 days, as
appropriate, for the actual number of days elapsed, and (ii) while the
Bonds pay interest at the Term Rate, computed on the basis of a year of
360 days and twelve 30-day months, provided that while any Bonds pay
interest at the Credit Provider Rate, interest on such Bonds will be
payable on the dates and will be calculated on the basis provided in
the Reimbursement Agreement. In no event will interest attributable to
any Bond accrue at a rate greater than the Maximum Rate. The Trustee
will calculate the amount of interest to be paid on each Interest
Payment Date, and will confirm the amount in writing with the Paying
Agent.
Initially, the Bonds will bear interest at the Variable Rate,
determined by the Placement Agent on the issuance date and thereafter by the
Remarketing Agent at the time and in the manner set forth below.
(b) Certain Interest Rates. Interest rates will be determined
as follows for Variable Rate Bonds, Term Rate Bonds and Credit Provider
Bonds.
(i) For Variable Rate Bonds, the interest rate for
any Variable Rate Period will be the rate established by the
Remarketing Agent on the first day of such Variable Rate
Period which is the minimum rate of interest necessary, in the
best professional judgment of the Remarketing Agent taking
into account prevailing market conditions, to enable the
Remarketing Agent to remarket all of the Variable Rate Bonds
in the secondary market on the date such rate is set at a
price equal to 100% of the principal amount thereof, plus
accrued interest, if any.
(ii) For Term Rate Bonds, the interest rate for any
Term Rate Period will be the rate established by the
Remarketing Agent on the first day of such Term Rate Period
which is the minimum fixed interest rate necessary, in the
best professional judgment of the Remarketing Agent, taking
into account prevailing market conditions, to enable the
Remarketing Agent to remarket all of the Term Raw Bonds in the
secondary market on the date such rate is set at a price equal
to 100 % of the principal amount thereof, plus accrued
interest, if any.
(iii) Only Credit Provider Bonds will bear interest
at the Credit Provider Rate. The Credit Provider will
calculate the Credit Provider Rate in accordance with the
Reimbursement Agreement and notify the Trustee and the Paying
Agent of the Credit Provider Rate
(iv) In no event shall the interest rate on the Bonds
(whether Variable Rate Bonds, Term Rate Bonds or Credit
Provider Bonds) exceed the Maximum Rate.
(c) NOTIFICATION OF INTEREST RATE. The Remarketing Agent will
promptly advise by facsimile the Trustee, the Paying Agent and the
Company of all interest rates determined by it
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pursuant to Section 2.03(b)(i) and (ii). Any determination of an
interest rate is conclusive and binding on the Company, the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent, the Credit Provider
and the Owners. In determining the interest rate that the Bonds shall
bear, the Remarketing Agent shall have no liability to the Company, the
Issuer, the Trustee, the Paying Agent, the Credit Provider or the
Owners, except for its gross negligence or willful misconduct.
(d) CREDITED FACILITY IN EFFECT AT ALL TIMES WITH RESPECT TO
CERTAIN BONDS. A Credit Facility must be in effect at all times with
respect to any Bonds bearing interest at (i) a Variable Rate and (ii) a
Term Rate, provided the applicable Term Rate Period ends prior to the
final stated maturity date of the Bonds. A Credit Facility need not be
in effect at all times with respect to Term Rate Bonds provided the
applicable Term Rate Period ends on the final stated maturity of the
Bonds.
Section 2.04. FAILURE TO COMPUTE INTEREST RATES; INEFFECTIVE INTEREST
RATES. If the Remarketing Agent no longer determines, or fails to determine,
when required, an interest rate pursuant to Section 2.03(b)(i) or (ii), or if
for any reason such manner of determination is held to be invalid or
unenforceable by a court of law, the interest rate for the next Interest Period
will be determined by the Trustee as follows:
(a) For Variable Rate Bonds, (1) if the Remarketing Agent does
not determine an interest rate pursuant to Section 2.03(b)(i) for one
Variable Rate Period, the interest rate shall be that interest rate
borne by such Bonds during the immediately preceding Variable Rate
Period or (2) if the Remarketing Agent does not determine an interest
rate pursuant to Section 2.03(b)(i) for two or more consecutive
Variable Rate Periods, that interest rate shall be determined in the
manner provided by Section 2.05(d).
(b) For Term Rate Bonds, (1) if the Remarketing Agent does not
determine an interest rate pursuant to Section 2.03(b)(ii) for one Term
Rate Period, the interest rate shall be that interest rate borne by
such Bonds during the immediately preceding Term Rate Period if the
duration of the new Term Rate Period is equal to the immediately
preceding Term Rate Period; or (2) if the Remarketing Agent does not
determine an interest rate pursuant to Section 2.03(b)(ii) for two or
more consecutive Term Rate Periods or if the duration of the new Term
Rate Period is not equal to the duration of the immediately preceding
Term Rate Period, the interest rate shall be that interest rate
determined in the manner provided by Section 2.05(d).
Section 2.05. CONVERSION OF INTEREST RATE.
(a) The interest rate on the Bonds is subject to Conversion
from one interest rate mode to another or from a Term Rate to one or
more successive Term Rates, in whole and not in part, at the option of
the Company, by mailing a notice thereof to the Trustee, the Credit
Provider, the Paying Agent and the Remarketing Agent at least 30 days
before the proposed Conversion Date, accompanied by a preliminary
opinion of Bond Counsel stating that such Conversion is authorized and
in accordance with this Indenture and will not adversely affect the
exclusion of the interest on any of the Bonds from the gross income of
the recipient thereof for federal and state income tax purposes. A
Conversion may occur only (i) when the Conversion Date is a date on
which the Bonds are subject to optional redemption under Section
4.01(a) or (b), (ii) if the Conversion Date would otherwise be an
Interest Payment Date or if not, then it is a Business Day and (iii) if
the Credit Facility, if any, is in the applicable Coverage Amount. At
least ten days prior to the proposed Conversion Date, as a necessary
condition to such Conversion, the Company must deliver to the Trustee:
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(1) a written notice which specifies the proposed change on
the Conversion Date, the change to be made on the proposed Conversion
Date, and, if one or more Term Rate Periods will be established, the
length for each such Term Rate Period and the last day of each such
Term Rate Period;
(2) an opinion of Bond Counsel dated the Conversion Date
confirming the preliminary opinion as of such Conversion Date;
provided, however, that the portion of such opinion relating to the
tax-exempt status of interest on the Bonds shall not be required if
(a) a Term Rate of one year or less is to be
established following a period in which the Bonds bear
interest at the Variable Rate,
(b) a period in which the Bonds bear interest at the
Variable Rate is to be established following a Term Rate
Period of one year or less, or
(c) a Term Rate Period of one year or less is to be
established following a Term Rate Period of one year or less.
(3) As long as the Credit Facility remains in effect during a
Term Rate Period:
(a) evidence satisfactory to the Trustee, including
an amendment to the existing Credit Facility and Confirmation
Letter ( if applicable), if necessary, that the amount which
can be realized under the Credit Facility and the Confirmation
Letter, if applicable, for the payment of interest on the
Bonds is equal to at least 204 days' interest on the Bonds
(or, if the Term Rate Period to be established will consist of
fewer than 6 months, the number of days' interest on the Bonds
obtained by adding 20 days to the number of days in such Term
Rate Period) calculated at the Term Rate to be in effect
during such period and on the basis of a 360 day year of
twelve 30-day months.
(4) in connection with the establishment of a Term Rate Period
of more than one year following a period in which the Bonds accrue
interest at the Variable Rate or a Term Rate Period of one year or
less, at the request of, and in form and content satisfactory to, the
Company, as agent for the Issuer, or the Remarketing Agent, additional
disclosure on the Company, the Project and any other matter deemed
appropriate by the Company and/or the Remarketing Agent for inclusion
in an offering document for the Bonds;
Notwithstanding any provision in this Indenture to the contrary, no
conversion to a Term Rate with a Term Rate Period exceeding nine months in
duration shall be permitted unless the Trustee and the Remarketing Agent
receive, at least two business days prior to the proposed Conversion Date, an
executed copy of a continuing disclosure agreement imposing obligations upon the
Company or the Issuer, as applicable, to comply with the requirements of Rule
15C2-12 promulgated by the Securities and Exchange Commission, as amended or
supplemented from time to time, with respect to the Bonds, and such other
documents as the Remarketing Agent may require in order to comply with such
Rule; provided that upon such Conversion the Bonds are subject to the
requirements of such Rule.
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The Trustee shall promptly deliver copies of such notices and opinions
to the Registrar, the Paying Agent the Remarketing Agent and the Credit
Provider.
Term Rate Periods established in accordance with this Section 2.05 may
be of the same or different periods, but each such Term Rate Period shall
commence on the first calendar day of a month or, if the Variable Rate is then
in effect, the first Wednesday of a month, or if such Wednesday is not a
Business Day, the immediately succeeding Business Day, and shall end on the last
calendar day of a month or, if the Bonds may bear interest at the Variable Rate
following the expiration of any Term Rate Period, the day immediately preceding
the first Wednesday of a month or if such Wednesday is not a Business Day, the
day immediately preceding the Business Day that immediately succeeds such
Wednesday. Any Term Rate Period (a) shall be for a period of at least 2 months
in duration and (b) may extend to the maturity of the Bonds; provided that no
Term Rate Period may extend beyond the maturity of the Bonds.
(b) If the confirming opinion of Bond Counsel referred to in subsection
(a) of this Section is not delivered on or before the proposed Conversion Date
or if any other condition to Conversion referred to above is not satisfied on or
before the proposed Conversion Date at least ten days prior to the proposed
Conversion Date, the proposed Conversion will not take place and (1) if the
Bonds were bearing interest at a Variable Rate immediately prior to the proposed
Conversion Date, then the Bonds shall continue to bear interest at the Variable
Rate, and (2) if the Bonds were bearing interest at a Term Rate prior to the
proposed Conversion Date, then the Bonds shall bear interest at a Term Rate
determined for a new Term Rate Period of equal duration to the immediately
preceding Term Rate Period. The Trustee shall give notice of a failure of
conversion to the Remarketing Agent not later than seven days prior to the
proposed Conversion Date.
(c)(1) The Trustee with give notice by Mail to the Owners not less than
25 days before the Conversion Date. Such notice will state (A) that such Bonds
are being converted, as set forth in the notice from the Company; (B) the
Conversion Date; (C) the date and intended method by which the interest rate
will be determined and the procedure, which may include the furnishing of a
telephone number which Owners can call for information; (D) the intended
Interest Payment Dates and the Purchase Dates, if any, after the Conversion
Date; (E) that, for a Conversion from a Variable Rate to one or more successive
Term Rates, the last day of each Term Rate Period; (F) that every Bond (with an
appropriate transfer of registration executed in blank in form satisfactory to
the Trustee) must be delivered to the Trustee (at its designated office) not
later than the Conversion Date or the next Business Day if the Conversion Date
is not a Business Day and, in the absence of such delivery, will be deemed to
have been delivered and purchased; (G) the anticipated ratings to be in effect
on the Conversion Date; (H) the Purchase Price; (1) that no interest will accrue
to the benefit of such Owners after the Purchase Date; and (J) that every
Outstanding Bond will be purchased by the Remarketing Agent on the Purchase
Date.
(2) A copy of the notice of Conversion given to Owners by the Trustee
will be given by Mail to Moody's, if the Bonds are then rated by Moody's, and to
S&P, if the Bonds are then rated by S&P.
(3) If the proposed Conversion will not take place because of the
failure to satisfy any necessary condition to Conversion at least 10 days prior
to the proposed Conversion Date, the Trustee will within a reasonable time, give
notice, in the manner in which notice of Conversion was given, that such
Conversion did not take place. In any event, the Trustee will give written
notice to the Credit Provider of a Conversion or a failure of Conversion on or
before the proposed Conversion Date.
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(d) Notwithstanding the foregoing provisions of this Section,
(i) if any payment of the principal of or premium (if any) or interest
on, or the purchase price of, any Bond shall not be made when due, the
Bonds shall continue to bear interest at the last interest rate borne
by the Bonds prior to the due date for such payment until such payment
is made or provided for in accordance with this Indenture, and (ii) if
the Trustee is required to determine the applicable Variable Rate or
Term Rate pursuant to Section 2.04, or a court of competent
jurisdiction holds that a rate determined by the Remarketing Agent is
invalid or unenforceable, the Bonds shall bear interest as follows: (A)
the Variable Rate for such Variable Rate Period shall be equal to 65 %
of the per annum bond equivalent yield applicable to 13-week United
States Treasury securities, and (B) the Term Rate for such Term Rate
Period shall be equal to 75% of the per annum bond equivalent yield
applicable to United States Treasury securities having the same number
of months to maturity as the number of months in the applicable Term
Rate Period (determined by linear interpolation between the yields for
instruments having the next shorter and next longer number of months to
maturity if no yield is announced for United States Treasury securities
having the number of months to maturity prescribed herein), in each
case as published by the Federal Reserve Bank of New York on the most
recent date prior to the applicable effective date; provided that in no
event shall any of the Bonds bear interest in excess of the Maximum
Rate. The Trustee shall not incur any liability for any errors in the
computation of the rates required to be determined in accordance with
this Section.
Section 2.06. ISSUANCE OF THE BONDS. The manual or facsimile signature
of a duly authorized officer of the Issuer shall appear on each Bond. Any Bond
shall be deemed to have been issued by a duly authorized officer of the Issuer
if signed by a Issuer Representative, but it shall not be necessary that the
same officer sign all of the Bonds issued hereunder. In addition, each Bond
shall be authenticated by the manual signature of an authorized officer of the
Trustee and shall have the seal of the Trustee affixed thereto. If any official
of the Trustee whose signature appears on the Bonds ceases to be such official
before delivery of the Bonds, such signature is nevertheless valid and
sufficient for all purposes, the same as if he had remained in office until
delivery.
Section 2.07. AUTHENTICATION. No Bond is valid or obligatory for any
purpose or entitled to any security or benefit hereunder unless and until issued
and authenticated in the manner prescribed by Section 2.06, and such issuance
and authentication of any Bond are conclusive evidence that such Bond has been
properly issued hereunder.
Section 2.08. LIMITED OBLIGATION. THE ISSUER COVENANTS THAT IT WILL
PROMPTLY PAY THE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST ON EVERY BOND ISSUED
UNDER THIS INDENTURE AT THE PLACE, ON THE DATE AND IN THE MANNER PROVIDED HEREIN
AND IN THE BONDS ACCORDING TO THE TRUE INTENT AND MEANING THEREOF, BUT SOLELY
FROM THE AMOUNTS PLEDGED THEREFOR WHICH ARE TO BE PAID UNDER THE LOAN AGREEMENT
AND THE NOTE AND OTHERWISE AS PROVIDED HEREIN AND IN THE LOAN AGREEMENT AND THE
NOTE, WHICH AMOUNTS ARE HEREBY SPECIFICALLY PLEDGED TO THE PAYMENT THEREOF IN
THE MANNER AND TO THE EXTENT HEREIN SPECIFIED, AND NOTHING IN THE BONDS OR IN
THIS INDENTURE SHALL BE CONSTRUED AS PLEDGING ANY OTHER FUNDS OR ASSETS OF THE
ISSUER. NEITHER THE STATE, THE ISSUER NOR ANY OTHER POLITICAL SUBDIVISION OF THE
STATE SHALL IN ANY EVENT BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OR PURCHASE
PRICE OF, REDEMPTION OR PURCHASE PREMIUM, IF ANY, OR INTEREST ON ANY OF THE
BONDS OR FOR THE PERFORMANCE OF ANY PLEDGE, OBLIGATION OR AGREEMENT UNDERTAKEN
BY THE ISSUER EXCEPT TO THE EXTENT THAT MONEYS PLEDGED HEREIN ARE SUFFICIENT
THEREFOR. NO OWNER OF THE BONDS WILL HAVE THE RIGHT TO COMPEL ANY EXERCISE OF
TAXING POWER OF THE ISSUER, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO
PAY THE BONDS OR THE INTEREST THEREON, AND THE BONDS DO NOT CONSTITUTE AN
INDEBTEDNESS NOR A LOAN OF THE CREDIT OF THE ISSUER, THE STATE OR ANY POLITICAL
SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
PROVISION.
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Section 2.09. DELIVERY OF THE BONDS. On the execution and delivery of
this Indenture, the Trustee shall deliver the Bonds in the aggregate principal
amount of $7,750,000. Before the initial delivery by the Trustee of any of the
Bonds, there shall be filed with the Trustee:
(a) An originally executed counterpart of the Loan Agreement,
this Indenture, the Placement and Remarketing Agreement, the Note and
the Reimbursement Agreement;
(b) A certified copy of the Resolution of the Issuer
authorizing issuance of the Bonds, and the execution of the Loan
Agreement, the Indenture and any other instruments and documents
executed in connection with the issuance of the Bonds;
(c) The original, executed Credit Facility;
(d) The original, executed Confirmation Letter;
(e) A request and authorization signed by a duly authorized
officer of the Issuer requesting and authorizing the Trustee to
authenticate and to deliver the Bonds to the initial purchasers thereof
upon payment to the Trustee for the account of the Issuer of the amount
of the initial purchase price for the Bonds specified in such request
and authorization;
(f) Evidence reasonably satisfactory to the Trustee of the
perfection of a security interest in favor of the Trustee in the Trust
Estate;
(g) An original, executed approving opinion of Bond Counsel;
(h) An Opinion of Counsel to the Credit Provider addressed to
the Trustee, or upon which the Trustee may rely, to the effect that the
Credit Facility is a valid and binding obligation of the Credit
Provider and is not subject to registration under the Securities Act of
1933, as amended;
(i) An Opinion of Counsel to the Confirming Bank addressed to
the Trustee, or upon which the Trustee may rely, to the effect that the
Confirmation Letter is a valid and binding obligation of the Confirming
Bank; and
(j) A certificate from the Credit Provider indicating that all
documents and preconditions as set forth in Section 3.1 of the
Reimbursement Agreement have been received and accepted or
satisfactorily met as the case may be.
Section 2.10. MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. If any Bond
is mutilated, lost, stolen, or destroyed, a new Bond may be issued on behalf of
the Issuer, of like date and denomination as that mutilated, lost, stolen, or
destroyed; provided that the Trustee has received indemnity from the Owner of
the Bond satisfactory to it and provided further, for any mutilated Bond, that
such mutilated Bond is first surrendered to the Trustee, and for any lost,
stolen or destroyed Bond, that there is first furnished to the Trustee evidence
of such loss, theft, or destruction satisfactory to the Trustee. If any such
Bond has become subject to the redemption, instead of delivering a duplicate
Bond, the Trustee may pay the same without surrender thereof. The Trustee may
charge the Owner of the Bond with its reasonable fees and expenses in this
connection.
Section 2.11. REGISTRATION OF BONDS; PERSONS TREATED AS OWNERS;
TRANSFER OF BONDS. Books for the registration of Bonds shall be kept by the
Paying Agent which is hereby appointed the Registrar. On surrender for
registration of transfer of a Bond at the principal corporate trust office of
the Paying
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Agent, duly endorsed for transfer or accompanied by an assignment duly, executed
by the Owner or its attorney duly authorized in writing in such form as is
satisfactory to the Paying Agent, the Trustee shall authenticate and deliver in
the name of me transferee or transferees a new fully registered Bond or Bonds.
All Bonds shall be exchangeable on the presentation and surrender
thereof at the principal corporate trust office of the Trustee for a Bond or
Bonds in other Authorized Denominations.
As to any Bond, the person in whose name the same is registered shall
be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on such Bond shall be made only to or on
the written order of the Owner thereof or its legal representative, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effectual to satisfy and discharge such Bond to the extent of the sum
or sums paid.
The Paying Agent shall require the payment, by any Owner requesting
registration of transfer or exchange of Bonds, of any tax, fee or other
governmental charge required to be paid with respect to such registration of
transfer or exchange. The Paying Agent is not required to register the transfer
of or exchange any Bonds selected, called or being called for redemption in
whole or in part.
The Issuer and the Paying Agent shall not be required to issue,
exchange or register the transfer of any Bond or any portion thereof (A) for a
period of 15 days prior to the date on which Bonds are selected for redemption,
or (B) after such Bond or portion thereof is called for redemption, unless the
transferee of such Bond or portion thereof delivers to the Trustee and to the
Paying Agent a written acknowledgment of such (call for redemption and agrees in
writing to be bound by such call for redemption. In addition, the Issuer and
Paying Agent shall not be required to issue, exchange or register the transfer
of any Bond or any portion thereof prior to the purchase of any Bond or any
portion thereof being purchased pursuant to an optional tender with respect to
which a notice of tender has been received by the Trustee or prior to a
mandatory tender of Bonds after a notice of mandatory tender notice has been
mailed; unless, in each such case, the transferee of such Bond or portion
thereof delivers to the Trustee and to the Paying Agent a written acknowledgment
of such optional tender notice or mandatory tender notice and agrees in writing
to be bound by such optional tender notice or mandatory tender notice, and, if
notice of election to retain any Bonds to be tendered has been received by the
Trustee with respect to such Bond or portion thereof, the transferee delivers to
the Trustee a written acknowledgment of such notice to retain and agrees in
writing to be bound by such notice.
The Paying Agent shall not register the transfer of any Credit Provider
Bonds unless the Paying Agent shall have received written notice from the Credit
Facility Provider that the Principal Portion of the Credit Facility has been
reinstated, the proceeds of which were used to purchase such Credit Provider
Bonds from the former Owner thereof.
Section 2.12. CANCELLATION OF BONDS. Whenever any outstanding Bonds are
delivered to the Paying Agent for cancellation pursuant to this Indenture, on
payment thereof or for or after replacement Pursuant to Section 2.10 or 2.11,
such Bonds shall be promptly canceled and burned or otherwise destroyed by the
Paying Agent, and counterparts of a certificate of destruction evidencing such
burning or other destruction shall be furnished by the Paying Agent to the
Trustee.
Section 2.13. TEMPORARY BONDS. Pending preparation of definitive Bonds,
there may be issued, and on request of the Issuer, the Trustee shall deliver, in
lieu of definitive Bonds and subject to the same limitations and conditions as
such definitive Bonds, temporary typewritten, printed, engraved or lithographed
Bonds, in the form of registered Bonds without coupons in Authorized
Denominations, substantially in the form of Exhibit A hereto, with such
appropriate omissions, insertions and variations as may be required with respect
to such temporary Bonds.
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<PAGE> 27
If temporary Bonds are issued, the Issuer shall cause the definitive
Bonds to be prepared and to be issued, and the Trustee, on presentation to it at
its principal corporate trust office of any temporary Bonds, shall cancel such
Bonds and authenticate and deliver in exchange therefor at the place designated
by the owner, without charge to the owner thereof, a definitive Bond or Bonds of
an equal aggregate principal amount. Until so exchanged, the temporary Bonds
shall in all respects be entitled to the same benefit and security of this
Indenture as the definitive Bonds to be issued and authenticated hereunder.
Section 2.14. BOOK-ENTRY SYSTEM. The Bonds will initially be issued by
means of a book-entry system with no physical distribution of Bonds made to the
public, unless the book-entry system is discontinued as described below. One
certificate for each maturity will be issued to The Depository Trust Company,
New York, New York ("DTC"), and immobilized in its custody. A Book-Entry System
will be employed, evidencing ownership of the Bonds in Authorized Denominations,
with transfers of beneficial ownership effected on the records of DTC, and its
participants (the "DTC Participants") and its indirect participants (the
"Indirect Participants") pursuant to rules and procedures established by DTC.
Payments of principal and interest with respect to the Bonds, so long
as DTC is the only owner of the Bonds, will be paid by the Paying Agent directly
to DTC or its nominee, Cede & Co as provided in the Letter of Representations
dated April 19, 1996 from the Issuer, the Remarketing Agent, and the Trustee to
DTC (the "Letter of Representation"). Transfer of principal, interest and any
premium payments or notices to DTC Participants and DTC Indirect Participants
will be the responsibility of DTC, and transfer of principal, interest and any
premium payment or notice to beneficial owners of the Bonds (the "Beneficial
Owners") will be the responsibility of DTC Participants and DTC Indirect
Participants. No other party will be responsible or liable for such transfers of
payments or notices or for maintaining, supervising or reviewing such records
maintained by DTC, DTC Participants or DTC Indirect Participants. Payments will
be made by wire transfer in immediately available funds to the account of Cede &
Co. as specified in the register maintained by the Registrar or by such other
method of payment as the Paying Agent may determine to be necessary or advisable
with the concurrence of DTC.
In the event that (a) DTC determines not to continue to act as
securities depository for the Bonds or (b) the Trustee or the Company determines
that the continuation of the book-entry system of evidence and transfer of
ownership of the Bonds would adversely affect their interests or the interests
of the Beneficial Owners of the Bonds, the Company may cause the Issuer to
discontinue the book-entry system with DTC. If the Company fails to identify
another qualified securities depository to replace DTC, the Issuer will cause
the Trustee, at the expense of the Company, to authenticate and deliver
replacement Bonds in the form of fully registered Bonds to each Beneficial
Owner. DTC may be removed at any time at the election of the Remarketing Agent,
with the consent of the Trustee and notice to the Company and the Issuer, and a
new securities depository may then be appointed by the Issuer, subject to the
approval of the Trustee and the Remarketing Agent.
Unless a Bond is presented by an authorized representative of DTC to
the County or its agent for registration of transfer, exchange or payment and
such Bond is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC, any transfer, pledge, or other use of such Bond for value
or otherwise by or to any person is wrongful inasmuch as the registered owner
thereof, Cede & Co., has an interest in such Bond.
THE ISSUER, THE COMPANY, THE REMARKETING AGENT, THE PAYING AGENT AND
THE TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO ANY DTC
PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT TO: (I) THE BONDS; (II) THE
ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (III) THE
PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL
22
<PAGE> 28
OWNER IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE
BONDS; (IV) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY DTC PARTICIPANT
OF ANY NOTICE DUE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER
THE TERMS OF THIS INDENTURE TO BE GIVEN TO BENEFICIAL OWNERS; (V) THE SELECTION
OF BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN THE EVENT OF ANY PARTIAL REDEMPTION
OF THE BONDS; OR (VI) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC, OR ITS
NOMINEE, CEDE & CO., AS OWNER.
SO LONG AS A BOOK-ENTRY SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF
ALL THE BONDS IS MAINTAINED IN ACCORDANCE HEREWITH, THE PROVISIONS OF THIS
INDENTURE RELATING TO THE DELIVERY OF PHYSICAL BOND CERTIFICATES SHALL BE DEEMED
TO GIVE FULL EFFECT TO SUCH BOOK-ENTRY SYSTEM.
[End of Article II]
23
<PAGE> 29
ARTICLE III
PURCHASE AND REMARKETING OF BONDS
Section 3.01. OPTIONAL DEMAND PURCHASE; MANDATORY PURCHASE.
(a) OPTIONAL DEMAND PURCHASE FOR VARIABLE RATE BONDS.
Any Variable Rate Bond (but solely from the Pledged Revenues
and proceeds of the remarketing of such Bond by the Remarketing Agent
and amounts realized from a drawing under the Credit Facility or the
Confirmation Letter), other than a Credit Provider Bond (or portion
thereof in a denomination of $5000 or integral multiple thereof
provided such tender does not result in a Bond in a denomination of
less than $100,000), will be purchased, on the demand of the Owner
thereof, on any Business Day designated by the Owner thereof (a
"Purchase Date") which is not less than seven days after the date
notice of such demand is delivered telephonically to the Remarketing
Agent. Any such purchase will be at the Purchase Price, To effect such
purchase, telephonic notice of such optional tender demand and purchase
must be delivered to the Remarketing Agent and such notice shall (A)
state the number and principal amount (or portion thereof in an
Authorized Denomination) of such Variable Rate Bond to be purchased,
(B) state the Purchase Date on which such Variable Rate Bond will be
purchased pursuant to this subsection, and (C) irrevocably request such
purchase.
The Remarketing Agent will promptly provide the Paying Agent
and the Trustee with telephonic notice of the receipt of the notice
referred to in the preceding paragraphs, confirmed promptly in writing
or by facsimile.
Any Variable Rate Bond with regard to which demand is made as
set forth in this subsection will be deemed to have been tendered for
purchase on any Purchase Date with respect thereto. Delivery of such
Variable Rate Bond (with an appropriate transfer of registration
executed in blank in form satisfactory to the Remarketing Agent) at the
designated office of Remarketing Agent at or prior to 10:00 a.m. (New
York City time) on the Purchase Date will be required for payment in
same-day funds of the Purchase Price due on such Purchase Date. No
Owner will be entitled to payment of the Purchase Price due on such
Purchase Date except on surrender of such Variable Rate Bonds as set
forth herein.
Notwithstanding anything to the contrary herein contained, no
optional tender and purchase of Bonds made pursuant to this Section
shall result in a Bond in a denomination of less than $100,000.
If the Bonds are held in a Book Entry System, a purchase notice
described in this Section 3.01 (a) may be delivered by a Beneficial
Owner. Such purchase notice must be delivered as set forth above and
must state that such Beneficial Owner will cause its beneficial
interest (or portion thereof in Authorized Denominations) to be
tendered, the amount of such beneficial interest to be tendered, the
optional tender date on which such beneficial interest will be tendered
and the identity of the Participant through which the Beneficial Owner
maintains its beneficial interest. Upon delivery of such notice, the
Beneficial Owner must make arrangements to have its beneficial
ownership interest in the
24
<PAGE> 30
Bonds being tendered transferred to the Trustee at or prior to 11:00
a.m. (New York time), on the applicable optional tender date, but need
not otherwise comply with the other provisions described above.
(b) MANDATORY PURCHASE ON CONVERSION DATES. On any Conversion Date with
respect to any Bonds (but solely from the Pledged Revenues and proceeds of the
remarketing of such Bond by the Remarketing Agent and amounts realized from a
drawing under the Credit Facility or the Confirmation Letter), other than a
Credit Provider Bond (or portion thereof in a denomination of $5,000 or integral
multiple thereof provided such tender does not result in a Bond in a
denomination of less than $100,000), (or in each case the next Business Day, if
not a Business Day) (a "Purchase Date"), such Bonds must be tendered and
delivered to the Trustee for purchase (with all necessary endorsements) at the
Purchase Price.
All Bonds will be deemed to have been tendered for purchase on any
Purchase Date with respect thereto. Delivery of such Bonds (with an appropriate
transfer of registration executed in blank in form satisfactory to the Trustee)
at the designated office of the Trustee at or prior to 10:00 a.m., New York City
time, on the Purchase Date will be required for payment in same-day funds of the
Purchase Price due on such Purchase Date. No Owner will be entitled to payment
of the Purchase Price due on such Purchase Date except upon surrender of such
Bonds as set forth herein.
Except as set forth in the following paragraph, the Owner of any Bond
may elect to retain such Bond or any portion thereof on a Conversion Date (if
such Bond or such portion thereof is in a denomination which will be an
Authorized Denomination after the applicable Conversion Date) by delivering a
notice of such Owner's election to retain such Bonds (a "Notice of Retention" to
the Trustee within 15 days prior to such Conversion Date (or, if such day is not
a Business Day, the immediately preceding Business Day), which irrevocable
written notice shall (a) affirmatively acknowledge such matters as shall be
specified in the notice of tender and purchase delivered to such Owner in
connection with such Conversion Date including an acknowledgment that the rating
on the Bonds may be reduced or withdrawn on the Conversion Date, (b) contain the
irrevocable agreement by such Owner to retain such Bond and not to tender such
Bond for purchase on the Conversion Date and (c) contain the irrevocable
agreement by such Owner not to deliver a notice of optional purchase or tender
such Bond for purchase on an optional tender date pursuant to Section 3.01(a) of
this Indenture on or before such Conversion Date.
Notwithstanding anything to the contrary contained herein, in the event
the Bonds are subject to mandatory tender and purchase as a result of a Credit
Expiration Date, and the Trustee has not received evidence satisfactory to it
that following the Conversion Date an Alternate Credit Facility will be in place
with respect to the Bonds, then the Bonds so purchased shall be held in the name
of the Credit Provider in accordance with the terms hereof and the Reimbursement
Agreement. Unless and until a Credit Facility has been provided, the Owners of
such Bonds shall not have the right to retain the Bonds following the Conversion
Date, and such Bonds shall not be remarketed. Such Bonds shall be deemed
tendered in accordance with Section 3.04 hereof.
(c) MANDATORY PURCHASE ON CREDIT EXPIRATION DATE. Before the Credit
Expiration Date, the Trustee will give notice not less than 15 days before the
Purchase Date described below to all Owners and the Remarketing Agent of the
Bonds that the Bonds will be subject to mandatory tender to the Trustee for
purchase at the Purchase Price on the Credit Expiration Date. After such notice
is given, the Bonds will thereafter be subject to mandatory tender for purchase
at the Purchase Price on the date set forth in the notice (a "Purchase Date").
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<PAGE> 31
All Bonds will be deemed to have been tendered for purchase on
any Purchase Date with respect thereto. Delivery of such Bonds (with an
appropriate transfer of registration executed in blank in form
satisfactory to the Trustee) at the designated office of the Trustee at
or prior to 10:00 a.m., New York City time, on the Purchase Date will
be required for payment in same-day funds of the Purchase Price due on
such Purchase Date. No Owner will be entitled to payment of the
Purchase Price due on such Purchase Date except upon surrender of such
Bonds as set forth herein.
Section 3.02. SOURCE OF FUNDS FOR PURCHASE OF BONDS. On the date on
which Bonds are to be purchased pursuant to Section 3.01, the Trustee will
purchase such Bonds from the Owners thereof at the Purchase Price. Funds for the
payment of such Purchase Price will be derived solely from the following source
in order of priority indicated and neither the Issuer, the Company, the Trustee,
the Paying sources in the Agent nor the Remarketing Agent will be obligated to
provide funds from any other source:
(a) Remarketing Proceeds;
(b) Available Moneys (other than a draw under the Credit
Facility or the Confirmation Letter, if applicable) held by the
Trustee, the Paying Agent or the Remarketing Agent and available for
such purpose, but only if the Company directs that such moneys be so
used;
(c) proceeds derived from a drawing under the Credit Facility;
and
(d) proceeds derived from a drawing under the Confirmation
Letter, if applicable.
In the event funds from the sources described in subsections (a) and
(b) above are not sufficient to provide for the Purchase Price of all Bonds to
be purchased pursuant to Section 3.01, the Trustee, no later than 1:00 p.m. New
York City time on the Business Day prior to each Purchase Date (whether such
tender was optional or mandatory), shall draw on the Credit Facility or in
accordance with the terms of an Alternate Credit Facility to purchase the Bonds
required to be purchased pursuant to Section 3.01.
In the event that the Credit Provider refuses to honor a draw on the
Credit Facility made in accordance with the provisions of this Indenture by 3:00
p.m. New York time on the day in which such draw is made by the Trustee, the
Trustee shall draw on the Confirmation Letter, if any, then in effect by 10:00
a.m. New York time, on the applicable Purchase Date.
Section 3.03. DELIVERY OF BONDS; DELIVERY OF PROCEEDS OF SALE; PAYMENTS
FROM CREDIT FACILITY.
(a) Bonds purchased with funds described in Section 3.02(a)
will be registered in the name of and delivered to the purchasers
thereof.
(b) Bonds purchased with funds described in Section 3.02(b)
will be registered in the name of the Company and delivered as directed
by the Company.
(c) Bonds purchased with funds described in Sections 3.02(c)
and (d) will be registered in the name of the Credit Provider and
delivered as directed by the Reimbursement Agreement and will
constitute Credit Provider Bonds. All Credit Provider Bonds shall be
held by the Trustee pursuant to the Reimbursement Agreement for the
benefit of the Credit Provider. Upon receipt of Remarketing Proceeds in
respect of the sale of Credit Provider Bonds, the Trustee shall notify
the Credit Provider and the Company of such receipt. Upon receipt of
notice by the Trustee from the Credit Provider by telephone, telecopy
or telex, promptly confirmed in writing, that the Bonds have ceased to
be Credit Provider Bonds and that the amount of the Credit Facility has
been reinstated as provided therein, the Trustee shall remit the
Remarketing Proceeds to the Credit
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<PAGE> 32
Provider or as otherwise directed by the Credit Provider and release
the Credit Provider Bonds and deliver them to the purchasers thereof in
accordance with (a) above. The Trustee shall hold such Remarketing
Proceeds in a segregated account in trust for the benefit of the Credit
Provider except that if the Credit Facility is not reinstated as
provided in the Credit Facility, then the Trustee shall hold such funds
for the benefit of the purchasers which provided such Remarketing
Proceeds.
Section 3.04. BONDS DEEMED TENDERED FOR PURCHASE. If Bonds have been
deemed to have been delivered for purchase as provided in Section 3.01, the
Trustee will authenticate (and the Issuer will issue, if necessary) a new Bond
as provided in Section 2.11. The Trustee will promptly give notice by Mail to
each owner whose Bonds are deemed to have been purchased pursuant to Section
3.01, which notice will state that interest on such Bonds ceased to accrue on
the applicable Purchase Date and that moneys representing the Purchase Price of
such Bonds are available against delivery thereof at the Principal Office of the
Trustee. The Trustee will hold moneys for the purchase of Bonds in trust and
uninvested, without liability for interest thereon, for the benefit of the
former Owner of the Bond on such Purchase Date, who will thereafter be
restricted exclusively to such moneys, for any claim of whatever nature on his
part under this Indenture or on, or with respect to, such Bond. Any moneys
deposited with the Trustee or then held by the Trustee or the Remarketing Agent
for the payment of the principal of or interest on the Bonds and remaining
unclaimed for the period set forth in any applicable escheat laws under the laws
of the State shall be paid to the appropriate officer or body as provided in
such escheat statute. Thereafter, the Owners shall look only to such officer or
body for payment and then only to the extent of the amount so received, without
any interest thereon, and the Trustee and the Remarketing Agent shall have no
responsibility with respect to such moneys.
Section 3.05. REMARKETING OF TENDERED AND PURCHASED BONDS.
(a) The Remarketing Agent will use its best efforts to
remarket Bonds to be tendered and purchased on a Purchase Date pursuant
to Section 3.01 (a), (b) or (c); provided, however, that with respect
to any Bonds which have been called for redemption, such Bonds must be
accompanied by a copy of the notice of redemption and will only be
remarketed to a purchaser who acknowledges that such Bonds have been
called for redemption and will be redeemed on the date stated in the
notice.
(b) On the Business Day prior to each Purchase Date (whether
optional or mandatory), the Remarketing Agent will give notice to the
Trustee and the Credit Provider by telephone at or before 11:00 a.m.,
New York City time, followed by telecopy or telex, of the aggregate
amount of Bonds to be purchased pursuant to Section 3.01 that have not
been successfully remarketed by the Remarketing Agent. The Trustee will
draw on the Credit Facility under Section 3.02.
(c) At or before 3:00 p.m., New York City time, on each
Purchase Date, the Purchase Price of such Bonds will be immediately
deposited by the Trustee in the Credit Facility Account or the General
Account of the Bond Purchase Fund, as appropriate.
(d) Under no circumstances shall Bonds bearing interest at a
Variable Rate or a Term Rate for a Term Rate Period not extending to
the final stated maturity date of the Bonds be remarketed unless a
Credit Facility is then in effect at the time of any such remarketing
securing the payment of such Bonds.
(e) Bonds bearing interest at a Term Rate for a Term Rate
Period ending on the final stated maturity date of the Bonds may be
remarketed without a Credit Facility being in effect with respect to
the payment of such Bonds.
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<PAGE> 33
Section 3.06. LIMITS OF REMARKETING. Bonds purchased by the Remarketing
Agent pursuant to Section 3.01(a) from the date of notice of a conversion is
given through the Conversion Date will not be remarketed except to a buyer who
agrees at the time of such purchase (i) to retain the Bond at the new rate on
the Conversion Date or (ii) to require repurchase pursuant to Section 3.01(a) on
or prior to the Conversion Date. The Remarketing Agent will not remarket Credit
Provider Bonds unless the Remarketing Agent has received notice from the Trustee
that the Trustee has received written notice of reinstatement of the Credit
Facility to the Coverage Amount from the Credit Provider. Under no circumstances
shall Bonds bearing interest at (i) a Variable Rate or (ii) a Term Rate for
which the applicable Term Rate Period ends on a day prior to the final stated
maturity of the Bonds be remarketed unless a Credit Facility is then in effect
at the time of any such remarketing securing the payment of such Bonds.
Section 3.07 MANDATORY TENDERED AND PURCHASES IN ACCORDANCE WITH
PROCEDURES OF DEPOSITORY. Notwithstanding any provisions contained herein,
during any period in which Bonds are maintained pursuant to a Book-Entry System,
mandatory tenders and purchases of Bonds and the procedures for transmittals of
any Notice of Retention shall occur in accordance with the Depository's standard
procedures for mandatory tenders, purchases and waivers of mandatory tenders of
obligations such as the Bonds. Notwithstanding anything herein to the contrary,
so long as the Bonds are held under the Book-Entry System, Credit Provider Bonds
shall not be delivered to and held by the Trustee; rather transfers of
beneficial ownership of Bonds to the persons indicated above will be effected
pursuant to the rules and procedures established by the Depository.
[End of Article III]
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<PAGE> 34
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. OPTIONAL REDEMPTION.
(a) OPTIONAL REDEMPTION DURING VARIABLE RATE PERIOD. During any period
in which the Bonds bear interest at the Variable Rate, the Bonds are subject to
redemption by the Issuer (solely from the Trust Estate), at be written direction
of the Company to the Trustee (such direction to be given by the Company at
least 45 days prior to the date fixed for redemption), in whole at any time, or
in part on any Interest Payment Date at a redemption price equal to the
principal amount thereof plus accrued interest, if any, to the redemption date.
(b) OPTIONAL REDEMPTION DURING TERM RATE PERIOD. The Bonds shall be
subject to optional redemption by the Issuer (solely from the Trust Estate), at
the written direction of the Company to the Trustee (such direction to be given
by the Company at least 45 days prior to the date fixed for redemption), during
any Term Rate Period that (i) extends to the maturity of the Bonds, and (ii) is
6 years or longer, on or after the Interest Payment Date next succeeding the
date that is the later of (A) the sixth anniversary of the Term Rate Conversion
Date for such Term Rate Period, and (B) the earlier of (1) the tenth anniversary
of the Term Rate Conversion Date for such Term Rate Period, and (2) the
anniversary of such Term Rate Conversion Date that approximates, more closely
than any other such anniversary date, the Midpoint Date for such Term Rate
Period, in whole at any time, or in part on any Interest Payment Date at a
redemption price equal to the principal amount thereof, plus a premium
(expressed as a percentage of the principal amount of Bonds redeemed) that for
the first permissible redemption date is equal to the lesser of (i) three
percent of the principal amount of the Bonds to be redeemed and (ii) one-half of
one percent times the number of years between the calendar year of such first
redemption date and the calendar year during which such Term Rate Period ends
(including, for purposes of computation, the calendar year of such first
redemption date but excluding the calendar year during which such Term Rate
Period ends), and declining by one-half of one percent annually thereafter, such
premium calculation to be made by the Trustee, upon consultation with the
Remarketing Agent, prior to such redemption date.
(c) OPTIONAL REDEMPTION UPON EXTRAORDINARY REDEMPTION EVENT.
Notwithstanding any other provisions of this Section, during any Term Rate
Period and during any period in which the Bonds bear interest at the Variable
Rate, the Bonds shall be subject to optional redemption by the Issuer (solely
from the Trust Estate), at the written direction of the Company to the Trustee
(such direction to be given by the Company at least 45 days prior to the date
fixed for redemption), in whole at any time, without premium or penalty, if any
of the following events shall have occurred, as evidenced to the Trustee by a
certificate of the Company Representative delivered together with such
direction:
(i) The Project is damaged or destroyed by fire or other
casualty to such extent that in the opinion of both the Company
Representative and an Independent Engineer or an Independent Architect
(A) it cannot be repaired, rebuilt or restored within a period of six
months to the condition thereof immediately preceding such damage or
destruction, or (B) the Company is thereby prevented, in its reasonable
judgment, from carrying on its normal operations for a period of six
months, or (C) the cost of restoration would exceed the Net Proceeds of
insurance carried thereon;
29
<PAGE> 35
(ii) Title to, or the temporary use of all or substantially
all of the Project or any part thereof is taken under the exercise of
the power of eminent domain by any governmental body or by any person
acting under governmental authority which, in the opinion of both the
Company Representative and an Independent Engineer or an Independent
Architect, both filed with the Trustee, prevents or is likely to
prevent the Company from carrying on its normal operations for a period
of six months, or
(iii) A change in the Constitution of the State or the
Constitution of the United States of America, or a legislative or
administrative action (whether local, state or federal), or a final
decree, judgment or order of any court or administrative body (whether
local, state or federal), and not contested by the Company in good
faith causes the Loan Agreement to become void or unenforceable or
impossible of performance in accordance with the intent and purpose of
the parties as expressed in the Bond Documents.
(d) OPTIONAL REDEMPTION OF CREDIT PROVIDER BONDS. Bonds owned by the
Credit Provider as result of a purchase under the Reimbursement Agreement are
subject to redemption at the option of the Company, on at least two Business
Days' notice by the Company to the Credit Provider.
Section 4.02. SINKING FUND REDEMPTION. The Bonds are subject to
mandatory redemption at i00% of the principal amount thereof on the Interest
Payment Date on or immediately following May 1 in the years and in the principal
amounts indicated below, until such time as the principal amounts indicated
below are redeemed pursuant to the operation of this provision:
<TABLE>
<CAPTION>
YEAR PRINCIPAL AMOUNT YEAR PRINCIPAL AMOUNT
---- ---------------- ---- ----------------
<S> <C> <C> <C>
1999 $ 430,000 2008 $ 430,000
2000 430,000 2009 430,000
2001 430,000 2010 430,000
2002 430,000 2011 430,000
2003 430,000 2012 430,000
2004 430,000 2013 430,000
2005 430,000 2014 430,000
2006 430,000 2015 430,000
2007 430,000 2016* 440,000
</TABLE>
- ------------------
*Final Maturity
At its option, to be exercised by written notice delivered to the
Trustee on or before the 45th day preceding any sinking fund redemption date,
the Company may (a) deliver to the Paying Agent for cancellation Bonds in any
aggregate principal amount desired, or (b) receive a credit in respect of its
sinking fund redemption obligation for any Bonds which before said date have
been redeemed (otherwise than through the operation of the sinking fund) and
canceled by the Paying Agent and not theretofore applied as a credit against any
sinking fund redemption obligation. Each Bond so delivered or previously
redeemed shall be credited by the Trustee ratably at 100% of the principal
amount thereof against the obligations of the Issuer on sinking fund redemption
dates, and the principal amount of Bonds to be redeemed by operation of the
sinking fund shall be accordingly reduced.
Section 4.03. MANDATORY REDEMPTION UPON DETERMINATION OF TAXABILITY.
The Bonds are subject to mandatory redemption at a redemption price equal to
100% of the principal amount thereof with interest to but not including the
redemption date in whole (or in part as provided below), without premium (except
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as provided below with respect to Bonds which bear interest at a Term Rate), on
the first day of a month within 180 days after the Company receives written
notice from an Owner or former Owner or the Trustee of a Determination of
Taxability, or if such date is not a Business Day, on the next succeeding
Business Day; provided that with respect to any Bonds which bear interest at a
Term Rate, a premium equal to 3 % of the principal amount of such Bonds shall be
paid in be event of a redemption pursuant to this Section. No such determination
will be considered final unless the Owner or former Owner involved in the
determination the Company, the Trustee, the Remarketing Agent, the Credit
Provider and the Paying Agent prompt written notice of the commencement of the
proceedings resulting in the determination and offers the Company, subject to
the Company's agreeing to pay all expenses of the proceeding and to indemnify
the Owner against all liabilities that might result from it, the opportunity to
control the defense of the proceeding and either the Company does not agree
within 30 days to pay the expenses, indemnify the owner and control the defense
or the Company exhausts or chooses not to exhaust available procedures to
contest or obtain review of the result of the proceedings. Fewer than all the
Bonds may be redeemed if redemption of fewer than all the Bonds would result in
the interest payable on the Bonds remaining Outstanding being not includable in
the gross income for federal income tax purposes of any holder. If fewer than
all Bonds are redeemed, the Paying Agent will select the Bonds to be redeemed by
lot as provided in Section 4.05 or by such other method acceptable to the
Trustee as may be approved in an opinion of Bond Counsel. Only holders of Bonds
on the date of redemption shall be entitled to the redemption premium, if
applicable. No premium shall be due to former Owners or with respect to any
Bonds which were not Outstanding as of the date of the Determination of
Taxability. If Bonds mature after Determination of Taxability, but before
redemption pursuant to this paragraph, the applicable premium for such Bonds, if
any, shall be paid at their maturity.
Section 4.04. NOTICE OF REDEMPTION. Notice of redemption will be given
by the Paying Agent by Mail, not less than 30 days nor more than 60 days before
the redemption date to each Owner of the Bonds or portions thereof to be
redeemed at the last address shown on the registration books kept by the Paying
Agent. Such notice must (i) specify the Bonds to be redeemed, the redemption
date, the redemption price and the place or places where amounts due on such
redemption must be payable (which must be the principal office of the Paying
Agent) and if less than all of the Bonds are to be redeemed, the numbers of the
Bonds and the portions of Bonds to be redeemed, and (ii) state that on the
redemption date the Bonds to be redeemed will cease to bear interest.
If moneys are on deposit in the Bond Fund to pay the principal amount
of the Bonds called for redemption and premium and accrued interest thereon on a
redemption date, Bonds or portions thereof thus called and provided for as
hereinabove specified will not bear interest after such redemption date and will
not be considered to be Outstanding or to have any other rights under the
Indenture other than the right to receive payment. No payment of principal will
be made by the Paying Agent on any Bonds or portions thereof called for
redemption until such Bonds or portions thereof have been delivered for payment
or cancellation or the Paying Agent has received the items required by Section
2. 10 with respect to any mutilated, lost, stolen or destroyed Bonds.
Section 4.05. SELECTION OF BONDS TO BE REDEEMED. If the Bonds are
redeemed in part, DTC will select the Bonds to be redeemed pursuant to its rules
and procedures or, if the book-entry system with DTC or any other securities
depository has been discontinued, the Paying Agent will select the Bonds to be
redeemed by lot in such manner as the Paying Agent in its discretion may deem
proper, but Bonds held by the Credit Provider pursuant to the Reimbursement
Agreement will be selected first for redemption. Each Authorized Denomination of
principal amount represented by any Bond will be considered a separate Bond for
purposes of selecting the Bonds to be redeemed.
If a Bond subject to redemption is in a denomination larger than the
minimum Authorized Denomination, a portion of such Bond may be redeemed, but
only in a principal amount such that the
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unredeemed portion of such Bond is equal to an Authorized Denomination. For any
Bond in a denomination of more than the minimum Authorized Denomination, the
Paying Agent shall treat each such Bond as representing a single Bond in the
minimum Authorized Denomination plus that number of Bonds that is obtained by
dividing the remaining principal amount of such Bond by the Minimum Authorized
Denomination.
If it is determined that one or more, but not all, of the Authorized
Denominations of principal amount represented by any Bond is to be called for
redemption, then, on notice of intention to redeem such Authorized Denominations
of principal amount of such Bond, the Owner of such Bond, on surrender of such
Bond to the Paying Agent for payment of the principal amount of such Bond called
for redemption, will be entitled to receive a new Bond or Bonds in the aggregate
principal amount of the unredeemed balance of the principal amount of such Bond.
New Bonds representing the unredeemed balance of the principal amount of such
Bonds will be issued to the Owner thereof without charge therefor.
If the Owner of any Bond of a denomination greater than the amount
being redeemed fails to present such Bond to the Paying Agent for payment and
exchange as aforesaid, such Bond will, nevertheless, become due and payable on
the date fixed for redemption to the extent of the denomination being redeemed
and to that extent only.
Section 4.06. NO PARTIAL REDEMPTION AFTER DEFAULT. Anything in this
Indenture to the contrary notwithstanding, if an Event of Default occurs and is
continuing hereunder there will be no redemption of less than all of the Bonds
Outstanding.
Section 4.07. PAYMENT OF REDEMPTION PRICE. The Issuer will cause to be
deposited in the Bond Fund an amount sufficient to pay the principal of Bonds to
be redeemed, premium, if any, and interest to become due on the date fixed for
such redemption, and such Bonds are deemed to be paid within the meaning of
Article XI.
Section 4.08. REDEMPTION IN ACCORDANCE WITH PROCEDURES OF DEPOSITORY.
Notwithstanding any provisions contained herein, during any period in which the
Bonds are maintained pursuant to a Book-Entry System, redemption of the Bonds
shall occur in accordance with the Depository's standard procedures for
redemption of obligations such as the Bonds.
[End of Article IV]
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ARTICLE V
GENERAL COVENANTS
Section 5.01. PAYMENT OF PRINCIPAL AND INTEREST, PLEDGE OF TRUST
ESTATE; LIMITED LIABILITY. The Issuer covenants that it will promptly pay to the
Owners the principal, premium, if any, and interest represented by every Bond
issued under this Indenture and cause to be paid, solely from the sources
described in Article III the Purchase Price of Bonds tendered or deemed tendered
for purchase as set forth in Article III, at the place, on the dates and in the
manner provided herein and in the Bonds, provided that the principal, premium,
if any, and interest are payable by the Issuer solely from the Trust Estate, and
nothing in the Bonds or this Indenture will be considered as assigning or
pledging any other funds or assets of the Issuer or the Company other than the
Trust Estate. The Trust Estate is hereby pledged and assigned as security for
the equal and ratable payment of the Bonds and will be used for no other purpose
than to pay the principal of, premium, if any, and interest on the Bonds, except
as may be otherwise expressly authorized in this Indenture or the Loan
Agreement. Subordinate to such pledge, the Trust Estate is hereby pledged to the
Credit Provider as security for the payment of all amounts owed the Credit
Provider by the Company pursuant to draws on the Credit Facility under the
Reimbursement Agreement.
No recourse will be had for the payment of the principal of, premium,
if any or interest represented by any of the Bonds or for any claim based
thereon or on any obligation, representation, covenant, agreement or warranty
contained in this Indenture, against any past, present or future officer,
employee or agent of the Issuer, or any successor corporation, as such, either
directly or through the Issuer or any successor corporation, under any rule of
law or equity, statute or constitution or by the enforcement of any assessment
or penalty or otherwise, and all such liability of any such officer, employee or
agent as such is hereby expressly waived and released as a condition of and in
consideration of execution of this Indenture and the issuance of the Bonds.
Section 5.02. PERFORMANCE OF COVENANTS BY ISSUER; AUTHORITY; DUE
EXECUTION. The Issuer covenants that it will faithfully perform at all times any
and all covenants, undertakings, stipulations and provisions contained in this
Indenture, in any and every Bond issued, authenticated and delivered hereunder
and in all of its proceedings pertaining hereto. The Issuer covenants that it is
duly authorized under the constitution and laws of the State, including
particularly the Act, to cause the Bonds to be issued and to execute this
Indenture. The Issuer further covenants that all action on its part for the
execution and delivery of this Indenture and the issuance of the Bonds has been
duly and effectively taken, and that the Bonds in the hands of the Owners
thereof are and will be valid and enforceable according to the terms thereof and
hereof.
Section 5.03. RECORDING AND FILING; INSTRUMENTS OF FURTHER ASSURANCE.
The Issuer covenants that it will do, execute, acknowledge and deliver, or cause
to be done, executed, acknowledged and delivered, such indentures supplemental
hereto and such further acts, instruments and transfers as may reasonably be
required for the better assuring, transferring, pledging, assigning and
confirming to the Trustee all and singular the rights assigned hereby and the
amounts pledged hereby to the payment of the principal and premium, if any, and
interest evidenced by the Bonds and the payment of amounts due to the Credit
Provider under the Reimbursement Agreement.
Section 5.04. RECORDING AND FILING; FURTHER INSTRUMENTS. The Trustee,
at the expense of the Company, will cause to be filed all financing statements
related to this Indenture and all supplements hereto, and such other documents
as may be, in the opinion of counsel acceptable to the Trustee, necessary to be
kept and filed in such manner and in such places as may be required by law in
order to preserve and protect fully the security of the Owners of the Bonds and
the rights of the Trustee hereunder. The Issuer
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will, on the reasonable request of me Trustee, execute and deliver such further
instruments and take such further action as may be reasonable and as may be
required to effectuate the purposes of this Indenture.
Section 5.05. NO DISPOSITION OF TRUST ESTATE. Except as permitted by
this Indenture, the Issuer will not sell, lease, pledge, assign or otherwise
encumber or dispose of its interest in the Trust Estate and win promptly pay or
cause to be discharged, or make adequate provision in the judgment of the
Trustee to discharge, any lien or charge on any part thereof not permitted
hereby.
Section 5.06. ACCESS TO BOOKS. All books and documents in the
possession of the Issuer, the Trustee or the Company relating to the Project,
and the receipts and revenues of the Issuer from the Loan Agreement and the
Trust Estate will at all reasonable times be open to inspection by such
accountants or other agencies as the Issuer, the Trustee or the Company may from
time to time designate.
Section 5.07. ARBITRAGE AND TAX COVENANTS. The Issuer will not take or
permit, or omit to take or cause to be taken, any action that would adversely
affect the exclusion from gross income for federal income tax purposes of the
interest evidenced by or paid on the Bonds and, if it should take or permit, or
omit to take or cause to be taken, any such action, the Issuer will take or
cause to be taken all lawful actions within its power necessary to rescind or
correct such actions or omissions promptly on having knowledge thereof. The
Issuer acknowledges that the continued exclusion of interest evidenced by or
paid on the Bonds from an Owner's gross income for federal income tax purposes
depends, in part, on compliance with the arbitrage limitations imposed by
Section 148 of the Code. The Issuer covenants herein that it will comply with
all the requirements of Section 148 of the Code, including the rebate
requirements, and that it will not permit at any time any of the proceeds of the
Bonds or other funds under its control be used, directly or indirectly, to
acquire any asset or obligation, the acquisition of which would cause the Bonds
to be "arbitrage bonds" for purposes of Section 148 of the Code. The Trustee and
the Issuer covenant that they will comply with the Tax Regulatory Agreement.
Section 5.08. NOTIFICATION OF RATING AGENCY. The Trustee hereby agrees
to promptly notify Moody's, if the Bonds are rated by Moody's, and S&P, if the
Bonds are rated by S&P, at the address set forth in Section 13.07, of (i) any
appointment of a successor Trustee, (ii) any amendment or supplement to the
Indenture, the Loan Agreement, the Credit Facility or the Confirmation Letter,
if then in effect, (iii) any provision for payment of the Bonds in accordance
with Article XI, (iv) 30 days prior to the issuance of an Alternate Credit
Facility or a Substitute Confirmation Letter, (v) any notification that the
Credit Facility and the Confirmation Letter related thereto, if applicable, is
scheduled to expire as a result of receipt of a notice of non-extension or
similar notice under the Credit Facility or the Confirmation Letter or any
Alternate Credit Facility, (vi) a change in the Remarketing Agent, (vii) any
change in the method by which the interest rate is determined, (viii) a
mandatory tender or acceleration resulting from a failure to reimburse a drawing
under the Credit Facility or the Confirmation Letter, if applicable, to pay
interest on the Bonds and (ix) the giving of notice of the call for redemption
of any Bonds pursuant to Section 4.04.
[End of Article V]
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ARTICLE VI
DEPOSIT OF BOND PROCEEDS;
FUNDS AND ACCOUNTS;
CREDIT FACILITY
Section 6.01. CREATION OF FUNDS. There are hereby created and ordered
established the following trust funds and trust accounts to be held by the
Trustee:
(a) A Bond Fund and therein a Principal Account, an Interest
Account and a Credit Facility Account;
(b) A Bond Purchase Fund and therein a Credit Facility Account
and a General Account; and
(c) A Construction Fund.
The Trustee and the Remarketing Agent are hereby authorized to
establish any other funds or accounts hereunder, temporarily or otherwise,
necessary or desirable in the administration of this Indenture.
Section 6.02. DEPOSIT OF BOND PROCEEDS. The proceeds of the sale of the
Bonds will be deposited by the Trustee in the Construction Fund.
Section 6.03. DEPOSIT OF RECEIPTS AND REVENUES. All receipts and
revenues of the Issuer from the Loan Agreement, all moneys received from a draw
under the Credit Facility or the Confirmation Letter, if applicable, and any
other amounts deposited with the Trustee will be applied by the Trustee on
receipt thereof in the me following order of priority:
(a) to the Credit Facility Account of the Bond Fund, all
amounts drawn under the Credit Facility or the Confirmation Letter in
an amount sufficient to pay interest and principal due on the Bonds on
the next applicable Interest Payment Date and Bond Payment Date;
(b) to the Interest Account of the Bond Fund, an amount
sufficient, together with other amounts on deposit therein, to pay
interest due on the Bonds on the next Interest Payment Date;
(c) to the Principal Account of the Bond Fund, an amount
sufficient, together with other amounts on deposit therein, to pay
principal due on the Bonds on the next Bond Payment Date;
(d) From time to time, to or as directed by the Company, on
receipt from the Company by the Trustee of a written statement, the
amount of administrative fees or other fees, expenses and obligations
due to the Trustee, the Paying Agent and the Remarketing Agent; and
(e) to the Credit Facility Account of the Bond Purchase Fund,
an amount sufficient to pay the Purchase Price of Bonds tendered or
deemed tendered under Article III, less any remarketing proceeds.
Section 6.04. [INTENTIONALLY OMITTED.]
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Section 6.05. REBATE FUND. A "Rebate Fund" is established pursuant to
the Tax Regulatory Agreement. This Issuer and the Trustee agree to deposit
moneys in, and pay moneys out of, the Rebate Fund as provided in the Tax
Regulatory Agreement.
Section 6.06. BOND FUND. Amounts deposited as provided in Section 6.02,
amounts transferred as provided in Section 6.03 and any other amounts deposited
with the Trustee with instructions to deposit the same in the Principal Account
or the Interest Account of the Bond Fund will be deposited in the appropriate
Account of the Bond Fund. Amounts received by the Trustee from draws on the
Credit Facility or the Confirmation Letter, if applicable, as provided in
Section 6.13(a) will be deposited in the Credit Facility Account of the Bond
Fund. The Trustee will disburse or cause the Paying Agent to disburse moneys in
the Bond Fund in the following priority:
(a) moneys on deposit in the Credit Facility Account of the
Bond Fund will be applied to pay interest due on the Bonds on each
Interest Payment Date and principal of the Bonds due on each Bond
Payment Date;
(b) moneys on deposit in the Interest Account of the Bond Fund
which do not constitute Available Moneys will be segregated in a
separate subaccount therein until such moneys become Available Moneys,
at which time such Available Moneys will be held in the Interest
Account of the Bond Fund, and moneys on deposit in the Interest Account
of the Bond Fund which constitute Available Moneys will be applied to
pay interest due on the Bonds on each Interest Payment Date to the
extent that the amounts in the Credit Facility Account are insufficient
therefor or to reimburse the Credit Provider to the extent of draws
therefor which have not previously been reimbursed; and
(c) moneys on deposit in the Principal Account of the Bond
Fund which do not constitute Available Moneys will be segregated in a
separate subaccount therein until such moneys become Available Moneys,
at which time such Available Moneys will be held in the Principal
Account of the Bond Fund, and moneys on deposit in the Principal
Account of the Bond Fund which constitute Available Moneys will be
applied to pay principal of the Bonds due on each Bond Payment Date to
the extent that the amounts in the Credit Facility Account are
insufficient therefor or to reimburse the Credit Provider to the extent
of draws therefor which have not previously been reimbursed.
provided, however, that to the extent such principal or interest is
paid with proceeds of a drawing under the Credit Facility and the
Company does not reimburse the Credit Provider directly, the Trustee
shall promptly reimburse the Credit Provider from funds on deposit in
the Interest Account or the Principal Account of the Bond Fund (other
than proceeds from a drawing on the Credit Facility) in accordance with
written instructions given from time to time to the Trustee by the
Credit Provider.
To the extent that the moneys deposited in the Bond Fund would not
constitute Available Moneys at the time of such deposit, the Trustee shall
create separate subaccounts in the Bond Fund in which such moneys will be held
until they constitute Available Moneys.
Section 6.07. CONSTRUCTION FUND. Amounts deposited as provided in
Section 6.02 and any other amounts deposited with the Trustee with instructions
to deposit the same in the Construction Fund will be deposited in the
Construction Fund. The Trustee is hereby authorized and directed to disburse the
amounts deposited in the Construction Fund to the Company on the date of
issuance and delivery of the Bonds to reimburse the Company for the costs of the
Project as required by the provisions of the Loan Agreement and to issue its
checks therefor or otherwise pay upon receipt of satisfactory evidence of the
payment of
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such amounts by the Company relating to the Project. The Trustee shall keep and
maintain adequate records pertaining to the Construction Fund and all
disbursements therefrom.
Section 6.08. PAYMENTS FROM CONSTRUCTION FUND. Payment of the costs of
the Project shall be made from the Construction Fund as herein provided as long
as no Event of Default under Section 7.01 has occurred and is continuing. All
payments from the Construction Fund shall be subject to the provisions and
restrictions set forth in this Article, and the Issuer covenants that it will
not cause or permit to be paid from the Construction Fund any sums except in
accordance with the provisions and restrictions set forth in this Article.
Section 6.09. ITEMS OF COST. (a) For the purpose of this Indenture, the
costs of the Project payable from the Construction Fund shall include all costs
of acquiring, constructing, installing and equipping the Project and all other
items of cost incident to such acquisition, construction, installation and
equipping and the financing thereof and, without intending thereby to limit or
restrict any proper definition of such costs under applicable law, shall
include:
(1) payment to the Company of such amounts incurred, if any,
as are necessary to reimburse the Company in full for all advances and
payments made by it or for its account, with respect to the Project for
expenditures in connection with the acquisition of any property
required for the Project, the preparation of the plans and
specifications (including any preliminary study or planning of the
Project), or any aspect thereof and any reports or analyses concerning
the Project, and all real or personal property deemed necessary in
connection with the Project, or any one or more of said expenditures
(including architectural, engineering and supervisory services);
(2) the cost of acquiring by purchase, if such purchase shall
be deemed expedient, such land, property rights, rights of way,
franchises, easements and other interests as may be deemed necessary or
convenient in connection with the construction and operation of the
Project, options and partial payments therein; the cost of filing,
drawing or improving any lands so acquired, and the amount of any
damages incident to or consequent upon the construction and operations
of the Project; including the cost of the preparation of the plans and
specifications (including any preliminary study or planning of the
Project, or any aspect thereof and any reports or analyses concerning
the Project, and all real or personal property deemed necessary in
connection with the Project, or any one or more of said expenditures
(including architectural, engineering and supervisory services);
(3) payment for labor, services, materials and supplies used
or furnished in the acquisition and construction of the Project, all as
provided in the plans and specifications, payment for the cost of the
acquisition, construction, installation and installation of facilities
and equipment, and all real and personal property deemed necessary in
connection with the Project and payment for the miscellaneous expenses
incidental to any of the foregoing items;
(4) payment of any other costs and expenses relating to the
(i) acquisition, construction and equipping of the Project, including
capitalized interest and capitalized credit enhancement fees, if any,
on the Bonds during the period of construction of the Project, (ii) all
Costs of Issuance or (iii) administration properly chargeable to the
Project and the placing of the Project in operation; and
(5) the cost of any indemnity and surety bonds to secure
deposits in the Construction Fund, the fees and expenses of any
depository or depositories of the Construction Fund during
construction, taxes or other municipal or governmental charges lawfully
levied or assessed during
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construction upon the Project or any property acquired therefor, and
premiums on insurance, if any, in connection with the Project, during
construction.
(b) In addition, with respect to any Net Proceeds, including earnings
thereon, held in the Construction Fund under this Indenture, the Trustee shall
(i) upon the election by the Company under the Loan Agreement to repair or
restore the Project, apply such Net Proceeds to payment of costs of repairing,
reconstructing and restoring the Project, upon receipt of requisitions and
attachments as described above, and, after completion of such repair,
reconstruction and restoration, transfer any remaining Net Proceeds, including
earnings thereon, to the Bond Fund to be used as a credit against future
principal and interest payments due from the Company or (ii) upon the election
by the Company under the Loan Agreement to prepay the Note, transfer such
amounts to the Bond Fund for the purpose of redeeming Bonds in accordance with
the provisions hereof.
Section 6.10. REQUISITIONS FOR PAYMENT FROM CONSTRUCTION FUND. Payments
from the Construction Fund shall be made in accordance with the further
provisions of this Article. The Company shall authorize payments from the
Construction Fund upon requisition or invoice for such payment to be signed by
the Company and, except for costs related to issuance of the Bonds, the amount
to be paid, the name of the person, firm or corporation to whom payment is due
and the purpose for which the obligation to be paid was incurred; provided,
however, that no such authorization shall be given unless and until the Company
Representative shall have certified:
(1) that an obligation in the stated amount to be
paid has been incurred, is presently due and payable, is et proper cost
and has not been previously paid from money in the Construction Fund;
(2) that, so far as he is aware, there has not been
filed with or served on the Company or any officer or agent thereof
notice of any lien, right to lien or attachment upon, or claim
affecting the right to receive payment of, any of the moneys payable to
any person, firm or corporation to whom the amount is to be paid, which
has not been released or will not be released simultaneously with the
payment of such obligation;
(3) that in so far as any obligation mentioned in such
requisition or invoice was incurred for work, materials, supplies or
equipment in connection with the Project, such work was actually
performed, or the materials, supplies or equipment attributable to such
obligation was actually delivered or installed at the site of the
Project, or delivered for fabrication;
(4) that sufficient moneys are left in the Construction Fund
to complete the Project;
(5) that after taking into account the costs proposed to be
paid or reimbursed in said certificate, at least 95 % of the costs paid
or reimbursed out of the Construction Fund are amounts which will be
chargeable to the Project's capital account or which would be so
chargeable either with a proper election by the Company under the Code
or but for a proper election by the Company to deduct such amount and
were incurred and paid, or are to be incurred and paid, on or after
October 18, 1995;
(6) that after taking into account the costs proposed to be
paid or reimbursed in said certificate, no more than $155,000 of the
costs paid or reimbursed out of the Construction Fund are issuance
costs within the meaning of the Code;
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(7) that after taking into account the costs proposed to be
paid or reimbursed in such certificate, no costs paid or reimbursed out
of the Construction Fund are costs paid or incurred prior to October
18, 1995; and
(8) that no Event of Default as defined in Section 7.01 has
occurred and is continuing.
Section 6.11. ESTABLISHMENT OF COMPLETION DATE. The completion date for
the Project shall be evidenced by a certificate signed by the Company
Representative setting forth the costs of the Project and setting forth the
information required to be set forth therein pursuant to Section 3.6 of the Loan
Agreement and otherwise complying with Section 3.6 of the Loan Agreement.
Notwithstanding the foregoing, such certificate shall state that it is given
without prejudice to any rights against third parties which exist at the date of
such certificate or which may subsequently come into being.
Section 6.12. BALANCE IN CONSTRUCTION FUND. On the receipt by the
Trustee of the certificate evidencing the completion date accompanied by an
Opinion of Counsel to the Company that there are no uncancelled mechanics',
laborers', lessors' or materialmen's liens against the Project or on file in any
public office where the same should be filed in order to be valid liens against
the Project and that the time within which such liens can be filed has expired,
any balance remaining in the Construction Fund (other than amounts retained to
pay costs not then due and payable or for which the liability for payment is in
dispute) shall be used or transferred by the Trustee as provided in Section 3.6
of the Loan Agreement.
Section 6.13. CREDIT FACILITY; ALTERNATE CREDIT FACILITY; CONFIRMATION
LETTER; SUBSTITUTE CONFIRMATION LETTER.
(a) The Trustee will make timely, draws on the Business Day
prior to any Purchase Date in accordance with the Credit Facility such
that timely payment under Section 6.06 and Section 6.17 is made without
resort to the other sources of payment described therein (except for
remarketing proceeds available under Section 6.17). Such draws will be
in amounts equal to the total principal and interest due on the Bonds,
including on the redemption or acceleration thereof, or the Purchase
Price payable -with respect to the Bonds (excluding Credit Provider
Bonds which are not entitled to the benefit of the Credit Facility). If
the draws are made as a result of a mandatory tender on a Credit
Expiration Date under Section 3.01(c) and an Alternate Credit Facility
has been delivered to the Trustee as described below, such draws are to
be made under the Credit Facility or the Confirmation Letter, if
applicable, and not under the Alternate Credit Facility or Substitute
Confirmation Letter. The Trustee will make such draws in accordance
with the Credit Facility so as to be able to obtain and transfer funds
one Business Day prior to the applicable payment date. Proceeds of
draws under the Credit Facility and the Confirmation Letter, if any,
will be segregated from other moneys held by the Trustee.
Notwithstanding any other provisions of this Indenture, moneys received
by the Trustee from a drawing under the Credit Facility of and the
Confirmation Letter, if applicable, will not be applied to the payment
of the principal or interest on any Bonds held of record by, or to the
knowledge of the Trustee, for the account of the Company or the Issuer.
In the event the Credit Provider fails to honor a draw on the Credit
Facility or in the event the Credit Facility has been repudiated, the
Trustee shall draw on the Confirmation Letter in accordance with its
terms so as to pay the principal, interest and purchase price on the
Bonds when due hereunder.
(b) With the prior written consent of the Remarketing Agent,
the Company may, at any time, deliver an Alternate Credit Facility to
the Trustee in substitution for the Credit Facility then in effect or a
Substitute Confirmation Letter for the Confirmation Letter then in
effect. In
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connection with the delivery of an Alternate Credit Facility or Substitute
Confirmation Letter, as applicable there must be delivered to the Remarketing
Agent and the Trustee the following:
(1) an opinion of Bond Counsel to me effect that the
delivery of such Alternate Credit Facility or such Substitute
Confirmation Letter, as applicable, is permitted hereunder and
will not adversely affect the exclusion from gross income for
federal income tax purposes of interest on the Bonds;
(2) an Opinion of Counsel to the obligor of such
Alternate Credit Facility or Substitute Confirmation Letter,
as applicable, addressed to the Issuer, the Trustee and the
Remarketing Agent to the effect that such Alternate Credit
Facility or Substitute Confirmation Letter, as applicable,
constitutes a legal, valid and enforceable obligation of such
obligor (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws for the relief of debtors and by
general principles of equity that permit the exercise of
judicial discretion);
(3) an Opinion of Counsel acceptable to the Trustee
and the Issuer, addressed to the Trustee and the Issuer,
stating that the substitution of such Alternate Credit
Facility or Substitute Confirmation Letter, as applicable,
will not subject the Bonds or such Alternate Credit Facility
or Substitute Confirmation Letter, to the registration
requirements of the Securities Act of 1933, as amended, or the
Indenture to qualification under the Trust Indenture Act of
1939, as amended, or, in the alternative, the Alternate Credit
Facility or Substitute Confirmation Letter has been registered
pursuant to the Securities Act of 1933, as amended;
(4) an amount sufficient to pay all costs incurred by
the Trustee and the Remarketing Agent in connection with the
substitution, if any, of such Alternate Credit Facility or
Substitute Confirmation Letter; and
(5) the written consent to the delivery of the
Alternate Credit Facility or the Substitute Confirmation
Letter from the Remarketing Agent.
(c) If at any time an Alternate Credit Facility has been delivered to
the Trustee in substitution for the Credit Facility then in effect or a
Substitute Confirmation Letter has been delivered to the Trustee to replace the
Confirmation Letter then in effect, each meeting the criteria set forth in
subsection (b) of this Section and if the Trustee and the Remarketing Agent
receive (i) written evidence from Moody's, if the Bonds are rated by Moody's,
and S&P, if the Bonds are rated by S&P, in each case to the effect that such
rating agency has reviewed the proposed Alternate Credit Facility or Substitute
Confirmation Letter, as applicable, and that the substitution of the proposed
Alternate Credit Facility for the Credit Facility then in effect or the
substitution of the Substitute Confirmation Letter for the Confirmation Letter
then in effect will not, of itself, result in a reduction or withdrawal of its
rating of the Bonds from that which then prevails, or (ii) in the event that the
Bonds are not then rated, evidence satisfactory to the Trustee and the
Remarketing Agent that the issuer of the Alternate Credit Facility or Substitute
Confirmation Letter, as the case may be, has (A) senior debt or long-term bank
deposits that are rated by Moody's or S&P at a rating at least equal to the
rating then assigned to the senior debt or long-term bank deposits of the Credit
Provider or the Confirming Bank, as the case may be, or (B) outstanding letters
of credit or other similar instruments supporting debt obligations that are
rated by Moody's or S&P at a rating at least equal to the rating assigned to
debt obligations supported with letters of credit or similar instruments issued
by the Credit Provider or the Confirming Bank, as the case may be, the Trustee
will accept such Alternate Credit Facility and promptly cause the
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Credit Facility then in effect to be canceled in accordance with its
terms for cancellation or will accept such Substitute Confirmation
Letter and promptly cause the Confirmation Letter then in effect to be
canceled in accordance with its terms for cancellation. If the Trustee
and the Remarketing Agent do not receive the written evidence from
Moody's or S&P described in the preceding sentence, the Trustee will
not cancel the Credit Facility or Confirmation Letter then in effect,
as applicable, until the mandatory tender required by Section 3.01(c)
has occurred. The Trustee will give notice to all Owners as soon as
practicable (but not more than 10 days thereafter) of its acceptance of
an Alternate Credit Facility or a Substitute Confirmation Letter.
(d) If an Alternate Credit Facility is delivered, a Substitute
Confirmation Letter will not be required so long as the rating on the
Bonds as a result of such Alternate Credit Facility will be equal to or
higher than "A."
(e) Notwithstanding anything to the contrary contained herein,
there shall at all times be a Credit Facility in effect with respect to
any Bonds bearing interest at (i) a Variable Rate and (ii) a Term Rate
provided the applicable Term Rate Period ends prior to the final stated
maturity date of the Bonds. A Credit Facility need not be in effect at
all times with respect to Term Rate Bonds provided the applicable Term
Rate Period ends on the final stated maturity date of the Bonds.
Section 6.14. BONDS NOT PRESENTED FOR PAYMENT. If any Bonds are not
presented for payment when the principal thereof becomes due, either at
maturity, or at the date fixed for redemption thereof, or otherwise, or if any
interest check is not cashed, if funds sufficient to pay such Bond have been
made available by the Issuer to the Trustee or any Paying Agent for the benefit
of the Owner thereof, all liability of the Issuer to the Owner thereof for the
payment of such Bond will forthwith cease, terminate and be completely
discharged, and it will then be the duty of the Trustee and any Paying Agent to
hold such funds in trust, uninvested and without liability for interest thereon,
for the benefit of the Owner of such Bond who will thereafter be restricted
exclusively to such funds for any claim of whatever nature on his part under
this Indenture or on, or with respect to, said Bond. Any money that is so set
aside or transferred and that remains unclaimed by the Owners for a period of 5
years after such payment has become due and payable will be treated as abandoned
property under applicable state law, and the Trustee or Paying Agent will report
and remit this property to the escheat fund according to the requirements of
applicable state law. Thereafter, the Owners may look only to the escheat fund
for payment and then only to the extent of the amounts so received without any
interest thereon, and the Issuer and the Trustee or Paying Agent will have no
responsibility with respect to such money.
Section 6.15. REFUNDING OF BONDS. If all Outstanding Bonds are paid,
redeemed or deemed to have been paid within the meaning of Article XI by reason
of the application of the proceeds of the sale of any obligations under an
indenture other than this Indenture, the Trustee will, without further
authorization, withdraw all amounts remaining in all funds and accounts and
deposit such amounts into corresponding funds or accounts created under the
indenture under which such obligations are executed and delivered, such
withdrawals and deposits to be made, in accordance with the provisions of such
indenture, on the date on which the Bonds are so paid, redeemed or deemed to
have been paid. The foregoing is subject to the condition that arrangements
satisfactory to the Credit Provider are made with regard to amounts due or to
become due to the Credit Provider under the Reimbursement Agreement.
Section 6.16. PAYMENT TO THE COMPANY. After the right, title and
interest of the Trustee in and to the Trust Estate and all covenants, agreements
and other obligations of the Issuer to the Owners has ceased, terminated and
become void and has been satisfied and discharged in accordance with Article XI,
and all fees, expenses and other amounts payable to the Credit Provider, the
Issuer, the Paying Agent, the Trustee and the Remarketing Agent, pursuant to any
provisions hereof, of the Placement and Remarketing
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<PAGE> 47
Agreement, or of the Reimbursement Agreement, have been paid in full, any moneys
remaining in any fund or account hereunder will be paid as directed by the
Company.
Section 6.17. BOND PURCHASE FUND. Amounts derived from the sources
described in Section 3.02(a) and (b) to pay the Purchase Price of Bonds and,
except amounts derived from the source described in Section 3.02(c) and (d), any
other amounts deposited with the Trustee to be applied to pay the Purchase Price
of Bonds will be deposited into the General Account of the Bond Purchase Fund.
Amounts derived from the source described in Section 3.02(c) and (d) will be
deposited into the Credit Facility Account of the Bond Purchase Fund. The
Trustee will disburse money hi the Bond Purchase Fund (all disbursement to be
made first from the General Account until it is depleted and thereafter from the
Credit Facility Account) to pay the Purchase Price of Bonds tendered or deemed
tendered pursuant to Section 3.01.
Section 6.18. CUSTODY OF FUNDS AND ACCOUNTS. Except as otherwise
expressly provided herein, all funds and accounts created pursuant to this
Indenture and held by the Trustee shall be held in trust, in the name of the
Issuer, for the benefit of the Owners and, to the extent of amounts owed by the
Company to the Credit Provider under the Reimbursement Agreement, the Credit
Provider.
[End of Article VI]
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ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01. EVENTS OF DEFAULT. If any of the following events occur
it is hereby defined as and shall be deemed an "Event of Default" under this
Indenture:
(a) A failure to pay the principal of or premium, if any, on
any Bond when the same becomes due and payable, whether at the stated
maturity thereof or on proceedings for redemption;
(b) A failure to pay any installment of interest on any Bond
when the same becomes due and payable;
(c) A failure to pay any amount due with respect to the
Purchase Price of Bonds delivered or deemed delivered pursuant to
Section 3.01 after such payment becomes due and payable;
(d) Receipt by the Trustee of written notice from the Credit
Provider of nonreinstatement of the Credit Facility to the Coverage
Amount on or before the date specified in the Credit Facility after a
draw on the Credit Facility or the Confirmation Letter, if then in
effect, to pay interest on the Bonds;
(e) The Trustee's receipt of written notice from the Credit
Provider that an "Event of Default" (as that term is defined in the
Reimbursement Agreement) has occurred under the Reimbursement Agreement
and written request that the Bonds and all accrued and unpaid interest
thereon become immediately due and payable;
(f) The occurrence of an "Event of Default" as provided in the
Loan Agreement; and
(g) A failure by the Issuer to observe and perform any
covenant, condition, agreement or provisions (other than as described
in subsections (a), (b), (c), (d) or (e) of this Section) contained in
the Bonds or in this Indenture on the part of the Issuer to be observed
or performed, which failure continues for a period of 90 days after
written notice, specifying such failure and requesting that it be
remedied, has been given to the Issuer by the Trustee, which may give
such notice in its discretion and will give such notice at the written
request of Owners of not less than 25% of principal amount of the Bonds
Outstanding, unless the Trustee, or the Trustee and Owners of a
principal amount of Bonds not less than the principal amount of Bonds
the Owners of which requested such notice, as the case may be, agrees
in writing to an extension of such period prior to its expiration;
provided, however, that the Trustee, or the Trustee and the Owners of
such principal amount of Bonds, as the case may be, will be deemed to
have agreed to an extension of such period if corrective action is
initiated by the Issuer within such period and is being diligently
pursued.
Section 7.02. REMEDIES ON DEFAULT.
(a) (i) On the occurrence and continuance of an Event of
Default under Sections 7.01 (a) - (c) or 7.01(f) or (g), the Trustee
may, or if required by the Credit Provider or the Owners of a majority
of the principal amount of the Bonds Outstanding, shall, declare all
obligations due under the Loan Agreement, the Note and the Bonds to be
immediately due and payable, whereupon they shall, without further
action, become due and payable, anything in this Indenture, the Note
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<PAGE> 49
or in the Bonds to the contrary notwithstanding or (ii) on the
occurrence and continuance of an Event of Default under Section 7.01(d)
or (e), the Trustee shall declare all obligations due under the Loan
Agreement, the Note and the Bonds to be due and payable within five
days thereafter, whereupon they shall, without further action, become
due and payable on such date, anything in this Indenture, the Note or
in the Bonds to the contrary notwithstanding. In the event of such
acceleration, the Trustee shall immediately notify the Issuer, the
Credit Provider and the Remarketing Agent, and the Trustee shall draw
on the Credit Facility in accordance with Section 6.13(a). Upon such
declaration of acceleration, interest on the Bonds shall cease to
accrue.
(b) The provisions of the preceding paragraph are subject to
the condition that if, after the principal of any of the Bonds have
been so declared to be due and payable, and before any judgment or
decree for the payment of the moneys due has been obtained or entered
as hereinafter provided, the defaulting party (the "Defaulting Party")
shall cause to be deposited with the Trustee a sum sufficient to pay
all matured installments of the principal of and interest on all Bonds
which have become due otherwise than by reason of such declaration
(with interest upon such overdue installments of interest, at the rate
per annum borne by the Bonds) and such amount as shall be sufficient to
cover reasonable compensation and reimbursement of expenses payable to
the Trustee, and all Events of Default hereunder other than nonpayment
of the principal of the Bonds which has become due by said declaration
has been remedied, then, in every such case, such Event of Default
shall be deemed waived and such declaration and its consequences
rescinded and annulled, and the Trustee shall promptly give written
notice of such waiver, rescission or annulment to the Issuer, the
Company, the Paying Agent and the Remarketing Agent and shall give
notice thereof by Mail to all Owners; but no such waiver, rescission
and annulment shall extend to or affect any subsequent Event of Default
or impair any right or remedy consequent thereon.
The provisions of paragraph (a) are further subject to the
condition that any waiver of any event of default under the Loan
Agreement and a rescission and annulment of its consequences shall
constitute a waiver of the corresponding Event of Default under this
Indenture and a rescission and annulment of the consequences thereof.
If notice of such event of default under the Loan Agreement shall have
been given as provided herein and if the Trustee thereafter has
received notice that such event of default has been waived, the Trustee
shall promptly give written notice of such waiver, rescission or
annulment to the Defaulting Party and shall give notice thereof by Mail
to all Owners; but no such waiver, rescission and annulment shall
extend to or affect any subsequent Event of Default or impair any right
or remedy consequent thereon.
(c) On the occurrence and continuance of any Event of Default,
then and in every such case the Trustee in its discretion may, and on
the written direction of Owners of not less than majority in principal
amount of the Bonds Outstanding and receipt of indemnity to its;
satisfaction, shall, in its own name and as the trustee of an express
trust:
(i) by mandamus, or other suit, action or proceeding
at law or in equity, enforce all rights of the Owners, and
require the Defaulting Party to carry out any agreements with
or for the benefit of the Owners and the Credit Provider and
to perform its or their duties under the Loan Agreement and
this Indenture, provided that any such remedy may be taken
only to the extent permitted under the applicable provisions
of the Loan Agreement or this Indenture, as the case may be;
(ii) take whatever action at law or in equity may
appear necessary or desirable to enforce its rights against
the Defaulting Party.
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No right or remedy is intended to be exclusive of any other
rights or remedies, but each and every such right or remedy is
cumulative and in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. If any Event
of Default has occurred and if requested by (i) the Credit Provider or
(ii) the Owners of a majority in aggregate principal amount of Bonds
then Outstanding and the Trustee is indemnified as provided in Section
8.06, the Trustee shall be obligated to exercise such one or more of
the rights and powers conferred by this Section as the Trustee, being
advised by counsel, shall deem most expedient in the interests of the
Owners and the Credit Provider.
Section 7.03. CREDIT PROVIDER'S OR OWNERS' RIGHT TO DIRECT PROCEEDINGS.
Anything in this indenture to the contrary notwithstanding, (i) the Credit
Provider or (ii) if the Credit Provider is in default with respect to its
obligations under the Credit Facility, the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding have the right, at any time, to
the extent permitted by law, by an instrument or instruments in writing executed
and delivered to the Trustee, to direct the time, method and place of conducting
all proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or for the appointment of a receiver, and any
other proceedings hereunder; provided that such direction shall not be otherwise
than in accordance with the provisions hereof. The Trustee is not required to
act on any direction given to it pursuant to this Section until the indemnity
described in Section 8.06 is furnished to it by the Credit Provider or by such
Owners, as appropriate.
Section 7.04. RIGHTS AND REMEDIES OF OWNERS. Neither the Credit
Provider nor an Owner has any right to institute any suit, action or proceeding
in equity or at law for the enforcement of this Indenture or for the execution
of any trust hereof or for the appointment of a receiver or any other remedy
hereunder, unless a Default has occurred of which the Trustee has been notified
as provided in Section 8.05, or of which by said Section it is deemed to have
notice, nor unless (i) the Credit Provider or (ii) the Owners of not less than a
majority in aggregate principal amount of Bonds then Outstanding shall have made
written request to the Trustee and have offered reasonable opportunity either to
proceed to exercise the powers granted therein or to institute such action, suit
or proceedings in its own name, nor unless they have also offered to the Trustee
indemnity as provided in Section 8.06 nor unless the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its own name; and such notification, request and
offer of indemnity are hereby declared in every case at the option of the
Trustee to be conditions precedent to the execution of the powers and trusts of
this Indenture, and to any action or cause of action for the enforcement of this
Indenture, or for the appointment of a receiver or for any other remedy
hereunder; it being understood and intended that neither the Credit Provider nor
any Owner has any right in any manner whatsoever to affect, disturb or prejudice
the lien of this Indenture by its or their action or to enforce any right
hereunder except in the manner herein provided and that all proceedings at law
or in equity shall be instituted, had and maintained in the manner herein
provided and for the equal benefit of the Owners of all Bonds then Outstanding.
Nothing contained in this Indenture shall, however, affect or impair the right
of any Owner to enforce the payment of the principal of, premium, if any, and
interest on any Bond at and after the maturity thereof.
Section 7.05. TRUSTEE MAY ENFORCE RIGHTS WITHOUT BONDS. All rights of
action and claims under this Indenture or any of the Bonds outstanding hereunder
may be enforced by the Trustee without the possession of any of the Bonds or the
production thereof in any trial or proceedings relative thereto; and any suit or
proceeding instituted by the Trustee shall be brought in its name as the
Trustee, without the necessity of joining as plaintiffs or defendants any Owners
of the Bonds, and any recovery of judgment shall be for the ratable benefit of
the Owners of the Bonds and thereafter the Credit Provider, subject to the
provisions of this Indenture.
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Section 7.06. DELAY OR OMISSION NO WAIVER. No delay or omission of the
Trustee or of any to exercise any Owner right or power accruing upon any Default
shall exhaust or impair any such right or power or shall be construed to be a
waiver of any such Default, or acquiescence therein; and every power and remedy
given by this Indenture may be exercised from time to time and as often as may
be deemed expedient.
Section 7.07. NO WAIVER OF ONE DEFAULT; TO AFFECT ANOTHER. No waiver of
any Default hereunder, whether by the Trustee or the Owners, shall extend to or
affect any subsequent or any other then existing Default or shall impair any
rights or remedies consequent thereon.
Section 7.08. DISCONTINUANCE OF PROCEEDINGS ON DEFAULT POSITION OF
PARTIES RESTORED. If the Trustee has proceeded to enforce any right under this
Indenture and such proceedings have been discontinued or abandoned for any
reason, or have been determined adversely to the Trustee, then and in every such
case the Issuer, the Company, the Trustee and the Owners shall be restored to
their former positions and rights hereunder with respect to the Trust Estate,
and all rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken
Section 7.09. WAIVERS OF EVENTS OF DEFAULT. The Trustee may in its
discretion waive any Event (of Default hereunder and its consequences, and
notwithstanding anything else to the contrary contained in this Indenture shall
do so on the written request of the Owners of a majority in aggregate principal
amount all the Bonds then Outstanding; provided, however, that there shall not
be waived without the consent of the Owners of 100% of the Bonds then
Outstanding as to which the Event of Default exists (a) any Event of Default in
the payment of the principal of or premium on any Outstanding Bonds at the date
of maturity specified therein or (b) any default in the payment when due of the
interest on any such Bonds, unless therefore such waiver or rescission, all
arrears of interest and all arrears of payments of principal and premium, if
any, then due, as the case may be (both with interest on all overdue
installments at the rate borne by the Bonds), and all expenses of the Trustee in
connection with such default shall have been paid or provided for. In case of
any such waiver, or in case any proceedings taken by the Trustee on account of
any such Default have been discontinued or abandoned or determined adversely to
the Trustee, then and in every such case the Issuer, the Company, the Trustee
and the Owners shall be restored to their former positions and rights hereunder
respectively, but no such waiver or rescission shall extend to any subsequent or
other Default, or impair any right consequent thereon. Notwithstanding anything
in the foregoing to the contrary, (a) an Event of Default under Section 7.01(d)
may be waived only if the Trustee receives written notice from the Credit
Provider that the Credit Facility has been restored to the Coverage Amount and
(b) an Event of Default under Section 7.01(e) may not be waived without the
consent of the Credit Provider.
Section 7. 10. APPLICATION OF MONEYS. All moneys received by the
Trustee pursuant to any right given or action taken under the provisions of this
Article or held by the Trustee hereunder shall, after payment of the costs and
expenses of the proceedings resulting in the collection of such moneys and of
the expenses, liabilities and advances incurred or made by the Trustee, be
deposited in the Bond Fund and applied as follows:
(a) Unless the principal of all the Bonds has become or has
been declared due and payable, all such moneys shall be applied:
FIRST - To the payment to the persons entitled
thereto of all installments of interest then due on the Bonds,
in the order of the maturity of the installments of such
interest beginning with the earliest such maturity and, if the
amount available is not sufficient, to pay in full any
particular installment, then to the payment ratably, according
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<PAGE> 52
to the amounts due on such installment, to the persons
entitled thereto, without any discrimination or privilege; and
SECOND - To the payment to the persons entitled
thereto of the unpaid principal of and premium, if any, on any
of the Bonds which have become due (other than Bonds matured
or called for redemption for the payment of which moneys am
held pursuant to the provisions of this Indenture), in the
order of their due dates and beginning with the earliest due
date and, if the amount available is not sufficient to pay in
full Bonds due on any particular date, then to the payment
ratably, according to the amount of principal due on such
date, to the persons entitled thereto without any
discrimination or privilege; and
THIRD - The payment to the persons entitled thereto
of all installments of interest on overdue installments of
interest and to the payment to the persons entitled thereto of
all installments of interest on overdue installments of
principal and premium, if any, to the extent permitted by law
and if the amount available is not sufficient to pay in full
any particular installment, then to the payment ratably,
according to the amounts due on such particular installment,
to the persons entitled thereto, without any discrimination or
privilege;
FOURTH - To be held for the payment to the persons
entitled thereto as the same shall become due of the principal
of, premium, if any, and interest on the Bonds which may
thereafter become due either at maturity or on call for
redemption before maturity and, if the amount available is not
sufficient to pay in full Bonds due on any particular date,
together with interest and premium, if any, then due and owing
thereon, payment shall be made ratably according to the amount
of principal, and premium, if any, and interest due on such
date to the persons entitled thereto without any
discrimination or privilege; and
FIFTH - To the payment of all sums due the Credit
Provider pursuant to the Reimbursement Agreement.
(b) If the principal of all the Bonds has become due or has
been declared due and payable, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid on the Bonds,
without preference or priority of principal over interest or of
interest over principal, or of any installment of interest over any
other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due, respectively, for principal and
interest, to the persons entitled thereto without any discrimination or
privilege, with interest on overdue installments of interest or
principal. Subsequent to making such payment remaining moneys shall be
applied to the payment of all sums due the Credit Provider pursuant to
the Reimbursement Agreement.
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied at such times, and from time to time, as
the Trustee shall determine, having due regard to the amount of such moneys
available for application and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee shall apply
such funds, it shall fix the date (which shall be an Interest Payment Date
unless it shall deem another date more suitable) on which such application is to
be made and upon such date interest on the amounts of principal to be paid on
such dates shall cease to accrue. The Trustee shall give such notice as it may
deem appropriate of the deposit with it of any such moneys and of the fixing of
any such date, and shall not be required to make payment to the Owner of any
Bond until such Bond is presented to the Trustee for appropriate endorsement or
for cancellation if fully paid.
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<PAGE> 53
Whenever the principal of, premium, if any, and interest on all of the
Bonds have been paid under the provisions of this Section 7.10 and all expenses
and charges of the Trustee and amounts owing to the Credit Provider and the
Issuer have been paid, any balance remaining in the Funds created hereunder
shall, subject to the provisions of the Reimbursement Agreement, be paid to the
Company.
Section 7.11. ASSIGNMENT TO CREDIT PROVIDER. It is expressly understood
and agreed by the Trustee ,that tile Issuer does hereby pledge and assign to the
Credit Provider, in consideration of the Credit provider's issuance of the
Credit Facility, all of the Trust Estate herein assigned to the Trustee as
security for the payment of the Bonds, which assignment to the Credit Provider
is subordinate to the simultaneous assignment thereof to the Trustee pursuant to
this Indenture.
Section 7.12. RECOGNITION OF CREDIT PROVIDER OR ITS ASSIGNEE AS
COMPANY. The Trustee hereby acknowledges that following receipt of notice from
the Credit Provider of the Credit Provider's election to exercise its right to
cure an "Event of Default" under the Loan Agreement, the Trustee shall recognize
that so long as the conditions of the Loan Agreement have been satisfied, the
Credit Provider, or its respective assignees, as the case may be, constitutes
the Company, and possesses all the rights, and owes all the obligations of the
Company, in accordance with the Loan Agreement; provided, however, that the
Trustee shall not recognize any assignee's assumption of the Company's rights
and obligations unless the Trustee has received (a) evidence in writing from an
Authorized Issuer Representative that such assignee has been approved by the
Issuer, (b) an instrument or instruments evidencing the assignee's assumption of
the Company's rights and obligations, and (c) an opinion of Bond Counsel to the
effect that such assumption will not adversely affect (i) the exclusion of the
interest payable on the Bonds from the gross money of the Owners of the Bonds
for purposes of federal income taxation pursuant to Section 103 of the Code, and
(ii) the exemption of the Bonds from state, county, and municipal taxation in
the State.
[End of Article VII]
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<PAGE> 54
ARTICLE VIII
TRUSTEE; PAYING AGENT; REMARKETING AGENT
Section 8.01. ACCEPTANCE OF TRUST. The Trustee hereby accepts and
agrees to execute the trusts hereby created, but only on the additional arms set
forth in this Article, to all of which the respective owners of Bonds agree by
their acceptance of delivery of any of the Bonds. The Trustee will not be
required to give any bond or surety in respect of the execution of the trusts
and powers or otherwise in respect of the premises herein.
Section 8.02. NO RESPONSIBILITY FOR RECITALS. The recitals, statements
and representations contained in this Indenture or in the Bonds, save only the
Trustee's or Paying Agent's authentication on the Bonds, will be taken and
construed as made by and on the part of the Issuer, and not by the Trustee, and
the Trustee does not assume, and will not have, any responsibility or obligation
for the correctness of any thereof.
Section 8.03. LIMITATIONS ON LIABILITY. The Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. The Trustee may execute any of
the trusts or powers hereof and perform the duties required of it hereunder by
or through attorneys, agents, receivers or employees, and will be entitled to
advice of counsel concerning all matters of trust and its duties hereunder, and
the Trustee will not be answerable for the default or misconduct of any such
attorney, agent or employee selected by it with reasonable care. Without
limitation, the Trustee will be entitled to the benefit of the foregoing
sentence with respect to the delegation to the Paying Agent of any or all of the
Trustee duties hereunder, including its duties with respect to payment of
principal of, premium, if any, or interest on, or redemption or purchase of the
Bonds, conversion of the interest rate on any Bonds, the authentication and
delivery of Bonds, and exchange and transfer thereof. The Trustee will not be
answerable for the exercise of any discretion or power under this Indenture or
for anything whatsoever in connection with the trust created hereby, except only
for its own gross negligence or willful misconduct.
No provision of this Indenture will require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers. The Trustee will not be answerable for the exercise of any discretion or
power under this Indenture or for anything whatsoever in connection with the
trust created hereby, except only for its own gross negligence or willful
misconduct.
Section 8.04. COMPENSATION, EXPENSES AND ADVANCES. The Trustee, the
Paying Agent and the Remarketing Agent are entitled to reasonable compensation
for their services rendered hereunder (not limited by any provision of law in
regard to the compensation of the trustee of an express trust) and to
reimbursement for their actual out-of-pocket expenses (including counsel fees)
reasonably incurred in connection therewith except as a result of their
negligence or misconduct. If the Issuer fails to perform any of the covenants or
agreements contained in this Indenture, other than the covenants or agreements
in respect of the payment of the principal of and interest on the Bonds, the
Trustee may, in its uncontrolled discretion and without notice to the Owners of
Bonds, at any time and from time to time, make advances to effect performance of
the same on behalf of the Issuer, but the Trustee will be under no obligation to
do so; and any and all such advances may bear interest at a rate per annum not
exceeding the rate of interest then in effect and as announced by the Trustee or
any bank controlling, controlled by or in common control with the Trustee as its
prime lending rate for domestic commercial loans in the Company in which the
principal office of the Trustee is located; but no such advance will operate to
provide relief
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from any Default hereunder. If the Issuer has failed to make any payment to the
Trustee hereunder and such failure has resulted in an Event of Default
hereunder, the Trustee, the Paying Agent and the Remarketing Agent each will
have, in addition to any other rights hereunder, a claim, before the claim of
the owners of Bonds, for the payment of its compensation and the reimbursement
of its expenses and any advances made by it, as provided in this Section, on the
moneys and obligations in all Funds and Accounts (other than the Rebate Fund)
created hereunder, except for moneys received under the Credit Facility, except
for moneys on deposit in a special subaccount of the Principal Account of the
Bond Fund to pay redemption premium, except for moneys or obligations deposited
with or paid to the Trustee for the redemption or payment of Bonds which are
deemed to have been paid in accordance with Article XI, redeem except for funds
held pursuant to Section 6.15, and except for Remarketing Proceeds.
Section 8.05. NOTICE OF EVENT OF DEFAULT AND OTHER EVENT OR FACTS. The
Trustee will not be required to take notice, or be deemed to have notice or
knowledge, of the existence or occurrence of any event or fact (other than an
Event of Default described under Section 7.01, except for paragraphs (f) and (g)
thereof), under an officer, agent or employee of the Trustee who has
specifically been designated as being responsible for matters relating to the
Bonds has actual knowledge of such Event of Default, event or fact or the
Trustee has been specifically notified in writing of such Event of Default,
event or fact by Owners of at least 25% of principal amount of the Bonds
Outstanding, by the Paying Agent, the Remarketing Agent or the Credit Provider.
The Trustee may, however, at any time, in its discretion, require of the Issuer
full information and advice as to the performance of any of the covenants,
conditions and agreements contained herein.
Section 8.06. ACTION BY TRUSTEE. Unless requested in writing to do so
by Owners of at least a majority in principal amount of the Bonds Outstanding or
the Credit Provider, the Trustee will be under no obligation to take any action
in respect of any Event of Default hereunder or toward the execution or
enforcement of any of the trusts hereby created, or to institute, appear in or
defend any suit or other proceeding in connection therewith. Before taking any
action hereunder, the Trustee, if in its opinion such action may tend to involve
it in expense or liability, may require that it be provided security and
indemnity satisfactory to it; but the foregoing provisions are intended only for
the protection of the Trustee, and will not affect any discretion or power given
by any provisions of this Indenture to the Trustee to take action in respect of
any Event of Default, including any drawing under the Credit Facility or
Confirmation Letter, if applicable, without such notice or request from the
Owners of Bonds, or without such security or indemnity. Any action taken by the
Trustee pursuant to this Indenture on the request, authority or consent of any
person who at the time of making such request or giving such authority or
consent is the Owner of any Bond, will be conclusive and binding on all future
Owners of the same Bond and upon Bonds issued in exchange therefor or in place
thereof. Notwithstanding anything contained elsewhere in this Indenture, the
Trustee has the right, but is not required, to demand, in respect of the
authentication of any Bonds, the withdrawal of any cash, the release of any
property, or any reasonable action whatsoever within the purview of this
Indenture, any showings, certificates, opinions, appraisals or other
information, or corporate action or evidence thereof, in addition to that
required by the terms hereof as a condition of such action by the Trustee deemed
desirable for the purpose of establishing the right of the Issuer to the
authentication of any Bonds, the withdrawal of any cash, the release of any
property, or the taking of any other action by the Trustee.
Section 8.07. GOOD-FAITH RELIANCE. The Trustee, the Paying Agent, the
Remarketing Agent and the Credit Provider will be protected and will incur no
liability in acting or proceeding in good faith on any resolution, notice,
telegram, telex or facsimile transmission, request, consent, waiver,
certificate, statement, affidavit, voucher, bond, requisition or other paper or
document which it in good faith believes to be genuine and to have been passed
or signed by the proper board, body or person or to have been prepared and
furnished pursuant to any of the provisions of this Indenture, the Reimbursement
Agreement, or on the written opinion of any attorney, engineer, accountant or
other expert believed by the Trustee,
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<PAGE> 56
the Paying Agent, the Remarketing Agent or the Credit Provider, as the case may
be, to be qualified in subject matter, and neither the Trustee, the Paying
Agent, the Remarketing Agent nor Credit Provider the will be under any duty to
make any investigation or inquiry as to any statements contained or matters
referred to in any such instrument, but may accept and rely on the same as
conclusive evidence of the truth and accuracy of such statements.
Section 8.08. DEALINGS IN BONDS AND WITH ISSUER. The Trustee will not
be accountable for the use of any of the Bonds. The Trustee, the Paying Agent,
the Remarketing Agent and the Credit Provider, each in its individual capacity,
may in good faith buy, sell, own, hold and deal in any of the Bonds, and may
join in any action which any Owner may be entitled to take with like effect as
if it did not act in any capacity hereunder. The Trustee, the Paying Agent, the
Remarketing Agent and the Credit Provider, each in its individual capacity,
either as principal or agent, may also engage in or be interested in any
financial or other transaction with the Issuer and may act as depository,
trustee or agent for any committee or body of Owners of Bonds or other
obligations of the Issuer as freely as if it did not act in any capacity
hereunder. The Trustee will not be responsible for determining whether interest
payable under the Bonds, the Indenture or the Reimbursement Agreement exceeds
the maximum amount permitted under the laws of the State.
Section 8.09. CONSTRUCTION OF INDENTURE. The Trustee shall construe any
of the provisions of this Indenture insofar as the same may appear to be
ambiguous or inconsistent with any other provision hereof, and any construction
of any such provisions hereof by the Trustee in good faith will be binding on
the Owners of the Bonds and any other persons affected thereby.
Section 8.10. RESIGNATION OF TRUSTEE. The Trustee may resign and be
discharged of the trusts created by this Indenture by executing an instrument in
writing resigning such trusts and specifying the date when such resignation will
take effect, and filing the same with the Issuer, the Company, the Paying Agent,
the Remarketing Agent and the Credit Provider not less than 45 days before the
date specified in such instrument when such resignation will take effect, and by
giving notice of such resignation by Mail, not less than three weeks before such
resignation date, to all Owners of Bonds. Such resignation will take effect on
the day specified in such instrument and notice unless (i) no successor Trustee
has been appointed as hereinafter provided and accepted such appointment or (ii)
previously a successor Trustee has been appointed as hereinafter provided and
accepted such appointment, in which event such resignation will take effect
immediately upon the appointment of such successor Trustee. Notwithstanding
anything herein to the contrary, no resignation will be effective until the
successor trustee has assumed the rights of the Trustee, if any, under the
Credit Facility and the Confirmation Letter, if then in effect.
Section 8.11. REMOVAL OF TRUSTEE. The Trustee may be removed at any
time by the Company or by the Owners of not less than a majority in principal
amount of Bonds Outstanding by filing with the Trustee so removed, and with the
Issuer, the Paying Agent, the Remarketing Agent and the Credit Provider an
instrument or instruments in writing, appointing a successor, executed by the
Company if the Trustee has been removed by the Company, or executed by the
Owners of not less than a majority in principal amount of Bonds Outstanding if
the Trustee has been removed by said Owners; provided that the Company may not
remove the Trustee if an Event of Default has occurred and is continuing
hereunder and provided further that no such removal will be effective until a
successor Trustee has been appointed and until such appointment has been
accepted.
Section 8.12. APPOINTMENT OF SUCCESSOR TRUSTEE. If the Trustee is
removed, resigns or is dissolved, or if its property or affairs are taken under
the control of any state or federal court or administrative body because of
insolvency or bankruptcy, or for any other reason, then a vacancy will forthwith
and (ipso facto) exist in the office of Trustee and a successor may be appointed
by filing with the Issuer, the Company, the Paying Agent, the Remarketing Agent
and the Credit Provider an instrument in writing executed by Owners of Bonds of
not less than a majority in principal amount of Bonds Outstanding.
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<PAGE> 57
Copies of such instrument will be promptly delivered by the Issuer to the
predecessor Trustee and to the Trustee so appointed.
Until a successor Trustee is appointed by the Owners of Bonds as
authorized by this Section, the (Company, by an instrument authorized by
resolution of the Board of Directors of the Company, will appoint a successor
Trustee. After any appointment by the Company, it will cause notice of such
appointment to be given to the Issuer, the Paying Agent, the Remarketing Agent
and the Credit Provider and by mail to all Owners of Bonds. Any new Trustee so
appointed by the Company will immediately and without further act be superseded
by a Trustee appointed by the Owners of the Bonds in the manner above provided.
Section 8.13. QUALIFICATIONS OF TRUSTEE. The Trustee and every
successor Trustee (a) will be a bank with trust powers or a trust company (other
than the Credit Provider) duly organized under the laws ,If the United States or
any state: or territory thereof, subject to examination by such authorizing
party, and author by law to perform all the (duties imposed upon it by this
Indenture, (b) will (i) have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition or (ii) be controlled directly or indirectly through one or more
subsidiaries by a bank holding company that has a combined capital and surplus
of at least $100,000,000 as set forth in its most recent published annual report
of condition, have at least $100,000,000 of trust assets under management and
have a combined capital and surplus of at least $20,000,000 as set forth in its
most recent published report of condition, (c) will be qualified under the laws
of the State to perform the duties of trustee and (d) will be subject to the
prior approval of the Credit Provider.
Section 8.14. JUDICIAL APPOINTMENT OF SUCCESSOR TRUSTEE. If the Trustee
resigns and no appointment of a successor Trustee is made pursuant to the
foregoing provisions of this Article before the date specified in the notice of
resignation as the date when such resignation is to take effect, the resigning
Trustee may forthwith apply to a court of competent jurisdiction for the
appointment of a successor Trustee. If no appointment of a successor Trustee is
made pursuant to the foregoing provisions of this Article within six months
after a vacancy has occurred hi the office of the Trustee, any Owner may apply
to any court of competent jurisdiction to appoint a successor Trustee. Such
court may then, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
Section 8.15. ACCEPTANCE OF TRUSTS BY SUCCESSOR TRUSTEE. Any successor
Trustee appointed hereunder must execute, acknowledge and deliver to the Issuer
an instrument accepting such appointment hereunder, and then such successor
Trustee, without any further act, deed or conveyance, will become duly vested
with all the estates, property, rights, powers, trusts, duties and obligations
of its predecessor in the trust hereunder, with like effect as if originally
named Trustee herein. On request of such Trustee, such predecessor Trustee and
the Issuer must execute and deliver an instrument transferring to such successor
Trustee all the estates, property, rights, powers and trusts hereunder of such
predecessor Trustee and, subject to the provisions of Section 8.04, such
predecessor Trustee will pay over to the successor Trustee all Moneys and other
assets at the time held by it hereunder.
Section 8.16. SUCCESSOR BY MERGER OR CONSOLIDATION. Any corporation
into which any Trustee hereunder may be merged or converted or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which any Trustee hereunder is a party or to which the corporate trust
business of the Trustee is transferred substantially as a whole and which
otherwise qualifies as a successor Trustee hereunder, will be the successor
Trustee under this Indenture, without the execution or filing of any paper or
any further act on the part of the parties hereto, anything in this Indenture to
the contrary notwithstanding.
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Section 8.17. STANDARD OF CARE. Notwithstanding any other provisions of
this Article, the Trustee will, during the existence of an Event of Default of
which the Trustee has notice or is deemed to have notice pursuant to Section
8.05, exercise such of the rights and powers vested in it by this Indenture and
use the same degree of skill and care in their exercise as a prudent person
would use and exercise under the circumstances in the conduct of the affairs of
others.
Section 8.18. INTERVENTION IN LITIGATION OF ISSUER. In any judicial
proceeding to which the Issuer party and which in the opinion of the Trustee and
its counsel has a substantial bearing on the interests of the Owners of Bonds,
the Trustee may and will, at the written request of the Credit Provider or the
owners of Bonds of at least 25% in principal amount of the Bonds Outstanding, on
receipt of indemnity satisfactory to it, intervene in such litigation for and on
behalf of the Owners of Bonds, if permitted by the court having jurisdiction in
the premises.
Section 8.19. RELIANCE ON CERTIFICATE OF ISSUER. As to the existence or
non-existence of any fact or as to the sufficiency or validity of any
instrument, paper or proceeding, the Trustee will be entitled to rely on a
certificate signed on behalf of the Issuer by the President or Vice President of
the Board of Trustees of the Issuer and attested by the Clerk or an Assistant
Clerk of the Issuer as sufficient evidence of the facts therein contained and
prior to the occurrence of a Default of which the Trustee is deemed to have
knowledge as provided in Section 8.05, shall also be at liberty to accept a
similar certificate to the effect that any particular dealing, transaction or
action is necessary or expedient, but may at its discretion secure such further
evidence reasonably deemed necessary or advisable, but shall in no case be bound
to secure do same. The Trustee may accept a certificate of the Clerk or an
Assistant Clerk of the Issuer under its seal to the effect that a resolution in
the form therein set forth has been adopted by the Issuer as conclusive evidence
that such resolution has been duly adopted, and is in full force and effect. The
resolutions, orders, opinions, certificates and other instruments provided for
in this Indenture may be accepted by the Trustee as conclusive evidence of the
facts and conclusions stated therein and shall be full warrant, protection and
authority to the Trustee for the withdrawal of cash and the taking or omitting
of my other action hereunder.
Section 8.20. PAYING AGENT. The Trustee will be the initial Paying
Agent under this Indenture. The Company may, with the approval of the
Remarketing Agent and the Credit Provider, appoint a successor Paying Agent for
the Bonds. Any Paying Agent will designate to the Issuer, the Company, the
Trustee, the Remarketing Agent and the Credit Provider its principal office and
signify its acceptance of the duties and obligations imposed on it hereunder by
a written instrument of acceptance delivered to the Issuer under which such
Paying Agent will agree, particularly:
(a) to hold all sums held by it for the payment of the
Purchase Price of Bonds in trust for the benefit of the Owners of Bonds
until such sums are paid to such Owners of Bonds or otherwise disposed
of as herein provided;
(b) to hold all Bonds delivered to it hereunder in trust for
the benefit of the respective Owners of Bonds who have delivered such
Bonds until moneys representing the Purchase Price of such Bonds have
been delivered to or for the account of or to the order of such Owners
of Bonds;
(c) to keep such books and records as are consistent with
prudent industry practice and to make such books and records available
for inspection by the Issuer, the Company, the Trustee and the Credit
Provider at all reasonable times;
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(d) on the request of the Trustee, to forthwith deliver to the
Trustee all sums so held in trust by the Paying Agent;
(e) to authenticate Bonds;
(f) to forward to the Trustee monthly a journal of
transactions with respect to the Bonds for the previous month; and
(g) notify the Trustee of all amounts of principal of,
premium, if any, and interest on the Bonds as and when the same become
due and payable.
The Issuer will cooperate with the Paying Agent, the Trustee and the
Credit Provider to cause the necessary arrangements to be made and to be
thereafter continued whereby funds derived from the sources specified herein
will be made available to the Paying Agent for the payment when due of the
principal of, premium, if any and interest on the Bonds.
Section 8.21. QUALIFICATIONS OF PAYING AGENT; RESIGNATION; REMOVAL. Any
Paying Agent or any successor Paying Agent appointed hereunder, other than the
Trustee, will be a national banking association duly organized under the laws of
the United States of America, or a commercial bank or trust company, leaving a
combined capital stock, surplus and undivided profits of at least $50,000,000,
authorized by law to perform all the duties imposed on it by this Indenture and
in all events will be subject to the prior written approval of the Credit
Provider. The Paying Agent may at any time resign and be discharged of the
duties with obligations created by this Indenture by giving at least 60 days'
notice to the Trustee, the Remarketing Agent and the Credit Provider. The Paying
Agent may be removed at any time, at the direction of the Trustee or the Company
with the consent of or at the direction of the Remarketing Agent by an
instrument, signed by the Trustee or the Company and the Remarketing Agent,
filed with the Paying Agent and the Credit Provider.
If the Paying Agent resigns or is removed, the Paying Agent will pay
over, assign and deliver any moneys held by it in such capacity to its successor
or, if there be no successor, to the Trustee.
If the Company fails to appoint a Paying Agent hereunder, or if the
Paying Agent resigns or is removed or is dissolved, or if the property or
affairs of the Paying Agent are taken under the control of state or federal
court or administrative body because of bankruptcy or insolvency, or for any
other reason, and the Trustee has not appointed its successor as Paying Agent,
the Trustee will (ipso facto) be deemed to be the Paying Agent for all purposes
of this Indenture until the appointment by the Trustee of the Paying Agent or
successor Paying Agent, as the case may be and will during such period receive
additional compensation for performing the duties thereof.
Section 8.22. REMARKETING AGENT. The Issuer hereby appoints Wheat,
First Securities, Inc., as the initial Remarketing Agent for the Bonds. Any
subsequent Remarketing Agent will designate its principal office to the Issuer,
the Company, the Trustee, the Paying Agent and the Credit Provider and signify
its acceptance of the duties and obligations imposed upon it hereunder by a
written instrument of acceptance delivered to the Issuer and the Trustee under
which the Remarketing Agent will agree, particularly:
(a) to hold all Bonds delivered to it hereunder in trust for
the benefit of the respective Owners of Bonds which delivered such
Bonds until moneys representing the Purchase Price of such Bonds are
delivered to or for the account of or to the order of such Owners of
Bonds sufficient to enable it to pay the full Purchase Price for all
such Bonds so tendered or deemed tendered;
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<PAGE> 60
(b) to hold all moneys delivered to it hereunder for the
purchase of Bonds in trust for the benefit of the person or entity
which has delivered such moneys until the Bonds purchased with such
moneys are delivered to or for the account of such person or entity;
(c) to keep such books and records as are consistent with
prudent industry practice and to make such books and records available
for inspection by the Issuer, the Company, the Trustee, the Credit
Provider and the Paying Agent at all reasonable times;
(d) on the request of the Trustee, to forthwith deliver to the
Trustee all sums so held in trust by it; and
(e) to perform all duties contemplated to be performed by it
under this Indenture.
Section 8.23. QUALIFICATIONS OF REMARKETING AGENT. The Remarketing
Agent and any successor Remarketing Agent will be either a national banking
association, a commercial bank or a trust company, an investment banking
company, or any other corporation acceptable to Moody's if the Bonds are rated
by Moody's or any other corporation acceptable to S&P if the Bonds are rated by
S&P, and authorized by law to perform all the duties imposed upon it by this
Indenture. The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Indenture by giving at least 30 days'
notice to the Issuer, the Company, the Paying Agent and the Trustee. The
Remarketing Agent may be removed on 30 days' prior written notice, at the
direction of the Company, by an instrument, signed by the Company and filed with
the Remarketing Agent and the Trustee. If the Remarketing Agent resigns or is
removed, the Remarketing Agent will pay over, assign and deliver any moneys and
Bonds held by it in such capacity to its successor or, if no successor is
appointed under the paragraph below, to the Trustee until such time as a
successor is appointed. If the Remarketing Agent fails to remarket the Bonds or
resigns or is removed pursuant to the provisions of this Indenture during any
period for which the remarketing and operations fee has been prepaid, an
appropriate pro-rata adjustment to the remarketing and operations fee shall be
made pursuant to the provisions of the Placement and Remarketing Agreement.
On the resignation or removal of the Remarketing Agent, the Issuer, at
the direction of the Company and with the approval of the Credit Provider, shall
appoint a successor Remarketing Agent, which must satisfy the qualifications set
forth above. If the Issuer fails to appoint a Remarketing Agent hereunder, or if
the Remarketing Agent resigns or is removed or is dissolved, or if the property
or affairs of the Remarketing Agent are taken under the control of any state or
federal court or administrative body because of bankruptcy or insolvency, or for
any other reason, and the Issuer has not appointed its successor as Remarketing
Agent, the Trustee, with the approval of the Credit Provider, will appoint a
successor Remarketing Agent. The Issuer and the Trustee will incur no liability
as a result of any appointment or failure to appoint the Remarketing Agent or a
successor Remarketing Agent except for the appointment of a Remarketing Agent
which does not conform to the requirements of this Section 8.23. Notwithstanding
anything herein to the contrary, no resignation or removal will be effective
until the successor Remarketing Agent has assumed the rights of the Remarketing
Agent, if any, under the Placement and Remarketing Agreement.
Section 8.24. SEVERAL CAPACITIES. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Paying Agent, the Remarketing Agent and in any other combination of such
capacities, to the extent permitted by law; provided, however, that the Trustee
may not serve as the provider of any financial guaranty instrument under this
Indenture.
Section 8.25. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture that there will be no violation of any law of any jurisdiction
(including particularly the law of the State) denying or restricting the right
of banking corporations or associations to transact business as Trustee in such
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jurisdiction. It is recognized that in case of litigation under this Indenture,
and in particular in case of the enforcement of either upon an Event of Default,
or in case the Trustee deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or remedies herein
granted to the Trustee or hold title to the properties, in trust, as herein
granted, or take any other action which may be desirable or necessary in
connection therewith, the Trustee may appoint an additional individual or
institution as a separate or Co-Trustee, in which event each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be exercised by or vested in
or conveyed to the Trustee with respect thereto will be exercisable by and vest
a such separate or Co-Trust but only to the extent necessary to enable such
separate or Co-Trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate or
Co-Trustee will run to and be enforceable by either of them.
Should any conveyance or instrument in writing from the Issuer be
required by the separate or Co-Trustee so appointed by the Trustee for more
fully and certainly vesting in and confirming to it such properties, right
powers, trusts, duties and obligations, any and all such deeds, conveyances and
instruments in writing will, on request, be executed, acknowledged and delivered
by the Issuer. If any separate or Co-Trustee, or a successor to either, dies,
becomes incapable of acting, resigns or is removed, all the estates, properties,
rights, powers, trusts, duties and obligations of such separate or Co-Trustee,
so far as permitted by law, will vest in and be exercised by the Trustee until
the appointment of a new Trustee or successor to such separate or Co-Trustee.
[End of Article VIII]
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ARTICLE IX
EXECUTION OF INSTRUMENTS BY OWNERS
AND PROOF OF OWNERSHIP OF BONDS
Any request, direction, consent or other instrument in writing required
or permitted by this indenture to be signed or executed by Owners of Bonds or on
their behalf by an attorney-in-fact may be in any number of concurrent
instruments of similar tenor and may be signed or executed by such Owners in
person or by an agent or attorney-in-fact appointed by an instrument in writing
or as provided in the Bonds. Proof of the execution of any such instrument and
of the ownership of Bonds will be sufficient for any purpose of this Indenture
and will be conclusive in favor of the Trustee with regard to any action taken
by it under such instrument if made in the following manner:
(a) The fact and date of the execution by any person of any
such instrument may be proved by the certificate of any officer in any
jurisdiction who, by the laws thereof, has power to take
acknowledgments within such jurisdiction, to the effect that the person
signing such instrument acknowledged before him the execution thereof,
or by an affidavit of a witness to such execution.
(b) The ownership of Bonds will be proved by the registration
books kept under the provisions of Section 2. 1 1.
Nothing contained in this Article will be construed as limiting the
Trustee to such proof, it being intended that the Trustee may accept any other
evidence of matters herein stated which it may deem sufficient. Any request,
consent of, or assignment by any Owner of Bonds will bind every future Owner of
the same Bond or any Bonds or Bonds issued in lieu thereof in respect of
anything done by the Trustee or the Issuer in pursuance of such request or
consent.
[End of Article IX]
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ARTICLE X
INVESTMENTS
The Trustee or the Paying Agent will invest moneys held in the
Construction Fund, the Rebate Fund, the Bond Fund and the Bond Purchase Fund at
the written direction of the Company in Permitted Investment. Moneys in the
Credit Facility Account of the Bond Fund and in the Bond Purchase Fund will be
held uninvested or will be invested in Federal Securities, under clauses (a) or
(b) of the definition thereof, maturing not later than the earlier of 30 days or
me date needed for payment. The Trustee and the Paying Agent will invest all
moneys held hereunder pursuant to the Tax Regulatory Agreement
As and when any amount thus invested may be needed for disbursement,
the Trustee or the Paying Agent will cause a sufficient amount of such
investments to be sold at the best price reasonably obtainable. All earnings
from the investment of moneys held in any other fund and account hereunder will
be credited to the fund and account from which moneys were obtained for such
investment.
[End of Article X]
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ARTICLE XI
DEFEASANCE
If the Issuer pays or causes to be paid to the Owner of any Bond the
principal of and interest due and payable, and thereafter to become due and
payable on such Bond, or any portion of such Bond in any payable an integral
multiple of the Authorized Denomination thereof, such Bond or portion thereof
will cease to be entitle to any lien, benefit or security under this Indenture.
All Bonds will be deemed paid for all purposes of this Indenture when (i)
payment of the greater of the principal of and the maximum amount of interest
that may become due on the Bonds to the due date of such principal and interest
(whether at maturity, upon redemption, acceleration or otherwise) and the
payment of the purchase price of any Bond that may be optionally tendered by the
owner either (a) has been made in accordance with the terms of section 3.01 or
(b) has been provided for by depositing with the Trustee (1) moneys sufficient
to make such payment, which moneys must constitute Available Moneys, (2)
noncallable Federal Securities maturing as to principal and interest in such
amounts and at such times as will insure the availability of deficient moneys to
make such payment without regard to the reinvestment thereof, provided that (A)
such Federal Securities must be purchased from Available Moneys and (B) unless
the Bonds bear interest at a Term Rate, the Trustee shall have received (x)
written evidence from each rating agency that provides a rating for the Bonds
that as a result of such action, their rating on the Bonds will not be lowered
or limited; and (y) if the applicable interest rate on the Bonds is not fixed
through the redemption date, evidence that moneys or non-callable Federal
Securities have been provided which will pay the principal of the Bonds to be
received, plus interest thereon to the redemption date at the Maximum Rate; (3)
a verification report by an independent public accounting firm verifying that
the moneys and non-callable Federal Securities maturing as to principal of and
interest are sufficient to make the payments of principal, premium, if any, and
interest on the Bonds coming due and payable through and including the
redemption date; provided that if the interest rate is not fixed through the
redemption date, such verification will assume that the Bonds bear interest at
the Maximum Rate for such purposes, with a copy to the Issuer if requested and
(4) an Opinion of Bond Counsel to the effect that the provision of such moneys
and noncallable Federal Securities will legally defease the Bonds and not
adversely affect the tax-exempt status of interest on the Bonds with a copy to
the Issuer if requested; and (ii) all compensation and expenses of the Trustee,
the Paying Agent, the Issuer, the Credit Provider and the Remarketing Agent (as
well as the fees and expenses of their counsel) pertaining to each Bond in
respect of which such payment or deposit is made have been paid or provided for
to the respective satisfaction of the Trustee, the Paying Agent, the Issuer, the
Credit Provider and the Remarketing Agent. When a Bond is deemed paid, it will
no longer be secured by or entitled to the benefits of this Indenture, except
for payment from moneys or Federal Securities under (i)(b) above and except that
it may be optionally tendered if and as provided in Section 3.01(a) and it may
be transferred, exchanged, registered, discharged from registration or replaced
as provided in Article II.
Notwithstanding the foregoing, no deposit under (i)(b) above made for
the purpose of paying the redemption price of a Bond (as opposed to the final
payment thereof upon maturity) will be deemed a Payment of a Bond as aforesaid
until (i) notice of redemption of the Bond is given in accordance with Article
IV or, if the Bond is not to be redeemed within the next 60 days, until the
Company has given the Trustee and the Paying Agent, in form satisfactory to the
Trustee, irrevocable instructions to notify, as soon as practicable, the holder
of the Bond, in accordance with Article III, that the deposit required by (i)(b)
above has been made with the Trustee and that the Bond is deemed to be paid
under this Article and stating the redemption date upon which moneys are to be
available for the payment of the principal of the Bond or (ii) the maturity of
the Bond. Additionally, and while the deposit under clause (i)(b) above made for
the purpose of paying the final payment of a Bond upon its maturity will be
deemed a payment of such Bond as aforesaid, the Trustee will mail notice to the
Owner of such Bond, as soon as practicable stating that the deposit required by
(i)(b) above has been made with the Trustee and that the Bond is deemed to be
paid under this Article.
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<PAGE> 65
When all Outstanding Bonds are deemed paid under the foregoing
provisions of this Section and other sums due hereunder, under the Reimbursement
Agreement and the Placement and Remarketing Agreement are paid, the Trustee
will, upon request, acknowledge the discharge of the Issuer's obligations under
this Indenture except for obligations relating to optional tender as provided in
Section 3.01(a), obligations under Article II in respect of the transfer,
exchange, registration, discharge from registration and replacement of Bonds,
and obligations under Section 9.06 with respect to the Trustee's compensation
and indemnification, and the Trustee without further direction will surrender
the Credit Facility to the Credit Provider, in accordance with the terms of the
Credit Facility, and will surrender the Confirmation Letter to the Confirming
Bank. Bonds delivered to the Paying Agent for payment shall be canceled by the
Paying Agent pursuant to Section 2.07.
A Company Representative shall direct the: deposit, investment and use
of the moneys and securities described in this Article such that no deposit will
be made and no use made of any such deposit which would cause any Bonds to be
treated as "arbitrage bonds" within the meaning of Section 148 of the Code.
Before accepting or using any such deposit, the Trustee may request an Opinion
of Bond Counsel ,as to whether such use or acceptance would cause the Bonds to
be so treated and, that all conditions hereunder have been satisfied, and may
conclusively rely on such Opinion with regard thereto.
The Trustee may request and shall be fully protected in relying upon a
certificate of an independent certified public accountant to the effect that a
deposit will be sufficient to defease the Bonds as provided in this Article VII.
Upon receipt of any amount pursuant to this Article VII, the Trustee
shall give written notice to the Owners thereof, which notice shall include,
without limitation, the amount of such deposit and any instructions given to the
Trustee pursuant thereto and to the Remarketing Agent by first-class mail,
postage prepaid. If such a defeasance occurs while the Bonds bear interest at a
Variable Rate, the Trustee must receive as a condition therefor written evidence
from Moody's, if the Bonds are rated by Moody's, and S&P, if the Bonds are rated
by S&P, in each case to the effect that such rating agency has reviewed the
proposed defeasance and that the defeasance will not, of itself, result in a
reduction or withdrawal of its rating of the Bonds from that which then
prevails.
[End of Article XI]
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ARTICLE 301
SUPPLEMENTAL INDENTURES AND
AMENDMENTS OF THE LOAN AGREEMENT
Section 12.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF OWNERS.
The Trustee and Issuer may, with the written consent of the Company and the
Credit Provider, but without the consent of or notice to, the Owners, enter into
such indentures or agreements supplemental hereto for any one or ,more or all of
the following purposes:
(a) To subject to this Indenture additional collateral or to
add to the covenants and agreements of the Issuer contained in this
Indenture other covenants and agreements to be thereafter observed by
the Issuer;
(b) To cure any ambiguity, or to cure, correct or supplement
any defect or omission or inconsistent provision contained in this
Indenture, or to make any provisions with respect to matters arising
under this Indenture or for any other purpose if such provisions do not
adversely affect the rights of any of the Owners;
(c) To grant to the Trustee for the benefit of the Owners
additional rights, remedies, power or authority;
(d) To modify, this Indenture or the Bonds to permit
qualification under the Trust Indenture Act of 1939, as amended, or any
similar federal statute at the time in effect, or to permit the
qualification of the Bonds for sale under the securities laws of any
state of the United States of America;
(e) To evidence the succession of a new Trustee or the
appointment by the Trustee or the Issuer of a co-trustee;
(f) To facilitate the use of the Book-Entry System;
(g) To implement the delivery of an Alternate Credit Facility
hereunder; or
(h) To implement the delivery of a Substitute Confirmation
Letter hereunder.
Section 12.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF OWNERS.
Exclusive of supplemental indentures covered by Section 12.01, the written
consent of the Company, the Credit Provider and the consent of the Owners of not
less than a majority in aggregate principal amount of the Bonds then Outstanding
shall be required for the execution by the Issuer and the Trustee of any
indenture or indentures supplemental hereto; provided, however, that without the
consent of the Owners of all the Bonds at the time Outstanding nothing herein
contained shall permit, or be construed as permitting:
(a) A change in the terms of redemption or maturity of the
principal amount of or the interest on any outstanding Bond, a change
in the Purchase Price or the terms of a purchase under Article III, or
a reduction in the principal amount of or premium payable upon any
redemption of any outstanding Bond or the rate of interest thereon:
(b) The deprivation of the Owner of any Bond then Outstanding
of the lien created by this Indenture (other than as originally
permitted hereby);
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<PAGE> 67
(c) it privilege or priority of any Band or Bonds over any
other Bond or Bonds; or
(d) A reduction in the aggregate principal amount of the Bonds
required for consent to such supplemental indenture.
If at any time the Company or the Issuer shall request the Trustee to
enter into such supplemental indenture for any of the purposes of this Section,
the Trustee shall, upon being satisfactorily indemnified with respect to
expenses, cause notice of the proposed execution of such supplemental indenture
to be mailed by Mail to the Owners of the Bonds then Outstanding at the address
shown on the registration books maintained by the Trustee. Such notice shall
briefly set forth the nature of the proposed supplemental indenture and shall
state that copies thereof are on file at the principal corporate trust office of
the Trustee for inspection by all Owners. If, within 60 days or such longer
period as shall be prescribed by the Company following the giving of such
notice, the Owners of not less than a majority in aggregate principal amount of
the Bonds then Outstanding at the time of the execution of any such supplemental
indenture shall have consented to and approved the execution thereof as herein
provided, no Owner shall have any right to object to any of the terms and
provisions contained therein, or in the operation thereof, or in any manner to
question the propriety of the execution thereof, or to enjoin or restrain the
Trustee or the Issuer from executing the same or from taking any action pursuant
to the provisions thereof.
Section 12.03. EXECUTION OF SUPPLEMENTAL INDENTURE. The Trustee is
authorized to join with the Issuer in the execution of any such supplemental
indenture and to make further agreements and stipulations which may be contained
therein, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects its rights, duties or immunities under this
Indenture. Any supplemental indenture executed in accordance with the provisions
of this Article shall thereafter form a part of this Indenture; and all the
terms and conditions contained in any such supplemental indenture as to any
provision authorized to be contained therein shall be deemed to be part of this
Indenture for any and all purposes. In case of the execution and delivery of any
supplemental indenture, express reference may be made thereto in the text of the
Bonds issued thereafter, if any, if deemed necessary or desirable by the
Trustee.
Section 12.04. AMENDMENTS OF THE LOAN AGREEMENT NOT REQUIRING CONSENT
OF OWNERS. The Issuer and the Trustee may, with the written consent of the
Company and the Credit Provider, but without the consent of or notice to the
Owners, consent to any amendment, change or modification of the Loan Agreement
as may be required (a) by the provisions of the Loan Agreement or this
Indenture; (b) for the purpose of curing any ambiguity or formal defect or
omission in the Loan Agreement; or (c) in connection with any other change
therein which, in the judgment of the Trustee, is not to the prejudice of the
Owners.
Section 12.05. AMENDMENTS OF THE LOAN AGREEMENT REQUIRING CONSENT OF
OWNERS. Except for the amendments, changes or modifications permitted by Section
12.04, the Trustee shall not consent to any other amendment, change or
modification of the Loan Agreement without the giving of notice and the written
approval or consent of the Credit Provider and the Owners of not less than a
majority in aggregate principal amount of the Bonds at the time Outstanding
given and procured as provided in Section 12.02. If at any time the Company and
the Issuer shall request the consent of the Trustee to any such proposed
amendment, change or modification of the Loan Agreement, the Trustee shall, upon
being satisfactorily indemnified with respect to expenses, cause notice of such
proposed amendment, change or modification to be given in the same manner as
provided in Section 12.02. Such notice shall briefly set forth the nature of
such proposed amendment, change or modification and shall state that copies of
the instrument embodying the same are on file at the principal corporate trust
office of the Trustee for inspection by all Owners.
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Section 12.06. MODIFICATIONS OF CREDIT FACILITY. No Credit Facility may
be modified without the written consent of 100% of the Owners, except to (a)
correct any formal defects therein, (b) effect transfers thereof, (c) effect
extensions thereof, (d) effect reductions and reinstatements thereof in
accordance with the terms of the Credit Facility, (e) increase the stated amount
thereof, or (f) effect any change which does not have a material adverse effect
upon the interests of the Owners. Pursuant to this indenture, however, the
Company has the right to obtain an Alternate Credit Facility, subject to the
requirements set forth therein without the consent of the Owners.
Section 12.07. NOTICE TO OWNERS. The Trustee will cause notice of the
execution of a supplemental indenture or of the execution of an amendment or
supplement to the Loan Agreement to be mailed promptly by Mail to each Owner at
the Owner's registered address. The notice shall state briefly the nature of the
supplemental indenture or the amendment or supplement to the Loan Agreement and
that copied thereof are on file with the Trustee for inspection by all Owners.
[End of Article XII]
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ARTICLE XIII
MISCELLANEOUS
Section 13.01. COVENANTS OF ISSUER. The Issuer agrees that wherever in
the Loan Agreement it is stated that the Issuer will notify the Trustee, or
whenever the Loan Agreement gives the Trustee some right or privilege, that such
part of the Loan Agreement shall be as if it were set forth in full in this
indenture. The Issuer agrees that the Trustee as assignee of the Issuer under
the Loan Agreement may enforce, in its name or in the name of the Issuer, all
rights of the Issuer and all obligations of the Company under the Loan
Agreement, for and on behalf of the owners, whether or not the Issuer is in
Default under this Indenture.
Section 13.02. PARTIES INTERESTED HEREIN. Nothing in this Indenture
expressed or implied is intended or shall be construed to confer on, or to give
to any person other than the Company, the Issuer, the Trustee, the Credit
Provider and the Owners, any right, remedy or claim under or by reason of this
Indenture or any covenant, condition or stipulation hereof, and all the
covenants, stipulations, promises and agreements in this Indenture contained by
and on behalf of the Issuer or the Trustee shall be for the sole and exclusive
benefit of the Company, the Issuer, the Trustee, the Credit Provider and the
Owners.
Section 13.03. TITLES, HEADINGS, CAPTIONS, ETC. The titles, captions
and headings of the article, seconds and subdivisions of this Indenture have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 13.04. NO PERSONAL LIABILITY OF ISSUER OF OFFICIALS. No
covenant or agreement contained in the Bonds or in this Indenture shall be
deemed to be the covenant or agreement of any member, trustee, official,
officer, agent or employee of the Issuer, the County or the State in his or her
individual capacity, and neither the members, trustees, officers, agents or
employees of the Issuer, the County or the State nor any official executing the
Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof.
Section 13.05. BONDS OWNED BY ISSUER OR COMPANY. In determining whether
Owners of the requisite aggregate principal amount of the Bonds have concurred
in any direction, consent or waiver under this Indenture, Bonds which are owned
by the Issuer or the Company or by any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company
(unless the Issuer, the Company or such person own all Bonds which are then
Outstanding, determined without regard to this Section 13.05) shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Bonds which the Trustee knows are so owned shall be so disregarded. Bonds so
owned which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Bonds and that the pledgee is not the Issuer or
the Company or any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer or the Company. For
purposes of this Section 13.05, Bonds purchased with a drawing under the Credit
Facility or the Confirmation Letter, if applicable, and registered in the name
of the Credit Provider or otherwise at the direction of the Credit Provider,
shall be regarded as Outstanding. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
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Section 13.06. SEVERABILITY. If any provision of this Indenture shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
Section 13.07. GOVERNING LAW. This Indenture is governed and construed
in accordance with the laws of the State.
Section 13.08. EXECUTION IN COUNTERPARTS. This Indenture 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 13.09. NOTICES. All notices, certificates or other
communications shall be sufficiently given and shall be deemed given when
delivered or mailed by certified or registered mail, postage prepaid, as
follows: if to the Company, to SteriGenics International, 4020 Clipper Court,
Fremont, California 94538, Attention: President; if to the Issuer, to the
Village of Gurnee, Illinois, 325 North O'Plaine, Gurnee, Illinois 60031
Attention: Village President; if to the Credit Provider, Comerica
Bank-California, 333 W. Santa Clara Street, San Jose, California 95113,
Attention: Michael Archer; if to Comerica Bank, 500 Woodward Avenue, Detroit,
Michigan 48226, Attention: Standby Letter of Credit Department; if to the
Trustee, to Bank One, Columbus, N.A., in care of Bank One Trust Company, N.A.,
100 East Broad street, Columbus, Ohio 43271-0181, Attention: Corporate Trust
Department; if to the Remarketing Agent, to) Wheat, First Securities, Inc., 901
East Byrd Street, Richmond, Virginia 23219, Attention: Money Market Trading; if
to the Paying Agent, to Bank One, Columbus, N.A., in care of Bank One Trust
Company, N.A., 100 East Broadway Street, Columbus, Ohio 43271-0181, Attention:
Corporate Trust Department; if to S&P, Standard & Poor's, a Division of The
McGraw Hill Companies, Inc., 25 Roadway, New York, New York 10004. Any party
listed in this Section may, by written notice, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.
Section 13.10. PAYMENTS DUE ON HOLIDAYS. If the date for making any
payment or the last day for performance of any act or the exercising of any
right, as provided in this Indenture, is not a Business Day, such payment may be
made or act performed or right exercised on the next succeeding day which is a
Business Day with the same force and effect as if done on the nominal date
provided in this Indenture.
Section 13.11. ISSUER, COMPANY AND TRUSTEE REPRESENTATIVES. Whenever
under the provisions hereof the approval of the Issuer, the Company or the
Trustee is required, or the Company, the Issuer or the Trustee is required to
take some action at the request of the other, unless otherwise provided, such
approval or such request shall be given for the Issuer by an Issuer
Representative, for the Company by the Company's Representative, and for the
Trustee by the Trustee Representative, and the Issuer, the Company and the
Trustee are authorized to act on any such approval or request.
[SIGNATURE PAGE CONTINUES ON THE FOLLOWING PAGE)
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<PAGE> 71
IN WITNESS THEREOF, the Issuer and the Trustee have caused this
Indenture to be executed in their respective names and their respective seals to
be hereto affixed and attested by their duly authorized officials or officers,
all as of the date first above written.
VILLAGE OF GURNEE, ILLINOIS
[SEALS]
ATTEST: By: /s/
----------------------
Vice President
By: /s/
--------------------------------
Village Clerk
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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<PAGE> 72
[COUNTERPART SIGNATURE PAGE TO THE INDENTURE]
BANK ONE, COLUMBUS, N.A.,
as Trustee
[SEAL]
By:/s/
-----------------------
Attest: Authorized Officer
By: /s/
------------------------
Authorized Officer
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<PAGE> 73
EXHIBIT A
FORM OF BOND
REGISTERED REGISTERED
No. R-1 $7,750,000
UNITED STATES OF AMERICA
STATE OF ILLINOIS
VILLAGE OF GURNEE, ILLINOIS
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(STERIGENICS INTERNATIONAL PROJECT),
SERIES 1996
<TABLE>
<CAPTION>
INTEREST RATE MATURITY DATE ORIGINAL ISSUE DATE CUSIP
- ------------ ------------- ------------------- -----
<S> <C> <C> <C>
VARIABLE RATE MAY 1, 2016 APRIL 19, 1996 40330J AE5
</TABLE>
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: SEVEN MILLION SEVEN HUNDRED FIFTY THOUSAND
DOLLARS ($7,750,000)
THE VILLAGE OF GURNEE, ILLINOIS (the "Issuer"), a municipal corporation
and a body corporate and politic of the State of Illinois (the "State"), for
value received, hereby promises to pay, solely from the source and as
hereinafter provided, to the registered owner, or registered assigns or legal
representative, upon presentation and surrender hereof at the principal
corporate trust office of Bank One, Columbus, N.A., Columbus, Ohio, or its
successor in trust, as paying agent (the "Paying Agent"), or by wire transfer,
as provided in the Indenture (as hereinafter defined), the principal amount set
forth above on the Maturity Date set forth above, subject to the prior mandatory
or optional redemption of this Bond as hereinafter provided, and to pay solely
from such source interest hereon at the Interest Rate (as hereinafter defined),
payable in arrears on the Interest Payment Date (as hereinafter defined), until
payment in full; except that if, as shown by the records of the Paying Agent,
interest on the Bonds is in default, Bonds issued in exchange for or upon
registration of transfer of Bonds will be dated as of the date to which interest
on the Bonds has been paid in full. If no interest has been paid on the Bonds,
Bonds issued in exchange for or upon the registration or transfer of Bonds will
be dated the date of initial authentication and delivery thereof.
Principal of and premium, if any, and interest on or the purchase price
of the Bonds will be payable in lawful currency of the United States of America.
Payment of the principal of and premium, if any, on this Bond will be made on
the presentation and surrender of this Bond as the same becomes due and payable.
Except as provided in the Indenture, payment of the interest on this Bond will
be made by
A-1
<PAGE> 74
the paying Agent on each Interest Payment Date to the person appearing as the
registered owner hereof as of the close of business on the Record Date preceding
the Interest Payment Date, by check mailed to such owner at his address as it
appears on the registration books maintained by the Registrar (as hereinafter
defined), or at such other address as is furnished in writing by such owner to
the Registrar; provided, however, that (i) payment of interest on this Bond may
(except as otherwise provided for Credit Provider Bonds), at the option of such
owner of this Bond in an aggregate principal amount of at least $1,000,000, be
transmitted by wire transfer to such owner, on written request therefor
delivered to the Paying Agent, to the bank account number on file with the
Registrar as of the relevant Record Date and (ii) all payments of principal or
redemption price of and interest on Credit Provider Bonds will be by wire
transfer in immediately available funds; provided further, however, that if this
Bond is registered in the name of a securities depository or its nominee as
registered owner, payment will be made by wire transfer pursuant to the wire
instruction received by the Paying Agent from such registered owner. If any
payment hereon is due on a day which is not a Business Day, payment shall be
made on the next succeeding Business Day with the same force and effect as if
made on the day such payment was due and, in the case of such payment, no
interest shall accrue for the intervening period if the Bonds bear interest at a
Term Rate.
This Bond is one of an issue of $7,750,000 in aggregate principal
amount of the Village of Gurnee, Illinois Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996 (the "Bonds"), of like date and
tenor, except as to number and principal amount, authorized and issued pursuant
to The Industrial Project Revenue Bond Act, 65 ILCS 5/11-74-1, et. seq., as
supplemented and amended (the "Act"), to finance a portion of the costs of (i)
the acquisition of an approximately 11 acre site at 1003 Lakeside Drive, Gurnee,
Lake County, Illinois, (ii) the acquisition, construction and equipping of an
approximately 78,000 square foot contract radiation sterilization processing
facility thereon and (iii) the acquisition and installation of machinery,
equipment and other personal property to be used in connection therewith, to be
used primarily for the sterilization of health care, laboratory, pharmaceutical
and packaging products (collectively, the "Project"). The proceeds received by
the Issuer from the sale of the Bonds will be loaned to SteriGenics
International, a California corporation (the "Company"), pursuant to a Loan
Agreement dated as of April 1, 1996 (the "Loan Agreement"), between the Issuer
and the Company. The Loan Agreement provides for the Company to make payments
sufficient to pay the principal of, premium, if any, and interest on and
purchase price of the Bonds as the same become due and payable and to pay
certain administrative expenses in connection with the Bonds.
The Bonds are issued under and are equally and ratably secured by an
Indenture of Trust, dated as of April 1, 1996 (the "Indenture"), between the
Issuer and Bank One, Columbus, N.A., as trustee (the "Trustee"), which assigns
to the Trustee, as security for the Bonds, the Issuer's rights under the Loan
Agreement (except for certain unassigned rights, including the right of the
Issuer to indemnification and payment of costs and expenses and notices and
consents) and the Company's promissory note in the aggregate principal amount of
$7,750,000, dated the date of issuance of the Bonds (the "Note"), issued and
delivered pursuant to the Loan Agreement and evidencing the Company's obligation
to repay the loan of the proceeds of the Bonds. Pursuant to the Loan Agreement,
the Company has caused Comerica Bank California (the "Credit Provider") to issue
its irrevocable, direct-pay letter of credit dated the date of the issuance of
the Bonds (the "Credit Facility") in favor of the Trustee, in an amount
sufficient to pay the outstanding principal amount of and unpaid interest on or
purchase price of the Bonds, but not to exceed $7,880,000, pursuant to a
Reimbursement Agreement dated as of April 1, 1996 (the "Reimbursement
Agreement"), between the Credit Provider and the Company, which Credit Facility
has been issued in favor of the Trustee and which initially expires (subject to
extension as provided in the Reimbursement Agreement and the Indenture) on May
15, 2001. The initial Credit Facility will be confirmed by Comerica Bank which
will undertake to honor drawings under the Credit Facility conforming with the
terms thereof to the extent that such drawings are not honored by the Credit
Provider in accordance with the terms and conditions of the Credit Facility
pursuant to a confirmation letter dated the date of issuance of the Bonds
A-2
<PAGE> 75
the "Confirmation Letter") and which initially expires (subject to extension as
provided therein) on May 15,2001.
The Indenture provides that for so long as Bonds remain Outstanding and
bear interest at a Variable Rate or Term Rate (other than a Term Rate extending
to the final stated maturity of the Bonds), a Credit Facility and Confirmation
Letter, if applicable, will at all times be in effect with respect to such Bonds
facility and a and any such Credit Facility and Confirmation Letter, if
applicable, will be in such form and contain such terms and conditions as more
fully described in the Indenture. Alternate credit facilities may be delivered
in accordance with the Indenture, but there is no requirement in the Indenture
that such alternate credit facilities be confirmed. The Trustee will draw on the
Credit Facility and the Confirmation Letter, if applicable, from time to time to
pay the principal of, interest on and purchase price of the Bonds. Reference is
hereby made to the Indenture, the Loan Agreement, the Credit Facility, the
Confirmation Letter and the Reimbursement Agreement and to all amendments
thereof and supplements thereto for a description of the provisions, among
others, with respect to the nature and extent of the security, the default
provisions, the rights, duties and obligations of the Issuer, the Company, the
Trustee or the rights of the owners of the Bonds and the terms upon which the
Bonds are issued and secured. Unless the context indicates otherwise, all
capitalized, undefined terms used in this Bond shall have the meanings ascribed
to them in the Indenture.
IN CERTAIN CIRCUMSTANCES THIS BOND MAY BE DEEMED TO HAVE BEEN TENDERED
AND PURCHASED OR PAID PRIOR TO THE MATURITY DATE HEREOF, AS DESCRIBED HEREIN.
This Bond shall not be entitled to any right or benefit under the
Indenture, or be valid or become obligatory for any purpose, until this Bond
shall have been authenticated by the Trustee or a duly authorized authenticating
agent, by execution of the certificate of authentication inscribed hereon.
THIS BOND IS A LIMITED OBLIGATION OF THE ISSUER PAYABLE SOLELY FROM THE
REVENUES AND RECEIPTS DERIVED FROM THE LOAN AGREEMENT, WHICH REVENUES AND
RECEIPTS HAVE BEEN PLEDGED AND ASSIGNED TO THE TRUSTEE FOR THE BENEFIT OF THE
OWNERS TO SECURE PAYMENT OF THIS BOND. THIS BOND AND THE ISSUE OF WHICH IT IS A
PART AND THE PREMIUM, IF ANY, AND INTEREST THEREON ARE LIMITED OBLIGATIONS OF
THE ISSUER PAYABLE SOLELY FROM THE REVENUES AND RECEIPTS DERIVED FROM THE LOAN
AGREEMENT, INCLUDING PAYMENTS RECEIVED UNDER THE NOTE, WHICH REVENUES AND
RECEIPTS HAVE BEEN PLEDGED AND ASSIGNED TO THE TRUSTEE TO SECURE PAYMENT OF THE
BONDS. THE BONDS, THE PREMIUM, IF ANY, AND THE INTEREST THEREON SHALL NOT BE
DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF
ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER. NEITHER THE
STATE OF ILLINOIS NOR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER,
SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE
BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES AND RECEIPTS
PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
STATE OF ILLINOIS OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER, IS
PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE
BONDS OR OTHER COSTS INCIDENT THERETO.
The Bonds are issuable as fully registered Bonds in denominations of
(i) with respect to any Bond bearing interest at a Variable Rate, $100,000 or
any integral multiple of $5,000 in excess thereof, (ii) with respect to any Bond
bearing interest at a Term Rate during a Term Rate Period that does not extend
to the final stated maturity of the Bonds, $100,000 or any integral multiple of
$5,000 in excess thereof, and (iii) with respect to any Bond bearing interest at
a Term Rate during a Term Rate Period that extends to the final stated maturity
of the Bonds, $5,000 or any integral multiple thereof (the "Authorized
Denominations"). This Bond, upon surrender hereof at the principal office of the
Paying Agent with a written instrument of transfer satisfactory to the Paying
Agent executed by the holder hereof or his attorney duly authorized in writing,
may, at the option of the holder hereof, be exchanged for an equal aggregate
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principle amount of Bonds of the same aggregate principal amount and tenor as
the Bonds being exchanged and of any Authorized Denomination. This Bond is
transferable as provided in the Indenture, subject to certain limitations
therein contained, only upon the register of the Paying Agent, as registrar (the
"Registrar"), and only upon surrender of this Bond for transfer to the Paying
Agent accompanied by a written instrument of transfer (in substantially the form
of the assignment attached hereto) duly executed by the holder hereof or his
duly authorized attorney. Thereupon, one or more new Bonds of any Authorized
Denomination or Denominations and in the same aggregate principal amount and
tenor as the Bond surrendered will be issued to the designated transferee or
transferees.
The Bonds will initially be issued by means of a book-entry system with
no physical distribution of Bonds made to the public, unless the book-entry
system is discontinued as described below. One certificate for each maturity
will be issued to The Depository Trust Company, New York, New York ("DTC"), and
immobilized in its custody. A book-entry system will be employed, evidencing
ownership of the Bonds in Authorized Denominations, with transfers of beneficial
ownership effected on the records of DTC and its participants (the "DTC
Participants") and its indirect participants (the "Indirect Participants")
pursuant to rules and procedures established by DTC. References in the remainder
of this paragraph and in the next five succeeding paragraphs to a Bond or the
Bonds shall be construed to mean the Bond or Bonds held under the book-entry
system. In such event, one Bond for each maturity will be issued to DTC, and
immobilized in its custody. A book-entry system will be employed, evidencing
ownership of the Bonds in Authorized Denominations, with transfers of beneficial
ownership effected on the records of DTC and the DTC Participants pursuant to
rules and procedures established by DTC.
Payments of principal, premium, if any, and interest with respect to
the Bonds, so long as DTC is the only registered owner of the Bonds, will be
paid by the Paying Agent directly to DTC or its nominee, Cede & Co as provided
in the Letter of Representations dated April 19, 1996 from the Issuer, the
Remarketing Agent and the Trustee to DTC (the "Letter of Representations").
Transfer of principal, interest and any premium payments or notices to DTC
Participants and DTC Indirect Participants will be the responsibility of DTC,
and transfer of principal, interest and any premium payment or notice to
beneficial owners of the Bonds (the "Beneficial Owners") will be the
responsibility of DTC Participants and DTC Indirect Participants. No other party
will be responsible or liable for such transfers of payments or notices or for
maintaining, supervising or reviewing such records maintained by DTC, DTC
Participants or DTC Indirect Participants. Payments will be made by wire
transfer in immediately available funds to the account of Cede & Co. as
specified in the register maintained by the Registrar or by such other method of
payment as the Paying Agent may determine to be necessary or advisable with the
concurrence of DTC.
In the event that (a) DTC determines not to continue to act as
securities depository for the Bonds or (b) the Trustee or the Company determines
that the continuation of the book-entry system of evidence and transfer of
ownership of the Bonds would adversely affect their interests or the interests
of the Beneficial Owners of the Bonds, the Company may cause the Issuer to
discontinue the book-entry system with DTC. If the Company fails to identify
another qualified securities depository to replace DTC, the Issuer will cause
the Trustee, at the expense of the Company, to authenticate and deliver
replacement Bonds in the form of fully registered Bonds to each Beneficial
Owner. DTC may be removed at any time at the election of the Remarketing Agent,
with the consent of the Trustee and notice to the Company and the Issuer, and a
new securities depository may then be appointed by the Issuer, subject to the
approval of the Trustee and the Remarketing Agent.
Unless this Bond is presented by an authorized representative of DTC to
the Trustee or its agent for registration of transfer, exchange or payment and
this Bond is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), any
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transfer pledge, or other use of this Bond for value or otherwise by or to any
person is wrongful inasmuch the registered owner thereof, Cede & Co., has an
interest in this Bond.
The ISSUER, THE COMPANY, THE REMARKETING AGENT, THE PAYING AGENT, THE
REGISTRAR AND THE TRUSTEE SHALL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO
ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER WITH RESPECT TO: (I) THE BONDS; (II)
THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (III) THE
PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER
IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS; (IV)
THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY
NOTICE DUE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
TERMS OF THE INDENTURE TO BE GIVEN To BENEFICIAL OWNERS; (V) THE SELECTION OF
BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN THE EVENT OF ANY PARTIAL REDEMPTION OF
THE BONDS; OR (VI) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC , OR ITS
NOMINEE, CEDE & CO., AS OWNER.
So LONG AS A BOOK-ENTRY SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF
ALL THE BONDS IS MAINTAINED IN ACCORDANCE WITH THE INDENTURE, THE PROVISIONS OF
THE INDENTURE RELATING TO THE DELIVERY OF PHYSICAL BOND CERTIFICATES WILL BE
DEEMED TO GIVE FULL EFFECT TO SUCH BOOK-ENTRY SYSTEM.
In the event that a book-entry system of evidence and transfer of
ownership of the Bonds is discontinued pursuant to the provisions of the
Indenture, the Bonds shall be delivered solely as fully registered bonds without
coupons in the Authorized Denominations, shall be lettered "R" and numbered
separately from "1" upward, and shall be payable, executed, authenticated,
registered, exchanged and canceled pursuant to the provisions hereof and of the
Indenture.
Books for the registration of Bonds will be kept by the Paying Agent
which is appointed the Registrar under the Indenture. On surrender for
registration of transfer of a Bond at the principal corporate trust office of
the Paying Agent, duly endorsed for transfer or accompanied by an assignment
duly executed by the Owner or its attorney duly authorized in writing in such
form as is satisfactory to the Paying Agent, the Trustee will authenticate and
deliver in the name of the transferee or transferees a new fully registered Bond
or Bonds.
All Bonds will be exchangeable on the presentation and surrender
thereof at the principal corporate trust office of the Trustee for a Bond or
Bonds in other Authorized Denominations.
As to any Bond, the person in whose name the same is registered will be
deemed and regarded as the absolute owner thereof for all purposes, and payment
of either principal or interest on such Bond will be made only to or on the
written order of the Owner thereof or its legal representative, but such
registration may be changed as hereinabove provided. All such payments will be
valid and effectual to satisfy and discharge such Bond to the extent of the sum
or sums paid.
The Issuer and the Paying Agent will not be requited to issue, exchange
or register the transfer of any Bond or any portion thereof (A) for a period of
15 days prior to the date on which Bonds are selected for redemption, or (B)
after such Bond or portion thereof is called for redemption, unless the
transferee of such Bond or portion thereof delivers to the Trustee and to the
Paying Agent a written acknowledgment of such call for redemption and agrees in
writing to be bound by such call for redemption. In addition, the Issuer and
Paying Agent will not be required to issue, exchange or register the transfer of
any Bond or any portion thereof prior to the purchase of any Bond or any portion
thereof being purchased pursuant to an optional tender with respect to which a
notice of tender has been received by the Trustee or prior to a mandatory tender
of Bonds after a notice of mandatory tender notice has been mailed; unless, in
each such case, the transferee of such Bond or portion thereof delivers to the
Trustee and to the Paying Agent
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a written acknowledgment of such optional tender notice or mandatory tender
notice and agrees in writing to be bound by such optional tender notice or
mandatory tender notice, and, if notice of election to retain any Bonds to be
tendered has been received by the Trustee with respect to such Bond or portion
thereof, the transferee delivers to the Trustee a written acknowledgment of such
notice to retain and agrees in writing to be bound by such notice.
1. INTEREST RATES
(a) CERTAIN DEFINITIONS
"INTEREST PAYMENT DATE" means (i) for all Variable Rate Bonds,
the first Wednesday (or if not a Business Day, the next succeeding
Business Day) of each calendar month; (ii) for Term Rate Bonds with a
Term Rate Period of six months or fewer, the calendar day after the
last day of each Term Rate Period; (iii) for Term Rate Bonds with a
Term Rate Period of greater than six months, the first calendar day of
the month that is the sixth month after the month in which such Term
Rate Period begins and each sixth month anniversary of such first
calendar day described above and the calendar day after the last day of
the Term Rate Period; (iv) for any Term Rate Period that extends to the
maturity of the Bonds, May 1 and November 1 of each year and (v) for
all Bonds, any mandatory purchase date pursuant to Sections 3.01(b) or
(c) of the Indenture.
"INTEREST PERIOD" means (i) initially, that period beginning
on the date of issuance of the Bonds through and including April 23,
1996, and (ii) thereafter, (A) with respect to each Variable Rate Bond,
the Variable Rate Period applicable thereto or (B) with respect to each
Term Rate Bond, that period beginning on an Interest Payment Date or a
Conversion Date through and including the date preceding the next
Interest Payment Date.
"INTEREST RATE" means either the Variable Rate or the Term
Rate as in effect from time to time in accordance with the Indenture.
"RECORD DATE" means, (i) while the Bonds bear interest at a
Variable Rate, the Business Day preceding each Interest Payment Date
applicable to such Bond and (ii) while the Bonds bear interest at a
Term Rate, the 15th calendar day (whether or not a Business Day) of the
month immediately preceding such Interest Payment Date.
"TERM RATE" means the interest rate for any Term Rate Period
established by the Remarketing Agent on the first day of such Term Rate
Period which is the minimum rate of interest necessary, in the best
professional judgment of the Remarketing Agent taking into account
prevailing market conditions, to enable the Remarketing Agent to
remarket all of the Term Rate Bonds in the secondary market on the date
such rate is set at a price equal to 100% of the principal amount
thereof, plus accrued interest, if any.
"TERM RATE PERIOD" means any period during which the Bonds
bear interest at the Term Rate.
"VARIABLE RATE" means the interest rate for any Variable Rate
Period established by the Remarketing Agent on the first day of such
Variable Rate Period which is the minimum interest rate necessary, in
the best professional judgment of the Remarketing Agent, taking into
account prevailing market conditions, to enable the Remarketing Agent
to remarket all of the Variable Rate Bonds in the secondary market on
the date such rate is set at a price equal to 100% of the principal
amount thereof, plus accrued interest, if any.
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<PAGE> 79
"VARIABLE RATE PERIOD" means any period during which the Bonds
bear interest at the Variable Rate.
(b) GENERAL PROVISIONS.
The Bonds will bear interest at the Variable Rate from the Original
Issue Date set forth above until the date, if any, upon which the interest rate
is converted to a Term Rate as described in the Indenture. The initial Variable
Rate will be determined by the Placement Agent on the Original Issue Date. After
the initial determination of the Variable Rate, the applicable Interest Rate
shall be determined by the Remarketing Agent at the time and in the manner
specified in the Indenture. The Remarketing Agent's determination of the
Interest Rate shall be conclusive and binding on the Owners, the Remarketing
Agent, the Trustee, the Paying Agent, the Credit Provider, the Company, and the
Issuer. The Remarketing Agent shall notify the Company, the Trustee and the
Paying Agent (and upon request, any holder) of each change in the Interest Rate;
provided failure to deliver any such notice shall not affect the change in the
Interest Rate.
The Indenture provides that the Company may change the interest rate
mode for the Bonds, subject to the terms and conditions set forth in the
Indenture.
Interest for each Interest Period will be paid on the next succeeding
Interest Payment Date, and (i) while the Bonds pay interest at a Variable Rate,
will be computed on the basis of a year of 365 or 366 day as appropriate, for
the actual number of days elapsed, and (ii) while the Bonds pay interest at the
Term Rate, computed on the basis of a year of 360 days and twelve 30-day months,
provided that while any Bonds pay interest at the Credit Provider Rate, interest
on such Bonds will be payable on the dates and will be calculated on the basis
provided in the Reimbursement Agreement. In no event will interest attributable
to any Bond accrue at a rate greater than the Maximum Rate. The Trustee will
calculate the amount of interest to be paid on each Interest Payment Date, and
will confirm the amount in writing with the Paying Agent.
The interest rate on the Bonds is subject to conversion from one
interest rate mode to another or from a Term Rate to one or more successive Term
Rates, in whole and not in part, at the option of the Company, by mailing a
notice thereof to the Trustee, the Credit Provider, the Paying Agent and the
Remarketing Agent at least 30 days before the proposed Conversion Date,
accompanied by a preliminary opinion of Bond Counsel stating that such
Conversion is authorized and in accordance with the Indenture and will not
adversely affect the exclusion of the interest on any of the Bonds from the
gross income of the recipient thereof for federal and state income tax purposes.
A Conversion may occur only (i) when the Conversion Date is a date on which the
Bonds are subject to optional redemption, (ii) if the Conversion Date would
otherwise be an Interest Payment Date or if not, then it is a Business Day and
(iii) if the Credit Facility, if any, is in the applicable Coverage Amount.
Notwithstanding the foregoing provisions of this Section 1, (i) if any
payment of the principal of or premium, if any, or interest on, or the purchase
price of, any Bond shall not be made when due, the Bonds shall continue to bear
interest at the last interest rate borne by the Bonds prior to the due date for
such payment until such payment is made or provided for in accordance with this
Indenture, and (ii) if the Remarketing Agent does not determine the applicable
Variable Rate or Term Rate in accordance with the Indenture, or a court of
competent jurisdiction holds that a rate determined by the Remarketing Agent is
invalid or unenforceable, the Bonds shall bear interest as follows: (A) the
Variable Rate for such Variable Rate Period shall be equal to 65 % of the per
annual bond equivalent yield applicable to 13-week United States Treasury
securities, and (B) the Term Rate for such Term Rate Period shall be equal to 75
% of the per annum bond
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equivalent yield applicable to United States Treasury securities having the same
number of months to maturity as the number of months in the applicable Term Rate
Period (determined by linear interpolation between the yields for instruments
having the next shorter and next longer number of months to maturity if no yield
is announced for United States Treasury securities having the number of months
to maturity prescribed herein), in each case as published by the Federal Reserve
Bank of New York on the most recent date prior to the applicable effective date;
provided that in no event shall any of the Bonds (whether Variable Rate Bonds,
Term Rate Bonds or Credit Provider Bonds) bear interest in excess of the Maximum
Rate. The Trustee shall not incur any liability for any efforts in the
computation of the rates required to be determined in accordance with this
Section I.
2. PURCHASE AND REMARKETING OF BONDS
(a) Optional Demand Purchase for Variable Rate Bonds.
Any Variable Rate Bond (but solely from the Pledged Revenues
and proceeds of the remarketing of such Bond by the Remarketing Agent
and amounts realized from a drawing under the Credit Facility or the
Confirmation Letter), other than a Credit Provider Bond (or a portion
thereof in a denomination of $5,000 or integral multiple thereof
provided such tender does not result in a Bond in a denomination of
less than $100,000) will be purchased, on the demand of the Owner
thereof, on any Business Day designated by the Owner thereof (a
"Purchase Date") which is not less than seven days after the date
notice of such demand is delivered telephonically to the Remarketing
Agent. Any such purchase will be at the Purchase Price. To effect such
purchase, telephonic notice of such optional tender demand and purchase
must be delivered to the Remarketing Agent and such notice will (A)
state the number and principal amount (or portion thereof in an
Authorized Denomination) of such Variable Rate Bond to be purchased,
(B) state the Purchase Date on which such Variable Rate Bond will be
purchased, and (C) irrevocably request such purchase.
The Remarketing Agent will promptly provide the Paying Agent
and the Trustee with telephonic notice of the receipt of the notice
referred to in the preceding paragraphs, confirmed promptly in writing
or by facsimile.
Any Variable Rate Bond with regard to which demand is made as
set forth above will be deemed to have been tendered for purchase on
any Purchase Date with respect thereto. Delivery of such Variable Rate
Bond (with an appropriate transfer of registration executed in blank in
form satisfactory to the Trustee) at the designated office of Trustee
at or prior to 10:00 a.m. (New York City time) on the Purchase Date
will be required for payment in same-day funds of the Purchase Price
due on such Purchase Date. No Owner will be entitled to payment of the
Purchase Price due on such Purchase Date except on surrender of such
Variable Rate Bonds as set forth in the Indenture.
Notwithstanding anything to the contrary contained in the
Indenture, no optional tender of Bonds made pursuant to this part may
result in a Bond in a denomination of less than $100,000.
If the Bonds are held in a Book Entry System, a purchase
notice described above may be delivered by a Beneficial Owner. Such
purchase notice must be delivered as set forth above and must state
that such Beneficial Owner will cause its beneficial interest (or
portion thereof in Authorized Denominations) to be tendered, the amount
of such beneficial interest to be tendered, the optional tender date on
which such beneficial interest will be tendered and the identity of the
Participant through which the Beneficial Owner maintains its beneficial
interest. Upon delivery
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<PAGE> 81
of such notice, the Beneficial Owner must make arrangements to have its
beneficial ownership interest in the Bonds being tendered transferred to the
Trustee at or prior to 10:00 a.m., New York City time on the applicable optional
tender date, but need not otherwise comply with the other provisions described
above.
(b) MANDATORY PURCHASE ON CONVERSION DATE.
On any Conversion Date with respect to any Bonds (but solely from the
Pledged Revenues and proceeds of the remarketing of such Bond by the Remarketing
Agent and amounts realized from a drawing under the Credit Facility or the
Confirmation Letter), other than a Credit Provider Bond (or portion thereof in a
denomination of $5,000 or integral multiple thereof provided such tender does
not result in a Bond in a denomination of less than $ 1 00, 000), (or in each
case the next Business Day, if not a Business Day) (a "Purchase Date"), such
Bonds must be tendered and delivered to the Trustee for purchase (with all
necessary endorsements) at the Purchase Price.
All Bonds will be deemed to have been tendered for purchase on any
Purchase Date with respect thereto. Delivery of such Bonds (with an appropriate
transfer of registration executed in blank in form satisfactory to the Trustee)
at the designated office of the Trustee at or prior to 10:00 a.m., New York City
Time, on the Purchase Date will be required for payment in same-day funds of the
Purchase Price due on such Purchase Date. No Owner will be entitled to payment
of the Purchase Price due on such Purchase Date except upon surrender of such
Bonds as set forth in the Indenture.
Except as set forth in the following paragraph, the Owner of any Bond
may elect to retain such Bond or any portion thereof on a Conversion Date (if
such Bond or such portion thereof is in a denomination which will be an
Authorized Denomination after the applicable Conversion Date) by delivering a
notice of such Owner's election to retain such Bonds (a "Notice of Retention")
to the Trustee within 15 days prior to such Conversion Date (or, if such day is
not a Business Day, the immediately preceding Business Day), which irrevocable
written notice will (a) affirmatively acknowledge such matters as will be
specified in the notice of tender and purchase delivered to such Owner in
connection with such Conversion Date, including an acknowledgment that the
rating on the Bonds may be reduced or withdrawn on such Conversion Date, (b)
contain the irrevocable agreement by such Owner to retain such Bond and not to
tender such Bond for purchase on the Conversion Date and (c) contain the
irrevocable agreement by such Owner not to deliver a notice of optional purchase
or tender such Bond for purchase on an optional tender date pursuant to the
Indenture on or before such Conversion Date.
Notwithstanding anything to the contrary contained in the Indenture, in
the event the Bonds are subject to mandatory tender and purchase as a result of
a Credit Expiration Date, and the Trustee has not received evidence satisfactory
to it that following the Conversion Date an Alternate Credit Facility will be in
place with respect to the Bonds, then the Bonds so purchased will be held in the
name of the Credit Provider in accordance with the terms of the Indenture and
the Reimbursement Agreement. Unless and until a Credit Facility has been
provided, the Owners of such Bonds will not have the right to retain the Bonds
following the Conversion Date, and such Bonds will not be remarketed. Such Bonds
will be deemed tendered as described in Section 2(d) below.
(c) MANDATORY PURCHASE ON CREDIT EXPIRATION DATE.
Before the Credit Expiration Date, the Trustee will give notice not
less than 15 days before the Purchase Date described below to all Owners and the
Remarketing Agent of the Bonds that the
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Bonds will be subject to mandatory tender to the Trustee for purchase
at the Purchase Price on the Credit Expiration Date. After such notice
is given, the Bonds will thereafter be subject to mandatory tender for
purchase at the Purchase Price on the date set forth in the notice (a
"Purchase Date").
All Bonds will be deemed to have been tendered for purchase on
any Purchase Date with respect thereto. Delivery of such Bonds (with an
appropriate transfer of registration executed in blank in form
satisfactory to the Trustee) at the designated office of the Trustee at
or prior to 10:00 a.m., New York City time, on the Purchase Date will
be required for payment in same-day funds of the Purchase Price due on
such Purchase Date. No Owner will be entitled to payment of the
Purchase Price due on such Purchase Date except upon surrender of such
Bonds as set forth in the Indenture.
(d) BONDS DEEMED TENDERED FOR PURCHASE.
If Bonds have been deemed to have been delivered for purchase,
the Trustee will authenticate (and the Issuer will issue, if necessary)
a new Bond. The Trustee will promptly give notice by Mail to each Owner
whose Bonds are deemed to have been purchased, which notice will state
that interest on such Bonds ceased to accrue on the applicable Purchase
Date and that moneys representing the Purchase Price of such Bonds are
available against delivery thereof at the Principal Office of the
Trustee. The Trustee will hold moneys for the purchase of Bonds in
trust and uninvested, without liability for interest thereon, for the
benefit of the former Owner of the Bond on such Purchase Date, who will
thereafter be restricted exclusively to such moneys, for any claim of
whatever nature on his part under the Indenture or on, or with respect
to, such Bond. Any moneys deposited with the Trustee or then held by
the Trustee or the Remarketing Agent for the payment of the principal
of or interest on the Bonds and remaining unclaimed for the period set
forth in any applicable escheat law of the State will be paid to the
appropriate officer or body as provided in such escheat law.
Thereafter, the Owners will look only to such officer or body for
payment and then only to the extent of the amount so received, without
any interest thereon, and the Trustee and the Remarketing Agent have no
responsibility with respect to such moneys.
3. REDEMPTION PROVISIONS
(a) OPTIONAL REDEMPTION DURING VARIABLE RATE PERIOD.
During any period in which the Bonds bear interest at the
Variable Rate, the Bonds are subject to redemption by the Issuer
(solely from the Trust Estate), at the written direction of the Company
to the Trustee (such direction to be given by the Company at least 45
days prior to the date fixed for redemption), in whole at any time, or
in part on any Interest Payment Date at a redemption price equal to the
principal amount thereof plus accrued interest, if any, to the
redemption date.
(b) OPTIONAL REDEMPTION DURING TERM RATE PERIOD.
The Bonds will be subject to optional redemption by the Issuer
(solely from the Trust Estate), at the written direction of the Company
to the Trustee (such direction to be given, by the Company at least 45
days prior to the date fixed for redemption), during any Term Rate
Period that (i) extends to the maturity of the Bonds, and (ii) is 6
years or longer, on or after the Interest Payment Date next succeeding
the date that is the later of (A) the sixth anniversary of the Term
Rate Conversion Date for such Term Rate Period, and (B) the earlier of
(1) the tenth anniversary
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of the Term Rate Conversion Date for such Term Rate Period, and (2) the
anniversary of such Term Rate Conversion Date that approximates, more closely
than any other such anniversary date, the Midpoint Date for such Term Rate
Period, in whole at any time, or in part on any Interest Payment Date at a
redemption price equal to the principal amount thereof, plus a premium
(expressed as a percentage of the principal amount of Bonds redeemed) that for
the first permissible redemption date is equal to the lesser of (i) three
percent of the principal amount of the Bonds to be redeemed and (ii) one-half of
one percent times the number of years between the calendar year of such first
redemption date and the calendar year during which such Term Rate Period ends
(including, for purposes of computation, the calendar year of such first
redemption date but excluding the calendar year during which such Term Rate
Period ends), and declining by one-half of one percent annually thereafter, such
premium calculation to be made by the Trustee, upon consultation with the
Remarketing Agent, prior to such redemption date.
(c) OPTIONAL REDEMPTION UPON EXTRAORDINARY REDEMPTION EVENT.
Notwithstanding the above provisions regarding optional redemption,
during any Term Rate Period and during any Variable Rate Period, the Bonds are
subject to optional redemption by the Issuer (solely from the Trust Estate), at
the written direction of the Company to the Trustee (such direction to be given
by the Company at least 45 days prior to the date fixed for redemption), in
whole at any time, without premium or penalty, if any of the following events
have occurred, as evidenced to the Trustee by a certificate of the Company
Representative delivered together with such direction:
(i) The Project is damaged or destroyed by fire or other
casualty to such extent that in the opinion of both the Company
Representative and an Independent Engineer or an Independent Architect
(A) it cannot be repaired, rebuilt or restored within a period of six
months to the condition thereof immediately preceding such damage or
destruction, or (B) the Company is thereby prevented, in its reasonable
judgment, from carrying on its normal operations for a period of six
months, or (C) the cost of restoration would exceed the Net Proceeds of
insurance carried thereon;
(ii) Title to, or the temporary use of all or substantially
all of the Project or any part thereof is taken under the exercise of
the power of eminent domain by any governmental body or by any person
acting under governmental authority which, in the opinion of both the
Company Representative and an Independent Engineer or an Independent
Architect, both filed with the Trustee, prevents or is likely to
prevent the Company from carrying on its normal operations for a period
of six months, or
(iii) A change in the Constitution of the State or the
Constitution of the United States of America, or a legislative or
administrative action (whether local, state or federal), or a final
decree, judgment or order of any court or administrative body (whether
local, state or federal), and not contested by the Company in good
faith causes the Loan Agreement to become void or unenforceable or
impossible of performance in accordance with the intent and purpose of
the parties as expressed in the Bond Documents.
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(d) MANDATORY SINKING FUND REDEMPTION.
The Bonds are subject to mandatory redemption at 100% of the principal
amount thereof on the Interest Payment Date or Dates on or immediately following
May 1 in the years and in the principal amounts indicated below until such time
as the principal amounts indicated below are redeemed pursuant to the Indenture:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
YEAR AMOUNT YEAR AMOUNT
- ---- ------ ---- ------
<S> <C> <C> <C>
1999 $ 430,000 2008 $ 430,000
2000 430,000 2009 430,00
2001 430,000 2010 430,000
2002 430,000 2011 430,000
2003 430,000 2012 430,000
2004 430,000 2013 430,000
2005 430,000 2014 430,000
2006 430,000 2015 430,000
2007 430,000 2016* 440,000
</TABLE>
- ---------------
*Final Maturity
At its option, to be exercised by written notice delivered to the
Trustee on or before the 45th day preceding any sinking fund redemption date,
the Company may (a) deliver to the Paying Agent for cancellation Bonds in any
aggregate principal amount desired, or (b) receive a credit in respect of its
sinking fund redemption obligation for any Bonds which before said date have
been redeemed (otherwise than through the operation of the sinking fund) and
canceled by the Paying Agent and not theretofore applied as a credit against any
sinking fund redemption obligation. Each Bond so delivered or previously
redeemed will be credited by the Trustee ratably at 100% of the principal amount
thereof against the obligations of the Issuer on sinking fund redemption dates,
and the principal amount of Bonds to be redeemed by operation of the sinking
fund will be accordingly reduced.
(e) MANDATORY REDEMPTION UPON DETERMINATION OF TAXABILITY.
The Bonds are subject to mandatory redemption at a redemption price
equal to 100% of the principal amount thereof with interest to but not including
the redemption date in whole (or in part as provided below), without premium
(except as provided below with respect to Bonds which bear interest at a Term
Rate), on the first day of a month within 180 days after the Company receives
written notice from an Owner or former Owner or the Trustee of a Determination
of Taxability, or if such date is not a Business Day, on the next succeeding
Business Day; provided that with respect to any Bonds which bear interest at a
Term Rate, a premium equal to 3% of the principal amount of such Bonds will be
paid in the event of a redemption pursuant to this paragraph. No such
determination will be considered final unless the Owner or former Owner involved
in the determination gives the Company, the Trustee, the Remarketing Agent, the
Credit Provider and the Paying Agent prompt written notice of the commencement
of the proceedings resulting in the determination and offers the Company,
subject to the Company's agreeing to pay all expenses of the proceeding and to
indemnify the Owner against all liabilities that might result from it, the
opportunity to control the defense of the proceeding and either the Company does
not agree within 30 days to pay the expenses, indemnify the Owner and control
the defense or the
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<PAGE> 85
Company exhausts or chooses not to exhaust available procedures to contest or
obtain review of the result of the proceedings. Fewer than all the Bonds may be
redeemed if redemption of fewer than all the Bonds would result in the interest
payable on the Bonds remaining Outstanding being not includable in the gross
income for federal income tax purposes of any holder. If fewer than all Bonds
are redeemed, the Trustee will select the Bonds to be redeemed by lot or by such
other method acceptable to the Trustee as may be approved in an opinion of Bond
Counsel. Only holders of Bonds on the date of redemption will be entitled to the
redemption premium, if applicable. No premium will be due to former Owners or
with respect to any Bonds which were not Outstanding as of the date of the
Determination of Taxability. If Bonds mature after a Determination of
Taxability, but before redemption pursuant to this paragraph, the applicable
premium for such Bonds, if any, will be paid at their maturity.
(f) NOTICE OF REDEMPTION.
Notice of redemption will be given by the Paying Agent by Mail, not
less than 30 days nor more than 60 days before the redemption date to each Owner
of the Bonds or portions thereof to be redeemed at the last address shown on the
registration books kept by the Paying Agent. Such notice must (i) specify the
Bonds to be redeemed, the redemption date, the redemption price and the place or
places where amounts due on such redemption must be payable (which must be the
principal office of the Paying Agent) and if less than all of the Bonds are to
be redeemed, the numbers of the Bonds and the portions of Bonds to be redeemed,
and (ii) state that on the redemption date, the Bonds to be redeemed will cease
to bear interest.
If moneys are on deposit in the Bond Fund to pay the principal amount
of the Bonds called for redemption and premium, if any, and accrued interest
thereon on a redemption date, Bonds or portions thereof thus called and provided
for as hereinabove specified will not bear interest after such redemption date
and will not be considered to be Outstanding or to have any other rights under
the Indenture other than the right to receive payment. No payment of principal
will be made by the Paying Agent on any Bonds or portions thereof called for
redemption until such Bonds or portions thereof have been delivered for payment
or cancellation or the Paying Agent has received the items required by the
Indenture with respect to any mutilated, lost, stolen or destroyed Bonds.
(g) SELECTION OF BONDS TO BE REDEEMED.
If the Bonds are redeemed in part, DTC will select the Bonds to be
redeemed pursuant to its rules and procedures or, if the book-entry system with
DTC or any other securities depository has been discontinued, the Paying Agent
will select the Bonds to be redeemed by lot in such manner as the Paying Agent
in its discretion may deem proper, provided that Credit Provider Bonds held by
the Credit Provider pursuant to the Reimbursement Agreement will be selected
first for redemption. Each Authorized Denomination of principal amount
represented by any Bond will be considered a separate Bond for purposes of
selecting the Bonds to be redeemed.
If a Bond subject to redemption is in a denomination larger than the
minimum Authorized Denomination, a portion of such Bond may be redeemed, but
only in a principal amount such that the unredeemed portion of such Bond is
equal to an Authorized Denomination. For any Bond in a denomination of more than
the minimum Authorized Denomination, the Paying Agent will treat each such Bond
as representing a single Bond in the minimum Authorized Denomination plus that
number of Bonds that is obtained by dividing the remaining principal amount of
such Bond by the minimum Authorized Denomination.
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<PAGE> 86
If it is determined that one or more, but not all, of the
Authorized Denominations of principal amount represented by any Bond is
to be called for redemption, then, on notice of intention to redeem
such Authorized Denominations of principal amount of such Bond, the
Owner of such Bond, on surrender of such Bond to the Paying Agent for
payment of the principal amount of such Bond called for redemption,
will be entitled to receive a new Bond or Bonds in the aggregate
principal amount of the unredeemed balance of the principal amount of
such Bond. New Bonds representing the unredeemed balance of the
principal amount of such Bonds will be issued to the Owner thereof
without charge therefor.
If the Owner of any Bond of a denomination greater than the
amount being redeemed fails to present such Bond to the Paying Agent
for payment and exchange as aforesaid, such Bond will, nevertheless,
become due and payable on the date fixed for redemption to the extent
of the denomination being redeemed and to that extent only.
4. MISCELLANEOUS
Upon the occurrence of certain events, and on the conditions, in the
manner and with the effect set forth in the Indenture, the principal of all
Bonds then Outstanding under the Indenture may become or may be declared due and
payable before the stated maturity thereof, together with interest accrued
thereon. The Trustee may, or if required by the Credit Provider or the Owners of
a majority of the Bonds Outstanding, shall, declare all obligations due under
the Loan Agreement and the Bonds to be immediately due and payable, whereupon
they shall, without further action, become due and payable, anything in the
indenture or in the Bonds to the contrary notwithstanding or (ii) upon receipt
by the Trustee of written notice from the Credit Provider of nonreinstatement
of the Credit Facility to the Coverage Amount on or before the date specified in
the Credit Facility after a draw on the Credit Facility or the Confirmation
Letter, if then in effect, to pay interest on the Bonds, the Trustee shall
declare all obligations due under the Loan Agreement and the Bonds to be due and
payable within 5 days thereafter, whereupon they shall, without further action,
become due and payable on such date, anything in the Indenture or in the Bonds
to the contrary notwithstanding. If provision is made for the payment and
redemption of this Bond in accordance with the Indenture, this Bond will
thereupon cease to be entitled to the lien of the Indenture and all other rights
granted thereby and this Bond will cease to bear interest from and after the
date fixed for redemption.
Neither the Credit Provider nor the Owner of this Bond have any right
to institute any suit, action or proceeding in equity or at law for the
enforcement of the Indenture or for the execution of any trust under the
Indenture or for the appointment of a receiver or any other remedy under the
Indenture, except as expressly provided in the Indenture.
Modifications or alterations of the Indenture or any indenture of trust
supplemental thereto, or the Loan Agreement or any agreement supplemental
thereto, may be made only to the extent and in the circumstances permitted by
the Indenture and the Loan Agreement.
Executed counterparts of the Indenture and the Loan Agreement are on
file at the principal corporate trust office of the Trustee. The holder of this
Bond, by acceptance hereof, consents to all of the terms and provisions of the
Indenture and the Loan Agreement.
It is hereby certified that all acts, conditions and things required to
happen exit and be performed under the laws of the State of Illinois, and under
the Indenture precedent to and in the issuance of this Bond have happened, exist
and have been performed as so required, and that the issuance, authentication
and delivery of this Bond have been duly authorized by the Issuer.
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<PAGE> 87
Unless the Certificate of Authentication hereon has been executed by
the Trustee by the manual signature of one of its authorized representatives,
this Bond shall not be entitled to any benefit under the Indenture, or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, this Bond has been executed with the manual or
facsimile signature of the Village President of the Issuer and attested with the
manual or facsimile signature of the Village (Clerk of the Issuer and has been
authenticated by the manual signature of an authorized representative of the Mac
all as of the date set forth below.
VILLAGE OF GURNEE, ILLINOIS
[SEAL]
ATTEST: BY: ___________________________
Village President
By: _________________________
Village Clerk
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<PAGE> 88
CERTIFICATE OF AUTHENTICATION
This is one of the Village of Gurnee, Illinois Industrial Development
Revenue Bonds (SteriGenics International Project), Series 1996 issued and
delivered pursuant to the within-mentioned Indenture.
[SEAL] BANK ONE, COLUMBUS, N.A.,
as Trustee
Dated: April 19, 1996 By: ________________________________
Authorized Representative
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<PAGE> 89
[FORM OF ASSIGNMENT]
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
(Please print or typewrite Name and Address,
including Zip Code, and Federal Taxpayer Identification or
Social Security Number of Assignee
- --------------------------------------------------------------------------------
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints
- --------------------------------------------------------------------------------
Attorney to register the transfer of the within Bond on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
-------------------
Signature guaranteed by:
- ------------------------------------ ---------------------------------
NOTICE: Signature must be guaranteed
by a Participant in the Securities Transfer NOTICE: The signature to this
Agent Medallion Program ("Stamp") assignment must correspond with
or similar program. the name as it appears on the
face of the within Bond in every
particular, without alteration,
enlargement or any change
whatever.
TRANSFER FEE MAY BE REQUIRED
A-17
<PAGE> 1
EXHIBIT 10.43
$7,880,000
REIMBURSEMENT AGREEMENT
By and Between
STERIGENICS INTERNATIONAL,
a California corporation
And
COMERICA BANK-CALIFORNIA
Dated as of April 1, 1996
Relating to:
Village of Gurnee, Illinois
Industrial Development Revenue Bonds (SteriGenics International Project),
Series 1996
<PAGE> 2
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT dated as of April 1, 1996 (this "Agreement"),
by and between STERIGENICS INTERNATIONAL, a California corporation duly
organized and existing under the laws of the State of California ("Company"),
and COMERICA BANK-CALIFORNIA, a California banking corporation (the "Credit
Bank").
WITNESSETH:
WHEREAS, Company proposes to finance the acquisition of an
approximately 11 acre site at 1003 Lakeside Drive, Gurnee, Lake County,
Illinois, and the construction and equipping of an approximately 78,000 square
foot contract radiation sterilization processing facility and the acquisition
and installation of machinery, equipment and other personal property to be used
in connection therewith, to be used primarily for the sterilization of health
care, laboratory, pharmaceutical and packaging products (collectively, the
"Project");
WHEREAS, in order to finance the Project, Company has requested the
assistance of the Village of Gurnee, Illinois, a municipal corporation and a
body politic and corporate of the State of Illinois (the "Issuer"), to issue
Village of Gurnee, Illinois Industrial Development Revenue Bonds (SteriGenics
International Project), Series 1996 (the "Bonds"), in the principal amount of
$7,750,000;
WHEREAS, in order to provide for the authentication and delivery of the
Bonds, to establish and declare the terms and conditions upon which the Bonds
are to be issued and secured and to secure the payment of the principal thereof
and of the interest and premium, if any, thereon, the Issuer has entered into an
Indenture of Trust (the "Indenture"), dated as of April 1, 1996, by and between
the Issuer and Bank One, Columbus, N.A. as trustee (the "Trustee");
WHEREAS, pursuant to the Indenture, Trustee will make certain
disbursements for the acquisition, construction and equipping of the Project
according to the terms more specifically set forth in the Indenture and the Loan
Agreement dated as of April 1, 1996 (the "Loan Agreement"), by and between the
Issuer and the Company;
WHEREAS, the Company has requested that the Credit Bank issue in favor
of the Trustee, for the account of the Company, a direct-pay letter of credit
("Letter of Credit") in an initial stated amount of $7,880,000, which Letter of
Credit is to be available to be drawn upon to provide funds for the payment of
principal and interest on and purchase price of the Bonds when due and payable;
and
WHEREAS, any Bonds purchased by the Credit Bank by application of
amounts drawn under the Letter of Credit pursuant to a Principal Drawing or
Interest Drawing (as defined herein) shall be reflected on the records of the
Depository as being held for the account of the Credit Bank until the Credit
Bank shall have been reimbursed for the amount so drawn and interest accrued
thereon in accordance with this Agreement, which reimbursement may be satisfied
by the payment of the principal and interest represented by the Bonds so held by
<PAGE> 3
of the account of the Credit Bank, as provided herein and in such Bonds, or the
payment to the Credit Bank pursuant to the terms of that certain Placement and
Remarketing Agreement dated as of April 13, 1996 (the "Remarketing Agreement"),
among the Issuer, Company and Wheat, First Securities, Inc. following the
remarketing of the Bonds;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, capitalized terms used herein which are
not defined herein shall have the meanings set forth in the Indenture. In
addition, the following terms hall have the following meanings:
"Agreement" shall mean this Reimbursement Agreement, including any
Exhibits hereto, as the same may be supplemented and amended in accordance with
its terms.
"Base Rate" shall mean the rate of interest publicly announced from
time to time by the Credit Bank as its "reference rate" or "prime rate."
"Bonds" shall mean the Village of Gurnee, Illinois Industrial
Development Revenue Bonds (SteriGenics International Project), Series 1996.
"Bond Documents" shall mean, at any time, each of the following as in
effect or as outstanding, as the case may be, at such time: (i) the Bonds; (ii)
the Indenture; (iii) the Loan Agreement; (iv) the Remarketing Agreement; (v) the
Mortgage; (vi) the Guaranty; (vii) the Environmental Indemnity; (viii) this
Agreement; and (ix) any other agreements, instruments, certificates or other
documents executed in connection with the foregoing.
"Business Day" shall mean a day other than (i) a day on which the
banking institutions in (a) New York, New York or (b) the City of San Jose,
California or (c) Detroit, Michigan or (d) the cities in which the Trustee or
the Paying Agent (as defined in the Indenture) or the Remarketing Agent have
their respective principal offices are authorized to close or (ii) a day on
which the New York Stock Exchange is closed.
"Company" shall mean SteriGenics International, a California
corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations, rulings and proclamations promulgated or issued thereunder.
"Credit Bank" shall mean Comerica Bank-California, a California banking
corporation and its successors and assigns, as issuer of the Letter of Credit,
or any issuer of a substitute Letter of Credit.
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<PAGE> 4
"Credit Provider Rate" shall mean one and one-half percent (1 1/2%) in
excess of the rate of interest established by Credit Bank from time to time as
its base rate during any Period that interest shall accrue at such rate pursuant
to the terms of this Agreement, each change in such Base Rate to become
effective on the date such change is announced by Credit Bank, such rate to be
calculated on the basis of actual number of days elapsed and a 360-day ,year. In
each case, the Credit Provider Rate shall change when and as the Base Rate
Changes.
"Date of Issuance" has the meaning set forth in Section 2.1 hereof.
"Drawing" shall mean a drawing under the Letter of Credit in accordance
with its terms, and shall include a "Purchase Drawing," "Principal Drawing," and
"Interest Drawing."
"Drawing Fee" shall mean the fee described in Section 2.4 hereof.
"ERISA " means the Employment Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" shall have the meaning set forth in Article 9
hereof.
"Expiration Date" shall have the meaning assigned to that term in the
Letter of Credit.
"Environmental Indemnity" shall mean the unsecured environmental
indemnity agreement executed in favor of the Credit Bank as required by Section
3.1(h) hereof.
"Guaranty" shall mean the Guaranty, dated as of April 1, 1996, from the
Guarantors for the benefit of the Credit Bank, as the same may be supplemented
and amended in accordance with its terms.
"Guarantors" shall mean Charles King, Jr. and The Charles W. King, Jr.
Trust as guarantors under the Guaranty.
"Indenture" shall have the meaning set forth in the third WHEREAS
clause hereof, as the same may be supplemented and amended in accordance with
its terms.
"Interest Drawing" shall mean a Drawing under the Letter of Credit to
pay interest on the Bonds (other than Bonds registered in the name of the
Company) when due and payable by Issuer pursuant to Indenture.
"Issuer" shall mean the Village of Gurnee, Illinois.
"Letter of Credit" shall mean the Letter of Credit issued by the Credit
Bank pursuant to this Agreement, and shall include an amended Letter of Credit
or any substitute therefor.
"Letter of Credit Fee" shall mean the fee described in Section 2.2
hereof.
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<PAGE> 5
"Loan Agreement" shall mean that certain Loan Agreement, dated as of
April 1, 1996, by and between the Issuer and the Company and relating to the
Bonds, as the same may be supplemented and amended in accordance with its terms.
"Mortgage " shall mean the Real Estate Mortgage, Assignment of Rents
and Leases, Security Agreement and UCC-2 Financing Statement, dated as of April
1, 1996, from the Company to the Credit Bank.
"Permitted Encumbrances" shall mean, as of any particular time (i) the
Mortgage, (ii) liens for taxes and assessments not then delinquent or which are
being contested in good faith and for which adequate reserves have been created,
(iii) utility, access and other easements and rights of way restrictions and
exceptions that an authorized officer of Company certifies will not interfere
with or impair the use intended to be made of the Property and the Project and
as to the existence of which the Credit Bank has consented in writing, (iv)
covenants, conditions or restrictions or liens of record relating to the
Property and the Project and existing on the date of sale and delivery of the
Bonds as set forth in the ALTA Title Insurance Policy delivered pursuant to
Section 3.1(f) hereof, (v) covenants, conditions, restrictions or liens relating
to the Property or the Project over which Chicago Title Insurance Company
provides affirmative coverage, (vi) materialmen's, mechanic's and similar liens
securing amounts not yet past due or which are being contested in good faith and
for which adequate reserves have been created and (vii) such minor defects,
irregularities, encumbrances and clouds on title as normally exist with respect
to property similar in character to the Property and as do not materially impair
the use intended to be made of property affected thereby.
"PBGC" shall mean Pension Benefit Guaranty Corporation.
"Person " shall mean an individual, association, unincorporated
organization, corporation, partnership, joint venture, trust, government or any
governmental agency or political subdivision or any other entity or
organization.
"Plan" shall mean an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by Company for employees of Company or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
Company is then making or accruing an obligation to make contributions or has
within the preceding five years of such plan made contributions.
"Principal Drawing" shall mean a Drawing under the Letter of Credit to
pay the principal of the Bonds (other than Bonds registered in name of the
Company) required to be made by Issuer upon the maturity thereof, upon
acceleration or upon the optional or mandatory redemption thereof, all pursuant
to the Bonds and the Indenture.
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<PAGE> 6
"Private Placement Memorandum" shall mean the private placement
memorandum, dated April 19, 1996, relating to the delivery and sale of the
Bonds, including any supplement to such Private Placement Memorandum.
"Project" shall mean the additions, extensions, alterations and
improvements to the Property to be financed with the proceeds of the Bonds,
including the acquisition of an approximately 11 acre site at 1003 Lakeside
Drive, Gurnee, Lake County, Illinois, and the construction and equipping of an
approximately 78,000 square foot contract radiation sterilization processing
facility and the acquisition and installation of machinery, equipment and other
personal property to be used in connection therewith, to be used primarily for
the sterilization of health care, laboratory, pharmaceutical and packaging
products;
"Property" means the real property, and any buildings, structures and
fixtures thereon, described in Exhibit A to the Mortgage.
"Purchase Drawing" shall mean a Drawing under the Letter of Credit to
pay the purchase price of the Bonds following the failure to remarket any Bonds
as set forth in Section 3.02 of the Indenture.
"Remarketing Agent" shall mean Wheat, First Securities, Inc., as
Remarketing Agent under the Remarketing Agreement, or any successor to it as
remarketing agent.
"Remarketing Agreement" shall mean that certain Placement and
Remarketing Agreement dated as of April 1, 1996 by and among the Issuer, Company
and the Remarketing Agent, and any successor remarketing agreement entered into
by the Issuer, Company and a successor remarketing agent in accordance with the
provisions of the Indenture.
"Restrictions" shall have the meaning set forth in Section 6.4 hereof
"Security Agreement" shall mean that certain Pledge and Security
Agreement dated as of April 1, 1996 by the Company in favor of Credit Bank.
"Special Counsel" shall mean Manatt, Phelps & Phillips, LLP.
"Stated Amount" shall mean the amount set forth in the Letter of Credit
as the "Stated amount", as such amount is reduced and reinstated from time to
time in accordance with the Letter of Credit.
"Stated Expiration Date" shall have the meaning assigned to that term
in the Letter of Credit.
"Transfer Certificate" shall have the meaning assigned to that term in
the Letter of Credit.
"Transfer Fee" shall mean the fee described in Section 2.4 hereof.
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<PAGE> 7
"Trustee" shall mean Bank One, Columbus, N.A., in its capacity as
trustee under the Indenture, and any other bank or trust company at any time
substituted in its place pursuant to and in accordance with the Indenture.
"Uniform Customs and Practice" means the Uniform Customs and Practice
for Documentary Credits approved by the International Chamber of Commerce and in
effect and adhered to by the Credit Bank as of the date of issuance of the
Letter of Credit.
ARTICLE 2
LETTER OF CREDIT; FEES; REIMBURSEMENT
Section 2.1. Amount and Terms of Letter of Credit. The Credit Bank
agrees, upon at least 24 hours' prior notice from Company to the Credit Bank and
on the terms and subject to the conditions hereinafter set forth, including,
without limitation, the conditions set forth in Article 3 hereof, to issue the
Letter of Credit on the date of delivery specified herein (the "Date of
Issuance"), provided such date of delivery is not later than April 19, 1996,
effective upon such delivery date and expiring on the Expiration Date. The
Letter of Credit will be issued in an initial Stated Amount of $7,880,000,
representing the aggregate principal amount represented by the Bonds as of the
Date of Issuance, plus interest on such principal amount for a period of 50 days
at a rate not to exceed twelve percent (12%) per annum. The Letter of Credit
shall be issued to the Trustee for the account of Company, and shall be
substantially in the form of Exhibit A hereto, with such changes to the form set
forth in Exhibit A as Company and the Credit Bank shall agree in writing are
necessary or advisable.
Section 2.2. Letter of Credit Fee. Company shall pay to the Credit Bank
a nonrefundable letter of credit fee (the "Letter of Credit Fee") in an amount
equal to 1.375% of the Stated Amount per each 12-month period for the period
from and including the Date of Issuance until but excluding the Expiration Date
on the Stated Amount available under the Letter of Credit in advance of the
first 12-month period to be paid on the Date of Issuance and in equal monthly
installments thereafter. The Letter of Credit Fee shall be calculated on the
basis of a 360-day year and shall be payable in respect of each 12-month period
in advance; provided, however, commencing on the one year anniversary of the
issuance of the Letter of Credit, in the event there is no default hereunder and
the Letter of Credit has terminated before the end of a 12-month period for
which the Letter of Credit Fee has been paid, Credit Bank shall refund that
portion of the Letter of Credit Fee relating to the period in which the Letter
of Credit is no longer in effect.
Section 2.3. Drawing Fee. Company shall pay to the Credit Bank for each
drawing on the date thereof a nonrefundable drawing fee (the "Drawing Fee") in
an amount equal to the usual and customary fee charged by the Credit Bank to its
customers for a draw under a letter of credit.
Section 2.4. Letter of Credit Transfer Fee. Any transfer of the Letter
of Credit by the Trustee or issuance of a substitute Letter of Credit shall be
made by, and be only effective upon, (a) in the case of such a transfer, the
Trustee providing the Credit Bank with
-6-
<PAGE> 8
a Transfer Certificate (as defined in the Letter of Credit) in accordance with
the Letter of Credit and (b) in the case of such a transfer or such an issuance,
payment to the Credit Bank by Company of a transfer fee (the "Transfer Fee") of
$500 for each transfer or issuance and of the costs payable to the Credit Bank
in respect of each such transfer or issuance. No Transfer Fee shall be due in
the event of a transfer or substitution due to: (a) non-renewal of the Letter of
Credit; (b) a downgrading of the Letter of Credit; or (c) an increase in costs
associated with the Letter of Credit.
Section 2.5. Reduction and Reinstatement of Stated Amount. The Stated
Amount shall be automatically reduced and reinstated as specified in the Letter
of Credit; provided that the Letter of Credit shall be reinstated to the extent
the Credit Bank is paid the full sale price with respect to Bonds (or portions
thereof) purchased on its behalf which have been resold pursuant to the terms of
the Remarketing Agreement.
Section 2.6. Interest. Company hereby agrees to pay interest at the
Credit Provider Rate on any and all amounts required to be paid by Company under
this Agreement from and after the due date thereof until paid in full, whether
before or after the expiration of the Letter of Credit and this Agreement, at
the Stated Expiration Date or otherwise, such interest to be payable on demand.
Notwithstanding anything herein to the contrary, to the extent permitted by law,
if at any time the Credit Provider Rate exceeds any statutory or constitutional
interest rate limitation or restriction and the Credit Bank shall not receive
payment at the Credit Provider Rate, any subsequent reduction in the Credit
Provider Rate shall not reduce the rate of interest utilized for the calculation
of amounts payable to the Credit Bank hereunder until the total amount due if
the Credit Provider Rate had at all times been utilized, has been paid to the
Credit Bank.
Section 2.7 Increased Costs. If any change in any law or regulation or
in the interpretation thereof by any court or administrative or governmental
Issuer charged with the administration thereof shall either (i) impose, modify
or deem applicable any reserve, special deposit, capitalization or similar
requirement against letters of credit issued by the Credit Bank or (ii) impose
on the Credit Bank any other condition relating, directly or indirectly, to this
Agreement or the Letter of Credit or the holding or owning of any Bonds by the
Credit Bank or the purchasing thereof, and the result of any event referred to
in (i) or (ii) above shall be to increase the cost to the Credit Bank of issuing
or maintaining the Letter of Credit, or of purchasing the Bonds, then, upon
demand by the Credit Bank, Company shall, upon not less than 10 days' prior
notice from the Credit Bank (which notice shall specify in reasonable detail the
circumstances giving rise to the increase and the method of calculating the
increase), pay to the Credit Bank, from time to time as specified by the Credit
Bank, such additional amounts as shall be demanded by the Credit Bank as
sufficient to compensate the Credit Bank for such increased cost, together with
interest at the Credit Provider Rate on amounts required to be paid under this
Section 2.7 from the due date of such payment following not less than 10 days'
prior notice until payment in full thereof.
Section 2.8. Net Payments. All payments under this Agreement shall be
made without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments (after deduction or withholding for or on account
of a proportionate share
-7-
<PAGE> 9
attributable to the transactions contemplated by this Agreement or any future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government, any political subdivision or any taxing Issuer other than any
tax on or measured by the overall ,net income of the Credit Bank pursuant to the
income tax laws of the United States or the jurisdiction where the Credit Bank's
principal office is located (collectively, the "Taxes")) shall not be less than
the amounts otherwise specified to be paid under this Agreement. A certificate
as to any additional amounts payable to the Credit Bank under this Section 2.8
submitted to Company by the Credit Bank shall show in reasonable detail the
amount payable and the calculations used to determine in good faith such amount
and shall be conclusive absent manifest error. Any amounts payable by Company
under this Section 2.8 with respect to past payments shall be due within ten
days following receipt by Company of such certificate from the Credit Bank; any
such amounts payable with respect to future payments shall be due concurrently
with such future payments. With respect to each deduction or withholding for or
on account of any Taxes, Company shall promptly furnish to the Credit Bank such
certificates, receipts and other documents as may be required (in the reasonable
judgment of the Credit Bank) to establish any tax credit to which the Credit
Bank may be entitled. Without in any way affecting any of its rights under this
Section 2.8, the Credit Bank agrees that, upon its becoming aware that any of
the present or future payments due it under this Agreement would be subject to
deduction for Taxes, it will notify Company in writing and the Credit Bank
further agrees that it will use reasonable efforts not disadvantageous to it (in
its sole determination) in order to avoid or minimize, as the case may be, the
payment by Company of any additional amounts for Taxes pursuant to this Section
2.8.
Section 2.9. Reimbursement of Principal Drawings and Interest Drawings.
(a) If a Principal Drawing or Interest Drawing is repaid at or prior to 1:00
p.m. (Pacific time) on the same day on which it is made, no interest shall be
payable on such Drawing. Company hereby agrees to pay to the Credit Bank the
amount of each Principal Drawing and each Interest Drawing no later than 1:00
p.m. (Pacific time) on the first Business Day following the date of payment by
the Credit Bank of such Drawing, plus interest at the Credit Provider Rate on
such amounts from and including the date such amounts are paid by the Credit
Bank until payment in full by Company (as determined by the Credit Bank). If
Company shall not have paid to the Credit Bank such amounts (and such interest,
if any) before 1:00 p.m. on the second Business Day following the date of the
Credit Bank's payment of such Drawing, Company shall pay interest on such
amounts from and including such second Business Day until payment in full by
Company at such fluctuating interest rate per annum as shall be in effect from
time to time, which rate per annum for each day shall be equal to the Credit
Provider Rate in effect on such day, but in no event higher than the maximum
rate permitted by applicable law. Unless otherwise waived by the Credit Bank,
Company shall be obligated, without notice of a Principal Drawing or Interest
Drawing or demand for reimbursement from the Credit Bank (which notice is hereby
waived by Company), to reimburse the Credit Bank for all Principal Drawings and
Interest Drawings (with interest as Provided in the first sentence of this
Section 2.9) on or before 1:00 p.m. (Pacific time) on the second Business Day
following the day on which the Credit Bank honored such Drawings. If a Principal
Drawing or Interest Drawing is repaid after 1:00 p.m. (Pacific
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time) on any Business Day, it shall be treated as having been repaid on the
following Business Day.
(b) The Credit Bank shall maintain in accordance with sound banking
practices an account or accounts evidencing the indebtedness of Company
resulting from each Principal Drawing and each Interest Drawing and the interest
accruing thereon, and in any legal action or proceeding in respect of this
Agreement, the entries made in such account or accounts shall all in the absence
of manifest error, be conclusive evidence of the existence and amounts of the
obligations of Company therein recorded.
Section 2.10. Reimbursement of Purchase Drawings. (a) Company's
obligation to reimburse the Credit Bank for any unreimbursed amounts drawn under
the Letter of Credit in respect of any Purchase Drawing shall be secured in part
by the purchased Bonds. The obligation of Company under this Agreement and under
the Indenture in respect of such Bonds purchased with the proceeds of a Purchase
Drawing shall be satisfied by the payment of such Bonds in accordance with their
terms and the terms of the Indenture and the subsequent payment to Credit Bank
of all such payments, or the reimbursement of the Credit Bank pursuant to the
terms of the Remarketing Agreement following the remarketing of the Bonds.
(b) In the event that any Bonds are registered in the name of Company
or the Credit Bank, on the date on which the Letter of Credit expires for any
reason, the principal amount of such Bonds and the interest accrued thereon
shall thereupon be paid by Company immediately to the Credit Bank; provided that
nothing herein contained shall affect any right which the Credit Bank may have
hereunder or under the Indenture or the Bonds upon the occurrence of an Event of
Default hereunder or thereunder.
Section 2.11. Security. Company, in order to secure its obligation to
make payments to the Credit Bank pursuant to the terms of this Agreement and to
perform all of its other covenants and agreements under this Agreement, has
pledged, assigned and granted to the Credit Bank, a lien on and security
interest in the Trust Estate subordinate only to the lien granted under the
Indenture to the owners of the Bonds and to the Trustee for its reasonable
compensation, expenses, charges, counsel fees and other disbursements incurred
in the performance of its powers and duties under the Indenture, and has
executed the Mortgage and caused to be delivered to Credit Bank the Guaranty for
the benefit of the Credit Bank.
Section 2.12. Place and Manner of Payment; Computation of Interest. All
payments by Company to the Credit Bank hereunder, except reimbursement of
Principal Drawings and Interest Drawings pursuant to Section 2.9 hereof and
reimbursement of Purchase Drawings pursuant to Section 2.10 hereof, shall be
made to the Credit Bank at 333 West Santa Clara Street, 2nd Floor, San Jose,
California 95113 in lawful currency of the United States in immediately
available funds not later than 1:00 p.m. (Pacific time) on the date due, without
set-off, counterclaim or deduction of any kind. In the event that the date
specified for any such payment hereunder is not a Business Day, such payment
shall be made not later than the next following Business Day. Company shall pay
interest on any such payment not made on the due date, at the Credit Provider
Rate, to the Business Day on which such
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payment is made. Computations of interest hereunder shall be made by the Credit
Bank and Company on the basis of actual days elapsed and a 360-day year.
ARTICLE 3
CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF CREDIT
Section 3.1. Documents to be Received. The Credit Bank's obligation to
issue the Letter of Credit as set forth in Section 2.1 hereof is subject to the
conditions precedent that, on or prior to the Date of Issuance, the Credit Bank
shall receive the following documents, all in form and substance satisfactory to
the Credit Bank and its Special Counsel:
(a) a copy of the resolution or resolutions of Company,
certified as of the date of the delivery of the Bonds by an authorized
officer of Company, authorizing, among other things, the execution,
delivery and performance by Company of this Agreement and the Bond
Documents to which Company is a party and authorizing Company to obtain
the issuance of the Letter of Credit and certified copies of all other
documents evidencing any other action of Company taken with respect
thereto;
(b) a certificate, signed by a duly authorized officer of
Company, dated the date of the delivery of the Bonds, to the effect
that:
(i) The representations and agreements of Company
contained in this Agreement and each of the Bond Documents to
which it is a party are true, complete and correct in all
material respects as of the Date of Issuance;
(ii) To such official's knowledge, Company has
complied with all agreements, covenants and conditions to be
complied with by Company at or prior to the Date of Issuance
under this Agreement and each of the Bond Documents to which
it is a party;
(iii) To such official's knowledge, no event
affecting Company has occurred since the date of the Private
Placement Memorandum which either makes untrue or incorrect in
any material respect, as of the Date of Issuance, the
statements or information contained in the Private Placement
Memorandum concerning Company or is not reflected in the
Private Placement Memorandum but should be reflected therein
in order to make the statements and information therein
concerning Company not misleading in any material respect;
(iv) The information concerning Company and the
Project contained in the Private Placement Memorandum and the
appendices thereto does not contain any untrue statement of a
material fact or omit to state any fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading in any material respect; and
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(v) No Event of Default has occurred and is
continuing, or would result from the issuance of the Letter of
Credit, the making of this Agreement or any of the other Bond
Documents to which Company is a party, and no event has
occurred and is continuing which would constitute an Event of
Default but for the requirement that notice be given or time
elapse or both;
(c) a certificate of a duly authorized officer of Company
certifying the names and true signatures of the officers of Company
authorized to sign this Agreement and the Bond Documents to which
Company is a party;
(d) evidence of the status of Company as a California
corporation, duly incorporated, validly existing and in good standing
under the laws of the State of California and fully authorized to
operate the Project in Illinois and a copy of the Articles of
Incorporation, certified by the Secretary of State;
(e) a certified copy of the Bylaws of Company;
(f) an ALTA Title Insurance Policy for the benefit of the
Credit Bank, insuring the Mortgage as a valid and enforceable
first-priority lien on the Property in the original Stated Amount,
subject only to Permitted Encumbrances;
(g) this Agreement, the Mortgage, the Security Agreement and
the Environmental Indemnity, duly executed by Company;
(h) all Bond Documents (other than the Guaranty) and other
documents, certificates, opinions, approvals or filings with respect to
the Bond Documents, this Agreement or the transactions contemplated
thereby or hereby as the Credit Bank or its Special Counsel shall
reasonably request, in form and substance satisfactory to the Credit
Bank.
Section 3.2. Other Conditions Precedent to Issuance of the Letter of
Credit. The Credit Bank's obligation to issue the Letter of Credit as set forth
in Section 2.1 hereof shall be subject to the additional conditions precedent
that on or before the Date of Issuance:
(a) Company shall pay to the Credit Bank the Letter of Credit
Fee, for the first 12-month period in immediately available funds;
(b) no change shall have occurred in any law, regulation,
ruling or other action of the United States, or the State of Illinois
or the State of California or any political subdivision or Issuer
therein or thereof which, in the opinion of Special Counsel for the
Credit Bank would make it illegal or inadvisable for the Credit Bank to
issue the Letter of Credit as provided therein; and
(c) all legal requirements provided herein incident to such
issuance shall be reasonably satisfactory to the Credit Bank and its
Special Counsel.
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ARTICLE 4
INDEMNIFICATION
In addition to any other amounts payable by Company under this
Agreement, Company hereby agrees to release, protect, indemnify, pay and save
the Credit Bank and its officers, directors, employees, attorneys and agents
(each, an "indemnified person") harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
attorneys' fees) which any indemnified person may, other than as a result of its
gross negligence or willful misconduct, incur or be subject to as a consequence,
direct or indirect, of (i) the execution and delivery or transfer of, or payment
or failure to pay, under the Letter of Credit, (ii) any breach by any party
hereto of any representation or warranty, covenant, term or condition in, or the
occurrence of any default, under, this Agreement or any of the Bond Documents,
including all fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default, (iii)
the holding or owning by the Credit Bank or its nominee of any Bond, (iv) the
issuance, sale or delivery of the Bonds, (v) the use of the proceeds of the
Bonds or any Drawing, or (vi) involvement of any indemnified person in any legal
suit, investigation, proceeding, inquiry or action as a consequence, direct or
indirect, of the Credit Bank's issuance of the Letter of Credit, the Credit
Bank's holding or owning of any Bond, the holding or owning of any Bond by the
Credit Bank's nominee, the Credit Bank's execution of this Agreement, or any
other event or transaction contemplated by any of the foregoing.
Promptly after receipt by an indemnified person of notice of the
commencement of any action in respect of which indemnity may be sought against
Company under this Article 4, such indemnified person will notify Company in
writing of the commencement thereof, and, subject to the provisions hereinafter
stated, Company may assume the defense of such action (including the employment
of counsel, who shall be satisfactory to the indemnified person, but at
Company's expense) insofar as such action shall relate to any alleged liability
in respect of which indemnification may be sought from Company.
An indemnified person shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, and the fees and
expenses of such counsel shall be at the expense of Company.
ARTICLE 5
OBLIGATIONS ABSOLUTE
To the fullest extent permitted by applicable law, the obligations of
Company under this Agreement shall be unconditional and irrevocable, and shall
be paid or performed strictly in accordance with the terms of this Agreement
under all circumstances, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit, this Agreement or any of the other Bond Documents;
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(b) any amendment or waiver of or any consent to depart from
the terms of this Agreement (other than the provisions of this
Agreement specifically amended or waived) or any of the other Bond
Documents;
(c) the existence of any claim, set-off, defense or other
right which Company may have at any time against the Trustee, any
beneficiary or any transferee of the Letter of Credit (or any persons
or entities for whom the Trustee, any such beneficiary or any such
transferee may be acting), the Credit Bank or any other person or
entity, whether in connection with this Agreement, any if the other
Bond Documents or the transactions contemplated hereby or thereby or
any unrelated transaction;
(d) any statement or any other document presented under the
Letter of Credit proving to be forged, fraudulent invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(e) any nonapplication or misapplication by the Trustee or
otherwise of the proceeds of any Drawing;
(f) payment by the Credit 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;
(g) the failure by the Credit Bank to honor any Drawing under
the Letter of Credit or to make any payment demanded under the Letter
of Credit on the grounds that the demand for such payment does not
conform to the terms and conditions of the Letter of Credit; or
(h) any other circumstances or happening similar to any of the
foregoing.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF COMPANY
To induce the Credit Bank to enter into this Agreement and issue the
Letter of Credit, Company makes the representations and warranties to the Credit
Bank set forth in this Article 6 on and as of the date hereof.
Section 6.1. Organization; Powers. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California and has the power and Issuer to carry on its business as presently
conducted including, without limitation, the operation of the Project, to own
its assets and to enter into and perform its obligations under this Agreement
and the other Bond Documents to which it is a party.
Section 6.2. Corporate Issuer, etc. The execution, delivery and
performance by Company of this Agreement and the other Bond Documents to which
Company is a party have been duly authorized by all necessary action of Company
and this Agreement and such
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other Bond Documents constitute legal, valid and binding obligations of Company
enforceable in accordance with their terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, by
general equitable principles which may limit the right to obtain equitable
remedies and by provisions of applicable California or Illinois law.
Section 6.3. Compliance with Laws and Contracts. The execution,
delivery and performance by Company of this Agreement and the other Bond
Documents to which Company is a party do not and will not (a) violate any
provision of any order, writ, judgment, injunction, decree, determination or
award as currently in effect to which Company is subject or of the Articles of
Incorporation or by-laws of Company or, to the best of Company's knowledge, any
law, rule or regulation to which Company is subject; (b) result in a breach of
or constitute a default under the provisions of any material indenture, loan or
credit agreement or any other agreement, lease or instrument to which Company
may be or is subject or by which it, or its property, is bound; or (c) result
in, or require, the creation or imposition of any mortgage, Mortgage,
assignment, pledge, lien, security interest or other charge or encumbrance of
any nature or with respect to any of the Property other than as provided
therein; and Company is not in default under any such order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement,
lease or instrument or any law, rule or regulation to which Company is subject.
Section 6.4. Approvals. Company has obtained all authorizations,
consents, approvals, licenses, exemptions of or filings or registrations with
all commissions, boards, bureaus, agencies, instrumentalities, trustees, holders
of any indebtedness of Company or any other Person, domestic or foreign,
necessary to the valid execution, delivery and performance by Company of this
Agreement and the other Bond Documents to which Company is a party which are
capable of being obtained on or prior to the Date of Issuance, except as such
may be required under the state securities or Blue Sky laws in connection with
the distribution of the Bonds by the Remarketing Agent. Company is familiar with
all conditions, restrictions, reservations, whether or not of record, statutes,
regulations and ordinances affecting the Property, including, without
limitation, all pollution control, environmental protection, zoning and land use
regulations, building codes and all restrictions and requirements imposed by the
Village of Gurnee, Illinois and all other governmental entities (collectively,
the "Restrictions"), with respect to the Property, the Project and the
construction of the Project and the existing and contemplated use of the
Property. Company has obtained or will timely obtain all permits, approvals,
consents and other authorizations necessary under the Restrictions for such
construction and use. As of the date hereof, Company is not aware of any
violation or asserted violation of any Restrictions concerning the Property or
the existing or contemplated use thereof, and further, Company is not aware of
any action or proceeding pending before any court or governmental agency with
respect to the validity of any such Restrictions or any of such authorizations
or permits.
Section 6.5. Financial Statements. The audited financial statements of
Company for the fiscal years ended in 1993 and 1994, and for the nine months
ending September 30, 1995 and the unaudited financial statements of Company for
the period from October 1, 1995 to December 31, 1995, copies of which have
heretofore been delivered to the Credit Bank,
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were prepared in accordance with generally accepted accounting principles
consistently applied are true, complete and correct in all material respects and
fairly the financial position of Company as of their respective dates, and
there, have been no material adverse change in the financial position or
operations of Company since the financial statements were prepared.
Section 6.6 Litigation. There is no action, suit, proceeding, inquiry
or investigation at law, or in equity or before or by any court, public board or
body pending against or affecting Company or the properties, assets or
operations of Company (a) wherein an unfavorable decision, ruling or finding
could have a materially adverse affect upon: (i) the transactions contemplated
by, or the validity of, this Agreement, the other Bond Documents, or any
agreement or instrument to which Company is a party and which is used or
contemplated for use in the consummation of the transactions contemplated by
this Agreement and the other Bond Documents, (ii) the tax-exempt status of the
interest on the Bonds, or (iii) Company's property, assets, operations or
condition, financial or otherwise, or its ability to perform its obligations in
respect of the Indenture or this Agreement; or (b) which in any way contests the
existence, organization or powers of Company or the titles of the officers of
Company to their respective offices.
Section 6 7. Employee Benefit Plans. Company is in compliance in all
material respects with ERISA to the extent applicable to it and has received no
notice to the contrary from the PBGC or any other governmental entity or agency
and no reportable event (as defined in ERISA) which could result in a material
accumulated deficiency under ERISA or a material liability to the PBGC has
occurred and is continuing.
Section 6.8. Defaults. No Event of Default or event which with the
passage of time, the giving of notice or both could become an Event of Default
has occurred and is continuing.
Section 6.9. Disclosure. The information contained in the Private
Placement Memorandum under the captions "The Company," "The Project" and
"Litigation" is true and correct, and such information does not contain any
untrue statement of a material fact. There are no facts that Company has failed
to disclose to the Credit Bank that, individually or in the aggregate,
materially adversely affect, or so far as Company can foresee, will materially
adversely affect, the operations, affairs, properties, condition (financial or
otherwise) or prospects of Company or its ability to operate the Project and
perform under this Agreement and the other Bond Documents to which it is a
party.
Section 6.10. Title. The Company holds fee simple title to the
Property.
Section 6.11. Reports. All reports and forms required to be filed with
the Internal Revenue Service by Company have been so filed.
Section 6.12. Utilities. All utility services necessary for the
construction and operation of the Project are either available within or at the
boundaries of the Property or all necessary steps have been or shall be taken by
Company to assure the complete
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<PAGE> 17
construction thereof, including, without limitation, all electrical and
telephone facilities, water supply gas and storm and sanitary sewer facilities.
Section 6.13. Condemnation. No taking of the Property or any part
thereof through eminent domain, conveyance in lieu thereof, condemnation or
similar proceeding is pending or, to Company's knowledge, threatened by any
governmental agency.
Section 6.14. Roads. All roads necessary for the full utilization of
the Project for their intended purpose have been completed.
Section 6.15. Brokers. Company has not dealt with any person, firm or
corporation who is or may be entitled to any finder's fee, brokerage commission,
loan commission or other sum in connection with the issuance of the Letter of
Credit pursuant to this Agreement nor the entering into of this Agreement.
Company hereby agrees to indemnify and defend the Credit Bank and hold the
Credit Bank harmless against any and all loss, liability, cost or expense,
including reasonable attorneys' fees, which the Credit Bank may suffer or
sustain should such warranty or representation prove inaccurate in whole or in
part.
Section 6. 16. Mechanics' Liens. Company shall take whatever actions
may be necessary such that the title insurance policy required to be delivered
to the Credit Bank pursuant to Section 3.1(f) hereof not contain any exceptions
for any mechanics', materialmen's, carriers', warehousemen's or similar liens.
Section 6.17. Hazardous Materials. Company is not in violation of any
federal, state or local law, ordinance or regulation relating to environmental
conditions on, under or about the Property, including, but not limited to, soil
and groundwater conditions. Neither Company, nor to Company's knowledge, any
third party, has used, generated, manufactured, refined, produced, processed,
stored or disposed of on, under or about the Property or transported to or from
the Property any "Hazardous Materials" except in compliance with applicable law
nor does Company intend to use the Property in the future for the purpose of
generating, manufacturing, refining, producing, storing, handling, transferring,
processing or transporting of Hazardous Materials except cobalt 60. For the
purposes hereof, "Hazardous Materials" shall mean any flammable explosives,
radioactive materials, asbestos, organic compounds known as polychlorinated
biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related materials,
including, without limitation, any substances defined as or included in the
definition of "hazardous substances," "hazardous materials," or "toxic
substances" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; or the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.; or any
applicable law relating to radioactive and/or nuclear materials or substances or
any applicable Illinois law; and in the regulations adopted, published and/or
promulgated pursuant to said laws.
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ARTICLE 7
AFFIRMATIVE COVENANTS OF COMPANY
Until the termination of this Agreement and the payment in full to the
Credit Bank of all amounts payable to the Credit Bank hereunder, Company hereby
covenants and agrees that it will:
Section 7.1. Reporting Requirements. Furnish to the Credit Bank:
(a) on request, notices of filing of all reports material to
the Project that Company may be required to file with any governmental
commission, department, board, bureau or agency of the Federal, State
or local government relating to the transactions contemplated by the
Indenture; and
(b) upon receipt, copies of all Nuclear Regulatory Commission
and Food and Drug Administration reports relating to the Project;
Section 7.2. Notices.
(a) Give prompt notice in writing to the Credit Bank of a
known occurrence of an Event of Default or event which with the passage
of time, the giving of notice or both could become an Event of Default,
and of any known development, financial or otherwise, which may be
reasonably expected to adversely affect the ability of Company to
perform its obligations as set forth hereunder or under any of the
other Bond Documents, setting forth the details of and the action
Company proposes to take with respect to such event or development; and
(b) Give prompt notice in writing to the Credit Bank of any
known pending action, suit or proceeding, relating to the operations or
the condition (financial or otherwise) of the Project or the ability of
Company to repay any debt incurred under this Agreement or the
Indenture or which questions the validity of the Bond Documents.
Section 7.3. Payment of Taxes and Other Obligations. From time to time
pay and discharge, or cause to be paid and discharged, all payments in lieu of
taxes, service charges, assessments or other governmental charges which may
lawfully be imposed upon the revenues and income from the Project and will pay
all lawful claims for labor, material and supplies which if unpaid might become
a lien or charge upon the Project, revenues or income or which might impair the
security of the Bonds or the use of the Project revenues or other funds to pay
the principal of and interest thereon, all to the end that the priority and
security of the Bonds and of the Credit Bank shall be preserved; provided that
nothing in this Section 7.3 shall require Company to make any such payment so
long as it in good faith shall contest the validity thereof and shall have
established adequate reserves with respect thereto.
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Section 7.4. Preservation of Existence, etc. Preserve and maintain its
existence as a corporation duly incorporated, validly existing and in good
standing in the State of California and duly admitted to conduct business and
operate the Project in Illinois and its rights, franchises and privileges
material to the conduct of its business and to the performance of its
obligations under this Agreement and the Bond Documents to which it is a party,
and will not dissolve.
Section 7.5. Compliance with Laws, etc. Comply with the requirements of
all laws, rules, regulations and orders of any governmental Issuer,
noncompliance with which would, singly or in the aggregate, materially and
adversely affect its ability to complete or operate the Project or perform under
this Agreement or any other Bond Documents to which Company is a party, unless
the same shall be contested by it in good faith and by appropriate proceedings
which shall operate to stay the enforcement thereof.
Section 7.6 Inspection Rights. At any reasonable time and from time to
time upon three (3) days' prior written notice, permit the Credit Bank or any
agents or representatives thereof to examine and make copies of the records and
books of account related to the transactions contemplated by this Agreement, and
at any reasonable time to visit the Project and to discuss its affairs, finances
and accounts with Company and its independent accountants.
Section 7.7. Keeping of Records and Books of Account. Keep or cause to
be kept proper and current books and accounts (separate from all other records
and accounts) in which complete and accurate entries shall be made of all
transactions relating to the Project and the Revenues and other funds provided
for in the Loan Agreement, and will prepare and furnish to the Credit Bank the
financial statements required under Section 7.1.
Section 7.8. Maintenance of Approvals, Filings and Registrations. At
all times maintain in effect, renew and comply with all the terms and conditions
of all consents, licenses, approvals and authorizations as may be necessary or
appropriate under any applicable law or regulation for the execution, delivery
and performance of this Agreement and the other Bond Documents to which Company
is a party, and to make this Agreement and such other Bond Documents its legal,
valid, binding and enforceable obligations, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally, to general equitable principles which may limit the right
to obtain equitable remedies and to provisions of applicable California or
Illinois law.
Section 7.9. Maintenance and Operation of the Project. (a) Subject to
applicable requirements and restrictions imposed, and to the extent permitted,
by law, operate or cause to operate the Project in the manner described in the
Private Placement Memorandum.
(b) To the extent material to the transactions contemplated herein or
in the Bond Documents, operate and maintain or cause to operate and maintain the
Project in accordance with all applicable governmental laws, ordinances,
approvals, rules, regulations and requirement including, without limitation,
such zoning, sanitary, pollution and safety ordinances and laws and such rules
and regulations thereunder as may be binding upon
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Company. Company further covenants and agrees that it will cause to be
maintained and operated all engines, boilers, pumps, machinery, apparatus,
fixtures, fittings and equipment of any kind in, or that shall be placed in any
building or structure now or hereafter at any time constituting part of the
Project in good repair, working order and condition, except such property or
equipment as is no longer being utilized by Company, and that it will from time
to time make or cause to be made all necessary and proper replacements, repairs,
renewals and improvements so that the efficiency and value of the Project shall
not be impaired.
Section 7.10. Insurance and Performance Bonds Required. Maintain, in
accordance with the provisions hereof and of the Mortgage, insurance on the
Project with responsible and reputable insurance companies and associations
which are acceptable to the Credit Bank, including, without limitation, public
liability, property damage, hurricane, fire and extended coverage insurance,
title insurance, business and rental interruption insurance including
interruption due to earthquake; provided that such property damage, fire and
extended coverage and earthquake insurance and title insurance shall each be
maintained in an amount not less than the greater of the aggregate principal
amount of the Bonds or the full insurable replacement value of the Project (the
term "full insurable replacement value" as used herein shall mean the cost to
repair or replace the Project and any portion thereof with property of like kind
and quality, without deduction for depreciation). All such policies shall name
Company, the Credit Bank and the Trustee as insured parties, beneficiaries or
loss payees as their interest may appear. Each policy shall contain a provision
to the effect that the insurer shall not cancel or substantially modify the
policy provisions without first giving 30 days' advance written notice thereof
to Company, the Trustee and the Credit Bank. At least once during each 12-month
period, commencing on the Date of Issuance, Company shall file with the Trustee
and the Credit Bank a certificate setting forth the policies of insurance
maintained pursuant to this Agreement and the Mortgage, the names of the
insurers and insured parties, the amounts of such insurance and applicable
deductibles, the risks covered thereby and the expiration dates thereof.
Section 7.11. ERISA. Promptly pay and discharge all obligations and
liabilities, applicable to Company, arising under ERISA of a character which if
unpaid or unperformed might result in the imposition of a lien against any of
its properties or assets and promptly notify the Credit Bank of the occurrence
of any reportable event (as defined in ERISA) which might result in the
termination by the PBGC of any Plan or of receipt of any notice from PBGC of its
intention to seek termination of any Plan or appointment of a trustee therefor.
Company will notify the Credit Bank of its intention to terminate or withdraw
from any Plan and will not terminate any such Plan or withdraw therefrom unless
it shall be in compliance with all of the terms and conditions of this Agreement
after giving effect to any liability to PBGC resulting from such termination or
withdrawal.
Section 7.12. Bond Proceeds; Additional Funds. Cause the proceeds of
the Bonds to be used for the purposes set forth in the Indenture and the Loan
Agreement and make any necessary deposit into the funds and accounts established
under and referred to in the Indenture and the Loan Agreement.
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Section 7.13. Further Assurances. Execute and deliver to the Credit
Bank all such documents and instruments and do all such other acts and things as
may be necessary or required by the Credit Bank to enable the Credit Bank to
exercise and enforce its rights under this Agreement and to realize thereon, and
record and file and re-record and re-file all such documents and instruments, at
such time or times, in such manner and at such place or places, all as may be
necessary or required by the Credit Bank to validate, preserve and protect the
position of the Credit Bank under this Agreement.
ARTICLE 8
NEGATIVE COVENANTS OF COMPANY
Until the termination of this Agreement and the payment in full to the
Credit Bank of all amounts payable to the Credit Bank hereunder, Company hereby
covenants and agrees that, without the prior written consent of the Credit Bank,
Company will not directly or indirectly:
Section 8.1. Additional Indebtedness. Issue any other obligations
payable, with respect to principal or interest, from the revenues of the Project
which have, or purport to have, any lien upon the revenues of the Project
superior to or on a parity with the lien of the Credit Bank and the Trustee for
the Bonds; provided, however, that nothing in this covenant shall prevent
company from issuing and selling pursuant to law refunding bonds or other
refunding obligations payable from and having a first lien upon the revenues of
the Project if such refunding certificates or other refunding obligations are
issued for the purpose of, and are sufficient for the purpose of, prepaying all
of the Bonds authorized by the Indenture and then outstanding.
Section 8.2. Limitation on Encumbrances on the Project. Create, assume
or suffer to exist any mortgage, Mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including the charge upon property
purchased under conditional sales or other title retention agreements) (a
"security interest") upon the Project, unless the obligations of Company under
this Agreement shall be secured prior to any indebtedness or other obligation
secured by such security interest and Company further covenants and agrees that
if such a security interest is created or assumed by Company, it will make or
cause to be made effective a provision whereby the obligation of Company under
this Agreement will be secured prior to such indebtedness or other obligation
secured by such security interest; provided, however, that notwithstanding the
foregoing provisions and without securing obligations of Company under this
Agreement, Company may create, suffer or assume Permitted Encumbrances.
Section 8.3. Amendments. Amend, modify, terminate, grant or waive, or
permit the amendment, modification, termination or grant of, or any waiver under
(or consent to, or permit or suffer to occur any action or omission which
results in, or is equivalent to, an amendment, modification, or grant of a
waiver under) the Bond Documents or the resolutions adopted by Company on April
18, 1996 authorizing the delivery of the agreements to be entered into by
Company relating to the issuance of the Letter of Credit and the Bonds.
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Section 8.4. Private Placement Memorandum. Make any changes in
reference to the Credit Bank in any revision or amendment of the Private
Placement Memorandum.
Section 8.5. Arbitrage. Use, or permit the use of, the proceeds of any
Bond in any manner that would have caused the Bonds, at the time of issuance
thereof, to be "arbitrage bonds" within the meaning of Section 148 of the Code.
Section 8.6. Prohibited Uses. Use any of the properties financed or
refinanced out of any proceeds of the Bonds or suffer or permit such properties,
to be used in any manner or take any action or omit to take any action which
would adversely affect the tax exempt status of interest on the Bonds.
Section 8.7. Prohibition on Sale of Assets. Sell, lease, assign,
transfer or otherwise dispose of any of the Project property or assets whether
now owned or acquired in the future, except (a) obsolete or worn out property or
equipment no longer necessary in the ordinary course of the Project's business,
or (b) property disposed of in the ordinary course of the Project's business for
adequate consideration.
ARTICLE 9
DEFAULT AND REMEDIES
Section 9.1. Events of Default. Each of the following events shall, at
the option of the Credit Bank, constitute an "Event of Default" under this
Agreement:
(a) the occurrence of any event which constitutes an "Event of
Default" under the Indenture, the Security Agreement, the Guaranty, the
Environmental Indemnity or the Mortgage; or
(b) the failure by Company to pay any amount payable hereunder
within three (3) Business Days following the due date of such amount;
or
(c) the failure by Company to perform or observe any other
term, covenant or agreement contained in this Agreement, provided that
the failure of Company to perform such covenants (other than as
provided in subsections (a) and (b) of this Section 9.1 and other than
the covenants set forth in Article 8 hereof) shall not be deemed an
Event of Default if Company is diligently proceeding to cure such
nonperformance; provided, however, that such cure shall have been
achieved, in any event, no later than thirty (30) days after written
notice given to Company by the Credit Bank; or
(d) any warranty, representation or other written statement
made by or on behalf of Company contained in this Agreement, or in any
Bond Document or in any instrument furnished in compliance with or in
reference to any of the foregoing, is false or misleading in any
material respect on any date as of which made, and such falsity or
misleading statement materially and adversely affects the Project, the
Property or Company, or its ability to or perform under this Agreement,
the
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Environmental Indemnity, the Mortgage, the Security Agreement or any
other Bond Documents to which Company is a party; or
(e) Company makes an assignment for the benefit of creditors,
files a petition in bankruptcy, is unable generally to pay its debts as
they come due, is adjudicated insolvent or bankrupt or there is entered
any order or decree granting relief in any involuntary case commenced
against Company under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or if Company petitions or
applies to any tribunal for any receiver, trustee, liquidator,
assignee, custodian, sequestrator or other similar official of Company
or of any substantial part of its properties, or commences any
proceeding in a court of law for a reorganization, readjustment of
debt, dissolution, liquidation or other similar procedure under the law
or statutes of any jurisdiction, whether now or hereafter in effect, or
if there is commenced against Company any such proceeding in a court of
law which remains undismissed or shall not be discharged, vacated or
stayed, or such jurisdiction shall not be relinquished, within sixty
(60) days after commencement; or
(f) Company by any act, indicates its consent to, approval of,
or acquiescence in any such proceeding in a court of law, or to an
order for relief in an involuntary case commenced against Company under
any such law, or to the appointment of any receiver, trustee,
liquidator, assignee, custodian, sequestrator or other similar official
for Company, or if Company suffers any such receivership, trusteeship,
liquidation, assignment, custodianship, sequestration or other similar
procedure to continue undischarged for a period of sixty (60) days
after commencement or if Company takes any action for the purposes of
effecting the foregoing; or
(g) any material provision of this Agreement, the Mortgage,
the Guaranty, the Security Agreement, the Environmental Indemnity or of
any of the Bond Documents shall cease to be valid and binding, or
Company or any governmental Issuer shall contest any such provision, or
Company, or any agent or trustee on behalf of Company, shall deny that
it has any or further liability under this Agreement, the Environmental
Indemnity, the Mortgage, the Security Agreement or any of the Bond
Documents; or
(h) final judgment for the payment of money in excess of an
aggregate of $100,000 related to the Project and not fully covered by
insurance shall be rendered against Company and the same shall remain
undischarged for a period of thirty (30) consecutive days during which
execution shall not be effectively stayed or for the payment of which a
surety bond or other adequate security has not been obtained in the
judgment of the Credit Bank; or
(i) any reportable event (as defined in ERISA) which the
Credit Bank determines in good faith constitutes grounds for the
termination of any Plan of Company or for the appointment by the
appropriate United States District Court of a trustee to administer or
liquidate any such Plan, shall have occurred and be continuing thirty
(30) days after written notice to such effect shall have been given to
Company
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<PAGE> 24
by the Credit Bank; or any such Plan shall be terminated; or a trustee
shall be appointed by the appropriate United States District Court to
administer any such Plan; or the PBGC shall institute proceedings to
administer or terminate any such Plan; and in the case of any such
event the aggregate amount of vested unfunded liabilities under such
Plan shall exceed (either singly or in the aggregate in the case of any
such liability arising under more than one such Plan) 5% of the total
assets of Company; or
(j) the failure of any Bonds to be remarketed within 60 days
of the date of a Purchase Drawing.
Section 9.2. Remedies. Upon the occurrence of an Event of Default
pursuant to Section 9.1 (e) or (f), all amounts payable by Company under this
Agreement shall become due and payable, in each case automatically and
immediately without any presentment, demand, protest or other notice or
formality of any kind (all of which are expressly waived). Upon the occurrence
of an Event of Default (other than pursuant to Section 9.l(e) or (f) the Credit
Bank may, by notice to Company, declare all amounts payable by Company under
this Agreement to be immediately due and payable (and the same shall upon such
notice become immediately due and payable), in each case without any
presentment, demand, protest or other notice or formality of any kind. Upon any
such occurrence, the Credit Bank may, in addition, (a) exercise of all of its
rights and remedies under any other Bond Document or applicable law or (b)
exercise all or any combination of the remedies provided for in this Section
9.2.
ARTICLE 10
CONTINUING OBLIGATION
This Agreement is a continuing obligation of Company and shall, until
the later of the Expiration Date or the date upon which all amounts due and
owing to the Credit Bank hereunder shall have been fully and finally paid, be
binding upon Company, its successors and assigns, and inure to the benefit of
and be enforceable by the Credit Bank and its successors, transferees and
assigns; provided, that Company may not assign all or any part of this Agreement
without the prior written consent of the Credit Bank.
ARTICLE 11
LIMITED LIABILITY OF THE CREDIT BANK
Company hereby assumes all risks of the acts, omissions or misuse of
the Letter of Credit by the Trustee or any successor thereto. Neither the Credit
Bank nor any of its officers, directors or agents shall be liable or
responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of, or the making of a Drawing under, the Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign the Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may
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<PAGE> 25
prove to be invalid or ineffective for any reason; (iii) for failure of the
Trustee to comply fully with the conditions required in order to effect a
Drawing; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; (v) for
any loss or delay in the transmission or otherwise of any Bond, document or
draft required in order to make a Drawing; or (vi) for any consequences arising
from causes beyond the control of the Credit Bank; provided, however, that
Company shall have a claim against the Credit Bank, and the Credit Bank shall be
liable to Company, to the extent, but only to the extent, of any direct, as
opposed to consequential, damages suffered by Company which Company proves were
proximately caused by (x) the Credit Bank's willful misconduct or gross
negligence in determining whether documents presented under the Letter of Credit
comply with the terms of the Letter of Credit or (y) the Credit Bank's willful
failure to pay under the Letter of Credit after the presentation to it by the
Trustee of a draft and certificate strictly complying with the terms and
conditions of the Letter of Credit. None of the above shall affect, impair, or
prevent the vesting of any of the Credit Bank's rights or powers hereunder.
In furtherance and extension, and not in limitation, of the specific
provisions hereinabove set forth, any action taken or omitted by the Credit Bank
under or in connection with the Letter of Credit or any related Bond Documents
or other documents, if taken or omitted in good faith, shall be binding upon
Company and shall not put the Credit Bank under any resulting liability to
Company.
ARTICLE 12
MISCELLANEOUS
Section 12.1. Amendments, Nonwaiver and Remedies. This Agreement may be
amended only upon the written agreement of Company and the Credit Bank, and
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if Company shall first obtain the written
consent of the Credit Bank. No course of dealing between Company and the Credit
Bank, nor any delay in exercising any, rights hereunder, shall operate as a
waiver of any rights of the Credit Bank hereunder. No single or partial exercise
of any right under this Agreement shall preclude any other further exercise of
such right or the exercise of any other right. The Credit Bank may remedy any
default by Company hereunder or with respect to any other person, firm or
corporation in a reasonable manner without waiving the default remedied and
without waiving any other prior or subsequent default by Company. The remedies
provided in this Agreement are cumulative and not exclusive of any remedies
provided by law.
Section 12.2. Survival of Representations and Warranties. All
agreements, representations and warranties of Company contained in this
Agreement and in any Bond Documents delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the issuance of the Letter of
Credit hereunder, and the agreements contained in Article 4 and Section 12.3
hereof shall survive payment of the Bonds, the reimbursement to the Credit Bank
of any payments or disbursements under the Letter of Credit and the termination
of this Agreement.
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Section 12.3. Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or the Letter of Credit is issued, Company agrees
to pay on demand, all reasonable costs and expenses of the Credit Bank
including, without limitation, the fees and expenses of Special Counsel in
connection with the preparation, issuance or delivery, as the case may be, of
the Letter of Credit, this Agreement, the other Bond Documents and any other
documents which may be delivered in connection with any of the foregoing. In
addition, Company agrees to pay on demand all costs and expenses of the Credit
Bank (including reasonable counsel fees and expenses) in connection with (i) the
filing, recording, administration, transfer, amendment, maintenance, renewal or
cancellation of the Letter of Credit, this Agreement or the other Bond
Documents, (ii) any payment by the Credit Bank under the Letter of Credit, or
(iii) any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
Letter of Credit, this Agreement or the other Bond Documents, and any other
documents which may be delivered in connection with this Agreement. In addition,
Company agrees to pay promptly all costs and expenses of the Credit Bank for (i)
any and all amounts which the Credit Bank has paid relating to the Credit Bank's
curing of any Event of Default under this Agreement or any of the other Bond
Documents, (ii) the enforcement of this Agreement or any of the other Bond
Documents, or (iii) any action or proceeding relating to a court order,
injunction, or other process or decree restraining or seeking to restrain the
Credit Bank from paying any amount under the Letter of Credit on the
presentation of drafts and other documents in connection with the same. Company
agrees to save the Credit Bank harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omitting to pay any
taxes and fees to the extent Company is obligated to pay the same under this
Section 12.3.
Section 12.4. Waiver of Right of Set-off and Limitation on Credit Bank
Collateral.
(a) Upon the occurrence and during the continuance of any
Event of Default, the Credit Bank is hereby authorized at any time and
from time to time, without notice to Company (any such notice being
expressly waived by Company) and 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 Credit Bank to or for the credit
of the account of Company against any and all of the obligations of
Company now or hereafter existing under this Agreement, irrespective of
whether or not the Credit Bank shall have made any demand hereunder.
(b) The Credit Bank agrees promptly to notify Company after
any such set-off and application; provided that the failure to give
such notice shall not affect the validity of such sell-off and
application. The rights of the Credit Bank under this Section 12.4 are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Credit Bank may have.
Section 12.5. Notices. All notices, requests and other communications
hereunder shall be in written form (including bank wire, telegram, facsimile,
telex or similar writing) and shall be given to the party to whom addressed, at
its address, facsimile or telex number
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set forth below, or such other address, facsimile or telex number as such party
may hereafter specify for the purpose by notice to the other parties listed
below. Each such notice, request or communication shall be effective (i) if
given by telex, facsimile or other electronic means, when such communication is
transmitted to the address specified below and the appropriate answer back is
received, (ii) if given by mail, three days after such communication is
deposited in the United States mail with postage prepaid by registered or
certified mail, return receipt requested, addressed as aforesaid or (iii) if
given by any other means, when delivered at the address specified below. All
notices given by telex, facsimile or other electronic means shall be confirmed
in writing as promptly as practicable.
If to Company:
SteriGenics International
4020 Clipper Court
Fremont, California 94538
Attention: Vice President-Finance
Telephone: (510) 770-9000
Facsimile: (510) 770-1499
with a copy to counsel:
Gray, Cary, Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Craig M. Tighe
Telephone: (415) 833-2362
Facsimile: (415) 327-3699
If to the Credit Bank:
Comerica Bank-California
333 West Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Commercial Loan Services Manager
Telephone: (408) 556-5224
Facsimile: (408) 998-7231
with a copy to counsel:
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064-1614
Attention: Chris A. Carlson
Telephone: (310) 312-4000
Facsimile: (310) 312-4224
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<PAGE> 28
Section 12.6. Participation. The Credit Bank may at any time arrange
for other banking institutions of the Credit Bank's choosing ("Participants") to
participate in all or any portion of the Credit Bank's obligations under the
Letter of Credit, of the obligations of Company evidenced hereby and by the
Bonds which may be held by the Credit Bank or its nominee ("Participations").
Without in any way limiting the right of the Participants hereunder, Company
agrees that the Participants shall be entitled to (i) receive copies of all
documents furnished to the Credit Bank pursuant to Section 7.1 hereof (at such
addresses as the Credit Bank shall designate from time to time to Company) and
(ii) receive the benefits of Sections 2.7 and 2.8 hereof to the extent of their
respective Participations. Notwithstanding the Credit Bank's granting of any
Participations, Company shall have the right to continue dealing solely with the
Credit Bank and agents of the Credit Bank which have been appointed in writing
(as to the appointment of which Company has received written notice). No
Participant shall enter into any reimbursement or other similar agreement with
Company with respect to the Letter of Credit, this Agreement or the Bonds.
Section 12.7. Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to the Credit Bank, the determination of
such satisfaction shall be made by the Credit Bank in its sole and exclusive
judgment exercised in good faith.
Section 12.8. Uniform Customs and Practices. This Agreement and the
Letter of Credit shall be subject to the Uniform Customs and Practice (a copy of
which is available upon request), and, in the event any provision of the Uniform
Customs and Practice is or is construed to vary from or be in conflict with any
provision of the California Uniform Commercial Code, as from time to time
amended and in force (the "Commercial Code"), the Uniform Customs and Practice
shall prevail. In addition to other rights of the Credit Bank hereunder or under
application for the Letter of Credit, any action, inaction or omission taken or
suffered by the Credit Bank, or by any of its correspondents, under or in
connection with the Letter of Credit or the relative instruments, documents, or
property, if in good faith and in conformity with such foreign or domestic laws,
regulation, or customs as the Credit Bank or any of its correspondents may deem
to be applicable thereto, shall be binding upon the Company and shall not place
the Credit Bank or any of its correspondents under any liability to the Company.
Section 12.9. Governing Law. This Agreement and the Letter of Credit
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of California, without giving
effect to conflicts of law principles. The parties hereby waive, to the fullest
extent permitted by law, any rights they may have to a jury trial.
Section 12.10. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
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<PAGE> 29
Section 12.11. 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 nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
STERIGENICS INTERNATIONAL
By /s/
------------------------------
Name EDWARD M. MILLER, JR.
Title VICE PRESIDENT FINANCE
COMERICA BANK-CALIFORNIA
By /s/ Michael J. Archer
------------------------------
Name MILLER J. ARCHER
Title VICE PRESIDENT
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<PAGE> 1
EXHIBIT 10.46
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Agreement") is made as of
April 1, 1996, by STERIGENICS INTERNATIONAL, a California corporation
("Pledgor"), in favor of COMERICA BANK-CALIFORNIA, a California banking
corporation ("Bank").
RECITALS
WHEREAS, Pledgor, pursuant to the Reimbursement Agreement, dated as of
April 1, 1996, between Pledgor and Bank (the "Reimbursement Agreement"), has
agreed to reimburse Bank with respect to payments made and expenses incurred by
Bank pursuant to, and in connection with, the letter of credit described in the
Reimbursement Agreement (the "Letter of Credit");
WHEREAS, Bank, as a condition to issuing the Letter of Credit, is
requiring Pledgor to pledge as security for Pledgor's obligation to Bank under
the Reimbursement Agreement (the "Obligations"), the loan proceeds to the extent
disbursed to the Company pursuant to the Indenture (the "Loan Proceeds") that
Pledgor receives pursuant to the Loan Agreement, dated as of April 1, 1996,
between Pledgor and the Village of Gurnee, Illinois (the "Loan Agreement"); and
WHEREAS, Pledgor is willing to so pledge the Loan Proceeds;
NOW, THEREFORE, Pledgor and Bank agree as follows:
1. Pledge of Collateral.
(a) Pledgor hereby pledges, assigns and delivers to Bank and
grants to Bank a security interest in the Loan Proceeds, together with
all proceeds and substitutions of any thereof, all interest and other
amounts paid thereon, and all other cash and noncash proceeds of the
foregoing (all hereinafter called the "Pledged Collateral"), as
security for the prompt performance of all Obligations.
(b) Promptly upon the parties' execution hereof, Pledgor shall
deposit all of the Loan Proceeds in a bank account with Bank (the "Bank
Account").
2. Representations, Warranties and Covenants. Pledgor represents
and warrants to, and covenants with, Bank for the term hereof that:
(a) The Pledged Collateral is owned by Pledgor free and clear
of any security interests, liens, encumbrances, options or other
restrictions;
(b) Pledgor has full power and authority to create a lien on
the Pledged Collateral in favor of Bank and no disability or
contractual obligation exists that would prohibit Pledgor from pledging
the Pledged Collateral pursuant to this Agreement, and Pledgor will not
assign, create or permit to exist any other claim to,
<PAGE> 2
lien or encumbrance upon, or security interest in any of the Pledged
Collateral, other than the lien of Union Bank;
(c) Pledgor will not withdraw, cancel, redeem or seek
repayment of the Pledged Collateral from the Bank Account;
(d) Pledgor shall, immediately upon Bank's request, execute
and deliver such further instruments and documents, and take all such
other action, as Bank deems reasonably necessary or desirable to
further evidence and perfect this pledge and grant of security; and
(e) The Pledged Collateral is not the subject of any present
or threatened suit, action, arbitration, administrative or other
proceeding, and Pledgor knows of no reasonable grounds for the
institution of any such proceedings.
All the above representations and warranties shall survive the making
of this Agreement.
3. Authorization of Bank Action. Pledgor irrevocably authorizes
and empowers Bank, at any time and from time to time, either in its own name or
in Pledgor's name, to:
(a) demand, collect, and receive payment of any and all monies
or proceeds represented by, or due with respect to, the Pledged
Collateral;
(b) execute any endorsements of the Pledged Collateral and any
or all instruments or documents for the withdrawal or repayment of some
or all of same;
(c) insert in any instrument or document utilized for the
withdrawal of funds represented by the Pledged Collateral signed by
Pledgor the date and amount due under the Pledged Collateral and to
complete such instrument or document in any respect Bank deems
necessary or desirable; and
(d) deal in all respects with the Pledged Collateral as the
holder thereof, and Pledgor irrevocably constitutes and appoints Bank
as its attorney to do any and all things Bank deems necessary or
desirable to effect this Agreement and the enforcement of Bank's rights
and remedies hereunder.
4. Bank's Remedies Upon Event of Default.
(a) Upon the occurrence of an Event of Default, as defined in
the Reimbursement Agreement, Bank shall have the right to exercise all
such rights as a secured party under the Uniform Commercial Code as it,
in its sole judgment, shall deem necessary or appropriate, including
the right to liquidate the Pledged Collateral.
(b) After the disposal of any of the Pledged Collateral, Bank
may deduct all reasonable legal and other expenses and fees for
protecting its interests and enforcing
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<PAGE> 3
its remedies under the Reimbursement Agreement and this Agreement and
shall apply the residue of the proceeds to, or hold as a reserve
against, the Obligations in such manner as Bank, in its reasonable
discretion, shall determine, and shall pay the balance, if any, to
Pledgor.
5. Release of Pledged Collateral. The pledge of and grant of a
security interest in the Pledged Collateral pursuant to this Agreement shall be
of no further force or effect and the Pledged Collateral shall be returned to
Pledgor upon the payment in full of the obligations to Bank and the expiration
or termination of the Reimbursement Agreement; provided, however, that this
Agreement shall be reinstated if any payment must be returned by Bank for any
reason, including, but not limited to, upon or after the insolvency, bankruptcy
or reorganization of Pledgor.
6. Notice. Unless otherwise set forth herein, all notices,
demands, requests and other written communications hereunder shall be given to
Bank and/or Pledgor by regular United States mail, postage prepaid and addressed
as follows:
If to Bank: Comerica Bank-California
333 West Santa Clara Street, 2nd Floor
San Jose, California 95113
Attention: Commercial Real Estate Loan
Operations-Manager
Telephone: (408) 556-5224
Facsimile: (408) 998-7231
With a copy to: Manatt, Phelps & Phillips
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: Chris A. Carlson, Esq.
Telephone: (310) 312-4000
Facsimile: (310) 998-7231
If to Pledgor: SteriGenics International
4020 Clipper Street
Fremont, California 94538
Attention: Vice President-Finance
Telephone: (510) 770-9000
Facsimile: (510) 770-1499
With a copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attention: Craig M. Tighe, Esq.
Telephone: (415) 833-2362
Facsimile: (415) 327-3699
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<PAGE> 4
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof, on the earlier of the third day
following the day on which it is posted or the date of its receipt by the party
to be notified and to prove the service of any such notice it shall be
sufficient to prove that the same was properly addressed and posted aforesaid or
actually received by any party to whom such notice was delivered in person.
Pledgor and Bank shall each have the right to change its address for the purpose
of this Agreement by giving at least three (3) days' written notice of any such
charge to the other party hereto.
7. Governing law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES.
8. WAIVER OF JURY TRIAL. PLEDGOR AND BANK EACH HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, SUIT OR
PROCEEDINGS (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT,
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (B) IN ANY WAY
CONNECTED WITH OR RELATED TO OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE REIMBURSEMENT AGREEMENT, OR
ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
PLEDGOR AND BANK HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, SUIT OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL, WITHOUT A
JURY, AND THAT EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
9. Miscellaneous.
(a) This Agreement may not be amended or modified except by a
written instrument signed by Bank and Pledgor.
(b) This Agreement constitutes the entire agreement between
Bank and Pledgor with respect to the subject matter hereof and
supersedes all prior agreements, understandings, offers and
negotiations, oral or written.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but Al of
which shall together constitute one and the same document.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly officers as of the day and executed and delivered by their respective duly
authorized ear first above written.
COMERICA BANK-CALIFORNIA
By: /s/
--------------------------------
Title: VICE PRESIDENT
-----------------------------
STERIGENICS INTERNATIONAL
By: /s/
--------------------------------
Title: VICE PRESIDENT FINANCE
-----------------------------
-5-
<PAGE> 1
EXHIBIT 10.47
------------------------------------------------------------
PLACEMENT AND REMARKETING AGREEMENT
AMONG
VILLAGE OF GURNEE, ILLINOIS,
STERIGENICS INTERNATIONAL,
AND
WHEAT, FIRST SECURITIES, INC.
Dated as of
April 1, 1996
------------------------------------------------------------
Relating to the Issuance of:
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project),
Series 1996
------------------------------------------------------------
<PAGE> 2
PLACEMENT REMARKETING AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of this Placement and Remarketing
Agreement and is, only for convenience of reference.)
Section 1. Definitions ......................................... 2
Section 2. Appointment of Placement Agent ...................... 2
Section 3. General Obligations of Placement Agent .............. 2
Section 4. Appointment of Remarketing Agent .................... 2
Section 5. General Obligations of Remarketing Agent ............ 2
Section 6. Determination of Interest Rates ..................... 3
Section 7. Maintenance of Registration; Records ................ 3
Section 8. Manner of Offer and Sale ............................ 3
section 9. Denominations; Conditions to Placement and
Remarketing ......................................... 5
Section 10. Wheat Not Obligated to Advance Own Funds; No
Liability for Inability to Place or Remarket Bonds .. 9
Section 11. Private Placement Memorandum; Rating and Blue
Sky Qualification ................................... 9
Section 12. Representations and Warranties of Wheat ............. 11
Section 13. Representations, Warranties, Covenants and
Agreements of the Company ........................... 11
Section 14. Representations of the Issuer ....................... 13
Section 15. Payment of Fees ..................................... 14
Section 16. Resignation and Removal ............................. 15
Section 17. Termination ......................................... 15
Section 18. Nature of Wheat's Obligations ....................... 15
Section 19. Other Transactions by Wheat ......................... 16
Section 20. Notices ............................................. 16
Section 21 Survival of Representations and Warranties .......... 16
Section 22. Consultation with Experts ........................... 16
Section 23. Liability of Wheat .................................. 16
Section 24. Officials of Company Not Liable ..................... 16
Section 25. Indemnification ..................................... 17
Section 26. Severability ........................................ 18
Section 27. Assignment; Successors and Assigns .................. 18
Section 28. Amendments .......................................... 19
Section 29. Applicable Law ...................................... 19
Section 30. Counterparts ........................................ 19
Section 31. Headings ............................................ 19
EXHIBIT A SUPPLEMENTAL OPINION OF BOND COUNSEL
EXHIBIT B BANKRUPTCY PREFERENCE OPINION OF
PLACEMENT AGENT COUNSEL
EXHIBIT C OPINION OF COUNSEL TO THE ISSUER
EXHIBIT D OPINION OF COUNSEL TO THE COMPANY
EXHIBIT E OPINION OF COUNSEL TO THE PLACEMENT AGENT
EXHIBIT F OPINION OF COUNSEL TO THE CREDIT PROVIDER
EXHIBIT G OPINION OF COUNSEL TO THE CONFIRMING BANK
<PAGE> 3
PLACEMENT AND REMARKETING AGREEMENT
This PLACEMENT AND REMARKETING AGREEMENT (this "Agreement") is made and
entered into as of April 1, 1996, among the VILLAGE OF GURNEE, ILLINOIS, a
Municipal corporation and a body politic and corporate of the State of Illinois
(the "Issuer"), STERIGENICS INTERNATIONAL, a California Corporation (the
"Company"), and WHEAT, FIRST SECURITIES, INC., a Virginia corporation, as the
placement Agent and as the Remarketing Agent ("Wheat," the "Placement Agent" or
the "Remarketing Agent," as applicable);
PREAMBLES
WHEREAS, the Issuer has authorized the issuance and sale of its
Industrial Development Revenue Bonds (SteriGenics International Project), Series
1996, in the aggregate principal amount of $7,750,000 the "Bonds"), pursuant to
the provisions of an Indenture of Trust dated as of April 1, 1996 (the
"Indenture," between the Issuer and Bank One, Columbus, N.A., as trustee (the
"Trustee"), the proceeds of which will be loaned by the Issuer to the Company
pursuant to the provisions of a Loan Agreement dated as of April 1, 1996 (the
"Loan Agreement"), such loan to be evidenced by the company's promissory note in
the aggregate principal amount of $7,750,000 (the "Note"), and will be used to
provide financing for a part of the cost of the acquisition, construction,
equipping and installation of a manufacturing facility located in the Village of
Gurnee, Lake County, Illinois to be owned and operated by the Company;
WHEREAS, the payment when due of the principal of, interest on and
Purchase Price (as hereinafter defined) of the Bonds will be secured initially,
to the extent provided therein, by a letter of credit in the initial stated
amount of $7,880,000 (the "Letter of Credit" and, together with any Alternate
Credit Facility, the "Credit Facility") dated the date of issuance and delivery
of the Bonds (the "Date of Issuance") and issued by Comerica Bank-California
(together with any issuer of an Alternate Credit Facility, the "Credit
Provider") and confirmed by Comerica Bank, a Michigan banking corporation (the
"Confirming Bank");
WHEREAS, the Bonds are more fully described in the Preliminary Private
Placement Memorandum dated April 15, 1996 (the "Preliminary Private Placement
Memorandum") and the Private Placement Memorandum dated April 19, 1996 (together
with the Preliminary Private Placement Memorandum, the "Private Placement
Memorandum") prepared in connection with the initial placement of the Bonds on
the Date of Issuance;
WHEREAS, the Company and the Issuer have requested that Wheat act as
the Placement Agent to locate the initial purchasers of the Bonds on the Date of
Issuance;
WHEREAS, the Bonds, once initially placed on the Date of Issuance, are
subject to both optional and mandatory tender for purchase by the owners thereof
under the circumstances set forth in the Indenture;
WHEREAS, the Indenture and this Agreement provide for the remarketing
of the Bonds in certain circumstances when so tendered for purchase from time to
time; and
WHEREAS, the Company and the Issuer have requested that Wheat act as
their agent to effect such remarketing and to perform certain other services as
contemplated by the Indenture and this Agreement, and the execution of this
Agreement will assist the Company and the Issuer in carrying out the purposes
for which the Bonds were issued;
<PAGE> 4
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. DEFINITIONS. Capitalized terms used herein but not defined
herein shall have the same meaning as set forth in the Indenture.
Section 2. APPOINTMENT OF PLACEMENT AGENT. Wheat is hereby appointed,
and subject to the ,terms and conditions contained in this Agreement, Wheat
accepts such appointment, as exclusive placement Agent for the initial offering,
issuance and sale of the Bonds on the Date of Issuance.
Section 3. GENERAL OBLIGATIONS OF PLACEMENT AGENT.
(a) As agent for the Company and the Issuer, the Placement
Agent will arrange for the purchase of $7,750,000 aggregate principal
amount of the Bonds on the Date of Issuance by Qualifying Investors (as
hereinafter defined) at a price equal to 100% of the principal amount
thereof, shall collect and deliver to the Trustee the purchase price so
paid therefor in immediately available funds, and, if the Bonds are not
to be held in book-entry only form, shall deliver to the Trustee a list
of all the initial purchasers of such Bonds, including the name,
address and taxpayer or other identifying number of, and the principal
amount of Bonds purchased by each such purchaser.
(b) Purchasers shall be required to deposit the purchase price
of Bonds with the Placement Agent on or before the Date of Issuance for
transfer by the Placement Agent to the Trustee on the Date of Issuance.
(c) The Placement Agent agrees that on the Date of Issuance it
will transfer to the Trustee, for the account of the Company, the
purchase price of the Bonds in immediately available funds, but only to
the extent that each purchaser has deposited the purchase price of the
Bonds to be purchased by such purchaser with the Placement Agent. If
any purchaser does not deposit with the Placement Agent the purchase
price of the Bonds to be purchased by such purchaser or otherwise
refuses to purchase the Bonds to be purchased by such purchaser, the
Placement Agent will use its best efforts to arrange for a substitute
purchaser for such Bonds on the terms set forth in this Section and in
Section 8.
Section 4. APPOINTMENT OF REMARKETING AGENT.
(a) Pursuant to the Indenture and this Agreement, Wheat is
appointed, and subject to the terms and conditions contained in the
Indenture and this Agreement, Wheat hereby accepts such appointment, as
exclusive Remarketing Agent in connection with offering and selling the
Bonds from time to time in the secondary market subsequent to their
initial offering, issuance and sale on the Date of Issuance.
(b) The Company and the Issuer agree that, unless this
Agreement has been previously terminated pursuant to the terms hereof
and subject to Section 27(b) below, the Remarketing Agent shall act as
the exclusive Remarketing Agent for the Company and the Issuer with
respect to the offer and sale of the Bonds in the secondary market on
the terms and conditions contained in this Agreement and in the
Indenture at all times.
Section 5. GENERAL OBLIGATIONS OF REMARKETING AGENT. The Remarketing
Agent, as agent for the Company and the Issuer and not as principal, undertakes
to use its best efforts to remarket to Qualifying Investors on the applicable
Purchase Date in accordance with Section 3.05 of the Indenture
2
<PAGE> 5
all Bonds that have been property tendered for purchase and to perform all other
obligations and duties Remarketing Agent provided for in the Indenture subject
to the terms and conditions hereof and thereof. If the proceeds from remarketing
are insufficient to purchase such Bonds on the Purchase Date, remarketing Agent
will thereafter continue to use its best efforts to remarket any such Bonds
which have been purchased with a draw on the Credit Facility and which are held
for the account of the Company, subject to the pledge of the Credit Provider,
after the Purchase Date, subject to the terms and company conditions of the
Indenture and this Agreement.
Section 6. DETERMINATION OF INTEREST RATES. The Placement Agent shall
determine the initial interest rate, applicable to the Bonds from the Date of
Issuance to and including April 23, 1996 and thereafter shall determine the
Variable Rate on the Bonds and the Term Rate on the Bonds in accordance with,
and shall provide notice thereof to the parties, in the manner and at the times
set forth in Section 03(b) of the Indenture.
Section 7. MAINTENANCE OF REGISTRATION, RECORDS. Wheat (a) shall
maintain its registration as broker-dealer and a municipal securities dealer
with the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and its qualification as a
member of the National Association of Securities Dealers, Inc. (the "NASD"), (b)
if the Bonds are held in book-entry only form, shall advise the Registrar and
Paying Agent of the name, address and taxpayer or other identifying number of,
and the principal amount of Bonds purchased by, each purchaser whom it has sold
Bonds pursuant to the provisions of the Indenture and this Agreement, (c) shall
hold all moneys delivered to it under this Agreement or under the Indenture for
the purchase of Bonds in trust or the benefit of the person who shall have so
delivered such moneys until the applicable securities depository, if the Bonds
are then held in book-entry only form, or the Registrar and Paying Agent, if the
Bonds are not then held in book-entry only form, reflects the ownership of such
Bonds on the registration books maintained for that purpose and thereupon
transfer such moneys (i) to the Trustee in the case of each initial placement of
Bonds or (ii) to the prior owner of the Bonds or to the Credit Provider to
reimburse it for any draw on the Credit Facility to purchase such Bonds, as
appropriate, in the case of any remarketing of the Bonds, and (d) shall keep
such records of purchases and sales of the Bonds and make and deliver such
confirmations relating thereto, as shall be consistent with prudent and
customary practice in the municipal securities industry.
Section 8. MANNER OF OFFER AND SALE.
(a) Prior to the first Conversion Date, Wheat, agrees:
(i) to offer and sell the Bonds at all times in
compliance with the exemptions set forth in the SEC's Rule
15c2-12(c);
(ii) not to offer or sell Bonds by means of any form
of general solicitation or general advertising, including but
not limited to, the following:
(A) any advertisement, article, notice or
other communication published in any newspaper,
magazine or similar media or broadcast over
television or radio; and
(B) any seminar or meeting whose attendees
have been invited by any general solicitation or
general advertising;
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<PAGE> 6
(iii) not to offer or sell Bonds to any person unless
immediately prior to making such sale Wheat, after making
reasonable inquiry, has reasonable grounds to believe and does
believe:
(A) that such person is a bank, savings and
loan association, financial institution, corporation,
pension and profit sharing account, business,
partnership, trust or substantial individual
investor, accustomed to dealings in the money-market
and is capable in its own sources of evaluating the
merits of investing in obligations comparable to the
Bonds (based on its own sources, obtaining copies of
the Indenture, the Loan Agreement and the Credit
Facility and the limited information in the Private
Placement Memorandum) and to whom securities could be
sold in reliance upon the exemption afforded by
Section 3(a) (3) or Section 4(2) of the Securities
Act of 1933, as amended (the "1933 Act"), and
comparable exemptions contained in other applicable
federal and state laws (herein referred to as
"Qualifying Investors");
(B) based upon information supplied by such
person to the Placement Agent or the Remarketing
Agent, as applicable, that (1) such person is
acquiring the Bonds for its own account or as trustee
or investment advisor for an account over which it
has investment discretion for the purpose of
investment and not with a view to, or for sale in
connection with, any distribution of such Bonds nor
with any present intention of distributing or selling
such Bonds, subject to its right to tender the Bonds
for purchase pursuant to their terms and except that
the disposition of its property shall at all times be
and remain within its control and (2) such person
understands that the Bonds are not being registered
under the 1933 Act and the Bonds are being sold to
such person in a transaction that is exempt from the
registration requirements of the 1933 Act; and
(C) that all representations made and
information furnished by such person in connection
with the purchase of any Bonds are true and correct
in all material respects;
(iv) no to give any information or make any
representation in connection with the offering and sale of any
Bonds other than those contained in the Private Placement
Memorandum.
(b) The Company and the Issuer hereby approve the offering and sale of
the Bonds prior to the first Conversion Date to prospective purchasers who are
Qualifying Investors on the terms set forth in this Agreement.
(c) The Remarketing Agent, in its individual capacity, may become the
owner of or may in good faith buy, sell, own, hold or deal in the Bonds as if it
were not the Remarketing Agent.
4
<PAGE> 7
Section 9. DENOMINATIONS; CONDITIONS TO PLACEMENT AND REMARKETING.
(a) The Placement Agent and the Remarketing Agent, as applicable, shall
not be authorized or required to offer any Bonds under this Agreement other than
in an Authorized Denomination.
(b) The Placement Agent's obligations under this Agreement shall be
conditioned upon the performance by the Issuer and the Company of their
respective obligations to be performed hereunder and shall also be subject to
the following additional conditions:
(i) the representations and warranties of the Issuer and the
Company contained herein shall be true, complete and correct on the
date hereof and of the Date of Issuance as if made on the Date of
Issuance;
(ii) as of the Date of Issuance, (A) this Agreement, the Loan
Agreement, the Note, the Private Placement Memorandum, the Bonds, the
Indenture, and the Confirmation Letter and the Credit Facility shall be
in full force and effect and shall be in the forms previously furnished
to the Placement Agent except for such changes as may have been agreed
to by the Placement Agent, and (B) there shall be in full force and
effect such ordinances and resolutions as, in the opinion of Bond
Counsel, shall be necessary in connection with the transactions
contemplated hereby;
(iii) none of the following shall have occurred between the
date hereof and the Date of Issuance:
(A) legislation shall lave been enacted by the
Congress of the United States of America or the legislature of
the State of Illinois or shall have been reported out of
committee of either body or be pending in a committee of
either body, or shall have been recommended to the Congress of
the United States of America or otherwise endorsed for passage
(by press release, other form of notice or otherwise) by the
President of the United States, the Treasury Department of the
United States, the Internal Revenue Service or the Chairman or
ranking minority member of the Committee on Finance of the
United States Senate or the Committee on Ways and Means of the
United States House of Representatives, or legislation shall
have been proposed for consideration by either such Committee
or by the staff of the Joint Committee on Taxation of the
Congress of the United States, or legislation shall have been
favorably reported for passage to either House of the Congress
of the United States by a Committee of such House to which
such legislation has been referred for consideration, or a
decision shall have been rendered by a court of the United
States or of the State of Illinois or the United States, Tax
Court or a ruling shall have been made or a regulation or
temporary regulation shall have been proposed or made or any
other release or announcement shall have been made by the
Treasury Department of the United States or any branch thereof
or the Internal Revenue Service, with respect to federal or
the State of Illinois taxation upon revenues or other income
of the general character to be derived by the Issuer or upon
interest received on obligations of the general character of
the Bonds, which in the reasonable judgment of the Placement
Agent, materially adversely affects the market for the Bonds;
5
<PAGE> 8
(B) there shall exit any event or condition that, in
the reasonable judgment of the Placement Agent, either (1)
makes untrue or incorrect in any material respect as of such
time any statement or information contained in the Private
Placement Memorandum or (2) is not reflected in the Private
Placement Memorandum but should be reflected therein in order
to make the statements and information contained therein not
misleading;
(C) in the reasonable judgment of the Placement
Agent, the market price or marketability of the Bonds or the
ability to enforce contracts for the sale of Bonds shall have
been materially adversely affected by an amendment of or
supplement to the Private Placement Memorandum,
notwithstanding the Placement Agent's approval of such
amendment or supplement prior to its distribution;
(D) there shall have occurred any outbreak of
hostilities, escalation of existing hostilities, or other
national or international calamity or crisis, the effect of
such outbreak, escalation, calamity or crisis on the financial
markets of the United States being such as, in the reasonable
judgment of the Placement Agent, materially adversely affects
the market for the Bonds;
(E) there shall be in force a general suspension of
trading on the New York Stork Exchange or minimum or maximum
prices for trading shall have been fixed and be in force, or
maximum ranges for prices for securities shall have been
requited and be in force on the New York Stock Exchange,
whether by virtue of a determination by the New York Stock
Exchange or by order of the SEC or any other governmental
authority having jurisdiction;
(F) a general banking moratorium shall have been
established by either federal, Illinois, Michigan, California
or New York authorities or any devaluation of the dollar shall
have been proposed or effected by any governmental authority
of the United States;
(G) there shall be any material adverse change in the
affairs of the Issuer or the Company that, in the reasonable
judgment of the Placement Agent, affects materially and
adversely the market price or the marketability of the Bonds;
(H) there shall be any material adverse change in the
financial position of the Credit Provider or the Confirming
Bank that, in the reasonable judgment of the Placement Agent,
affects materially and adversely the market price or the
marketability of the Bonds;
(I) there shall be established any new material
restriction on transactions in securities (including the
imposition of any limitation on interest rates) or the
placement of the Bonds by the Placement Agent as contemplated
by this Agreement;
(J) there shall occur a default with respect to the
debt obligations of or the institution of proceedings under
bankruptcy laws by or against any state of the United States
or agency or instrumentality thereof or any municipality
6
<PAGE> 9
located in the United States or agency or instrumentality
thereof that, in the reasonable judgment of the Placement
Agent, affects materially and adversely the market price or
marketability of the Bonds; or
(K) any legislation shall be enacted. or proposed,
any decision of any federal or state court or any ruling or
regulation (final, temporary or proposed) of the SEC or other
governmental agency shall have been made or issued that would
(1) make the Bonds or any securities of the Issuer or of any
similar body subject to the registration requirements of the
1933 Act, or (2) require the qualification of an indenture
with respect to the Bonds or any such securities under the
Trust Indenture Act of 1939, as amended;
(iv) at or prior to the Date of Issuance, the Placement Agent shall
receive the following documents, in each case satisfactory in form and substance
to the Placement Agent and its counsel:
(A) the unqualified approving opinion, dated as of
the Date of Issuance of Chapman and Cutler, as bond counsel
("Bond Counsel"), substantially in the form attached to the
Private Placement Memorandum as Appendix D thereto,
accompanied by a supplemental opinion of Bond Counsel, dated
as of the Date of Issuance, substantially in the form attached
hereto as Exhibit A;
(B) the opinion of counsel to the Issuer, dated as of
the Date of Issuance, substantially in the form attached
hereto as Exhibit C
(C) the opinion of counsel to the Company, dated as
of the Date of Issuance, substantially in the form attached
hereto as Exhibit D;
(D) the opinion of Parker, Poe, Adams & Bernstein
L.L.P., counsel to the Placement Agent, dated as of the Date
of Issuance, substantially in the form attached hereto as
Exhibit E accompanied by a bankruptcy preference opinion of
counsel to the Placement Agent, dated as of the Date of
Issuance, substantially in the form attached hereto as Exhibit
B;
(E) the opinion of counsel to the Credit Provider,
dated as of the Date of Issuance, substantially in the form
attached hereto as Exhibit F;
(F) the opinion of counsel to the Confirming Bank,
dated as of the Date of Issuance, substantially in the form
attached hereto as Exhibit G;
(G) a certificate or certificates, dated as of the
Date of Issuance, signed by an authorized officer of the
Issuer and in form and substance satisfactory to the Placement
Agent, to the effect that the representations and warranties
of the Issuer contained in this Agreement are true and correct
in all material respects as of the Date of Issuance and that
the Issuer has performed its obligations under this Agreement;
7
<PAGE> 10
(H) a certificate of the President of the Company, or
such other officer as is acceptable to the Placement Agent,
dated as of the Date of Issuance, in form and substance
satisfactory to the Placement Agent, to the effect that the
representations and warranties of the Company contained in
this Agreement are true and correct in all material respects
as of the Date of issuance and that the Company has performed
its obligations under this Agreement;
(I) a certificate of the Secretary of the Company,
dated as of the Date of Issuance, in form and substance
satisfactory to the Placement Agent and its counsel,
certifying (1) that attached thereto is a copy of the articles
of incorporation of the Company, and all amendments thereto,
certified as of a recent date by the Secretary of State of the
State of California, and that such documents have not been
amended since such date; (2) that attached thereto is a true
and complete copy of the Bylaws of the Company, as in affect
on the date of such certification, (3) that attached thereto
is a true and complete copy of the resolutions of the Board of
Directors of the Company authorizing the execution and
delivery of all documents and all transactions contemplated by
the Private Placement Memorandum and this Agreement and (4)
that attached thereto are certificates issued as of a recent
date by the Secretary of State of the State of California and
the State of Illinois, respectively, as to the good standing
and authorization of the Company to do business in each of
those jurisdictions;
(J) a certificate dated as of the Date of Issuance of
an authorized officer of each of the Credit Provider and the
Confirming Bank satisfactory to the Placement Agent and its
counsel and in form and substance satisfactory to the
Placement Agent, to the effect that no event affecting the
Credit Provider, the Confirming Bank or their operations has
occurred that either (1) makes untrue or incorrect in any
material respect as of the Date of Issuance any statement or
information contained in the Private Placement Memorandum or
(2) is not reflected in the Private Placement Memorandum but
should be reflected therein in order to make the statements
and information therein not misleading;
(K) copies of the documents required to be filed with
the Trustee prior to delivery of the Bonds pursuant to Section
2.09 of the Indenture;
(L) copies of the Private Placement Memorandum,
executed on behalf of the Company by the President of the
Company (or such other authorized officer as the Placement
Agent shall have approved) and on behalf of the Issuer by an
authorized officer of the Issuer;
(M) evidence of the ratings of A and A-1 issued by
Standard & Poor's, with respect to the Bonds; and
(N) such additional legal opinions, consents,
certificates, proceedings, instruments and other documents as
the Placement Agent, counsel for the Placement Agent, or Bond
Counsel may reasonably request to evidence compliance by the
Issuer, the Company, the Credit Provider and the Confirming
Bank with legal requirements, the truth and accuracy, as of
the Date of Issuance, of the representations of the Issuer and
the Company contained in this Agreement and the due
performance or satisfaction by the Issuer and the Company at
or
8
<PAGE> 11
prior to such time of all agreements then to be performed and
all conditions then to be satisfied by the Issuer and the
Company;
(c) The Remarketing Agent shall not be required to remarket
any Bonds under this Agreement it after the Date of Issuance;
(i) Any representation or warranty of the Company or
the Issuer made or incorporated by referenced in this
Agreement shall prove to have been untrue, incorrect
incomplete or misleading in any material respect;
(ii) Any fee, reimbursement, indemnity or other
amount payable to the Remarketing Agent under this Agreement
is not paid when due, or a default by the Company or the
Issuer in the observance or performance of any other covenant
or agreement contained in this Agreement shall have occurred
and be continuing;
(iii) Any event or condition, set forth in Section
9(b)(iii) shall have occurred; or
(iv) The Company and the Remarketing Agent fail to
agree upon a fee to be paid to the Remarketing Agent in
connection with the initial conversion of the interest rate
determination method on the Bonds from a Variable Rate to a
Term Rate no later than 45 days prior to the first Conversion
Date.
(d) No Bond redeemed pursuant to Article IV of the Indenture
shall be referenced after such redemption.
Section 10. WHEAT NOT OBLIGATED TO ADVANCE OWN FUNDS; NO LIABILITY FOR
INABILITY TO PLACE OR REMARKET BONDS.
(a) The Company and the Issuer acknowledge and agree that
Wheat, as the Placement Agent and the Remarketing Agent, as applicable,
(i) is only acting under this Agreement as the agent of the Company and
the Issuer, and not as a principal, insofar as the purchase of Bonds is
concerned, (ii) is only obligated to use its best efforts to place or
remarket any Bonds, as applicable and (iii) is in no way obligated
under this Agreement to advance its own funds to purchase the Bonds in
the event any purchaser fails to pay the purchase price of any Bonds to
be purchased by it or in the event Wheat, as the Placement Agent or the
Remarketing Agent, as applicable, is unable to arrange for the purchase
of any Bonds.
(b) The Company and the Issuer further acknowledge and agree
that the Remarketing Agent shall in no respect be deemed (i) to be
warranting that it will be able to remarket the Bonds on any particular
Purchase Date or (ii) to be assuming any liability or undertaking any
obligation of any nature in the event such remarketing shall not be
consummated on any particular Purchase Date.
Section 11. Private Placement Memorandum; Rating and Blue Sky
Qualification.
(a) The Company has prepared or caused to be prepared the
Private Placement Memorandum, in form and substance satisfactory to the
Placement Agent, in connection with the initial offering and sale of
Bonds on the Date of Issuance, and the Company agrees at its cost to
amend or supplement the Private Placement Memorandum with Wheat's
assistance as the
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Placement Agent or the Remarketing Agent as applicable, whenever requested by
Wheat, as the Placement Agent or the Remarketing Agent, as applicable, when, in
the reasonable judgment of the Placement Agent or the Remarketing Agent, as
applicable, such amendment or supplementation is required in order to offer and
sell the Bonds in accordance with federal and any applicable state securities
laws. The Company agrees to notify Wheat, as the Placement Agent or the
Remarketing Agent, as applicable, in writing if an event shall have occurred a
result of which, in the judgment of the Company or its counsel, the Private
Placement Memorandum includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstance under which they were made,
not misleading, or if it is necessary to amend or supplement the Private
Placement Memorandum to comply with any law, and forthwith to prepare an
appropriate amendment or supplement so that the statements in the Private
Placement Memorandum as so amended or supplemented will not, in the light of the
circumstances under which they were made, be misleading, or so that the Private
Placement Memorandum will comply with law, as the case may be.
(b) The Company agrees to promptly furnish, or cause to be promptly
furnished, to Wheat, upon its request, as applicable, such financial statements
and other information concerning the Company (including such certificates,
opinions of counsel and other support for such information) as Wheat, reasonably
determines is necessary or desirable in connection with the offer, placement,
remarketing and sale of the Bonds at any time and from time to time.
(c) The Company agrees to use its best efforts to furnish promptly, or
cause to be furnished promptly, to the Placement Agent or the Remarketing Agent,
as applicable, such financial and other information (including, without
limitation, credit and debt ratings) concerning the Credit Provider and the
Confirming Bank as the Placement Agent or the Remarketing Agent, as applicable,
reasonably determines is necessary or desirable in connection with the offer,
placement, remarketing and sale of the Bonds at any time and from time to time.
(d) The Company and the Issuer hereby authorize and approve of the use
and distribution of the Private Placement Memorandum (including any amendments,
modifications and supplements thereto) and all exhibits and appendices thereto
and all other documents provided by the Company and the Issuer to the Placement
Agent for use in the initial placement of the Bonds and the Remarketing Agent
for use in the subsequent remarketing of the Bonds. The Company agrees to cause
the Placement Agent and the Remarketing Agent to be furnished with as many
copies of the Private Placement Memorandum and all exhibits and appendices
thereto and documents incorporated by reference therein as the Placement Agent
and the Remarketing Agent may reasonably request and to furnish the Placement
Agent and the Remarketing Agent, with such other information as the Company
deems necessary or as the Remarketing Agent may reasonably request from time to
time in connection with the remarketing of the Bonds in accordance with the
terms of this Agreement.
(e) The Company will cooperate fully with Wheat and pay all reasonable
costs and expenses incurred by Wheat (i) in obtaining, with the prior written
consent of the Company, and maintaining a rating on the Bonds by one or more
national rating agencies for so long as such a rating or ratings are reasonably
deemed necessary by Wheat, as the Remarketing Agent, in order to remarket the
Bonds at the lowest interest cost possible to the Company and (ii) in the
qualification of the Bonds for offering and sale and the determination of the
eligibility of the Bonds for investment under the laws of such jurisdictions as
Wheat, as the Remarketing Agent shall designate, and the Company will use its
best efforts to continue any such qualification in
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effect so long as required for the remarketing of the Bonds by Wheat,
as the Remarketing Agent, provided that the Company shall not be
required to take any action which would subject it to general service
of process or to qualify as a foreign corporation in any jurisdiction
where it is not now so subject.
(f) In the event that the Remarketing Agent, in connection
with the remarketing of the Bonds, is ever required to comply with Rule
15c2-12 or a. comparable rule of the SEC in connection with the Bonds,
the Company and the Issuer agree to cooperate (at the sole cost and
expense of the Company) with the Remarketing Agent so as to enable the
Remarketing Agent to comply with the then applicable requirements of
Rule 15c2-12 or such comparable rule.
Section 12. REPRESENTATIONS AND WARRANTIES OF WHEAT. Wheat, as the
Placement Agent and Remarketing Agent, by its acceptance hereof, represents and
warrants to the Company and the Issuer as follows:
(a) It is registered as a broker dealer and as a municipal
securities dealer with the SEC under Section 15 of the 1934 Act, is
qualified as a member of the NASD, and is authorized by law to perform
all the duties imposed upon it by this Agreement;
(b) It has full power and authority to take all actions
required or permitted to be taken by it by or under, and to perform and
observe the covenants and agreements on its part contained in, this
Agreement; and
(c) The execution, delivery and performance of this Agreement
by it have been duly authorized, no further corporate action by it is
required therefor, and this Agreement represents its legal, valid and
binding obligation, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws, judicial
decisions or principles of equity relating to or affecting the
enforcement of creditors' rights or contractual obligations generally.
Section 13. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
THE COMPANY. The Company represents and warrants to, and covenants and agrees
with the Issuer, the Placement Agent and the Remarketing Agent as follows:
(a) Each of the Company's representations and warranties
contained in the Loan Agreement is true and correct on and as of the
date hereof and are hereby made to the Placement Agent and the
Remarketing Agent as if set forth herein;
(b) The Company has full right, power and authority to take
all actions required or permitted to be taken by the Company by or
under, and to perform and observe the covenants and agreements on its
part contained in, this Agreement;
(c) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws, judicial decisions or principles of equity relating to or
affecting the enforcement of creditors' rights generally;
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(d) The execution and delivery of this Agreement, and compliance with
the terms, conditions or provisions hereof, do not upon the date of execution
and delivery hereof and will not violate any existing law or any existing
regulation, order, writ, injunction decree of any court or governmental
instrumentality applicable to the Company, or result in a breach of any of the
Terms, conditions or provisions of, or constitute a default under, any mortgage,
indenture, agreement or instrument to which the Company is a part or by which it
or any of its properties is bound;
(e) There is no action, suit, proceeding or inquiry, or, to the best
knowledge and information of the Company, any investigation, at law or in
equity, or before or by any court, public board or body or other governmental
authority, pending or, to the best knowledge and information of the Company,
threatened against or affecting the Company wherein an unfavorable decision,
ruling or finding could materially adversely affect the condition (financial or
otherwise) of the Company, or the transactions contemplated by this Agreement or
the Private Placement Memorandum, or that in any manner raises any question
concerning the legality, validity or enforceability of this Agreement, the
Bonds, the Indenture or the Loan Agreement, nor to the best knowledge and belief
of the Company is there any basis therefor;
(f) The information relating to the Company contained or incorporated
by reference in the Private Placement Memorandum or otherwise supplied by the
Company in writing for inclusion therein does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made and considering the purpose for which such information was so supplied or
included, not misleading;
(g) The Company is not in default in the payment of the principal of or
interest on any of its indebtedness for borrowed money or under any instrument
under or subject to which any indebtedness has been incurred and no event has
occurred and is continuing that, with the lapse of time or the giving of notice
or both, would constitute an event of default under any such instrument;
(h) The Company will not take or omit to take any action, which action
or omission might in any way result in the inclusion of interest on the Bonds in
the gross income of the owners thereof for federal income tax purposes;
(i) The Company agrees to make available to Wheat, without cost,
sufficient copies of any relevant documents pertaining to the Company as
reasonably may be required from time to time for the prompt and efficient
performance by Wheat as the Placement Agent or the Remarketing Agent, as
applicable, of its obligations under this Agreement, including its obligations
in connection with the remarketing of the Bonds; and
(j) Except as and to the extent the Placement Agent or the Remarketing
Agent, as applicable, receives express prior written notice in reasonable detail
to the contrary, none of the foregoing representations, warranties or
information is or will be false or misleading in any material respect on (or as
of me date made, or on or as of the Date of Issuance or any Purchase Date.
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Section 14. REPRESENTATIONS OF THE ISSUER. The Issuer
represents to the Company, the Placement Agent and the Remarketing
Agent:
(a) Each of the representations of the Issuer contained in the
Loan Agreement and in the Indenture are true and correct on and as of
the date hereof and are hereby made to the Placement Agent and the
Remarketing Agent, as if set forth this Agreement;
(b) All actions required on the part of the Issuer for the
issuance of the Bonds and the execution and delivery of, and the
performance of its obligations under, this Agreement and under the Loan
Agreement, the Indenture and the Bonds have been duly and effectively
taken; this Agreement has been duly authorized, executed and delivered
and, assuming the due authorization, execution and delivery by the
other parties thereto is a valid, binding and enforceable agreement of
the Issuer, except as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; and the Bonds have been duly authorized,
executed, issued and delivered, and in the hands of the owners thereof
constitute, legal, valid and binding special limited obligations of the
Issuer, enforceable against the Issuer in accordance with their
respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally;
(c) To the best knowledge of the Issuer, there is no action,
suit, proceeding or investigation pending before or by any court, board
or body or other governmental authority, or threatened against or
affecting the Issuer, or any basis therefor, to restrain or enjoin the
issuance or delivery of the Bonds or the collection, application or
pledge of the revenues pledged under the Indenture for the Bonds or in
any way contesting or affecting the authority for the issuance of the
Bonds or the validity or enforceability of the Bonds, the Loan
Agreement, the Indenture or this Agreement or the power of the Issuer
to execute and deliver such documents or to consummate the transactions
contemplated therein or the existence or powers of the Issuer or the
titles of its officers to their respective offices, or wherein an
unfavorable decision, ruling or finding would materially adversely
affect the transactions contemplated hereby and in the Indenture or the
Loan Agreement, or which in any way would materially adversely affect
the validity of the Bonds, the Indenture, the resolutions adopted in
connection with the issuance of the Bonds, the Loan Agreement or this
Agreement, nor to the best knowledge and belief of the Issuer is there
any basis therefor;
(d) The execution, delivery and performance by the Issuer of
this Agreement, the Loan Agreement, the Indenture and the Bonds do not
and will not violate any order, injunction, ruling or decree by which
the Issuer is bound, and do not and will not constitute a breach of or
a default under any agreement, indenture, mortgage, lease, note or
other obligation, instrument or arrangement to which the Issuer is a
party or by which the Issuer or any of its property is bound, or
contravene or constitute a violation of any federal or State
constitutional or statutory provision, rule or regulation to which the
Issuer or any of its property is subject, and no approval or other
action by, or filing or registration with, any governmental authority
or agency is required in connection therewith that has not been
obtained or accomplished, other than any filings, registrations or
consents that may be required pursuant to any federal or State
securities laws; and
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(e) The information contained under the caption "THE ISSUER"
and in the first paragraph under the caption "LITIGATION" contained in
the Private Placement Memorandum does not contain any untrue statement
of a material fact and does not omit to state a material fact necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 15. PAYMENT OF FEES.
(a) Upon receipt by the Trustee of payment in full of the
purchase price of the Bonds on the Date of Issuance, the Company shall
pay the Placement Agent a placement fee of 0.75% of the original
aggregate principal amount of the Bonds for its services initially
placing the Bonds.
(b) The Company shall pay Wheat, as the Remarketing Agent, in
advance on the Date of Issuance a remarketing and operations fee for
services to be rendered by the Remarketing Agent under the Indenture
and under this Agreement for the Bonds for the period from the Date of
Issuance through the date which is the first year anniversary of the
Date of Issuance, equal to 0.15% per annum of the aggregate principal
amount of the Bonds placed on the Date of Issuance. Thereafter, so long
as Wheat continues to serve as the Remarketing Agent under this
Agreement, the Company shall pay Wheat in advance on each anniversary
of the Date of Issuance for services to be rendered by it under the
Indenture and hereunder as the Remarketing Agent, a continuing
remarketing and operations fee equal to 0.15% per annum of the
principal amount of the Bonds outstanding on the date such remarketing
fee is due (calculated on the basis of the actual number of days within
the period for which such fee has been prepaid over a 365 or 366-day
year, as appropriate). If the aggregate principal amount of Bonds
outstanding should decrease or if the Remarketing Agent, should fail to
remarket Bonds or resign or be removed during any period for which the
remarketing and operations fee has been prepaid, an appropriate
pro-rata adjustment, based on the principal amount of Bonds outstanding
for each day during the period that Wheat was serving as Remarketing
Agent hereunder shall be made. If, pursuant to the preceding sentence,
the Company is entitled to a reimbursement, such amount shall be
reimbursed to the Company (i) by credit against the next annual fee due
Wheat thereunder so long as it continues to serve as the Remarketing
Agent or (ii) in the event Wheat shall resign or be removed, by check
in the amount of the pro-rata adjustment due commencing with the date
of the resignation or removal of Wheat, if earlier, and shall be paid
by Wheat within 60 days of such resignation date. Wheat shall notify
the Company in writing of the amount of the remarketing and operations
fee, as calculated by Wheat, at least ten Business Days prior to the
date such fee payment is due.
(c) The Company also shall pay the Remarketing Agent all
reasonable out-of-pocket costs and expenses of Wheat to the extent
incurred in connection with the issuance, placement and remarketing of
the Bonds and the preparation, execution and delivery of this
Agreement, the Preliminary Private Placement Memorandum, the Private
Placement Memorandum, the Indenture, the Loan Agreement, the Bonds and
any other documents contemplated to be delivered in connection herewith
or therewith.
(d) The Company also shall pay all other reasonable fees and
expenses incurred in connection with the issuance, placement and
remarketing of the Bonds and the preparation, execution and delivery of
this Agreement, the Preliminary Private Placement Memorandum, the
Private Placement Memorandum, the Indenture, the Loan Agreement, the
Bonds and any other it document that may be delivered in connection
herewith or therewith, including, but not limited
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to the reasonable fees and expenses of Bond Counsel and counsel to the
Issuer, counsel for the Placement Agent and the Remarketing Agent,
counsel for the Credit Provider, counsel for the Confirming Bank,
counsel for the Company and counsel for the Trustee, the fees and
expenses of the Issuer, the Credit Provider, the Confirming Bank and
the Trustee, the cost of photocopying and delivery of the Bonds, the
cost of printing the Preliminary Private Placement Memorandum and the
Private Placement Memorandum, and all rating agency fees, if any.
(e) For the services of the Remarketing Agent in connection
with the remarketing of Bonds upon the adjustment of the interest rate
determination method to a Term Rate, the Company shall pay to the
Remarketing Agent a mutually agreed upon fee. In the event the Company
and the Remarketing Agent are unable to agree upon a fee, the
Remarketing Agent shall be under no obligation to use its reasonable
efforts to remarketing the Bonds upon such conversion to a Term Rate.
(f) All fees and expenses described in this Section, to the
extent they are identifiable and billed, shall be paid on the Date of
Issuance, and the first Conversion Date, and the remainder shall be
paid promptly upon receipt of statements therefor. The obligations of
the Company under this Section shall survive the issuance and maturity
of the Bonds and any termination of this Agreement
Section 16. RESIGNATION AND REMOVAL. Wheat may resign and be discharged
of its duties and obligations as Remarketing Agent under this Agreement and
under the Indenture and may be removed all of its duties and obligations as
Remarketing Agent hereunder and under the Indenture in the manner with the prior
notice specified in Section 8.23 of the Indenture.
Section 17. TERMINATION. This Agreement shall terminate (except as to
rights to any fees payable and rights to indemnity or contributions, which shall
survive any terminations on the earliest of (i) the removal or resignation of
Wheat pursuant to Section 16, (ii) the first Conversion Date, (iii) the date of
final maturity of the Bonds, (iv) the date of redemption of the Bonds in full or
(v) any Credit Expiration Date.
Section 18. NATURE OF WHEAT'S OBLIGATIONS. Without limiting the
foregoing, Wheat is hereby expressly authorized and directed to honor its
obligations under and in compliance with the terms of this Agreement without
regard to, and without any duty on its part to inquire into, the existence of
any disputes or controversies between the Issuer, the Company, the Trustee, the
Credit Provider, the Confirming Bank, the holders of the Bonds or any other
person or the respective rights, duties or liabilities of any of them, or
whether any facts or occurrences represented in any of the documents presented
under this Agreement or the Indenture or the Loan Agreement is true and correct.
The duties and obligations of wheat under this Agreement are only those
expressly set forth in this Agreement and in the Indenture, and no implied
covenants or obligations shall be read into this Agreement against Wheat.
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Section 19. OTHER TRANSACTIONS BY WHEAT. Wheat in its individual
capacity, either as principal or agent, may buy, sell, own and hold any Bonds
and may do anything any other owner of Bonds may in any action which any owner
of Bonds may be entitled to take to the same extent and as if it did not act in
any capacity under this Agreement. Wheat, either as principal agent, or also may
engage in or be interested in any financial or other transaction with the
Issuer, the Credit Provider or the Confirmation Bank and may act as fiduciary or
agent for any committee or body of owners of Bonds or the owners of any other
obligations of the Issuer, the Company, the Credit Provider or the Confirmation
Bank as freely as if it did not act in any capacity under this Agreement.
Section 20. NOTICES. Unless otherwise provided in this Agreement, all
demands, notices, approvals, requests, consents, opinions and other
communications under this Agreement shall be given or (a) telex or telecopier at
such number as each party hereto may subsequently designate to the other or (b)
in writing, which shall be deemed to have been given when delivered in person or
by a third party or mailed by first class registered or certified mail, postage
prepaid, or by overnight delivery service to issuer, the Company, the Trustee,
the Credit Provider, the Confirming Bank, the Placement Agent Remarketing Agent
at the addresses specified in Section 13.07 of the Indenture. The Issuer, the
company, the Trustee, the Credit Provider, the Placement Agent or the
Remarketing Agent may by given hereunder, designate any further or different
numbers or addresses to which subsequent notices, approvals, requests consents,
opinions or other communications shall be sent or persons to whose attention the
same shall be directed.
Section 21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Issuer, the Company the Placement Agent
and the Remarketing Agent in this Agreement shall remain operative and in full
force and effect regardless of (a) any investigation made by or on behalf the
Placement Agent, the Remarketing Agent, the Issuer, the Credit Provider, the
Confirming Bank or the Company, (b) delivery of and any payment for any Bonds
under this Agreement or (c) termination or cancellation of this Agreement.
Section 22. CONSULTATION WITH EXPERTS. Wheat, as the Placement Agent or
the Remarketing Agent, may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faiths in accordance with the
advice of such counsel, accountants or experts.
Section 23. LIABILITY OF WHEAT. Neither Wheat, as the Placement Agent
or the Remarketing Agent, nor any of its directors, officers, agents, or
employees shall be liable for any action taken or not taken by it in connection
with this Agreement (a) with the consent or at the request of the holders of all
of the Bonds or (b) in the absence of its own gross negligence or willful
misconduct. Wheat, as the Placement Agent or the Remarketing Agent, shall not
incur any liability by acting or refraining to act in reliance upon, and may
conclusively rely as to the truth and accuracy of statements contained in, any
notices certificates or other communications under this Agreement believed by it
to be genuine or to be signed by the proper party or parties.
Section 24. OFFICIALS OF COMPANY NOT LIABLE. No covenant or agreement
contained herein shall be deemed to be the covenant or agreement of any officer,
director, agent, or employee of the Company in his or her individual capacity
and no officer, director, agent, or employee of the Company shall be liable
personally under this Agreement.
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Section 25. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless the Issuer Section and any member, commissioner, trustee, officer,
director, employee or agent of the Issuer, the Placement Agent or the,
Remarketing Agent and each person, if any, who controls the Issuer, the
Placement Agent or the Remarketing Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act the "Indemnified Parties") from and
against any and all losses, claims, damages, facilities expenses whatsoever
(collectively "Loss" which any of them may incur or suffer, without negligence
willful misconduct or bad faith on the part of the Placement Agent or the
Remarketing Agent, arising out of, connection with or relating to the placement
or remarketing of the Bonds, including, without limitation, any Loss caused by,
or which arises out of or relates to, any breach) by the company of its
representations (or alleged or warranties set forth in this Agreement, or any
untrue statement or misleading statement of a material fact contained in the
Private Placement Memorandum or orated therein by reference (except statements
pertaining to the Credit Provider, the Confirming the Issuer, the Placement
Agent or the Remarketing Agent) or supplied by the Company in writing in
connection with the placement or remarketing of Bonds in accordance with the
terms hereof effectively, the "Disclosure Materials") or which arises out of or
relates to, any omission or alleged omission from such Disclosure Materials of
any material fact required to be stated therein or necessary in order to make
the statements contained therein, in light of the circumstances under which they
were made and consider no the purposes for which such information is so
contained or supplied, not misleading except omissions or alleged omissions
pertaining to the Issuer. This indemnity agreement is in addition to any other
liability that the Company may otherwise have.
In case any action (including any governmental investigation) shall be
brought against one or more of the Indemnified Parties hereunder and in respect
to which indemnity may be sought against the company as provided hereinabove,
the Indemnified Parties shall promptly notify the Company in writing and the
Company shall promptly assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party or Indemnified
Parties, payment of all licenses and the right to negotiate and consent to
settlement; but the omission to notify the Company as provided herein shall not
relieve the Company from any liability which it may have (i) under this Section,
so long as the Company is given the reasonable opportunity to defend such claim,
and (ii) otherwise than under this Section. Any one or more of the Indemnified
Parties shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Indemnified Parties unless
(i) the employment of such counsel has been specifically authorized in writing
by the Company, or (ii) the named parties to any such action (including any
impleaded parties) include both the Company and such Indemnified Party or
indemnified Parties and representation of both the Company and such Indemnified
Party or Indemnified parties by the: same counsel would be inappropriate due to
actual or potential differing interests between them or (iii) the Indemnified
Party or Indemnified Parties have been advised that one or more legal defenses
may be available to any or all of them which may not be available to the Company
in which case the Company shall not be entitled to assume the defense of such
suit notwithstanding its obligation to bear the fees and expenses of such
counsel. The Company shall not be liable for any settlement of any such action
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff in any such action with or without
consent, the Company agrees to indemnify and hold harmless the Indemnified
Parties from and against any loss or liability by reason of such settlement or
judgment.
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Section is due in accordance with
its terms but is for any reason held by a court to be unavailable from the
Company or unenforceable against the Company on grounds of policy or otherwise,
the Company and Wheat shall contribute severally to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with
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investigating or defending same) to which the Company and Wheat may be subject
in such proportionas is appropriate to reflect the relative fault of the Company
on the one hand and Wheat on the other hand, as well as any other relevant
equitable considerations provided, however that no person guilty of asudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act shall by
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution shall, promptly after
receipt of notice of or commencement of any action, suit or such party in
respect of which a claim for contribution may be made against another party
under this paragraph, notify such party from whom contribution may be sought,
but the omission so to notify such party shall not relieve the party from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise, The liabilities under this paragraph are in addition to
other liabilities that the parties may have.
The obligations under this Section shall survive the issuance and the
maturity of the Bonds and termination of this Agreement.
Section 26. SEVERABILITY. If any provision of this Agreement shall be
held or deemed to be or shall in fact, be invalid, inoperative or unenforceable
as applied in any particular case in any jurisdiction,or jurisdictions, or in
all jurisdictions because it conflicts with any provisions of any constitution,
statute, rule of public policy, or any other reason, such circumstances shall
not have the effect of rendering the provision in question invalid, inoperative
or unenforceable in any other case or circumstance, or of rendering any other
provision or provisions of this Agreement invalid, inoperative or unenforceable
to any extent whatever.
Section 27. ASSIGNMENT; SUCCESSORS AND ASSIGNS.
(a) The rights and obligations of the respective parties
hereto may not be assigned or delegated to any other person without the
consent of the: other parties hereto, except that Wheat may assign its
rights and obligations hereunder to an affiliate as provided in
paragraph (b) below.
(b) With prior written notice to (but without the consent of)
the Issuer, the Company, the Trustee and the Credit Provider, Wheat may
assign or transfer any or all of its rights and obligations hereunder
to any other affiliate of Wheat so long as (a) there is no change in
the fees payable pursuant to Section 15 hereof, (b) such affiliate is
registered with the SEC as a broker-dealer and a municipal securities
dealer under the 1934 Act and is qualified, and maintains such
qualification as a member of the NASD, and is otherwise permitted to
perform such obligations under all applicable federal and state banking
and securities laws, rules and regulations, and (c) Wheat provides
evidence satisfactory to the Issuer and the Company that Wheat's
assignment or transfer of its rights and obligations hereunder to such
affiliate will not adversely affect the interest rate on the Bonds. The
Issuer and the Company agree to execute any amendment or supplement
hereto as requested by Wheat to effect the assigner or transfer of
rights and obligations contemplated hereby.
(c) This Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective
successors and assigns.
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Section 28. AMENDMENTS. This Agreement may be amended only with the
consent of all of the parties hereto and the Credit Provider.
Section 29. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
Section 30. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which together shall
constitute but one and the same instrument.
Section 31. HEADINGS. Section headings used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
19
<PAGE> 22
IN WITNESS WHEREOF, the Issuer, the Company and Wheat (for itself and
as the Placement Agent and the Remarketing Agent) have caused this Placement and
Remarketing Agreement to be executed in its corporate name by a duly authorized
officer all as of the date first written.
VILLAGE OF GURNEE ILLINOIS
By: /s/
--------------------------------
Village President
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
20
<PAGE> 23
[COUNTERPART SIGNATURE PAGE TO THE PLACEMENT AND REMARKETING AGREEMENT]
STERIGENICS INTERNATIONAL
By: /s/
--------------------------------
Vice President
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
21
<PAGE> 24
[COUNTERPART SIGNATURE PAGE TO THE PLACEMENT AND REMARKETING AGREEMENT]
WHEAT, FIRST SECURITIES INC.
as Placement Agent and Remarketing Agent
By: /s/
------------------------------------
Vice President
22
<PAGE> 25
EXHIBIT A
[SUPPLEMENTAL OPINION OF BOND COUNSEL]
April 19,1996
Wheat, First Securities, Inc.
Richmond, Virginia
Re: $7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
Reference is made to our approving opinion delivered to you
concurrently herewith to the Bonds identified above (the "Bonds"). At your
request we have undertaken a review of certain other matters pertaining to the
Bonds. Terms not otherwise defined herein shall have the meanings ascribed to
them in the Placement and Remarketing Agreement dated as of April 1, 1996 (the
"Placement and Remarketing Agreement") among Wheat, First Securities, Inc.,
SteriGenics International (the "Company") and the Village of Gurnee, Illinois
(the "Issuer").
We are of the opinion that:
1. The Placement and Remarketing Agreement and the Tax Exemption
Certificate and Agreement dated the date hereof (the "Tax Agreement") among the
Issuer, the Company and the Trustee have been duly authorized, executed and
delivered by the Issuer and, assuming the due authorization, execution and
delivery by, and the binding effect of the Placement and Remarketing Agreement
and the Tax Agreement on, the other parties thereto, are the legal, valid and
binding obligations of the Issuer, enforceable in accordance with their terms,
except as enforceability may be limited by laws relating to bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and by
the availability of equitable remedies.
2. The Issuer has duly authorized the execution and delivery of the
Private Placement Memorandum and has duly consented to the, distribution of the
Private Placement Memorandum by the Placement Agent.
3. In reliance upon certain certificates of the Issuer, the Company and
related parties relating to the Project, the use of proceeds of the Bonds and
related matters, we are of the opinion that the offer, sale and delivery of the
Bonds do not require registration of the Bonds under the Securities Act of 1933,
as amended, and likewise do not require qualification of the Indenture under the
Trust Indenture Act of 1939, as amended. We express no opinion with respect to
the registration requirements of the Securities Act of 1933, as amended,
relating to the obligations of the Credit Provider under the Letter of Credit or
the Confirming Bank under the Confirmation Letter.
<PAGE> 26
4. We have reviewed the statements contained in the Private Placement
Memorandum under the captions "Introductory Statement," "Financing Summary, "The
Bonds," "Optional and Mandatory Purchase of Bonds," "Redemption of Bonds," "The
Credit Facility-Drawings Under the Credit Facility,". "The Credit
Facility-Alternate Credit Facility" and in Appendix A to the Private Placement
Memorandum. In our opinion, the statements described above under the foregoing
captions of the Private Placement Memorandum, and insofar as such statements
purport to summarize the terms of the Bonds, the Indenture or the Loan
Agreement, constitute fair and accurate summaries of such matters. We have also
reviewed the statements contained in the Private Placement Memorandum under the
caption "Tax Matters" and, in our opinion, such statements constitute a fair and
accurate summary of the matters relating to the tax exemption of the Bonds.
We express no opinion relating to the Private Placement Memorandum
except for matters explicitly referenced in paragraphs 2 and 4 above,
Respectfully submitted,
-2-
<PAGE> 27
EXHIBIT B
[BANKRUPTCY PREFERENCE OPINION OF PLACEMENT AGENT COUNSEL]
April ____, 1996
Bank One, Columbus N.A. as Trustee
Columbus Ohio
Wheat, First Securities, Inc.
Richmond, Virginia
Standard & Poor's
New York, New York
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
We have acted as bond counsel in connection with the authorization and
issuance of the $7,750,000 Village of Gurnee, Illinois Industrial Development
Revenue Bonds (SteriGenics International Project), Series 1996 (the "Bonds"), by
the Village of Gurnee, Illinois (the "Issuer").
The Bonds are being issued pursuant to an Indenture of Trust dated as
of April 1, 1996 (the Indenture") between the Issuer and Bank One, Columbus,
N.A., as trustee (the "Trustee"), The Issuer and SteriGenics International (the
"Company"), have entered into a Loan Agreement dated as of April 1, 1996 (the
"Loan Agreement"), pursuant to which the Company has agreed to make payments to
be used to pay when due the principal of, redemption premium, if any, purchase
price and interest on the Bonds, and such payments and certain other revenues
under the Loan Agreement (collectively, the "Revenues") and the rights of the
Issuer under the Loan Agreement (except certain rights to notices,
indemnification, reimbursements and administrative fees) are pledged and
assigned by the Issuer to the Trustee as security for the Bonds. The Bonds are
payable solely from the Revenues and the other sources referenced in the
Indenture.
As additional security for the Bonds, the Company has caused Comerica
Bank-California (the "Credit Provider") to deliver its letter of credit, dated
the date hereof (the "Original Credit Facility"), to the Trustee. The Original
Credit Facility permits the Trustee to draw moneys pursuant to the terms thereof
in an amount equal to the principal amount of the Bonds outstanding from time to
time plus up to 50 days accrued interest thereon at a maximum interest rate
equal to 12% per annum. The Original Credit Facility is stated to expire on
April 15, 2001, unless extended or sooner terminated in accordance with its
terms. Comerica Bank, a Michigan banking corporation (the "Confirming Bank") has
confirmed the payment of proper draws on the Credit Facility by issuing its
Confirmation Letter dated April 19, 1996 (the "Confirmation Letter"). The
Confirming Bank has covenanted to use its own funds in making
B-1
<PAGE> 28
Bank One, Columbus N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 2
any payment under the Confirmation Letter. In the Original Credit Facility and
in the Reimbursement Agreement dated as of April 1, 1996 between the Credit
Provider and the Company (the "Reimbursement Agreement"), the Credit Provider
has covenanted to use its own funds in making any payment under the Original
Credit Facility
We have examined the Indenture, the Loan Agreement, the Original Credit
Facility, the Reimbursement Agreement, the Confirmation Letter and certain other
documents as we deemed necessary to enable us to express the opinions set forth
below. For the purposes of this opinion, we have assumed Holder of the Bonds is
an "insider" with respect to the Issuer or the Company within the meaning of
Title 11 of the United States Code (the "Bankruptcy Code").
Based on the foregoing, we are of the opinion that, under existing law:
1. In the event that the Issuer, the Company, any other person
obligated (as guarantor or otherwise to make payments on the Bonds or under the
Loan Agreement or the Reimbursement Agreement, or an "affiliate" of the Company
(as defined in 11 U.S.C. Section 101(2)) were to become a debtor under the
Bankruptcy Code, payments of principal of, Purchase Price (as defined in the
Indenture) of or interest on the Bonds from the proceeds of a drawing under the
Original Credit Facility or proceeds from payment under the Confirmation Letter
in accordance with the terms of the Indenture will not be recoverable from the
Holders of the Bonds pursuant to Section 550 of the Bankruptcy Code as avoidable
preferential payments under Section 547 of the Bankruptcy Code.
2. In the event the Issuer, the Company, any other person obligated, as
guarantor or otherwise, to make payments on the Bonds or under the Loan
Agreement or the Reimbursement Agreement, or an "affiliate" of the Company (as
defined in 11 U.S.C. Section 10 1(2)) were to become a debtor under the
Bankruptcy Code, payments of principal of, Purchase Price of or interest on the
Bonds with the moneys described in clause (ii) of the definition of "Available
Moneys" in the Indenture will not be recoverable from the Holders of the Bonds
pursuant to Section 550 of the Bankruptcy Code as avoidable preferential
payments under Section 547 of the Bankruptcy Code.
3. In the event the Issuer, the Company, any other person obligated, as
guarantor or otherwise, to make payments on the Bonds or under the Loan
Agreement or the Reimbursement Agreement, or an "affiliate" of the Company (as
defined in 11 U.S.C. Section 10 1(2)) were to become a debtor under the
Bankruptcy Code, payments of the Purchase Price of Bonds with the proceeds from
remarketing the Bonds in accordance with the terms of the Indenture, other than
proceeds of remarketing to an entity other than the Company or the Issuer, will
not be recoverable from the Holders of the Bonds pursuant to Section 550 of the
Bankruptcy (Code as avoidable referential payments under Section 547 of the
Bankruptcy Code.
In rendering this opinion we have relied upon the opinion of Manatt,
Phelps & Phillips, of even date herewith, delivered in connection with the
issuance of the Original Credit Facility and the Confirmation Letter, with
respect to the enforceability of the Original Credit Facility and the
Confirmation Letter and as to the other matters set forth therein.
B-2
<PAGE> 29
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 3
The opinions contained herein are rendered solely for your benefit in
connection with the subject Transaction and may not be used or relied upon by,
or published or communicated to, any other party any purpose whatsoever without
or prior written approval in each instance.
Very truly yours,
B-3
<PAGE> 30
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 4
The opinions contained herein are rendered solely for your benefit in
connection with the subject Transaction and may not be used or relied upon by,
or published or communicated to, any other party for any purpose whatsoever
without or prior written approval in each instance
Very truly yours,
B-4
<PAGE> 31
EXHIBIT C
[OPINION OF COUNSEL TO THE ISSUER]
April __, 1996
Bank One, Columbus, N.A., as Trustee
Columbus, Ohio
Village of Gurnee, Illinois
Gurnee, Illinois
SteriGenics International
Fremont, California
Chapman and Cutler
Chicago, Illinois
Wheat, First Securities, Inc.
Richmond, Virginia
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
I have acted as counsel to the Issuer in connection with the issuance
of the $7,750,000 Village of Gurnee, Illinois Industrial Development Revenue
Bonds (SteriGenics International Project), Series 1996 (the "Bonds"). Terms used
herein that are defined in the Placement and Remarketing Agreement dated as of
April 1, 1996 (the "Placement and Remarketing Agreement") among the Issuer,
SteriGenics International (the "Company") and Wheat, First Securities, Inc.
shall have the meanings given those terms in the Placement and Remarketing
Agreement.
Based upon such investigation as I have deemed appropriate, I am of the
opinion that:
1. The Issuer is a body corporate and politic of the State of Illinois,
validly organized and existing under the Constitution and laws of the State of
Illinois, and has all requisite power and authority (i) to issue, sell and
deliver the Bonds, (ii) to enter into the Indenture, the Placement and
Remarketing Agreement and the Loan Agreement and (iii) to carry out the
transactions contemplated by the Indenture, the Private Placement Memorandum,
the Placement and Remarketing Agreement and the Loan Agreement.
2. The resolution dated April __, 1996 relating to the Bonds (the "Bond
Resolution") has been duly adopted by the Issuer and has not been repealed,
revoked, rescinded or amended and no further action of the Issuer is required
for its continued validity.
C-1
<PAGE> 32
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 2
3. Under the Constitution and laws of the State of Illinois, the
execution, delivery and performance of the Indenture, the Loan Agreement and the
Placement and Remarketing Agreement have been authorized by all necessary action
on the part of the Issuer, and, assuming that they are the respective legal,
valid, binding and enforceable obligations of the other parties thereto, the
Indenture, the Loan Agreement, and the Placement and Remarketing Agreement
constitute legal, valid, binding and obligations of the Issuer, except that the
enforceability thereof may be subject to (a) the exercise of judicial discretion
in accordance with general principles of equity, and (b) bankruptcy, involvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally. The rights of the Issuer under the Loan Agreement and the Note have
been duly endorsed and assigned to the Trustee (except for certain retained
rights).
4. The Bonds (a) have been authorized and executed by the Issuer and
delivered to the Trustee for authentication, (b) are legal, valid, binding and
enforceable special limited obligations of the Issuer, except that the rights of
the holders of the Bonds and the enforceability thereof may be subject to (i)
the exercise of judicial discretion in accordance wish general principles of
equity, and (ii) bankruptcy, involvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally, and (c) are entitled to the
benefits and security of the Indenture, the Loan Agreement, the Credit Facility
and the Confirmation Letter.
5. The issuance and sale of the Bonds, the adoption of the Bond
Resolution and the execution and delivery by the Issuer of the Indenture, the
Placement and Remarketing Agreement, the Private Placement Memorandum and the
Loan Agreement and the compliance by the Issuer with the terms thereof and of
the Bonds do not and will not conflict with, or result in any violation or
breach of any of the provisions of, or constitute a default under, any
activating resolution or bylaw of the Issuer or any constitutional provision,
statute, agreement, indenture, note, mortgage, deed of trust, resolution or
other agreement or other instrument to which the Issuer is a party or by which
it is bound, or any license, judgment, decree, order, law, statute, ordinance or
governmental rule or regulation applicable to the issuer, or result in the
creation or imposition of any lien, charge, encumbrance or security interest on
the property of the Issuer other than as contemplated by the Indenture).
6. The Issuer is not in default in any material respect under any
agreement or other instrument to which it is a party or by which it may be
bound.
7. All consents, approvals, orders or authorizations, if any, of any
governmental authority required on the part of the Issuer in connection with the
adoption of the Bond Resolution, the execution and delivery of the Indenture,
the Placement and Remarketing Agreement, the Private Placement Memorandum and
the Loan Agreement, the offer, issue, sale of delivery of the Bonds and the
consummation of the transactions contemplated thereby or by the Private
Placement Memorandum have been seen obtained, and the Issuer has complied with
all applicable provisions of law requiring any designation, declaration, filing,
registration and/or qualification with any governmental authority in connection
with the foregoing and the offer, sale, execution or delivery of the Bonds,
provided, however, no opinion is given concerning any requirement for
registration of the Bonds under federal or state
C-2
<PAGE> 33
Bank One, Columbus, N.A. as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 3
securities laws, nor is any opinion given as to the necessity for qualification
of any document under the Trust Indenture Act of 1939, as amended.
8. There are no proceedings pending or, to best of my knowledge,
threatened against the Issuer in any court or before any governmental authority
or arbitration board or tribunal, that could materially and adversely affect the
transactions contemplated by the Private Placement Memorandum or that in any
way, would adversely affect the validity and enforceability of the Bonds, the
Indenture, the Placement and Remarketing Agreement, the Loan Agreement or any
agreement or instrument to which the Issuer is a party and that is contemplated
by the foregoing, or to contest the legal existence or powers of the issuer or
the title to any of the offices of any officer of the Issuer.
9. I have considered the information contained in the Private Placement
Memorandum under the heading "THE ISSUER" and "LITIGATION" as it relates to the
Issuer, and, in regard to such information,or the Private Placement Memorandum
does not contain any untrue statement of a material fact omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
10. The Private Placement Memorandum has been duly approved, executed
and delivered by the Issuer, and the Issuer has authorized the distribution of
the Private Placement Memorandum and the use thereof by the Placement Agent in
connection with the placement of the Bonds by the Placement Agent on behalf of
the Issuer and the Company.
11. All actions taken by the Issuer in connection with the Bond
Resolution, the Indenture, the Placement and Remarketing Agreement, the Loan
Agreement, the Private Placement Memorandum and the Bonds are legal and valid in
all respects and none of the proceedings had, or actions taken, with respect to
any of the foregoing have been repealed, revoked or rescinded.
12. Pursuant to the terms of the Indenture, the Issuer has granted to
the Trustee, as security for the Bonds, a security interest in the Trust Estate
(as defined in the Indenture), such security interest being hereinafter referred
to as the "Security Interest." I have caused financing statements (the
"Financing Statements") relating to the Security Interest to be filed as
follows:
In the Office of the County Clerk
Lake County, Illinois on
____, 1996 at __.m., File No. ___; and
In the Office of the Secretary of State of Illinois,
Springfield, Illinois, on ____, 1996 at _ __.m., File No. ___.
C-3
<PAGE> 34
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 4
The Security Interest has been perfected as required by the Uniform
Commercial (Code of Illinois ,and there are no other properly indexed financing
statements or liens of record affecting the property in which the Security
Interest has been granted. In order, however, to continue the effectiveness of
the Financing Statements that have been filed as aforesaid, continuation
statements with respect to each of such financing statements must be filed in
the manner and at such times as are prescribed by the Uniform Commercial Code of
Illinois.
Very truly yours,
C-4
<PAGE> 35
EXHIBIT D
[OPINION OF COUNSEL TO THE COMPANY]
April ___, 1996
Bank One, Columbus, N.A., as Trustee
Columbus, Ohio
Village of Gurnee, Illinois
Gurnee, Illinois
Chapman and Cutler
Chicago, Illinois
Wheat, First Securities, Inc.
Richmond, Virginia
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
We have acted as counsel to SteriGenics International (the "Company")
in connection with the issuance of the $7,750,000 Village of Gurnee, Illinois
Industrial Development Revenue Bonds (SteriGenics International Project), Series
1996 (the "Bonds"). Terms used herein that are defined in the Placement and
Remarketing Agreement dated as of April 1, 1996 (the "Placement and Remarketing
Agreement"), among the Village of Gurnee, Illinois, Wheat, First Securities,
Inc. And the Company, shall have the meanings given those terms in the Placement
and Remarketing Agreement.
Based on such investigation as we have deemed appropriate, we are of
the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, is qualified to do
business and is in good standing in the State of Illinois, and has all requisite
corporate power and authority to carry on its business and own its properties as
it is currently being conducted.
2. The Company is authorized to conduct its business in, and has been
duly qualified and is in good standing as a foreign corporation in, each
jurisdiction in the United States of America in which failure to be so
authorized or qualified might materially adversely affect the business or assets
of the Company.
3. The Company has full corporate power to enter into and perform its
obligations under the Loan Agreement, the Note, the Placement and Remarketing
Agreement and the Reimbursement Agreement (collectively, the "Company
Documents"), and the Company Documents have been duly authorized, executed and
delivered by all necessary corporate action on the part of the Company.
D-1
<PAGE> 36
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 2
4. The Company Documents constitute legal, valid and binding
obligations of the Company enforceable in accordance with their respective terms
(assuming due authorization, execution and delivery by the other parties
thereto) except as enforcement may be limited by bankruptcy, insolvency, and
other similiar laws affecting the enforcement of creditors' rights generally and
principles of equity.
5. The Private Placement Memorandum has been duly approved, executed
and delivered by the company, the Company has authorized the distribution of the
Private Placement Memorandum and the use thereof by the Placement Agent in
connection with the placement of the Bonds by the Placement Agent on behalf of
the Issuer and the Company and the Company has approved the terms of the
Indenture.
6. The execution, delivery and approval of the Company Documents, the
compliance by the Company with the respective terms thereof, and the
consummation of the transactions contemplated thereby do not and will not
conflict with or constitute on the part of the Company a violation of, breach of
or default under, (i) the articles of incorporation or bylaws of the Company,
(ii) any indenture, mortgage, deed of trust, lease, note, agreement or other
agreement or instrument to which the Company is a party or by which the Company
is bound, or (iii) any constitutional provision or statute or any order, consent
decree, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its activities or property.
7. All consents, approvals or authorizations, if any, of any
governmental authority required on the part of the Company in connection with
the execution and delivery of the Company Documents and the consummation of the
transactions contemplated thereby have been obtained, and the Company has
complied with any applicable provisions of law requiring any designation,
declaration, filing, registration or qualification by the Company with any
governmental authority in connection with such execution, delivery and
consummation.
8. There are no actions, proceedings or investigations pending or, to
the best of our knowledge, threatened against or affecting the Company in any
court or before any governmental authority or body, arbitration board or
tribunal, wherein an unfavorable decision, ruling or finding would have a
materially adverse effect on the financial condition or operations of the
Company or challenging the transactions contemplated by the Company Documents,
or which, in any way, would materially and adversely affect the validity or
enforceability of the Bonds or the Company Documents or any agreement or
instrument to which the Company is a party or by which it is bound and which is
used or contemplated for use in connection with the transactions contemplated
thereby.
9. The information contained in the Private Placement Memorandum under
the headings "ESTIMATED SOURCES AND USES OF FUNDS," "THE PROJECT," "THE COMPANY"
and "LITIGATION" (to the extent that litigation affecting the Company is
described under such heading) does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except with respect to the items set forth
in the preceding sentence, we did not participate in the preparation of the
Private Placement Memorandum and have not undertaken to
D-2
<PAGE> 37
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 3
verify the accuracy of the information contained therein; therefore, we express
no opinion as to the accuracy or completeness thereof; however, nothing has come
to our attention which, would lead us to believe that the Private Placement
Memorandum contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Very truly yours,
D-3
<PAGE> 38
EXHIBIT E
[OPINION OF COUNSEL TO THE PLACEMENT AGENT]
April ___, 1996
Wheat, First Securities, Inc.
Richmond, Virginia
$7,750,000
Village of Gurnee, Illinois
industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
We have acted as your counsel in connection with your placement of the
$7,750,000 Village of Gurnee, Illinois Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996 the "Bonds"). Terms used herein
that are defined in the Placement and Remarketing Agreement with respect to the
Bonds dated as of April 1, 1996 shall have the meanings given them in that
Placement and Remarketing Agreement.
Based on such investigation as we have deemed appropriate, we are of
the opinion that the Bonds are exempt from registration pursuant to the
Securities Act of 1933, as amended, and the Indenture is exempt from
qualification as an indenture pursuant to the Trust Indenture Act of 1939, as
amended.
Based upon the examinations which we made as counsel to the Placement
Agent, and without having undertaken to determine independently the accuracy or
completeness of the statements contained in the Private Placement Memorandum,
nothing has come to our attention that would lead us to believe that the Private
Placement Memorandum contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading (except that we express no opinion about the information
concerning the validity and tax-exempt status of the Bonds, the Credit Provider,
the Confirming Bank or about the financial and statistical data contained in the
Private Placement Memorandum).
Very truly yours,
E-1
<PAGE> 39
EXHIBIT F
[OPINION OF COUNSEL TO THE CREDIT PROVIDER]
April ____, 1996
Bank One, Columbus, N.A., as Trustee
Columbus, Ohio
Village of Gurnee, Illinois
Gurnee, Illinois
SteriGenics International
Fremont, California
Chapman and Cutler
Chicago, Illinois
Wheat, First Securities, Inc.
Richmond, Virginia
Standard & Poor's
New York, New York
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
We have acted as counsel to Comerica Bank-California (the "Credit
Provider") in connection with the Reimbursement Agreement (the "Reimbursement
Agreement"), dated as of April 1, 1996 between the Credit Provider and
SteriGenics International (the "Company"), pursuant to which the Credit Provider
has agreed to issue an irrevocable letter of credit (the "Credit Facility")
substantially in the form of Exhibit A thereto in support of certain payments in
respect of the $7,750,000 Village of Gurnee, Illinois Industrial Development
Revenue Bonds (SteriGenics International Project), Series 1996 (the "Bonds").
We have, as such counsel, examined the Reimbursement Agreement, the
Credit Facility and all such corporate records, certificates and other documents
and legal matters as we have deemed relevant and necessary for the purposes of
this opinion.
As to questions of fact material to our opinion, we have relied upon
certificates furnishes to us by appropriate governmental officials and
appropriate officers and representatives of the Credit Provider and the
Confirming Bank. In making the examination referred to above, we have assumed
the genuineness
F-1
<PAGE> 40
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 2
of all signatures (other than the signatures of the Credit Provider), the
capacity of natural persons, the authenticity of all documents submitted to us
as originals, the conformity with the original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such documents.
This opinion is limited to the laws of the State of California and the
federal laws of the United States.
Based upon the foregoing examination and review, we are of the opinion
that:
1. The Credit Provider is a banking corporation duly organized and
existing under the laws of the State of California.
2. The Credit Provider has the corporate power and authority to
execute, deliver and perform its obligations under the Credit Facility.
3. The Credit Facility has been duly executed and issued by the Credit
Provider in accordance with the terms of the Reimbursement Agreement and
constitutes the legal, valid and binding obligation of the Credit Provider
enforceable against the Credit Provider in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium, fraudulent conveyance or other similar laws affecting
the enforcement of creditors' rights in general as such laws would apply in the
event of the bankruptcy, insolvency, reorganization, or liquidation of, or other
similar occurrence with respect to the Credit Provider or in the event of any
moratorium or similar occurrence affecting the Credit Provider and subject, as
to enforceability, to general principles of equity (whether enforcement is
sought in a proceeding in equity or at law).
4. Registration of the Credit Facility is not required under the
Securities Act of 1933, as amended.
5. The information appearing under the headings "THE CREDIT FACILITY
- --GENERAL," and "--REDUCTION AND REINSTATEMENT OF THE CREDIT FACILITY" and
"SUMMARY OF CERTAIN PROVISIONS OF THE REIMBURSEMENT AGREEMENT" in the
Preliminary Private Placement Memorandum dated April 12, 1996 and the Private
Placement Memorandum dated April 19, 1996, insofar as such statements purport to
summarize certain provisions of the Reimbursement Agreement, accurately or
fairly summarize such provisions.
We are furnishing this opinion to you solely for your benefit and no
other person is entitled to rely hereon. This opinion is not to be used,
circulated, quoted or otherwise referred to for any purpose other than in
connection with the delivery of the Credit Facility.
Very truly yours,
F-2
<PAGE> 41
EXHIBIT G
[OPINION OF COUNSEL TO THE CONFIRMING BANK]
April ___, 1996
Bank One, Columbus, N.A., as Trustee
Columbus, Ohio
Village of Gurnee, Illinois
Gurnee, Illinois
SteriGenics International
Fremont, California
Chapman and Cutler
Chicago, Illinois
First Securities, Inc.
Richmond, Virginia
Standard & Poor's.
New York, New York
$7,750,000
Village of Gurnee, Illinois
Industrial Development Revenue Bonds
(SteriGenics International Project), Series 1996
Ladies and Gentlemen:
We have acted as counsel to Comerica, Bank (the "Confirming Bank") in
connection with the issuance by the Confirming Bank of a confirmation letter
dated the date hereof (the Confirmation Letter") confirming the payment of draws
on the irrevocable direct pay Letter of Credit No. [ ] (the "Credit Facility")
issued by Comerica Bank-California (the "Credit Provider") pursuant to the
Reimbursement Agreement (the "Reimbursement Agreement") dated as of April 1,
1996 between the Credit Provider and SteriGenics International (the "Company"),
in support of certain payments in respect of the $7,750,000 Gurnee, Illinois
Industrial Development Revenue Bonds (SteriGenics International Project), Series
1996 (the "Bonds").
We have, as such counsel, examined the Reimbursement Agreement, the
Credit Facility, the Confirmation Letter and all such corporate records,
certificates and other documents and legal matters as we have deemed relevant
and necessary for the purposes of this opinion.
G-1
<PAGE> 42
Bank One, Columbus, N.A., as Trustee
Wheat, First Securities, Inc.
Standard & Poor's
April __, 1996
Page 2
As to questions of fact material to our opinion, we have relied upon
certificates furnishes to us by appropriate governmental officials and
appropriate officers and representatives of the Credit Provider and ,the
Confirming Bank. In making the examination referred to above, we have assumed
the genuineness of all signatures (other than the signatures of the Credit
Provider), the capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity with the original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents.
This opinion is limited to the laws of the State of Michigan and the
federal laws of the United States.
Based upon the foregoing examination and review, we are of the opinion
that:
1. The Confirming Bank is a banking corporation duly organized and
existing under the laws of the State of Michigan.
2. The Confirming Bank has the corporate power and authority to
execute, deliver and perform its obligations under the Confirmation Letter.
3. The Confirmation Letter has been duly executed and issued by the
Confirming Bank at the request of the Credit Provider and constitutes the legal,
valid and binding obligation of the Confirming Bank enforceable against the
Confirming Bank in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors rights in general as such laws would apply in the event of the
bankruptcy, insolvency, reorganization, or liquidation of, or other similar
occurrence with respect to the Confirming Bank or in the event of any moratorium
or similar occurrence affecting the Confirming Bank and subject, as to
enforceability, to general principles of equity (whether enforcement is sought
in a proceeding in equity or at law).
4. Registration of the Confirmation Letter is not required under the
Securities Act of 1933,as amended.
5. The information relating to the Confirming Bank and the Confirmation
Letter appearing under the headings "THE CREDIT FACILITY -GENERAL," and
"--REDUCTION AND REINSTATEMENT OF THE CREDIT FACILITY" and "SUMMARY OF CERTAIN
PROVISIONS OF THE REIMBURSEMENT AGREEMENT" in the Preliminary Private Placement
Memorandum dated April 12, 1996 and the Private Placement Memorandum dated April
19, 1996, insofar as such statements purport to summarize certain provisions of
the Reimbursement Agreement, accurately or fairly summarize such provisions.
We are furnishing this opinion to you solely for your benefit and no
other person is entitled to rely hereon. This opinion is not to be used,
circulated, quoted or otherwise referred to for any purpose other than in
connection with the delivery of the Confirmation Letter.
Very truly yours,
G-2
<PAGE> 1
EXHIBIT 10.50
LETTER OF CREDIT AGREEMENT
Dated as of December 1, 1984
By and Between
SOUTH JERSEY PROCESS TECHNOLOGY, INC.
and
BANKERS TRUST COMPANY
$2,500,000
CITY OF SALEM MUNICIPAL PORT AUTHORITY
Port Development Revenue Bonds
(South Jersey Process Technology, Inc. Project)
Series of 1984
<PAGE> 2
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Page
----
<S> <C>
l. Issuance of Letter of Credit; Fees ..................... 1
2. Agreement to Repay Letter of Credit Draw-
ings; Pledged Bonds .................................... 3
3. Conditions Precedent to Issuance of the Letter of Credit 5
4. Indemnification ........................................ 7
5. Character of Obligations Hereunder ..................... 7
6. Convenants ............................................. 7
7. Representations and Warranties ......................... 9
8. Events of Default ...................................... 12
9. Definitions ............................................ 15
10. Nature of Bank's Duties ................................ 17
11. Miscellaneous .......................................... 19
ANNEX I - FORM OF LETTER OF CREDIT
ANNEX II - FORM OF PLEDGE AGREEMENT
</TABLE>
<PAGE> 3
LETTER OF CREDIT AGREEMENT
AGREEMENT dated as of December 1, 1984 between SOUTH JERSEY PROCESS
TECHNOLOGY, INC., a corporation organized and existing under the laws of the
State of New Jersey (the "Company"), and BANKERS TRUST COMPANY (the "Bank");
WHEREAS, the City of Salem Municipal Port Authority (the "Issuer")
pursuant to the Act (as defined in the Indenture hereinafter referred to)
intends to issue and sell its Port Development Revenue Bonds (South Jersey
Process Technology, Inc. Project) Series of 1984 in the aggregate principal
amount of $2,500,000 (the "Bonds") pursuant to a Trust Indenture dated as of
December 1, 1984 (the "Indenture") from the Issuer to The Farmers and Merchants
National Bank of Bridgeton, as trustee (the "Trustee") and to use the proceeds
thereof to finance the cost of constructing, improving and equipping a radiation
processing system with related facilities (the "Project") and to finance the
Project pursuant to the provisions of a Sublease and Security Agreement dated as
of December 1, 1984 (the "Sublease Agreement") between the Issuer and the
Company; and
WHEREAS, the Company has requested the Bank to issue its irrevocable
letter of credit in the form of Annex I attached hereto (the "Letter of Credit",
which term shall include any substitute therefor or replacement thereof issued
in accordance with the terms of the Letter of Credit); and
WHEREAS, the obligations of the Company hereunder are to be guaranteed by
Simon Engineering P.L.C., an English company (the "Guarantor"), pursuant to a
Guaranty-Agreement dated as of December 1, 1984, between the Guarantor and the
Bank (the "Guaranty Agreement");
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Issuance of Letter of Credit; Fees.
1A. Amount and Terms of Letter of Credit. The Bank agrees, on the terms
and subject to the conditions herein-
<PAGE> 4
after set forth, to issue the Letter of Credit to the Trustee in an amount not
to exceed $2,500,000 plus an amount equal to 120 days' interest on the Bonds,
computed as though the Bonds bore interest at the rate of 15% per annum
notwithstanding the actual rate borne from time to time by the Bonds and
expiring on December 15, 1994, unless otherwise terminated or extended.
1B. Letter of Credit Fee. The Company hereby agrees to pay to the Bank a
letter of credit fee, computed on the basis of the actual number of days elapsed
over a year of 360 days, at a rate per annum equal to 3/4% of the Stated Amount
of the Letter of Credit outstanding from time to time, but including, in any
event, the principal amount of any Pledged Bonds. Such fees are to be paid in
immediately available funds quarterly in arrears on the fifteenth day of each
March, June, September and December, until the Termination Dater and on the
Termination Date, commencing March 15, 1985.
1C. Transfer Fees. The Company hereby agrees to pay to the Bank upon each
transfer of the Letter of Credit in accordance with its terms, $150 or such
other amount as shall at the time of transfer be the charge which the Bank is
making for transfers of similar letters of credit.
1D. Drawing Fees. The Company hereby agrees to pay to the Bank upon each
drawing by the Trustee under the Letter of Credit, the sum of $50 or such other
amount as shall at the time of such drawing be the charge which the Bank is
making for drawings on similar letters of credit.
1E. Additional Payments. If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof, or in generally accepted accounting
principles, shall either (i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against letters of credit issued by the
Bank or (ii) impose on the Bank any other condition relating, directly or
indirectly, to this Agreement or the Letter of Credit, and the result of any
event referred to in the preceding clause (i) or (ii) shall be to increase the
cost to the Bank of issuing or maintaining the Letter of Credit, then, upon
demand by the Bank, the Company shall promptly pay to the Bank, from time to
time as specified by the Bank, such additional amounts as shall be sufficient to
compensate the Bank for such increased cost together with interest on each such
-2-
<PAGE> 5
amount from the date demanded until payment in full thereof at 125% of the Prime
Lending Rate.
2. Agreement to Repay Letter of Credit Drawings; Pledged Bonds.
2A. Reimbursement. The Company hereby agrees:
(i) to pay to the Bank (1) on the Termination Date, an amount equal to
all "A Drawings" under the Letter of Credit; and (2) interest on each such
amount from the date of drawing of such amount under the Letter of Credit
until payment (including prepayment) in full thereof, at the Prime Lending
Rate plus 1%, payable quarterly in arrears on the fifteenth day of each
March, June, September and December and on the date of payment (including
prepayment) of any such amount;
(ii) to pay to the Bank immediately after any payment is made under
the Letter of Credit pursuant to any "B Drawing" or any "C Drawing" to pay
principal of or interest (or the portion of Purchase Price corresponding
to interest) on the Bonds, an amount equal to such amount so paid under
the Letter of Credit; and
(iii) to pay to the Bank interest on any and all amounts required to
be paid as provided in Paragraph 1, clause (1) of Paragraph 2 A(i),
Paragraph 2 A(ii) and, to the extent permitted by law, clause (2) of
Paragraph 2 A(i) from and after the due date thereof until payment in
full, payable on demand, at 125% of the Prime Lending Rate. If any payment
under the Letter of Credit with respect to a "B Drawing" or a "C Drawing"
shall be reimbursed by the Company to the Bank on the same date such
payment is made by the Bank, no interest shall be payable on the amount of
such drawing.
2B. Pledge of Bonds. As security for the payment of the obligations of the
Company pursuant to Paragraph 2A(i) above, the Company will pledge to the Bank,
and grant to the Bank a security interest in, its right, title and interest in
and to Bonds delivered to the Bank in connection with "A Drawings" (herein
called "Pledged Bonds"), pursuant to a pledge agreement in the form of Annex II
attached hereto (the "Pledge Agreement"). Any amounts from time to time owing to
the Bank pursuant to Paragraph 2A(i) above may be prepaid (i) at any time by the
Company on one Business Day's
-3-
<PAGE> 6
notice stating the amount to be prepaid (which shall be $5,000 or a whole
multiple thereof), and (ii) at any time on behalf of the Company on one Business
Day's notice from the Company directing the Bank to deliver a specified
principal amount of Pledged Bonds held by the Bank for sale pursuant to Section
3.09(b) of the Indenture. Upon payment to the Bank of the amount to be prepaid
pursuant to clause ( i) or ( ii) above, together with accrued interest, as set
forth in clause (2) of Paragraph 2A(i), to the date of such prepayment on the
amount to be prepaid, the outstanding obligations of the Company under Paragraph
2A(i) above shall be reduced by the amount of such prepayment, interest shall
cease to accrue on the amount prepaid, and the Bank shall release from the
pledge and security interest created by the Pledge Agreement a principal amount
of Pledged Bonds equal to the amount of such prepayment, provided that prior to
such release from the pledge and security interest created by the Pledge
Agreement of Bonds delivered to the Bank in connection with an "A Drawing", the
Company shall have paid to the Bank the amount owing in respect of the "C
Drawing" if any, made in conjunction with such "A Drawing". Such Bonds shall be
delivered to the Company, in the event of a prepayment pursuant to clause (i)
above, or to the Tender Agent pursuant to Section 3.09(b) of the Indenture, in
the event of a prepayment pursuant to clause (ii) above, as appropriate.
Notwithstanding the foregoing, no prepayment of amounts owing to the Bank
pursuant to Paragraph 2A(i) may be made, and no Pledged Bonds shall be released,
during the period commencing two Business Days prior to an interest payment date
with respect to the Bonds and ending at the close of business on such interest
payment date.
2C. Reinstatement of Letter of Credit. After any "C Drawing", the
obligation of the Bank to honor demands for payment under the Letter of Credit
with respect to payment of interest (or the portion of Purchase Price
corresponding to interest) on the Bonds will automatically be reinstated upon
the terms and conditions set forth in the Letter of Credit. Upon release by the
Bank pursuant to Paragraph 2B hereof of any Pledged Bonds, the obligation of the
Bank to honor demands for payment under the Letter of Credit with respect to
payment of the principal, or the portion of Purchase Price corresponding to
principal, of the Bonds will automatically be reinstated upon the terms and
conditions set forth in the Letter of Credit.
2D. Credit for Amount Paid on Bonds. The Company shall (i) receive a
credit against its obligation to pay
-4-
<PAGE> 7
interest pursuant to clause (2) of Paragraph 2A(i) above to the extent of any
amounts actually paid by the Issuer to the Bank in respect of the interest due
on any Pledged Bonds and (ii) receive a credit against its reimbursement
obligation pursuant to clause (1) of Paragraph 2A(i) above to the extent of any
amounts actually paid by the Issuer to the Bank in respect of the principal due
on any Pledged Bonds.
2E. Computation of Interest; Place of Payment. Interest payable hereunder
shall be computed on the basis of a 360-day year, actual number of days elapsed.
All payments by the Company to the Bank hereunder shall be made in lawful
currency of the United States and in immediately available funds at the Bank's
office at One Bankers Trust Plaza, New York, New York 10015, Attention: Letter
of Credit Division. In the event the date specified for any payment hereunder is
not a Business Day, such payment shall be made on the next following Business
Day and interest shall be paid at the rate provided for herein on any such
payment to the Business Day on which such payment is made.
3. Conditions Precedent to Issuance of the Letter of Credit. This
Agreement shall become effective, and the Bank will issue the Letter of Credit,
on the date the Bonds are issued and sold to the purchaser(s) thereof, provided
that all of the following conditions are met:
3A. This Delivery of the Bonds and Operative Documents. This Agreement,
the Sublease Agreement, the Pledge Agreement, the Guaranty Agreement, the
Remarketing Agreement (as defined in the Indenture), the Tender Agent Agreement,
and the Indenture (collectively, the "Operative Documents") and the Bonds shall
have been executed and delivered by the parties thereto, each in form and
substance satisfactory to the Bank. The Bank shall have received an executed or
conformed copy of each of the Operative Documents.
3B. No Default. On the Date of Issuance and after giving effect to the
issuance of the Letter of Credit, there shall exist no Default or Event of
Default.
3C. Representations and Warranties. On the Date of Issuance and after
giving effect to the issuance of the Letter of Credit, all representations and
warranties of the Company and the Guarantor contained herein or in the other
Operative Documents or otherwise made in writing in connection herewith shall be
true and correct in all material respects with the same force and effect as
though such rep-
-5-
<PAGE> 8
resentations and warranties had been made on and as of such date.
3D. Certificates of Compliance. There shall have been delivered to the
Bank (i) a certificate of an authorized officer of the Company, dated the Date
of Issuance, to the effect that, insofar as concerns the Company, all of the
conditions specified in Paragraphs 3B and 3C have been satisfied as of such
date, and (ii) a certificate of an authorized officer of the Guarantor, dated
the Date of Issuance, to the effect that, insofar as concerns the Guarantor, all
of the conditions specified in Paragraphs 3B and 3C have been satisfied as of
such date.
3E. Opinions of Counsel. There shall have been delivered to the Bank (i)
an opinion of Messrs. Strulowitz, Spear and Spalter, counsel to the Company,
dated the Date of Issuance and in form and substance satisfactory to the Bank,
covering such matters as the Bank may reasonably request, and (ii) an opinion of
Rogers Hoge & Hills, counsel to the Guarantor, dated the Date of Issuance and in
form and substance satisfactory to the Bank, covering such matters as the Bank
may reasonably request.
3F. Opinion of Bond Counsel. There shall have been delivered to the Bank
an opinion (or a signed copy of such opinion together with a satisfactory
reliance letter) of Messrs. Drinker Biddle & Reath, Bond Counsel, dated the Date
of Issuance and in form and substance satisfactory to the Bank, to the effect
that the Bonds are legal, valid and binding obligations of the Issuer and that
interest on the Bonds is exempt from Federal income taxes under existing
statutes regulations and rulings, and covering such other matters as the Bank
may reasonably request.
3G. Other Documents. There shall have been delivered to the Bank such
other information, documents, instruments, approvals (and if requested by the
Bank, certified duplicates of executed copies thereof) or opinions as the Bank
or its counsel may reasonably request.
3H. Documentation and Proceedings. All corporate and legal proceedings and
all instruments in connection with the transactions contemplated by this
Agreement and the other Operative Documents shall be satisfactory in form and
substance to the Bank and its counsel and the Bank shall have received all
information and copies of all documents, including records of corporate
proceedings, governmental
-6-
<PAGE> 9
approvals and incumbency certificates which it may have reasonably requested in
connection with the transactions contemplated by this Agreement and the other
Operative Documents, such documents where appropriate to be certified by proper
officers.
4. Indemnification. In addition to amounts, payable under Paragraphs l and
2 of this Agreement, the Company hereby agrees to protect, indemnify, pay and
save the Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which the Bank may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of the Letter of Credit, other than as a
result of the gross negligence or willful misconduct of the Bank, (ii) any
breach by the Company, the Guarantor or the Issuer of any warranty, covenant,
term or condition in, or the occurrence of any default under, this Agreement,
any other Operative Document or the Bonds, together with all reasonable expenses
resulting from the compromise or defense of any claims or liabilities arising as
a result of any such breach or default, and (iii) defense against any legal
action commenced to challenge the validity of any of the above referred to
instruments. The obligations of the Company under this Paragraph 4 shall survive
the payment of the Bonds and the termination of this Agreement.
5. Character of Obligations Hereunder. The obligations of the Company
under this Agreement are primary, absolute, independent, irrevocable and
unconditional. The Company understands and agrees that no payment by it under
any other agreement (whether voluntary or involuntary or pursuant to court order
or otherwise) shall constitute a defense to the several obligations hereunder
except to the extent that the Bank has been indefeasibly paid in full.
6. Covenants. The Company agrees that, so long as any amount is payable
under this Agreement:
6A. Compliance with Agreements. The Company will observe and perform all
of its obligations under this Agreement and the other Operative Documents to
which it is a party. The Company will not amend or otherwise modify, or agree to
the amendment, modification or termination of, any of the Bonds or the Operative
Documents, without the consent of the Bank.
-7-
<PAGE> 10
6B. Notice of Default. The Company will furnish to the Bank as soon as
possible and in any event within two Business Days after the discovery by any
executive officer of the Company of any Event of Default or Default, an
Officer's Certificate, setting forth the details of such Event of Default or
Default and the action which the Company proposes to take with respect thereto.
6C. Financial Statements. The Company will deliver to the Bank, in
duplicate the following documents relating to the Company and the Parent
Corporation: (i) within 45 days after the end of each fiscal quarterly period in
each fiscal year an income statement and a surplus statement for the period from
the beginning of the current fiscal year to the end of such quarterly period,
and a balance sheet as at the end of such quarterly period, signed by an
authorized financial officer, (ii) within 90 days after the end of each fiscal
year similar statements for such year certified by independent certified public
accountants acceptable to the Bank whose certificate shall be satisfactory to
the Banks, (iii) copies of all statements and reports sent to stockholders or
filed with the Securities and Exchange Commission, and (iv) such other financial
data as the Bank may reasonably request. All financial statements specified in
clauses (i) and (ii) above shall be furnished in consolidated form for the
Company and all consolidated subsidiaries with comparative figures for the
corresponding period in the preceding year. Together with each delivery of
financial statements required by clause (i) above, the Company will deliver to
the Bank an Officer's Certificate stating that there exists no Event of Default
or Default or, if any such Event of Default or Default exists, stating the
nature thereof, the period of existence thereof and what action the Company
proposes to take with respect thereto.
The Bank is hereby authorized to deliver a copy of any financial statement
delivered to it pursuant to this Paragraph 6C to any regulatory body having
jurisdiction over it.
6D. ERISA. The Company will as soon as possible and in any event within 10
days after the Company or a Subsidiary knows or has reason to know that a
Reportable Event has occurred, that an accumulated funding deficiency has been
incurred or an application may be or has been made to the Secretary of the
Treasury for a waiver of the minimum funding standard under Section 412 of the
Code with respect to a Plan, that a Plan has been or may be terminated, that
proceedings may be or have been instituted to terminate a Plan,
-8-
<PAGE> 11
or that the Company, a Subsidiary or an ERISA Affiliate will or may incur any
liability to or on account of a Plan under Section 4062, 4063, 4064, 4201 or
4204 of ERISA, the Company will deliver to the Bank an Officer's Certificate
setting forth details as to such occurrence and action, if any, which the
Company or the Subsidiary is required or proposes to take, together with any
notices required or proposed to be filed with or by the Company, the Subsidiary,
the ERISA Affiliate, the PBGC or the plan administrator with respect thereto.
The Company will furnish to the Bank a copy of the annual report of each Plan
(Form 5500) required to be filed with the Internal Revenue Service. Copies of
annual reports or any notices required to be delivered to the Bank hereunder
shall be delivered no later than 10 days after the later of the date such report
or notice has been filed with the Internal Revenue Service or the PBGC or
received by the Company or the Subsidiary.
6E. Inspection. The Company covenants that, so long as this Agreement
shall remain in effect, it will permit any Person designated by the Bank in
writing at the Bank's expense to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom, and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company, all at such reasonable
times and as often as the Bank may reasonably request.
6F. Company to Maintain Its Corporate Existence. The Company will maintain
its corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets, and (unless the surviving corporation following
any consolidation or merger is the Company) will not consolidate with or merge
into another Person or permit one or more other Persons to consolidate with or
merge into it.
7. Representations and Warranties. The Company represents and warrants
that:
7A. Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of its state of
incorporation and the Company has and each Subsidiary has the corporate power to
own its respective property and to carry on its respective business as it is now
being conducted.
-9-
<PAGE> 12
7B. Financial Statements. The Company has furnished the Bank with the
following financial statements identified by a principal financial officer of
the Parent Corporation: (i) consolidated audited balance sheets of the Parent
Corporation and its consolidated subsidiaries as at December 31, 1982 and
December 31, 1983, and consolidated profit and loss and surplus statements of
the Parent Corporation and its consolidated subsidiaries for the fiscal years
ended on such dates, respectively, certified by its certified public
accountants; and (ii) a consolidated balance sheet of the Parent Corporation and
its consolidated subsidiaries as at September 30, 1984, and consolidated profit
and loss and surplus statements of the Parent Corporation and its consolidated
subsidiaries for the nine months ended on such date, prepared by, the Parent
Corporation. Such financial statements (including any related schedules and/or
notes) are true and correct in all material respects (subject, as to interim
statements, to changes resulting from audits and year-end adjustments) and have
been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all liabilities,
direct and contingent of the Parent Corporation and its consolidated
subsidiaries required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Parent Corporation and its
consolidated subsidiaries as at the dates thereof, and the profit and loss and
surplus statements fairly present the results of the operations of the Parent
Corporation and its consolidated subsidiaries for the periods indicated. There
has been no material adverse change in the business, condition (financial or
otherwise) or operations of the Parent Corporation or any of its consolidated
subsidiaries since December 31, 1983.
7C. Actions Pending. There is no action, suit, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, or any of their respective properties, which might
result in any material adverse change in the business, condition (financial or
otherwise) or operations of the Company any of its Subsidiaries or which
involves the possibility of materially adversely affecting the ability of the
Company to comply with this Agreement or any of the other Operative Documents to
which the Company is a party.
7D. Taxes. The Company and each of its Subsidiaries has filed all Federal
and State income tax returns which, to the best knowledge of the officers of the
Company, are re-
-10-
<PAGE> 13
quired to be filed, and each has paid all taxes as shown on said returns and on
all assessments received by it to the extent that such taxes have become due.
7E. Compliance with ERISA. The Plans are in substantial compliance with
ERISA, no Plan is insolvent or in reorganization, no Plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code, neither
the Company nor a Subsidiary nor an ERISA Affiliate has incurred any material
liability (including any material contingent liability) to or on account of a
Plan pursuant to Section 4062, 4063, 4064, 4201 or 4204 of ERISA, no proceedings
have been instituted to terminate any Plan, and no condition exists which
presents a material risk to the Company or a Subsidiary of incurring a liability
to or on account of a Plan pursuant to any of the foregoing Sections of ERISA.
7F. Conflicting Agreements and Other Matters. Neither the Company nor any
of its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, or financial condition. The execution,
delivery and performance of this Agreement and each of the other Operative
Documents to which the Company is a party will not result in the violation of or
be in conflict with or constitute a default under the charter or by-laws of the
Company or any term or provision of any mortgage, lease, agreement or other
instrument, or any judgment, decree, governmental order, statute, rule or
regulation, by which the Company is bound or to which any of its assets is
subject. No approval by, authorization of, or filing with any federal, state or
other governmental commission, agency or authority is necessary in connection
with the execution and delivery by the Company of this Agreement or the other
Operative Documents to which the Company is a party. Neither the Company nor any
subsidiary is a party to,or otherwise subject to any provision contained in, any
instrument evidencing Indebtedness of the Company or such Subsidiary, any
agreement relating thereto or any other contract or agreement (including its
charter) which restricts or otherwise limits the incurring of the Indebtedness
to be represented by this Agreement and the other Operative Documents.
7G. Disclosure. There is no fact known to the Company or any Subsidiary
which materially adversely affects or in the future may,(so far as the Company
can now foresee) materially adversely affect the business, property assets or
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<PAGE> 14
financial condition of the Company or any of its Subsidiaries which has not been
set forth in this Agreement or in the other documents, certificates and
statements furnished to the Bank by or on behalf of the Company prior to the
date hereof in connection with the transactions contemplated hereby,
7H. Operative Documents. The Company makes each of the representations and
warranties contained in the Operative Documents to which the Company is a party
to, and for the benefit of, the Bank as if the same were set forth at length
herein.
8. Events of Default. Upon the occurrence of any of the following events
(herein referred to as an "Event of Default"), unless waived by the Bank:
(i) the occurrence of an "Event of Default" as described and defined
in the Indenture; or
(ii) failure to pay any amount when due under the terms of this
Agreement; or
(iii) failure on the part of the Company to perform or observe any of
the terms of Paragraph 6 hereof; or
(iv) the Company shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or any of the Operative
Documents on its part to be performed or observed and (a) with respect to
any such term, covenant or agreement contained herein, any such failure
remains unremedied for 30 days; and (b) with respect to any such term,
covenant or agreement contained in any of the other Operative Documents,
any such failure remains unremedied after any applicable grace period
specified in such Operative Document; or
(v) any warranty, representation or other written statement made by or
on behalf of the Company contained herein, in any of the other Operative
Documents or in any instrument furnished in compliance with or in
reference to this Agreement is false or misleading in any material respect
on the date as of which made; or
(vi) default shall be made in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
Indebtedness of
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<PAGE> 15
the Company or any of its Subsidiaries (except any such Indebtedness of
any Subsidiary to the Company or to any other Subsidiary) or any interest
or premium thereon, or default shall be made in the performance or
observance of any obligation or condition with respect to any such
Indebtedness if the effect of such default is to accelerate the maturity
of any such Indebtedness or to permit the holder or holders thereof, or
any trustee or agent for such holders, to cause such Indebtedness to
become due and payable prior to its expressed maturity, or any such
Indebtedness shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to
stated maturity, whether or not any such default shall subsequently be
cured; or
(vii) the Company or any Subsidiary shall (1) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or the
like of itself or of its property, (2) admit in writing its inability to
pay its debts generally as they become due, (3) make a general assignment
for the benefit of creditors, (4) be adjudicated a bankrupt or insolvent,
(5) commence a voluntary case under the Federal bankruptcy laws of the
United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding, or action shall be
taken by it for the purpose of effecting any of the foregoing or (6) if
without the application, approval or consent of the Company or any
Subsidiary, as the case may be, a proceeding shall be instituted in any
court of competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of the
Company or any Subsidiary, as the case may be, an order for relief or an
adjudication in bankruptcy reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment
of debts, or the appointment of a trustee, receiver, liquidator or
custodian or the like of the Company or any Subsidiary, as the case may
be, or of all or any substantial part of its assets, or other like relief
in respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Company or any subsidiary, as
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<PAGE> 16
the case may be, in good faith, the same shall (A) result in the entry of
an order for relief or any such adjudication or appointment or (B)
continue undismissed, or pending and unstayed, for any period of sixty
(60) consecutive days; or
(viii) a Plan shall fail to maintain the minimum funding standard
required by Section 412 of the Code for any plan year or a waiver of such
standard is sought or granted under Section 412(d) of the code, or a Plan
is, shall have been or is likely to be terminated or the subject of
termination proceedings under ERISA, or the Company or a Subsidiary or an
ERISA Affiliate has incurred or is likely to incur a liability to or on
account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA,
and there shall result from any such event or events either a liability or
a material risk of incurring a liability to the PBGC or a Plan, which in
the opinion of the Bank, will have a material adverse effect upon the
business operations or the financial condition of the Company or a
Subsidiary; or
(ix) the occurrence of an "Event of Default" as described and defined
in the Guaranty Agreement;
then, and in any such event, the Bank may, in its sole discretion, but shall not
be obligated to, (1) by notice to the Company, declare all amounts payable by
the Company hereunder (including, without limitation, amounts payable pursuant
to Paragraph 2A hereof) to be forthwith due and payable, and the same shall
thereupon become due and payable without demand, presentment, protest or further
notice of any kind, all of which are hereby expressly waived, and/or (2)
exercise all of its rights and remedies under the Operative Documents and/or (3)
by notice to the Trustee, require the Trustee to accelerate payment of all Bonds
and interest accrued thereon as provided in Section 10.02 of the Indenture.
No remedy herein conferred or reserved is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or any other Operative Document or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default, omission or failure of performance hereunder shall
impair any
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<PAGE> 17
such right or power or shall be construed to be a waiver thereof, but any such
right or power may be exercised from time to time and as often as may be deemed
expedient. In order to exercise any remedy reserved to the Bank in this
Agreement, it shall not be necessary to give any notice, other than such notice
as may be herein expressly required. In the event any provision contained in
this Agreement should be breached by any party and thereafter duly waived by the
other party so empowered to act, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder. No
waiver, amendment, release or modification of this Agreement shall be
established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties thereunto duly authorized by this
Agreement.
9. Definitions. For the purpose of this Agreement, in addition to terms
defined elsewhere herein, the following terms shall have the following meanings:
"A Drawing" shall have the meaning specified in the Letter of Credit which
shall be a drawing in respect of the payment of the portion of the Purchase
Price corresponding to principal of the Bonds.
"B Drawing" shall have the meaning specified in the Letter of Credit which
shall be a drawing in respect of the payment of principal of the Bonds.
"Business Day" shall mean a day on which the Bank and the Trustee are each
open for the purpose of conducting a commercial banking business.
"C Drawing" shall have the meaning specified in the Letter of Credit which
shall be a drawing in respect of the payment of interest, or the portion of
Purchase Price corresponding to interest, on the Bonds.
"Code" shall mean the Internal Revenue Code of 1954, as amended from time
to time,
"Date of Issuance" shall mean the date of issuance and delivery of the
Letter of Credit,
"Default" shall mean any event which with notice or lapse of time, or
both, would become an Event of Default.
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<PAGE> 18
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company or a Subsidiary would be deemed to
be a "single employer" within the meaning of Section 4001 of ERISA.
"Event of Default" shall have the meaning specified in Paragraph 8 hereof.
"Indebtedness" shall mean, for any Person, (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property and
(ii) all direct or indirect guarantees of such Person in respect of, and all
obligations or undertakings (contingent or otherwise) of such Person to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness of any other Person for borrowed money or for the deferred
purchase price of property.
"Officer's Certificate" shall mean a certificate signed by the Chairman of
the Company's Board of Directors, or President of the Company and its Secretary
or Assistant Secretary or Treasurer, or such other officer as shall be
authorized by the Company's Board of Directors to act on behalf of the Company,
under its corporate seal. One person shall not, however, be permitted to execute
the certificate in more than one capacity.
"Operative Documents" shall have the meaning assigned to such term in
Paragraph 3A hereof.
"Parent Corporation" shall mean Radiation Technology, Inc., a New Jersey
corporation, and its successors and assigns.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Person" shall mean an individual, corporation partnership, joint venture,
trust, unincorporated organization
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<PAGE> 19
or any other juridical entity, or a foreign state or any agency or political
subdivision thereof.
"Plan" shall mean any multiemployer plan or single employer plan, as
defined in Section 4001 and subject to Title IV of ERISA, which is maintained,
or at any time during the five calendar years preceding the date of this
Agreement was maintained, for employees of the Company or a Subsidiary or an
ERISA Affiliate.
"Prime Lending Rate" shall mean the rate announced by the Bank from time
to time at its principal office as its prime lending rate for domestic
commercial loans; the Prime Lending Rate to change when and as such prime
lending rate changes.
"Purchase Price" shall have the meaning assigned to such term in the
Indenture.
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA (with respect to which the 30-day notice requirement has not been waived
by the PBGC).
"Security" shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
"Stated Amount" shall have the meaning specified in the Letter of Credit.
"Subsidiary" shall mean any corporation of which at least a majority of
the outstanding stock having by the terms thereof ordinary voting power to elect
at majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
the Company or one or more of its Subsidiaries or by the Company and one or more
of its Subsidiaries.
"Tender Agent" shall have the meaning assigned to such term in the
indenture.
"Tender Agent Agreement" shall mean the Tender Agent Agreement dated as of
December 1, 1984, among the Company, the Trustee and the Tender Agent.
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<PAGE> 20
"Termination Date" shall mean the date the Letter of Credit terminates or
expires in accordance with its terms.
10. Nature of Bank's Duties. As between the Company and the Bank, the
Company shall assume all risks of the acts, omissions or misuse of the Letter of
Credit by the Trustee. The Bank shall not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
the Letter of Credit, even if it should in fact prove to be in any or all
respects inaccurate, fraudulent or forged; (ii) for the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
the Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the Trustee to comply fully with conditions
required in order to draw upon the Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for
errors in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under the Letter of Credit or of the proceeds thereof; and (vii) for any
consequences arising from causes beyond the control of the Bank. None of the
above shall affect, impair, or prevent the vesting of any of the Bank's rights
or powers hereunder,
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Bank. under
or in connection with the Letter of Credit or the related drafts or document(s),
if taken or omitted in good faith, shall not put the Bank under any resulting
liability to the Company.
The Company hereby agrees at all times to protect, indemnify and save
harmless the Bank from and against any and all claims, actions, suits and other
legal proceedings, and from and against any and all losses, claims, demands,
liabilities, damages, costs, charges, counsel fees and other expenses which the
Bank may, at any time, sustain or incur by reason of or in consequence of or
arising out of the issuance of the Letter of Credit; it being the intention of
the parties that this Agreement shall be construed and applied to protect and
indemnify the Bank against any and
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<PAGE> 21
all risks involved in the issuance of the Letter of Credit, all of which risks
are hereby assumed by the Company, including, without limitation, any and all
risks of the acts or omissions, whether rightful or wrongful, of any present or
future de jure or de facto government or governmental authority (all such acts
and omissions, herein called "Government Acts"). The Bank shall not, in any way,
be liable for any failure by the Bank or anyone else to pay any drawing under
the Letter of Credit as a result of any Government Acts or any other cause
beyond the control of the Bank. The obligations of the Company under this
Paragraph 10 shall survive the payment of the Bonds and the termination of this
Agreement.
Notwithstanding anything to the contrary contained in this Paragraph 10,
the Company shall have no obligation to indemnify the Bank in respect of any
liability incurred by the Bank arising solely out of the gross negligence or
willful misconduct of the Bank or out of the wrongful dishonor by the Bank of a
proper demand for payment made under the Letter of Credit,
11. Miscellaneous.
11A. Amendments. This Agreement may be amended, and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it if the Company shall obtain the written consent of the Bank. No
course of dealing between the Company and the Bank, nor any delay in exercising
any rights hereunder shall operate as a waiver of any rights of the Bank
hereunder.
11B. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by the Company in connection
herewith shall survive the execution and delivery of this Agreement, regardless
of any investigation made by the Bank or on its behalf.
11C. Expenses. The Company agrees to pay promptly all costs and expenses
in connection with the preparation, issuance, delivery, filing, recording, and
administration of the Letter of Credit, this Agreement, the other operative
Documents, the Bonds and any other documents which may be delivered in
connection with this Agreement, including, without limitation, all engineers'
and architects' fees, the reasonable fees and expenses of White 3 Case, counsel
for the Bank, and the reasonable fees and expenses of any local counsel who may
be retained by the Bank, with respect to the
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<PAGE> 22
transactions contemplated by this Agreement, and all costs and expenses
(including reasonable counsel fees and expenses) in connection with (i) the
transfer, drawing upon, change in terms, maintenance, renewal or cancellation of
the Letter of Credit, (ii) any and all amounts which the Bank has paid relative
to the Bank's curing of any Event of Default resulting from the acts or
omissions of the Company under this Agreement, any other Operative Document or
the Bonds, (iii) the enforcement of this Agreement or any other Operative
Document, or (iv) 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 stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
Letter of Credit, this Agreement, any other Operative Document or the Bonds, or
any other document which may be delivered in connection with this Agreement, 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, Notwithstanding the foregoing, no payment shall be required under this
Paragraph 11C in respect of any cost or expense which the Bank has incurred
because of its gross negligence or willful misconduct,
11D. Set-off; Limitation on Bank Collateral. (i) In addition to any rights
now or hereafter granted under applicable law (including, but not limited to,
Section 151 of the New York Debtor and Creditor Law) and not by way of
limitation of any such rights, during the continuance of any Event of Default
hereunder the Bank is hereby authorized at any time and from time to time,
without notice to the Company or to any other person or entity, any such notice
being hereby expressly waived, to set-off and to appropriate and apply any and
all deposits (general or special) and any other indebtedness at any time held or
owing by the Bank to or for the credit or the account of the Company against and
on account of the obligations and liabilities of the Company to the Bank under
this Agreement, irrespective of whether or not the Bank shall have made any
demand hereunder and although said obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
(ii) Notwithstanding the provisions contained in paragraph (i) above, the
Bank hereby agrees to waive the exercise, at any time after the commencement of
a proceeding in bankruptcy or reorganization with respect to the Company, of
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<PAGE> 23
its right to set-off any and all deposits (general or special) 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
or hereafter existing in respect of the reimbursement obligations of the Company
set forth in this Agreement.
(iii) Except as provided in the Pledge Agreement with respect to the
Pledged Bonds, the Bank hereby agrees that it will not at any time accept any
collateral as security for the payment of the reimbursement obligations of the
Company set forth in this Agreement unless provision is made prior to or
simultaneously with the taking of such collateral security by the Bank for a
prior or an equal and ratable security interest in such collateral security to
be granted to the Trustee for the benefit of the holders from time to time of
the Bonds.
(iv) Notwithstanding the foregoing, the covenants of the Bank contained in
clauses (ii) and (iii) of this Paragraph 11D shall be of no force or effect at
such time as, in the opinion of nationally recognized counsel experienced in
bankruptcy matters, due to legislative or judicial developments after the date
hereof, the absence of such covenants or failure to comply therewith will not
constitute a basis for the granting of injunctive relief against payment under
the Letter of Credit.
11E. Binding Effect; Assignment. This Agreement is a continuing obligation
and shall (i) be binding upon the Company, its successors and assigns, and (ii)
inure to the benefit of and be enforceable by the Bank and its successors,
transferees and assigns; provided, that the Company may not assign all or any
part of this Agreement without the prior written consent of the Bank. The Bank
may assign, negotiate, pledge or otherwise hypothecate all or any portion of
this Agreement, or grant participations herein, in the Letter of Credit or in
any of its rights or security hereunder, including, without limitation, the
instruments securing the Company's obligations hereunder. No such assignment or
participation by the Bank, however, will relieve the Bank of its obligation
under the Letter of Credit. In connection with any assignment or participation,
the Bank may disclose to the proposed assignee or participant any information
that the Company is required to deliver to the Bank pursuant to this Agreement.
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<PAGE> 24
11F. Notices. All communications provided for hereunder shall be sent by
first class mail and, if to the Bank, to it at One Bankers Trust Plaza, New
York, New York 10015, Attention: Letter of Credit Division and with a copy to it
at 280 Park Avenue, Floor 15E, New York, New York 10015, Attention: European
Department, Europe U.K. Group; and if to the Company, to it at P.O. Box 185, 108
Lake Denmark Road, Rockaway, New Jersey 07866, Attention: Vice President; or to
such other address with respect to either party as such party shall notify the
other in writing; provided, however, that any such communication to the Company
may also, at the Bank's option, be either delivered to the Company at its
address set forth above or to any officer of the Company.
1lG. Satisfaction Requirement. If any agreement, certificate or other
writing or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Bank, the determination of such satisfaction
shall be made by the Bank in its sole and exclusive judgment exercised in good
faith.
11H. Governing Law. This Agreement is being delivered and is intended to
be performed in the State of New York, and shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
such State.
11I. Consent to Jurisdiction and Venue, etc.
(i) The Company irrevocably (i) agrees that any suit, action or other
legal proceeding arising out of or relating to this Agreement or the other
Operative Documents may be brought in a court of record in the State of New York
or in the Courts of the United States of America located in such state, (ii)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (iii) waives any objection which it may have to the laying of
venue of any such suit, action or proceeding in any of such courts and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Company hereby irrevocably appoints CT Corporation System (the
"Process Agent") with an office on the date hereof at 1633 Broadway, New York,
New York 10019 as its agent to receive on behalf of the Company and its property
service of copies of the summons and complaint and any other process which may
be served in any such suit, action or proceeding. Such service may be made by
mailing or delivering a copy of such process to the Company in care of the
Process Agent at the Process
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<PAGE> 25
Agent's above address and the Company hereby irrevocably authorizes and directs
the Process Agent to accept such service on its behalf . The Bank agrees to mail
to the Company at its address provided in Paragraph 11F hereof a copy of any
summons, complaint or other process mailed or delivered by it to the Company in
care of the Process Agent. As an alternate method of service, the Company also
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by mailing of copies of such process to the Company at its
address provided in Paragraph 11F. The Company agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
All mailings under this Paragraph shall be by certified mail, return receipt
requested.
(ii) Nothing in this Paragraph 11I shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the right of
the Bank to bring any suit, action or proceeding against the Company or its
property in the courts of any other jurisdiction.
11J. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
SOUTH JERSEY PROCESS
TECHNOLOGY, INC
By /s/ signature unreadable
------------------------
Title: President
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<PAGE> 26
BANKERS TRUST COMPANY
By /s/ signature unreadable
------------------------
Title: V.P.
H. Cotterill
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<PAGE> 27
ANNEX I
IRREVOCABLE LETTER OF CREDIT
BANKERS TRUST COMPANY
One Bankers Trust Plaza
New York, New York 10015
December 28, 1984
IRREVOCABLE LETTER OF CREDIT NO, V 65986-S
The Farmers and Merchants
National Bank of Bridgeton
53 South Laurel Street
Bridgeton, New Jersey 08302
Attention: Corporate Trust Department
Dear Sirs:
At the request and on the instructions of our customer, South Jersey
Process Technology, Inc., a New Jersey corporation (the "Company"), we hereby
establish in your favor, as Trustee under the Trust Indenture, dated as of
December 1, 1984 (the "Indenture") from the City of Salem Municipal Port
Authority (the "Authority") to you pursuant to which $2,500,000 in aggregate
principal amount of the Authority's Port Development Revenue Bonds (South Jersey
Process Technology, Inc. Project) Series of 1984 (the "Bonds") are being issued,
this Irrevocable Letter of Credit in the amount of $2,625,000 (hereinafter, as;
reduced from time to time in accordance with the provisions hereof, the "Stated
Amount") of which an amount not exceeding $2,500,000 (as reduced from time to
time in accordance with the terms hereof, the "Principal Component") may be
drawn upon with respect to payment of the unpaid principal amount or the portion
of Purchase Price corresponding to principal of the Bonds, and an amount not
exceeding $125,000 (as reduced from time to time in accordance with the terms
hereof, the "Interest Component") may be drawn upon with respect to payment of
interest accrued or the portion of Purchase Price corresponding to interest
accrued on the Bonds on or prior to their stated maturity date, effective
immediately and expiring on December 15, 1994 unless terminated earlier in ac-
<PAGE> 28
Annex I
page 2
cordance with the Provisions hereof or unless otherwise extended. All drawings
under this Letter of Credit will be paid with our own funds.
Funds under this Letter of Credit will be made available to you against
receipt by us of the following items at the time required below: (A) if the
drawing is being made with respect to payment of the portion of the Purchase
Price of Bonds delivered to the Tender Agent (as defined in the Indenture)
pursuant to Section 3.01, 3.02 or 3.06 of the Indenture corresponding to the
principal thereof (an "A Drawing"), (i) receipt by us of Bonds ("Pledged Bonds")
in an aggregate outstanding principal amount equal to the total amount specified
in your certificate referred to in clause (iii) below, (ii) receipt by us of any
and all due-bills for interest due on the next succeeding interest payment date
delivered pursuant to Section 3.06 of the Indenture in respect of such Pledged
Bonds and (iii) receipt by us of your written certificate in the form of Exhibit
A attached hereto appropriately completed and signed by an Authorized Officer;
(B) if the drawing is being made with respect to principal of the Bonds (a "B
Drawing"), receipt by us of your written certificate in the form of Exhibit B
attached hereto appropriately completed and signed by an Authorized officer; and
(C) if the drawing is being made with respect to the payment of interest, or the
portion of Purchase Price corresponding to interest, on the Bonds (a "C
Drawing"), receipt by us of your written certificate in the form of Exhibit C
attached hereto appropriately completed and signed by an Authorized Officer.
Such certificate(s), Pledged Bonds and due-bills shall be (x) presented at our
office located at One Bankers Trust Plaza, New York, New York, Attention: Letter
of Credit Division or at any other office in the City and State of New York
which may be designated by us by written notice delivered to you, or (y) in the
case of such certificate(s), sent to us by tested telex (Telex No. 126600,
126699, 126642, or 126609).
If a drawing is made by you hereunder at or prior to 11:00 A.M., New York
time, on a business day, and provided that such drawing and the documents and
other items presented in connection therewith conform to the terms and
conditions hereof, payment shall be made to you, or to your designee, of the
amount specified, in immediately available funds, not later than 3:00 P.M., New
York time, on the same business day or not later than 12:00 Noon, New York time,
on such later business day as you may specify. If requested by you, payment
under this Letter of Credit will be made by
<PAGE> 29
Annex I
page 3
deposit of immediately available funds into a designated account that you
maintain with us. If a demand for payment made by you hereunder does not, in any
instance, conform to the terms and conditions of this Letter of Credit, we shall
give you prompt notice that the demand for payment was not effected in
accordance with the terms and conditions of this Letter of Credit, stating the
reasons therefor and that we will upon your instructions hold any documents at
your disposal or return the same to you. Upon being notified that the demand for
payment was not effected in conformity with this Letter of Credit, you may
attempt to correct any such non-conforming demand for payment to the extent that
you are entitled to do so.
Demands for payment hereunder honored by us shall not, in the aggregate,
exceed the Stated Amount, as the Stated Amount may have been reinstated by us as
provided in the next paragraph. Subject to the preceding sentence, each "A
Drawing" and each "B Drawing" honored by us hereunder shall pro tanto reduce the
Principal Component, and each "C Draw- ing" honored by us hereunder shall pro
tanto reduce the Interest Component, and any such reduction shall result in a
corresponding reduction in the Stated Amount, it being understood that after the
effectiveness of any such reduction you shall no longer have any right to make a
drawing hereunder in respect of the amount of such principal and/or interest on
the Bonds or the payment of Purchase Price corresponding thereto causing or
corresponding to such reduction.
Upon release by us of any Pledged Bonds, the Principal Component shall be
reinstated automatically by an amount equal to the principal amount of such
Pledged Bonds. In addition, (i) if you shall not have received, within ten
business days after any payment in respect of a "C Drawing", notice from us that
an Event of Default under the Letter of Credit Agreement dated as of December 1,
1984 between the Company and us has occurred and is continuing, the Interest
Component shall be reinstated automatically, as of the close of business on such
tenth business day (unless the Interest Component previously has been reinstated
with respect to such "C Drawing"), by the amount of such "C Drawing" and (ii)
upon the release by us of any Pledged Bonds, the Interest Component shall be
reinstated automatically by the amount of the "C Drawing" made to pay the
portion of the Purchase Price corresponding to interest on such Pledged Bonds
(unless the Interest Component previously has been reinstated with respect to
such "C Drawing"); provided,
<PAGE> 30
Annex I
page 4
however, that in no event shall the Interest Component be reinstated to an
amount in excess of 120 days' interest (computed at the rate of 15% per annum
and on the basis of a 360-day year, actual days elapsed, notwithstanding the
actual rate borne from time to time by the Bonds) on the sum of the then
applicable Principal Component plus the aggregate principal amount of any
Pledged Bonds at the time of any such reinstatement.
Only you or your successor as Trustee may make a drawing under this Letter
of Credit. Upon the payment to you, to your designee or to your account of the
amount demanded hereunder, we shall be fully discharged on our obligation under
this Letter of Credit with respect to such 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 to you or any other person who may have
made to you or makes to you a demand for payment of principal of, Purchase Price
of, or interest on, any Bond. 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 applies only to the payment of principal or the
portion of Purchase Price of the Bonds corresponding to principal, and up to 120
days' interest (computed as aforesaid) accruing on the Bonds on or prior to the
expiration of this Letter of Credit and does not apply to any interest that may
accrue thereon or any principal or premium which may be payable with respect
thereto after such date,
Upon the earliest of (i) the making by you of the final drawing available
to be made hereunder; (ii) our receipt of a certificate signed by an Authorized
Officer stating that: "(a) the conditions precedent to the acceptance of a
Substitute Letter of Credit (as defined in the Indenture) have been satisfied,
(b) the Trustee has accepted the Substitute Letter of Credit and (c) on the
effective date of the Substitute Letter of Credit and after receipt by Bankers
Trust Company of this certificate, Bankers Trust Company Irrevocable Letter of
Credit No. V 65986-S shall terminate"; (iii) our receipt of a certificate signed
by an Authorized Officer stating that no Bonds remain Outstanding (as defined in
the Indenture); (iv) fifteen days after the Optional Conversion Date (as defined
in the Indenture); and (v) the stated
<PAGE> 31
Annex I
page 5
expiration date hereof, this Letter of Credit shall automatically terminate and
be delivered to us for cancellation.
Communications with respect to this Letter of Credit shall be in writing
and shall be addressed to us at One Bankers Trust Plaza, New York, New York
10015, Attention: Letter of Credit Division, specifically referring thereon to
this Letter of Credit by number, with a copy to Bankers Trust Company, 280 Park
Avenue, Floor 15E, New York, New York 10015, Attention: European Department,
Europe/U.K. Group.
This Letter of Credit may not be transferred or assigned, either in whole
or in part except to a successor trustee properly appointed and qualified
pursuant to Article XI of the Indenture. We agree to issue a substitute letter
of credit to any such successor trustee (and to successively replace any such
substitute letter of credit) upon the return to us for cancellation of the
original of the letter of credit to be replaced, accompanied by a request
relating to such letter of credit, which (i) shall be in the form of Exhibit D
attached hereto with the blanks appropriately completed, (ii) shall be signed by
an Authorized Officer, (iii) shall specify where indicated therein the same
letter of credit number as the number of the letter of credit to be replaced,
and (iv) shall state the name and address of the successor trustee. Each
substitute letter of credit will be in substantially the form of this Letter of
Credit except for the date and letter of credit number.
As used herein (a) "Authorized officer" shall mean any of your Vice
Presidents, Assistant Vice Presidents, Trust officers or Assistant Trust
Officers; (b) "Purchase Price" shall mean the principal amount of any Bonds to
be purchased in accordance with Section 3.01 or 3.02 of the Indenture and shall
mean the principal amount of, together with accrued interest on, any Bonds to be
purchased in accordance with Section 3.06 of the Indenture; and (c) "business
day" shall mean any day on which we are open for the purpose of conducting a
commercial banking business.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the certificate(s)
referred to herein; and any such reference
<PAGE> 32
Annex I
page 6
shall not be deemed to incorporate herein. by reference any document, instrument
or agreement except for such certificate(s) .
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits, 1983 Revision, ICC Publication No. 400 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be a contract made under the
laws of the State of New York and shall, as to matters not governed by the
Uniform Customs, be governed by and construed in accordance with the laws of
said State.
Very truly yours,
BANKERS TRUST COMPANY
By___________________________
Title:
<PAGE> 33
EXHIBIT A
CERTIFICATE FOR "A DRAWING"
[Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
- ------------------------------------------------
The undersigned, a duly Authorized Officer of The Farmers and Merchants
National Bank of Bridgeton (the "Trustee"), hereby certifies to Bankers Trust
Company (the "Bank") that:
(1) The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
(2) The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $__________ with respect to the payment
of the portion of the Purchase Price of the Bonds corresponding to the
principal amount thereof, which Bonds are to be purchased pursuant to
Section [3.01] (3.02] [3.06] of the Indenture.
(3) The amount demanded hereby does not exceed the amount available
on the date hereof to be drawn under the above-referenced Letter of Credit
in respect of the portion of the Purchase Price of Bonds corresponding to
the principal amount thereof.
(4) The amount demanded hereby does not include any amount in
respect of the purchase of any Pledged 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 principal amount owing on account of the purchase of 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 other funds held by the undersigned.
<PAGE> 34
Exhibit A
page 2
As used herein, the terms "Authorized Officer". "Indenture" , "Bonds" ,
"Pledged Bonds" and "Purchase Price" shall have the respective meanings assigned
to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _____, 19__.
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON,
as Trustee
By_____________________
Title:
<PAGE> 35
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
[Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
- ------------------------------------------------
The undersigned, a duly Authorized Officer of The Farmers and Merchants
National Bank of Bridgeton (the "Trustee"), hereby certifies to Bankers Trust
Company (the "Bank") that:
(1) The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
(2) The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $________________ with respect to the
payment of principal of the Bonds, which amount has, or will, within five
business days, become due and payable pursuant to the Indenture, upon
maturity or as a result of acceleration or redemption of the Bonds.
(3) The amount demanded hereby does not include any amount in
respect of the principal amount of any Pledged Bonds.
(4) The amount demanded hereby, together with the aggregate of all
prior payments made pursuant to "B Drawings" under the above-referenced
Letter of Credit, does not exceed $2,500,000.
(5) The amount demanded hereby does not exceed the amount available
on the date hereof to be drawn under the above-referenced Letter of Credit
in respect of the principal of the Bonds.
(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 principal
<PAGE> 36
Exhibit B
page 2
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 other
funds held by the undersigned.
As used herein, the terms "Authorized Officer", "Indenture", "Bonds"
"business day", "B Drawing" and "Pledged Bonds", shall have the respective
meanings assigned to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of _____, 19__.
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON,
as Trustee
By________________________
Title:
<PAGE> 37
EXHIBIT C
CERTIFICATE FOR "C DRAWING"
[Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
- ------------------------------------------------
The undersigned, a duly Authorized Officer of The Farmers and Merchants
National Bank of Bridgeton (the "Trustee"), hereby certifies to Bankers Trust
Company (the "Bank") that:
(1) The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
(2) The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $___________ with respect to payment of
[the portion of the Purchase Price of $______________ in principal amount
of the Bonds corresponding to the accrued interest thereon, which Bonds
are to be purchased pursuant to Section 3.06 of the Indenture] [accrued
interest on the Bonds, which amount has, or will, within five business
days, become due and payable pursuant to the Indenture].
(3) The amount demanded hereby does not exceed the amount available
on the date hereof to be drawn under the above-referenced Letter of Credit
in respect of interest on the Bonds.
(4) The amount demanded hereby does not include any amount in
respect of the interest on any Pledged 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 [interest owing on account of the Bonds pursuant to the Indenture]
[portion of the Purchase Price of Bonds pursuant to Section 3.06 of the
Indenture corresponding to accrued interest thereon], (b) no portion of
said amount shall be applied by the undersigned for any other pur-
<PAGE> 38
Exhibit C
page 2
pose and (c) no portion of said amount shall be commingled with other
funds held by the undersigned.
As used herein, the terms "Authorized Officer", "Indenture", "Bonds",
"business day", "Pledged Bonds" and "Purchase Price" shall have the respective
meanings assigned to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _________, 19__.
___________________________
as Trustee
By_________________________
Title:
<PAGE> 39
EXHIBIT D
INSTRUCTION TO ISSUE SUBSTITUTE LETTER OF CREDIT
(Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
- ------------------------------------------------
Gentlemen:
Reference is made to (i) the above-referenced letter of credit (the "Old
Letter of Credit") and (ii) the Indenture of Trust, dated as of December 1, 1988
(the "Indenture"), between the City of Salem Municipal Port Authority and us.
[Name and address of successor trustee] (the "Successor Trustee") has been
appointed successor trustee under the Indenture. You are hereby requested to
issue, in accordance with the terms of the Old Letter of Credit, a new letter of
credit to the Successor Trustee having the same terms and providing for the same
Stated Amount as the Old Letter of Credit.
We submit herewith for cancellation the original of the Old Letter of
Credit.
The individual signing below on our behalf hereby represents that he or
she is duly authorized to so sign on our behalf.
Very truly yours,
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON
By___________________________
Title:_________________
<PAGE> 40
ANNEX II
PLEDGE AND SECURITY AGREEMENT, dated as of December 1, 1984, made by South
Jersey Process Technology, Inc., a corporation organized and existing under the
laws of the State of New Jersey (the "Pledgor"), to Bankers Trust Company (the
"Bank") pursuant to the Letter of Credit Agreement dated as of December 1, 1984,
between the Pledgor and the Bank (hereinafter, as the same may from time to time
be amended or supplemented, called the "Letter of Credit Agreement").
W I T N E S S E T H:
WHEREAS, the City of Salem Municipal Port Authority (the "Issuer") has
agreed with the Pledgor to issue its Port Development Revenue Bonds (South
Jersey Process Technology, Inc. Project) Series of 1984 (the "Bonds") under the
Trust Indenture dated as of December 1, 1984 (the "Indenture"), from the Issuer
to The Farmers and Merchants National Bank of Bridgeton, as trustee (the
"Trustee");
WHEREAS, the Indenture provides for the purchase of Bonds under certain
circumstances as set forth in Section 3.01, 3.02 and 3.06 of the Indenture (the
"Purchased Bonds") from the holders thereof;
WHEREAS, in connection with the issuance of the Bonds the Pledgor has
entered into the Letter of Credit Agreement in order to cause the Bank to issue
the Letter of Credit thereunder which may be used, inter alia, to pay the
Purchase Price of the Purchased Bonds (to the extent moneys drawn under the
Letter of Credit are used to purchase Purchased Bonds, such Purchased Bonds are
hereinafter referred to as "Pledged Bonds"); and
WHEREAS, it is a condition precedent to the obligation of the Bank to
enter into the Letter of Credit Agreement that the Pledgor shall have executed
and delivered this Pledge Agreement to the Bank;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to enter into the Letter of Credit Agreement and issue the Letter of
Credit thereunder and for other good and valuable consideration, receipt of
which is hereby acknowledged, the Pledgor hereby agrees with the Bank as
follows:
<PAGE> 41
Annex II
page 2
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Letter of Credit Agreement shall have such defined meanings when used herein.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates, transfers,
and delivers to the Bank all its right, title and interest to the Pledged Bonds
as the same may be from time to time delivered to the Tender Agent by the
holders thereof and hereby grants to the Bank a first lien on, and security
interest in, its right, title and interest in and to the Pledged Bonds, the
interest thereon and all proceeds thereof, as collateral security for the prompt
and complete payment when due of all amounts due in respect of the obligations
of the Pledgor set forth in Paragraph 2A(i) of the Letter of Credit Agreement
and interest on such amounts as set forth in Paragraph 2A(iii) of the Letter of
Credit Agreement (all the foregoing being hereinafter called the "Obligations"),
3. Payments on the Bonds. If, while this Pledge Agreement is in effect,
Pledgor shall become entitled to receive or shall receive any principal or
interest payment in respect of the Pledged Bonds, the Pledgor agrees to accept
the same as the Bank's agent and to hold the same in trust on behalf of the Bank
and to deliver the same forth with to the Bank. All sums of money so paid in
respect of the Pledged Bonds which are received by the Pledgor and paid to the
Bank shall be credited against the obligations of the Pledgor to the Bank in the
manner set forth in Paragraph 2D of the Letter of Credit Agreement. So long as
no Default or Event of Default has occurred and is continuing, any amounts
received by the Bank in respect of the stated interest on any Pledged Bonds in
excess of the amounts then owing to the Bank pursuant to Paragraph 2A(i)(2) of
the Letter of Credit Agreement, shall, upon request of the Pledgor, be remitted
to the Pledgor.
4. Collateral. All property at any time pledged with the Bank hereunder
(whether described herein or not) and all income therefrom and proceeds thereof,
are herein collectively sometimes called the "Collateral".
5. Release of Pledged Bonds. If the Pledgor makes or causes to be made to
the Bank a prepayment in respect of its reimbursement obligation under Paragraph
2A(i) of the Letter of Credit Agreement pursuant to clause (i) of Paragraph 2B
thereof or such a prepayment is made on behalf of the Pledgor pursuant to clause
(ii) of Paragraph 2B thereof, the Bank
<PAGE> 42
Annex II
page 4
equity of redemption in the Pledgor, 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 Pledgor
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 to be paid by any provision of law, including, without
limitation, Section 9-504(l)(c) of the Uniform Commercial Code, need the Bank
account for the surplus, if any, to the Pledgor. The Pledgor 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. No notification need be given to the Pledgor 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 Pledge 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 New York. The Pledgor further agrees to waive and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
Uniform Commercial code and the Pledgor shall be liable for the deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay all amounts to which the Bank is entitled, and the fees of any attorneys
employed by the Bank to collect such deficiency.
8. Representations, Warranties and Covenants of the Pledgor. The Pledgor
represents and warrants that: (a) on the date of delivery to the Bank of any
Pledged Bonds described herein, neither the Issuer, the Remarketing Agent (as
defined in the Indenture), the Tender Agent, nor the Trustee will have any
right, title or interest in and to the Pledged Bonds; (b) it has, and on the
date of delivery to the Bank of any Pledged Bonds will have, full power,
authority and legal right to pledge all of its right, title and interest in and
to the Pledged Bonds pursuant to this Pledge
<PAGE> 43
Annex II
page 5
Agreement; (c) this Pledge Agreement has been duly authorized, executed and
delivered by the Pledgor and constitutes a legal, valid and binding obligation
of the Pledgor enforceable in accordance with its terms; (d) no consent of any
other party (including, without limitation, creditors of the Pledgor) and no
consent, license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by the Pledgor in
connection with the execution, delivery or performance of this Pledge Agreement;
(e) the execution, delivery and performance of this Pledge Agreement will not
violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which the Pledgor is a party or
which purports to be binding upon the Pledgor or upon its assets and will not
result in the creation or imposition of any lien, charge or encumbrance on or
security interest in any of the assets of the Pledgor except as contemplated by
this Pledge Agreement; and (f) the pledge, assignment and delivery of such
Pledged Bonds pursuant to this Pledge Agreement will create a valid first lien
on and a first perfected security interest in, all right, title or interest of
the Pledgor in or to such Pledged Bonds, 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 Pledgor which would include
the Pledged Bonds. The Pledgor covenants and agrees that it will defend the
Bank's right, title and security interest in and to the Pledged Bonds and the
proceeds thereof against the claims and demands of all persons whomsoever; and
covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter pledged to the Bank as Collateral hereunder
and will likewise defend the Bank's right thereto and security interest therein.
9. No Disposition, etc. Without the prior written consent of the Bank the
Pledgor agrees that it will not sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, nor will it
create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any
of the Collateral, or any interest therein, or any proceeds thereof,
<PAGE> 44
Annex II
page 6
except for the lien and security interest provided for by this Pledge Agreement
and sale of the Pledged Bonds pursuant to Section 3.09(b) of the Indenture.
10. Further Assurances. The Pledgor agrees that at any time and from time
to time upon the written request of the Bank, the Pledgor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Pledge Agreement.
11. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. No Waiver; Remedies Cumulative. The Bank shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by the Bank,
and then only to the extent therein set forth. A waiver by the Bank of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Bank would otherwise have on any future occasion. No
failure to exercise nor any delay in exercising on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by the Operative Documents or by law.
13. Waivers, Amendments; Applicable Law. None of the terms or provisions
of this Pledge Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the Bank. This Pledge Agreement and
all obligations of the Pledgor hereunder shall be binding upon the successors
and assigns of the Pledgor, and shall, together with the rights and remedies of
the Bank hereunder, inure to the benefit of the Bank and its successors and
assigns. This Pledge Agreement shall be governed
<PAGE> 45
Annex II
page 7
by, and be construed and interpreted in accordance with, the laws of the State
of New York.
IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be
duly executed and delivered on the day and year first above written.
SOUTH JERSEY PROCESS
TECHNOLOGY, INC.
By__________________________
Title:
<PAGE> 1
EXHIBIT 10.51
PLEDGE AND SECURITY AGREEMENT, dated as of December 1, 1984, made by South
Jersey Process Technology, Inc., a corporation organized and existing under the
laws of the State of New Jersey (the "Pledgor"), to Bankers Trust Company (the
"Bank") pursuant to the Letter of Credit Agreement dated as of December 1, 1984,
between the Pledgor and the Bank (hereinafter, as the same may from time to time
be amended or supplemented, called the "Letter of Credit Agreement").
W I T N E S S E T H:
WHEREAS, the City of Salem Municipal Port Authority (the "Issuer") has
agreed with the Pledgor to issue its Port Development Revenue Bonds (South
Jersey Process Technology, Inc. Project) Series of 1984 (the "Bonds") under the
Trust indenture dated as of December 1, 1984 (the "Indenture"), from the Issuer
to The Farmers and Merchants National Bank of Bridgeton, as trustee (the
"Trustee");
WHEREAS, the Indenture provides for the purchase of Bonds under certain
circumstances as set forth in Section 3.01, 3.02 and 3.06 of the Indenture (the
"Purchased Bonds") from the holders thereof;
WHEREAS, in connection with the issuance of the Bonds the Pledgor has
entered into the Letter of Credit Agreement in order to cause the Bank to issue
the Letter of Credit thereunder which may be used, inter alia, to pay the
Purchase Price of the Purchased Bonds (to the extent moneys drawn under the
Letter of Credit are used to purchase Purchased Bonds, such Purchased Bonds are
hereinafter referred to as "Pledged Bonds"); and
WHEREAS, it is a condition precedent to the obligation of the Bank to
enter into the Letter of Credit Agreement that the Pledgor shall have executed
and delivered this Pledge Agreement to the Bank;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to enter into the Letter of Credit Agreement and issue the Letter of
Credit thereunder and for other good and valuable consideration, receipt of
which is hereby acknowledged, the Pledgor hereby agrees with the Bank as
follows:
<PAGE> 2
page 2
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Letter of Credit Agreement shall have such defined meanings when used herein.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates, transfers,
and delivers to the Bank all its right, title and interest to the Pledged Bonds
as the same may be from time to time delivered to the Tender Agent by the
holders thereof and hereby grants to the Bank a first lien on, and security
interest in, its right, title and interest in and to the Pledged Bonds, the
interest thereon and all proceeds thereof, as collateral security for the prompt
and complete payment when due of all amounts due in respect of the obligations
of the Pledgor set forth in Paragraph 2A(i) of the Letter of Credit Agreement
and interest on such amounts as set forth in Paragraph 2A(iii) of the Letter of
Credit Agreement (all the foregoing being hereinafter called the "Obligations").
3. Payments on the Bonds. If, while this Pledge Agreement is in effect,
the Pledgor shall become entitled to receive or shall receive any principal or
interest payment in respect of the Pledged Bonds, the Pledgor agrees to accept
the same as the Bank's agent and to hold the same in trust on behalf of the Bank
and to deliver the same forth with to the Bank. All sums of money so paid in
respect of the Pledged Bonds which are received by the Pledgor and paid to the
Bank shall be credited against the obligations of the Pledgor to the Bank in the
manner set forth in Paragraph 2D of the Letter of Credit Agreement. So long as
no Default or Event of Default has occurred and is continuing, any amounts
received by the Bank; in respect of the stated interest on any Pledged Bonds in
excess of the amounts then owing to the Bank pursuant to Paragraph 2A(i)(2) of
the Letter of Credit Agreement, shall, upon request of the Pledgor, be remitted
to the Pledgor.
4. Collateral. All property at any time pledged with the Bank hereunder
(whether described herein or not) and all income therefrom and proceeds thereof,
are herein collectively sometimes called the "Collateral".
5. Release of Pledged Bonds. If the Pledgor makes or causes to be made to
the Bank a prepayment in respect of its reimbursement obligation under Paragraph
2A(i) of the Letter of Credit Agreement pursuant to clause (i) of Paragraph 2B
thereof or such a repayment is made on behalf of the Pledgor pursuant to clause
(ii) of Paragraph 2B thereof, the Bank
<PAGE> 3
page 3
agrees to release from the lien of this Pledge Agreement and deliver to the
Pledgor or the Tender Agent for resale in accordance with Section 3.09 of the
Indenture, as the case may be, Pledged Bonds in a principal amount equal to the
amount of the prepayment so made or to the principal amount of Pledged Bonds so
purchased. Notwithstanding the foregoing, no prepayment of amounts owing to the
Bank pursuant to Paragraph 2A(i) may be made, and no Pledged Bonds shall be
released, during the period commencing two Business Days prior to an interest
payment date with respect to the Bonds and ending at the close of business on
such interest payment date,
6 Rights of the Bank. The Bank shall not be liable for failure to collect
or realize upon the Obligations or any collateral security or guarantee
therefor, or any part thereof, or for any delay in so doing nor shall it be
under any obligation- to take any action whatsoever with regard thereto. If an
Event of Default has occurred and is continuing, the Bank may thereafter,
without notice, exercise all rights, privileges or options pertaining to any
Pledged Bonds as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but the Bank shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
7. Remedies. In the event that any portion of the obligations has been
declared due and payable pursuant to the Letter of Credit Agreement, 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 Pledgor 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 to 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
<PAGE> 4
page 4
equity of redemption in the Pledgor, 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 Pledgor
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 to be paid by any provision of law, including, without
limitation, Section 9-504(l)(c) of the Uniform Commercial Code, need the Bank
account for the surplus, if any, to the Pledgor. The Pledgor 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. No notification need be given to the Pledgor 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 Pledge 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 New York. The Pledgor further agrees to waive and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
Uniform Commercial Code and the Pledgor shall be liable for the deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay all amounts to which the Bank is entitled, and the fees of any attorneys
employed by the Bank to collect such deficiency.
8. Representations, Warranties and Covenants of the Pledgor. The Pledgor
represents and warrants that: (a) on the date of delivery to the Bank of any
Pledged Bonds described herein, neither the Issuer, the Remarketing Agent (as
defined in the Indenture), the Tender Agent, nor the Trustee will have any
right, title or interest in and to the Pledged Bonds; (b) it has, and on the
date of delivery to the Bank of any Pledged Bonds will have, full power,
authority and legal right to pledge all of its right, title and interest in and
to the Pledged Bonds pursuant to this Pledge
<PAGE> 5
page 5
Agreement; (c) this Pledge Agreement has been duly authorized, executed and
delivered by the Pledgor and constitutes a legal, valid and binding obligation
of the Pledgor enforceable in accordance with its terms; (d) no consent of any
other party (including, without limitation, creditors of the Pledgor) and no
consent, license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority, domestic or foreign, is required to be obtained by the Pledgor in
connection with the execution, delivery or performance of this Pledge Agreement;
(e) the execution, delivery and performance of this Pledge Agreement will not
violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of any mortgage, indenture, lease, contract,
or other agreement, instrument or undertaking to which the Pledgor is a party or
which purports to be binding upon the Pledgor or upon its assets and will not
result in the creation or imposition of any lien, charge or encumbrance on or
security interest in any of the assets of the Pledgor except as contemplated by
this Agreement; and (f) the pledge, assignment and del [ word unreadable] of
such Pledged Bonds pursuant to this Pledge Agreement will create a valid first
lien on and a first perfected security interest in, all right, title or interest
of the Pledgor in or to such Pledged Bonds, 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 Pledgor which would include
the Pledged Bonds. The Pledgor covenants and agrees that it will defend the
Bank's right, title and security interest in and to the Pledged Bonds and the
proceeds is thereof against the claims and demands of all persons whomsoever;
and covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter pledged to the Bank as Collateral hereunder
and will likewise defend the Bank's right thereto and security interest therein.
9. No Disposition, etc. Without the prior written consent of the Bank, the
Pledgor agrees that it will not sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, nor will it
create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security charge, option or any other encumbrance with respect to any of the
Collateral, or any interest therein, or any proceeds thereof,
<PAGE> 6
page 6
except for the lien and security interest provided for by this Pledge Agreement
and sale of the Pledged Bonds pursuant to Section 3.09(b) of the Indenture.
l0. Further Assurances. The Pledgor agrees that at any time and from time
to time upon the written request of the Bank, the Pledgor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Pledge Agreement.
11. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. No Waiver; Remedies Cumulative. The Bank shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by the Bank,
and then only to the extent therein set forth. A waiver by the Bank of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Bank would otherwise have on any future occasion. No
failure to exercise nor any delay in exercising on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by the operative Documents or by law.
13. Waivers, Amendments; Applicable Law. None of the terms or provisions
of this Pledge Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by the Bank. This Pledge Agreement and
all obligations of the Pledgor hereunder shall be binding upon the successors
and assigns of the Pledgor, and shall, together with the rights and remedies of
the Bank hereunder, inure to the benefit of the Bank and its successors and
assigns. This Pledge Agreement shall be governed
<PAGE> 7
page 7
by, and be construed and interpreted in accordance with, the laws of the State
of New York.
IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be
duly executed and delivered on the day and year first above written.
SOUTH JERSEY PROCESS
TECHNOLOGY,INC.
By /s/ [SIG]
-------------------------
Title: President
<PAGE> 1
================================================================================
EXHIBIT 10.53
CITY OF SALEM MUNICIPAL PORT AUTHORITY
TO
THE FARMERS AND MERCHANTS NATIONAL BANK OF BRIDGETON,
AS TRUSTEE
------------------------------------------------------
TRUST INDENTURE
Dated as of December 1, 1984
-------------------------------------------------------
Securing Port Development Revenue Bonds, Series of 1984
(South Jersey Process Technology, Inc. Project)
DRINKER BIDDLE & REATH JOSEPH DINICOLA, ESQUIRE
1100 PNB Building Golf View at Hollywood
Broad and Chestnut Streets Carneys Point, NJ 08069
Philadelphia, PA 19107 Authority Solicitor
Bond Counsel
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
Number Title Number
------ ----- ------
<S> <C> <C>
Recitals ...............................................
Form of Notes ..........................................
1.01 Definitions ............................................ 4
2.01 Amounts and Terms of the Bonds ......................... 15
2.02 Interest on the Bonds .................................. 16
2.03 Disposition of Proceeds of the Bonds ................... 18
2.04 Closing Statement; Payment by Trustee .................. 18
2.05 Execution .............................................. 19
2.06 Authentication ......................................... 19
2.07 Forms of Bonds ......................................... 19
2.08 Registration and Transfered; Persons Treated as Owners . 20
2.09 Mutilated, Destroyed, Lost or Stolen Bonds ............. 21
2.10 Temporary Bonds ........................................ 22
2.11 Cancellation and Destruction of Surrendered Bonds ...... 22
3.01 Conversion of Interest Rate on Optional Conversion Date 23
3.02 Conversion of Interest Rate on Automatic Conversion Date 24
3.03 Exchange of Bonds after Conversion Date ................ 25
3.04 Condition to Conversion ................................ 25
3.05 Additional Notices ..................................... 25
3.06 Demand Purchase Option ................................. 25
3.07 Funds for Purchase of Bonds ............................ 26
3.08 Delivery of Purchased Bonds ............................ 26
3.09 Delivery of Proceeds of Sale of Purchased Bonds ........ 27
3.10 Duties of Trustee and Tender Agent with Respect
to Purchase of Bonds ................................. 27
4.01 Covenant to Complete Project in Conformity to Plans
and Specifications; Changes .......................... 29
4.02 Compliance with Laws, etc .............................. 29
4.03 Performance by Authority under Construction Contracts .. 29
4.04 Builder's Risk, Liability, and Workmen's
Compensation Insurance ............................... 29
5.01 Establishment of Construction Fund ..................... 31
5.02 Payments from Construction Fund ........................ 31
5.03 Payment to Relate to Underlying Obligations ............ 32
5.04 Procedure Upon Completion of Project ................... 32
5.05 Use of Money in Construction Fund Upon Default ......... 32
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Section Page
Number Title Number
------ ----- ------
<S> <C> <C>
6.01 Rentals, etc. to be Sufficient .......................... 33
6.02 Pledged Revenues to Be Paid Over to Trustee ............. 33
6.03 Bond Fund ............................................... 34
6.04 Custody of Separate Trust Funds ......................... 34
6.05 Sinking Fund Account .................................... 35
6.06 Moneys To Be Held for All Owners of Bonds, with
Certain Exceptions .................................... 35
6.07 Nonpresentment of Bonds ................................. 35
6.08 Repayment to the Bank and Company from
Bond Fund or Construction Fund ........................ 36
6.09 Letter of Credit ........................................ 36
7.01 Deposits and Security Therefor .......................... 37
7.02 Investment or Deposit of Funds .......................... 37
7.03 Valuation of Funds ...................................... 38
8.01 Extraordinary Redemption ................................ 39
8.02 Optional Redemption by the Company ...................... 39
8.03 Determination of Taxability ............................. 40
8.04 Mandatory Partial Redemption ............................ 41
8.05 Notice of Redemption .................................... 42
8.06 Redemption Payments ..................................... 42
8.07 Cancellation ............................................ 42
8.08 Partial Redemption of Bonds ............................. 42
9.01 Payment of Principal and Interest on Bonds .............. 44
9.02 Corporate Existence and Maintenance of Project Facilities 44
9.03 Subleasing, etc. of Facilities .......................... 44
9.04 Enforcement, Execution and Amendment of Sublease and
Other Contracts; Notice of Default .................... 44
9.05 Insurance Requirements .................................. 45
9.06 Annual Certificate Regarding Insurance .................. 45
9.07 Sale, Lease or Encumbrance of Premises
Prohibited; Exceptions ................................ 47
9.08 Payment of Taxes; Discharge of Liens .................... 47
9.09 Extension of Time for Payment of
Interest, etc. Prohibited ............................. 47
9.10 Employment of an Architect .............................. 47
9.11 Employment of Certified Public Accountant ............... 48
9.12 Annual Budget and Statements ............................ 48
9.13 Financing Statements and Other Action to Project
Security Interests .................................... 48
9.14 Further Assurances; Additional Revenues ................. 49
9.15 Investments to Comply with Internal Revenue Code ........ 49
10.01 Events of Default Defined ............................... 50
10.02 Acceleration ............................................ 51
10.03 Entry by Trustee ........................................ 51
10.04 Legal Proceedings by Trustee ............................ 52
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
Number Title Number
------ ----- ------
<S> <C> <C>
10.05 Discontinuance of Proceedings by Trustee ................ 52
10.06 Owners of Bonds May Direct Proceedings .................. 52
10.07 Limitations on Actions by Owners of Bonds ............... 53
10.08 Trustee May Enforce Rights Without
Possession of Bonds ................................... 53
10.09 Remedies Not Exclusive .................................. 53
10.10 Delays and Omissions Not to Impair Rights ............... 53
10.11 Application of Moneys in Event of Default ............... 53
10.12 Trustee's Right to Receiver; Compliance with Act ........ 54
10.13 Waivers of Default ...................................... 54
10.14 Trustee and Owners of Bonds Entitled to
all Remedies under Act ................................ 55
11.01 Acceptance of Trust ..................................... 56
11.02 No Responsibilities for Recitals, etc ................... 56
11.03 Trustee May Act Through Agents; Answerable Only for
Willful Misconduct or Negligence ...................... 56
11.04 Compensation and Indemnity .............................. 56
11.05 No Duty as to Insurance ................................. 57
11.06 Notice of Default; Right to Investigate ................. 57
11.07 Reliance on Requisitions, etc ........................... 57
11.08 Trustee May Deal in Bonds ............................... 57
11.09 Allowance of Interest ................................... 58
11.10 Construction of Ambiguous Provisions .................... 58
11.11 Intervention by the Trustee ............................. 58
11.12 Resignation of Trustee .................................. 58
11.13 Removal of Trustee ...................................... 58
11.14 Appointment of Successor Trustee ........................ 58
11.15 Qualification of Successor .............................. 59
11.16 Instruments of Succession ............................... 59
11.17 Merger of Trustee ....................................... 59
11.18 Reports of Trustee ...................................... 59
11.19 Successor Tender Agent .................................. 59
11.20 Notice to Rating Agencies ............................... 61
12.01 Acts of Owners of Bonds; Evidence of Ownership .......... 62
13.0l Amendments and Supplements Without Consents of
the Owners of Bonds ................................... 63
13.02 Amendments with Consent of the Owners of Bonds .......... 63
13.03 Amendments to Sublease Without Consent of Owners of Bonds 64
13.04 Amendments to Agreement With Consent of Owners of Bonds . 64
13.05 Trustee Authorized to Join in Amendments
and Supplements; Reliance on Counsel .................. 64
14.01 Discharge of Indenture .................................. 66
14.02 Defeasance of Bonds ..................................... 66
15.01 No Recourse ............................................. 69
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
Number Title Number
------- ----- ------
<S> <C> <C>
15.02 No Recourse against State, County or
Authority, etc .............................. 69
15.03 No Rights Conferred on Others ................. 69
15.04 Illegal, etc. Provisions Disregarded .......... 69
15.05 Notice to Owners of Bonds ..................... 70
15.06 Notices ....................................... 70
15.07 Controlling Law ............................... 70
15.08 Successors and Assigns ........................ 71
15.09 Headings for Convenience Only ................. 71
15.10 Counterparts .................................. 71
15.11 Information Under Commercial Code ............. 71
15.12 Payments Due on Saturdays, Sundays and Holidays 71
15.13 Certain References Ineffective After Letter
of Credit Termination Date .................. 71
Testimonium ...................................
Signatures and Seals ..........................
Exhibit A .....................................
Exhibit B .....................................
Acknowledgments ............................... 73
</TABLE>
-iv-
<PAGE> 6
THIS INDENTURE, dated as of December 1, 1984 between CITY OF SALEM
MUNICIPAL PORT AUTHORITY (the "Authority"), a public body corporate and politic
organized and existing under the laws of the State of New Jersey, and THE
FARMERS AND MERCHANTS NATIONAL BANK OF BRIDGETON (the "Trustee"), a national
banking association organized and existing under the laws of the United States
of America, having its principal corporate trust office in Bridgeton, New
Jersey, as Trustee;
W I T N E S S E T H:
WHEREAS, the Authority is a public body corporate and politic
constituting a political subdivision of the State of New Jersey established as
an instrumentality exercising public and essential governmental functions under
the provisions of the New Jersey Municipal Port Authorities Law (N.J. Stat. Ann.
Sec 40:68A 29 et seg. (West)) (the "Act"); and
WHEREAS, the Authority is empowered pursuant to the Act to issue bonds
for the purpose of raising funds to pay the cost of any part of its port system;
and
WHEREAS, pursuant to the Act, and in order to obtain funds necessary to
pay the costs of the Project (hereinafter defined), the Authority has duly
adopted a resolution authorizing the execution and delivery of this Indenture
and the initial issuance of $2,500,000 principal amount of its Port Development
Revenue Bonds, Series of 1984 (South Jersey Process Technology, Inc. Project)
(the "Bonds"), to be issued and to bear interest as hereinafter set forth; and
WHEREAS, in furtherance of the purposes of the Act, the Authority
proposes to undertake a project (the "Project") consisting of, inter alia, the
application of the proceeds of the Bonds to the cost of (1) constructing,
improving and equipping a radiation processing system, with related facilities
(collectively, the "Project Facilities"), for the irradiation of agricultural
products prior to shipping thereof, to be situated on certain real estate leased
by the Authority from the City of Salem, more particularly described in Exhibit
A to the Sublease (hereinafter defined) (the "Premises"), and (2) the payment of
costs of issuance of the Bonds; and
WHEREAS, the Authority and South Jersey Process Technology, Inc. (the
"Company") have entered into a Sublease and Security Agreement dated as of
December 1, 1984 (the "Sublease"), pursuant to which the Authority will sublease
the Premises to the Company and under which the Company has agreed to construct,
or cause to be constructed, the Project Facilities on the Premises, and certain
rights of
<PAGE> 7
the Authority under said Sublease have been assigned to the Trustee for the
benefit of the Owners of the Bonds pursuant to an Assignment (the "Assignment");
and
WHEREAS, the execution and delivery of the Bonds and of this Indenture
have in all respects been duly authorized and all acts and things necessary to
make such Bonds, when executed by the Authority and authenticated by the
Trustee, valid and binding legal obligations of the Authority, and to make this
Indenture a valid and binding agreement, have been done;
NOW THEREFORE, THIS INDENTURE WITNESSETH, That to secure the Bonds
issued and outstanding under this Indenture, the payment of the principal
thereof, premium, if any, and interest thereon, the rights of the Owners of the
Bonds and the performance by the Authority of the covenants contained in the
Bonds and herein, the Authority does hereby sell, assign, transfer, set over and
pledge unto The Farmers and Merchants National Bank of Bridgeton, as Trustee,
its successors in the trust and its assigns forever, the following property
(collectively referred to herein as the "Trust Estate"): all of the right, title
and interest of the Authority in and to (i) the Sublease (except for the right
of the Authority to receive amounts payable to the Authority under Sections
4.01(b), 9.03 and 9.05 of the Sublease) and (ii) all moneys, investments and
deposits in the Funds created hereunder and the income and receipts derived
therefrom, subject to the terms hereof.
TO HAVE AND TO HOLD the same and any other revenues (including all
income and receipts earned on the Funds held by the Trustee hereunder except as
otherwise herein set forth), contracts or contract rights or other property of
any nature whatsoever which may, by delivery, assignment or otherwise, be
subject to the lien and security interest created by this Indenture.
IN TRUST NEVERTHELESS for the equal and ratable benefit and security of
all present and future Owners of the Bonds issued and to be issued under this
Indenture, except as otherwise provided in this Indenture, and for the
enforcement and payment of the Bonds when payable according to their true
meaning, tenor and effect, and to secure the performance of, and compliance with
the covenants and conditions of the Bonds and of the Indenture, without
preference, priority or distinction as to lien or otherwise, of any one Bond
over any other Bond, except in the case of funds held hereunder for the benefit
of particular Owners of Bonds, and for the benefit of the Bank to the extent
provided herein, so that each and every Bond issued and to be issued under this
Indenture, shall have the same right, lien and privilege under this Indenture
and so that the principal of and
-2-
<PAGE> 8
interest on all Bonds shall be equally and proportionately secured hereby,
except as aforesaid.
-3-
<PAGE> 9
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. In this Indenture and any indenture
supplemental hereto (except as otherwise expressly provided or unless the
context otherwise requires) terms used as defined terms in the recitals hereto
shall have the same meanings throughout this Indenture, and, in addition, the
following terms shall have the meanings specified below:
"Act" shall mean the New Jersey Municipal Port Authorities Law, N.J.
Stat. Ann. Sec 40:68A-29 et. seg., and all acts supplemental or amendatory
thereof.
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy
(or other commencement of a bankruptcy or similar proceeding) by or against the
Company or the Authority under any applicable bankruptcy, insolvency,
reorganization or similar law, now or hereafter in effect.
"Administrative Expenses" shall mean those reasonable expenses of the
Authority which are properly chargeable as administrative expenses under
generally accepted accounting principles and include, without limiting the
generality of the foregoing, the following: (a) fees and expenses of the
Trustee; (b) fees and expenses of the Tender Agent; and (c) fees and expenses of
the Authority which are reasonably necessary and fairly attributable to the
Project, including, without limiting the generality of the foregoing, fees and
expenses of the Authority's Counsel and other professional advisors.
"Architect" shall mean an architect, engineer or firm thereof or other
Person qualified to pass on questions relating to the construction and
maintenance of the Project who has been appointed by the Company and who is in
fact Independent.
"Authority" shall mean the City of Salem Municipal Port Authority.
"Automatic Conversion Date" shall mean the interest payment date
immediately preceding the Letter of Credit Termination Date.
"Available Moneys" means (a) with respect to any payment date occurring
during the term of the Letter of Credit, (i) moneys drawn under the Letter of
Credit, or (ii) moneys deposited into the Bond Fund pursuant to Section 6.03(a)
or 6.03(b) hereof or moneys deposited directly by the Company with the Trustee,
in any such case, which moneys
-4-
<PAGE> 10
have been on deposit in the Bond Fund for at least 123 days during and prior to
which no Act of Bankruptcy shall have occurred, or (iii) the proceeds of the
sale of refunding obligations, if, in the opinion of nationally recognized
counsel experienced in bankruptcy matters, the application of such moneys will
not constitute a voidable preference in the event of the occurrence of an Act of
Bankruptcy, or (iv) the proceeds from investment of moneys qualifying as
Available Moneys under clause (i), (ii), or (iii) above, and (b) with respect to
any payment date not occurring during the term of the Letter of Credit, any
moneys held by the Trustee and the proceeds from the investment thereof.
Notwithstanding; the foregoing, when used with respect to payment of any amounts
due in respect of any Pledged Bonds, the term "Available Moneys" shall mean any
moneys held by the Trustee and the proceeds from the investment thereof, except
for moneys drawn under the Letter of Credit.
"Bank" shall mean Bankers Trust Company, a banking corporation
organized and existing under the laws of the State of New York in its capacity
as issuer of the Letter of Credit, and any Substitute Bank.
"Bond" or "Bonds" shall mean the Port Development Revenue Bonds, Series
of 1984 (South Jersey Process Technology, Inc. Project) authenticated and
delivered under this Indenture.
"Bond Fund" means the fund created pursuant to Section 6.03 hereof.
"Business Day" means a day on which the Bank, the Trustee and banks
located in New York City are open for the purpose of conducting a commercial
banking business.
"Certified Public Accountant" shall mean a Person, who shall be
Independent, appointed by the Company, actively engaged in the business of
public accounting and duly certified as a certified public accountant under the
laws of New Jersey.
"Certified Resolution of the Authority" shall mean a copy of a
resolution certified by the Secretary or an Assistant Secretary of the
Authority, under its seal, to have been duly adopted by the Authority and to be
in full force and effect on the date of such certification.
"Certified Resolution of Company" shall mean a copy of a resolution of
the Board of Directors of the Company or a duly authorized committee thereof,
certified by the Secretary or an Assistant Secretary of the Company or other
officer serving in a similar capacity, under its corporate
-5-
<PAGE> 11
seal, to have been duly adopted and to be in full force and effect as of the
date of such certification.
"Code" means the Internal Revenue Code of 1954, as amended from time to
time.
"Company" shall mean South Jersey Process Technology, Inc., a New
Jersey Corporation, and any surviving, resulting, or transferee entity as
provided in the Sublease.
"Completion Date" shall mean the date of completion of the acquisition,
construction, improving, and equipping of the Project Facilities, as that date
shall be certified as provided in Section 3.07 of the Sublease.
"Construction Fund" shall mean the fund or funds so designated to be
established by the Trustee pursuant to Section 5.01 hereof.
"Conversion Date" shall mean the earlier to occur of either the
Optional Conversion Date or the Automatic Conversion Date.
"Conversion Option" means the option granted to the Company in Section
3.01 hereof pursuant to which the interest rate on the Bonds is converted from
the Floating Rate to the Fixed Rate as of the Optional Conversion Date.
"Cost" or "Costs", in connection with the Project, shall mean all
expenses which are properly chargeable thereto under generally accepted
accounting principles or which are incidental to the financing, acquisition, and
construction of such Project including without limiting the generality of the
foregoing:
(a) Amounts payable to contractors and costs incident to the
award of contracts;
(b) Costs of labor, facilities and services furnished by or
for the Company, or the Authority and their employees, or others,
materials and supplies purchased by the Company, or the Authority or
others, and permits and licenses obtained by the Company, the Authority
or others;
(c) Engineering, legal, accounting and other professional and
advisory fees;
(d) Premiums for contract bonds and insurance during
construction, and costs resulting from personal injuries and property
damage in the course of construction, and insurance against the same;
-6-
<PAGE> 12
(e) Interest during construction;
(f) Administrative Expenses of the Authority;
(g) Printing, engraving and other expenses of financing;
(h) Costs, fees and expenses in connection with the
acquisition of real and personal property or rights therein, including
premiums for title insurance;
(i) Costs of equipment purchased by the Authority or the
Company and necessary to the completion and proper operation of the
Project Facilities or property in question;
(j) Amounts required to repay temporary or bond anticipation
loans or advances from other funds of the Company made to finance the
costs of the Project;
(k) Amounts required to pay premiums for municipal bond
insurance, fees for financial rating services and fees for issuance of
bank letters of credit or similar banking arrangements;
(1) Moneys necessary to fund the Funds created hereunder; and
(m) The reimbursement to the Bank for any amounts drawn under
the Letter of Credit to pay interest on the Bonds prior to the
Completion Date.
Whenever Costs are required to be itemized, such itemization shall, to
the extent practicable, correspond with the items listed above. Whenever Costs
are to be paid hereunder, such payment may be made by way of reimbursement to
the Authority or others who have paid the same.
"Counsel" shall mean an attorney-at-law or law firm (who may be counsel
for the Company or for the Authority) satisfactory to the Trustee.
"Credit Agreement" shall mean the Letter of Credit Agreement dated as
of this date between the Company and Bankers Trust Company, and any amendments
and supplements thereto and the letter of credit agreement or reimbursement
agreement between the Company and any Substitute Bank, and any amendments and
supplements thereto.
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"Demand Purchase Option" shall mean the option granted to Owners of the
Bonds to require that their Bonds be purchased prior to the Conversion Date
pursuant to Section 3.06 hereof.
"Event of Default" shall mean any of the events described in Section
10.01 hereof.
"First Optional Redemption Date" shall mean the December 1 occurring in
the year which is a number of years after the Conversion Date equal to the
number of years between the December 1 immediately following the Conversion Date
(unless the Conversion Date is December 1, in which case from such December 1)
and December 1, 1999, multiplied by 1/2 and rounded up to the nearest whole
number.
"Fiscal Year" shall mean the period of twelve (12) months beginning
January 1 of each year.
"Fixed Rate" shall mean the interest rate in effect on the Bonds from
and after the Conversion Date, as said rate is determined in accordance with
Section 2.02(b) hereof.
"Floating Rate" shall mean the interest rate in effect on the Bonds
from the date of issuance of the Bonds until (but not including) the Conversion
Date, as said rate is determined in accordance with Section 2.02(b) hereof.
"Government Obligations" shall mean direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America.
"Indenture" shall mean this Indenture as amended or supplemented at the
time in question.
"Independent" shall mean with respect to the Certified Public
Accountant, the Insurance Consultant, the Architect and any Counsel, a Person
who is neither a member of the Company Board of Directors or the Authority, nor
an officer or employee of the Authority nor an officer or employee of the
Company, or which is not a partnership, corporation or association having a
partner, director, officer, member or substantial stockholder who is a member of
the Company Board of Directors or the Authority, an officer or employee of the
Authority or an officer or employee of the Company; provided, however, that the
fact that such Person is retained regularly by or transacts business with the
Authority or the Company shall not make such Person an employee within the
meaning of this definition.
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"Insurance Consultant" shall mean a Person who shall be Independent,
appointed by the Company and not unsatisfactory to the Authority or the Trustee,
and qualified to survey risks and to recommend insurance coverage for
organizations engaged in like operations to that of the Company, and having a
favorable reputation for skill and experience in such surveys and such
recommendations, and who may be a broker or agent with whom the Company
regularly transacts business.
"Investment Securities" shall mean and include any of the following
securities, if and to the extent the same are at the time legal for investment
of Authority funds:
(a) Government Obligations;
(b) Bonds, debentures, participation certificates, notes or
other evidences of indebtedness issued by any of the following: Bank
for Cooperatives, Federal Intermediate Credit Banks, Federal Financing
Bank, Federal Home Loan Bank System, Export-Import Bank of the United
States, Government National Mortgage Association, Farmers Home
Administration, Federal Land Banks, Tennessee Valley Authority or
Washington Metropolitan Area Transit Authority or any other agency or
corporation which has been or may hereafter be created by or pursuant
to an act of the Congress of the United States as an agency or
instrumentality thereof and which is rated "AAA" or the equivalent by a
nationally recognized rating agency;
(c) Public housing bonds issued by public agencies or
municipalities or temporary notes, preliminary loan notes or project
notes issued by public agencies of municipalities, but only if such
obligations are rated "AAA" or the equivalent by a nationally
recognized rating agency;
(d) Direct and general obligations of, or obligations
guaranteed by, the State or any political subdivision thereof, to the
payment of the principal of and interest on which the full faith and
credit of the State or any political subdivision thereof is pledged,
but only if at the time of their purchase such obligations are rated in
any of the three highest rating categories by either S&P or Moody's or,
upon the discontinuance of either or both of such services, such other
nationally recognized rating service or services;
(e) Repurchase agreements or similar arrangements: (1) with
banking institutions,
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<PAGE> 15
including the Trustee if applicable, or brokerdealers registered under
the Securities Exchange Act of 1934, as amended, (having or the parent
company of which shall have a current S&P or other equivalent rating
for any purpose, including outstanding indebtedness, of at least "A")
pursuant to which there shall have been delivered to the Trustee, or
his designee, Investment Securities of the types set forth in
subsection (a) and/or (b) above having at all times a fair market value
of at least 100% of the value of such agreement; or (2) with banking
institutions, including the Trustee if applicable, not meeting the
rating requirements of (1) above, pursuant to which there shall have
been delivered to the Trustee, or his designee, Investment Securities
of the types set forth in subsection (a) and/or (b) above and at all
times having a fair market value of at least 102% of the value of such
agreement;
(f) Negotiable or non-negotiable certificates of deposit, time
deposits or other similar banking arrangements, issued by any bank or
trust company (which may be the commercial banking department of the
Trustee) which are insured by the Federal Deposit Insurance Corporation
or Federal Savings and Loan Insurance Corporation, or secured as to
principal by the securities listed in subsections (a) or (b) above and
in a manner satisfactory to the Authority;
(g) Shares of an open-end, diversified investment company
which is registered under the Investment Company Act of 1940 whose
shares are registered under the Securities Act of 1933, as amended, and
which invests exclusively in Investment Securities of the types listed
in subsections (a), (b), (e) and/or (f) above, seeks to maintain a
constant net asset value per share, and has aggregate net assets of not
less than $10,000,000 on the date of purchase; and
(h) Commercial paper of the highest credit rating of S&P or
Moody's or their respective successors, if any, and having a maturity
at the time of purchase not in excess of six months.
"Late Payment Rate" shall mean with respect to the Bonds the rate of
interest on the Bonds, and for all other purposes means fourteen percent (14%)
per annum.
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<PAGE> 16
"Letter of Credit" shall mean that certain Letter of Credit dated the
date of issuance of the Bonds issued by Bankers Trust Company and any Substitute
Letter of Credit.
"Letter of Credit Termination Date" shall mean the later of (i) that
date upon which the Letter of Credit shall expire or terminate pursuant to its
terms, or (ii) that date to which the expiration or termination of the Letter of
Credit may be extended, from time to time, either by extension or renewal of the
existing Letter of Credit or the issuance of a Substitute Letter of Credit.
"Moody's" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns, and, if such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, "Moody's" shall
be deemed to refer to any other nationally recognized securities rating agency
designated by the Company, with the consent of the Bank, by notice to the
Trustee.
"Officers' Certificates" shall mean (a) in the case of the Authority, a
certificate, duly executed by its Chairman or Vice Chairman and by its
Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, or other person
authorized to execute such certificate by a Certified Resolution of the
Authority under its official seal, and (b) in the case of the Company, a
certificate, duly executed by the Chairman of the Company Board of Directors, or
President of the Company and its Secretary or Assistant Secretary or Treasurer,
or such other officers as shall be authorized by the Company's Board of
Directors to act on behalf of the Company, under its corporate seal; in the case
of either such certificate, one person shall not, however, be permitted to
execute the certificate in more than one capacity.
"Optional Conversion Date" shall mean that date on or after July 1,
1985, which shall be a Business Day, from and after which the interest rate on
the Bonds is converted from the Floating Rate to the Fixed Rate as a result of
the exercise by the Company of the Conversion Option.
"Outstanding", in connection with the Bonds, shall mean, as of the time
in question, all the Bonds authenticated and delivered hereunder, except:
(a) Bonds theretofore cancelled or required to be cancelled
hereunder after purchase in the open market or because of payment at or
redemption prior to maturity;
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<PAGE> 17
(b) Bonds which are deemed to have been paid pursuant to
Section 14.02 hereof; and
(c) Bonds in substitution for which other Bonds have been
authenticated and delivered Pursuant to Article II hereunder.
"Owner" or "Owner of Bonds" shall mean the Registered Owner of a Bond.
"Person" shall mean an individual, a corporation, a partnership, an
association, a joint stock company, a trust, any unincorporated organization, a
governmental body, any other political subdivision, municipality or municipality
authority or any other group or entity.
"Pledge Agreement" shall mean the Pledge and Security Agreement dated
as of this date made by the Company to Bankers Trust Company, and any amendments
or supplements thereto and the pledge and security agreement made by the Company
to any Subsitute Bank, and any amendments or supplements thereto.
"Pledged Bonds" shall mean any Bonds which shall, at the time of
determination thereof, be held by the Bank pursuant to the Pledge Agreement.
"Premises" shall mean the tract of land described in Exhibit A to the
Sublease, together with all buildings, and improvements and other tenements,
hereditaments and appurtenant facilities and property, real, personal or mixed,
located thereon or appurtenant thereto and all future improvements, additions or
betterments.
"Principal Office", with respect to the Trustee, shall mean the
Trustee's principal corporate trust office at 53 South Laurel Street, Bridgeton,
New Jersey 08302.
"Project" shall mean the financing of the Costs of construction,
improvement and equipping of the Project Facilities, together with the cost of
issuance of the Bonds.
"Project Facilities" shall mean and be defined as described in the
recitals hereto.
"Purchase Price" shall mean an amount equal to 100% of the principal
amount of any Bond tendered or deemed tendered pursuant to Section 3.01, 3.02 or
3.06 hereof, plus, in the case of purchase pursuant to Section 3.06 hereof,
accrued and unpaid interest thereon to the date of purchase.
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<PAGE> 18
"Record Date" shall mean with respect to any interest payment date the
fifth Business Day next preceding such interest payment date.
"Registered Owner", in connection with a Bond, shall mean the person in
whose name the Bond is registered on the books held by or on behalf of the
Authority.
"Remarketing Agent" shall mean the Remarketing Agent acting as such
under the Remarketing Agreement. "Principal Office" of such Remarketing Agent
means the principal office of the Remarketing Agent designated in the
Remarketing Agreement.
"Remarketing Agreement" shall mean the TENR Services and Remarketing
Agreement dated as of this date between the Company and Bankers Trust Company,
and any amendments or supplements thereto.
"State" shall mean the State of New Jersey.
"S&P" shall mean Standard & Poor's Corporation, a corporation organized
and existing under the laws of the State of New York, its successors and
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Company, with the consent of the Bank, by notice to the
Trustee.
"Sublease" shall mean the Sublease and Security Agreement dated as of
December 1, 1984 between the Authority, as sublessor, and the Company, as
sublessee, and all modifications, alterations, amendments and supplements
thereto.
"Substitute Bank" shall mean a commercial bank or savings and loan
association which has issued a Substitute Letter of Credit.
"Substitute Letter of Credit" shall mean a letter of Credit delivered
to the Trustee in accordance with Section 4.06 of the Sublease (i) issued by the
Bank or a Substitute Bank, (ii) replacing any existing Letter of Credit, (iii)
dated as of a date prior to the expiration date of the Letter of Credit for
which the same is to be substituted, (iv) which shall expire on a date which is
15 days after an interest payment date with respect to the Bonds and (v) issued
on substantially identical terms and conditions as the then existing Letter of
Credit, except that the Substitute Letter of Credit may expire on a date which
is later than the expiration of the Letter of Credit being replaced, and except
that the stated amount of the Substitute Letter of
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<PAGE> 19
Credit shall equal the sum of (A) the aggregate principal amount of Bonds at the
time Outstanding, plus (B) an amount equal to at least 120 days' interest
(computed at the maximum interest rate applicable to the Bonds) on all Bonds at
the time Outstanding.
"Tender Agent" shall mean Bankers Trust Company, a New York banking
corporation and its successors and any corporation resulting from or surviving
any consolidation or merger to which it or its successors may be a party and any
successor Tender Agent at the time serving as successor Tender Agent hereunder.
"Delivery Office" of the Tender Agent means 123 Washington Street, New York, New
York 10006, Attention: Securities Services Division or such other address as may
be designated in writing to the Authority, the Trustee, the Remarketing Agent
and the Company. "Principal Office" of the Tender Agent means the address
specified in Section 15.06 hereof or such other address as may be designated in
writing to the Authority, the Trustee, the Remarketing Agent and the Company.
"Trust Estate" shall mean the property conveyed to the Trustee pursuant
to the granting clause hereof.
"Trustee" shall mean The Farmers and Merchants National Bank of
Bridgeton, a banking association organized and existing under the laws of the
United States of America and having its principal corporate trust office in
Bridgeton, New Jersey, and its successor or successors as trustee hereunder.
The words "hereof", "herein", "hereto", "hereby" and "hereunder"
(except in the form of Bond) refer to the entire Indenture.
Every "request", "requisition", "order", "demand" "application",
"notice", "statement", "certificate", "consent" or similar action hereunder by
the Authority shall, unless the form thereof is specifically provided, be in
writing signed by the Chairman, the Vice-Chairman, the Treasurer, the Assistant
Treasurer, the Secretary or Assistant Secretary of the Authority.
All words importing persons include firms, associations and
corporations, and all words importing the singular number include the plural
number and vice versa.
All words and terms used in this Indenture and not defined above or
elsewhere herein shall have the same meanings as set forth in the Sublease, if
defined therein.
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ARTICLE II
THE BONDS
SECTION 2.01. Amount and Terms of the Bonds. The Bonds shall be
designated "Port Development Revenue Bonds, Series of 1984 (South Jersey Process
Technology, Inc. Project)", shall be limited to $2,500,000 in aggregate
principal amount and shall contain substantially the terms recited herein.
Prior to the Conversion Date, the Bonds shall be issuable as fully
registered Bonds, without coupons, in the denomination of $100,000, or any
integral multiple of $5,000 in excess thereof; provided that the Bonds may be
issued in the denomination of $5,000 or any integral multiple thereof if
necessary to evidence the unredeemed portion of any Bond. From and after the
Conversion Date, the Bonds shall be issuable as fully registered Bonds, without
coupons, in the denomination of $5,000 or any integral multiple thereof. Unless
the Authority shall otherwise direct, the Bonds shall be lettered "R" and shall
be numbered consecutively from 1 upward.
The Bonds shall provide that principal or redemption price of and
interest on the Bonds shall be payable only out of the Trust Estate (or such
particular portion of the Trust Estate as may be therein designated), but the
Authority, at its option and upon deposit with the Trustee by the Company of the
moneys required for such payment, may, subject to Section 6.03 hereof, make
other moneys available for the purpose of paying the principal or redemption
price of and interest with respect to the Bonds provided that such other moneys
constitute Available Moneys. The Authority in issuing its Bonds may use "CUSIP"
numbers, and the Trustee may use such CUSIP numbers in notices of redemption as
a convenience to Owners of the Bonds, provided that any such notice shall state
that no representation is made as to the correctness of such numbers either as
printed on the Bonds or as contained in any notice of redemption and that
reliance may be placed only on the identification numbers printed on the Bonds.
The Authority may cause a copy of the text of the opinion of bond counsel to be
printed on its Bonds and shall deposit with the Trustee an executed counterpart
of such opinion.
Each Bond shall be dated the date of its authentication and shall
mature on December 1, 1999.
The Authority may issue the Bonds upon execution of this Indenture. The
Trustee shall, at the Authority's request, authenticate such Bonds and deliver
them as specified in the request.
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<PAGE> 21
SECTION 2.02. Interest on the Bonds. The Bonds shall bear interest as
follows:
(a) Prior to the Conversion Date, the Bonds shall bear
interest at the Floating Rate. The Floating Rate shall be a variable rate of
interest equal to TENR plus an amount (as adjusted from time to time as
hereinafter provided, the "TENR Amount") initially equal to one-half of one
percent (1/2 of 1%), provided that:
(i) if the Trustee and Remarketing Agent shall have
received a notice requiring the purchase of any Bond(s)
pursuant to Section 3.06 hereof, and if the Remarketing Agent
shall remarket all or a portion of such Bond(s) pursuant to
the Remarketing Agreement, the TENR Amount for all Bonds shall
be the TENR Amount required for the Remarketing Agent to
remarket such Bond(s) at par, which adjusted TENR Amount shall
become effective as of the day next following the next
announcement of TENR, unless such announcement of TENR occurs
during the period of five Business Days prior to an interest
payment date or a date fixed for redemption, in which case
such adjusted TENR Amount shall become effective as of the day
next following the first announcement of TENR subsequent to
such interest payment date or date fixed for redemption, as
the case may be. In connection with any such remarketing, the
Remarketing Agent shall determine what increments of 1/8th of
1% per annum will, when added to or subtracted from the TENR
Amount at the time applicable to the Bonds, produce the
minimum interest rate per annum necessary to enable the
Remarketing Agent to remarket such Bond(s) at par; provided,
that the TENR Amount shall not be more than two and one-half
percent (2-1/2%);
(ii) if the TENR Amount is adjusted pursuant to the
preceding clause (i), such adjusted TENR Amount shall remain
in effect until a further adjustment to the TENR Amount is
made pursuant to such clause (i) or until the interest rate
hereunder is otherwise determined as provided for in this
Indenture; provided that if the Remarketing Agent shall have
advised the Company, the Authority and the Trustee at least
two Business Days prior to any interest payment date that the
Bonds are bearing interest at a rate higher than the minimum
interest rate per annum necessary to enable the Remarketing
Agent to remarket the Bonds at par, as of such interest
payment date, the TENR Amount shall be such amount as the
Remarketing Agent
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<PAGE> 22
shall specify as being the minimum amount necessary to enable
the Remarketing Agent to remarket the Bonds at par;
(iii) if the TENR Amount is adjusted pursuant to the
preceding clause (ii), such adjusted TENR Amount shall remain
in effect until such time as the TENR Amount may again be
adjusted pursuant to the preceding clause (i) or clause (ii)
or until the interest rate hereunder is otherwise determined
as provided for in this Indenture; and
(iv) notwithstanding the foregoing, no adjustment
shall be made to the Floating Rate during the period of five
Business Days prior to an interest payment date or a date
fixed for redemption.
TENR is the rate announced by Bankers Trust Company, New York, New York
at its principal office as the annual rate of interest which is indicative of
current bid-side yields on high-quality, short-term, tax-exempt obligations,
which rate shall be announced by Bankers Trust Company, New York, New York as of
the close of business on Wednesday in each calendar week until the earlier of
the Conversion Date or payment in full of the Bonds or, if Wednesday in any
calendar week shall not be a business day in New York, New York, on the next
succeeding business day in New York, New York. TENR shall be effective during
the period from and including the day next succeeding the day on which Bankers
Trust Company announces TENR, to aid including the day on which Bankers Trust
Company next announces TENR. TENR shall be communicated by Bankers Trust
Company, New York, New York to the Trustee and Remarketing Agent on the same day
that TENR is announced. The Remarketing Agent shall inform the Trustee in
writing of any adjustments to the TENR Amount required by clause (i) above. The
Trustee shall inform the Company of TENR and of any such adjustments to the TENR
Amount. TENR is a Service Mark of Bankers Trust Company, New York, New York.
Anything herein to the contrary notwithstanding, the Floating Rate
shall in no event exceed 15% per annum.
The announcement of TENR and the determination of any adjustments to
the TENR Amount as contemplated by the foregoing paragraphs shall be conclusive
and binding upon the Trustee, the Tender Agent, the Authority, the Company and
the Owners of the Bonds.
(b) The Bonds shall bear interest at the "Fixed Rate" from and
after the Conversion Date until the maturity of the Bonds. The Fixed Rate shall
be a fixed
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<PAGE> 23
annual interest rate on the Bonds established by the Remarketing Agent as the
rate of interest for which the Remarketing Agent has received commitments on or
prior to the 20th day preceding the Optional Conversion Date or Automatic
Conversion Date, as the case may be, to purchase all the Outstanding Bonds on
the Optional Conversion Date or Automatic Conversion Date, as the case may be,
at a price of par without discount or at a premium not to exceed the then
customary underwriting discount (but in no event may the premium exceed 3
percent).
(c) Prior to the Conversion Date, interest on the Bonds shall
be computed on the basis of a 360-day year, actual number of days elapsed. On
and after the Conversion Date, interest on the Bonds shall be computed on the
basis of a 360-day year of twelve 30-day months. Payment of interest on the
Bonds shall be made at the time, place and in the manner described in the form
of Bond attached hereto as Exhibit A with respect to interest paid at the
Floating Rate, and in the form of Bond attached hereto as Exhibit B with respect
to interest paid at the Fixed Rate.
SECTION 2.03. Disposition of Proceeds of the Bonds. The Authority shall
deliver the proceeds of the sale of the Bonds to the Trustee. The Trustee shall
deposit the same in a special fund, which shall be designated the Clearing Fund
(the "Clearing Fund"), from which the Trustee shall make transfers or payments
as follows:
(1) there shall be deposited in the Bond Fund an amount equal
to accrued interest, if any, on the Bonds, and, thereafter, the
aforesaid funds so deposited into and transferred within the Bond Fund
shall be held for payment of interest on the Bonds;
(2) there shall be paid to the Company an amount equal to the
Costs of the Project incurred prior to the issuance of the Bonds and
for which it is entitled to be reimbursed;
(3) there shall be paid upon the order of the Authority and on
behalf of the Authority all Costs in connection with the issuance of
the Bonds; and
(4) there shall be deposited in the Construction Fund the
remaining balance in the Clearing Fund not reserved for any of the
above purposes to pay the remaining Costs of the Project.
SECTION 2.04. Closing Statement; Payment by Trustee. The Trustee is
authorized to pay from the Clearing
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<PAGE> 24
Fund in connection with the issuance of the Bonds in amounts set forth in a
closing statement signed by the Chairman or Vice Chairman and Secretary or
Assistant Secretary of the Authority and approved by an authorized officer of
the Company, any and all Costs of the Project, which may include amounts to
reimburse the Company.
SECTION 2.05. Execution. The Bonds shall be executed by the manual or
facsimile signature of the Chairman or Vice-Chairman of the Authority, and its
corporate seal shall be imprinted thereon (which may be in facsimile) and be
attested by the manual or facsimile signature of its Secretary or Assistant
Secretary. Bonds executed as above provided may be issued and shall, upon
request of the Authority, be authenticated by the Trustee or any other duly
appointed authenticating agent, notwithstanding that one or both of the officers
signing such Bonds shall have ceased to hold office at the time of issuance or
authentication or shall not have held office at the date of the Bonds.
SECTION 2.06. Authentication.
(a) The Trustee hereby appoints the Tender Agent as an
authenticating agent for the Bonds.
(b) No Bonds shall be valid or obligatory for any purpose or
be entitled to any security or benefit under this Indenture unless and until the
certificate of authentication on such Bond substantially in the form set forth
in Exhibits A and B attached hereto shall have been duly executed by the Tender
Agent or the Trustee, and such executed certificate of authentication upon any
Bond shall be conclusive evidence that such Bond has been authenticated and
delivered under this Indenture. The certificate of authentication on any Bond
shall be deemed to have been executed by the Trustee or Tender Agent if signed
by an authorized signatory of the Trustee or Tender Agent, as the case may be,
but it shall not be necessary that the same signatory execute the certificate of
authentication on all of the Bonds.
(c) In the event any Bond is deemed tendered to the Tender
Agent as provided in Section 3.01 or 3.02 hereof but is not physically delivered
to the Tender Agent, the Authority shall execute and the Trustee or Tender Agent
shall authenticate a new Bond of like denomination as that deemed tendered.
SECTION 2.07. Forms of Bonds. The Bonds and the certificate of
authentication to be endorsed thereon prior to the Conversion Date are to be in
substantially the form set forth in Exhibit A attached hereto, with appropriate
variations, omissions and insertions as permitted or
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<PAGE> 25
required by this Indenture. The Bonds which bear interest at the Fixed Rate and
the certificate of authentication to be endorsed thereon are to be in
substantially the form set forth in Exhibit B attached hereto, with appropriate
variations, omissions and insertions as permitted or required by this Indenture.
SECTION 2.08. Registration and Transfer; Persons Treated as Owners.
The Authority shall keep, or cause to be kept at the Principal Office
of the Trustee, books for the registration and transfer of Bonds. The Trustee is
hereby constituted and appointed the registrar of the Authority. The Tender
Agent is hereby constituted and appointed co-registrar of the Authority.
Upon surrender for transfer of any Bond at the Principal Office of the
Trustee or Principal Office of the Tender Agent, the Trustee or Tender Agent, as
the case may be, shall authenticate and deliver in the name of the transferee or
transferees one or more new fully registered Bonds of authorized denominations
for the aggregate principal amount which the Registered Owner is entitled to
receive.
Any Bond shall be exchangeable for Bonds of any authorized
denomination, in an aggregate principal amount equal to the principal amount of
the Bond presented for exchange.
All Bonds presented for transfer or exchange shall be accompanied by a
written instrument or instruments of transfer or authorization for exchange, in
form satisfactory to the Trustee or Tender Agent, duly executed by the Owner or
by his attorney duly authorized in writing.
No service charge shall be made for any exchange or transfer of Bonds;
but the Authority may require payment by the Owner thereof of a sum sufficient
to cover any tax, fee or other governmental charge that may be imposed in
relation thereto. The Company will pay the costs of any transfer of any Bond,
except for payment of any tax, fee or governmental charge imposed in connection
with the exchange or transfer of the Bonds.
The Trustee and the Tender Agent shall not be required to exchange or
register a transfer of (a) any Bonds during the 15-day period next preceding the
selection of Bonds to be redeemed and thereafter until the date of the mailing
of a notice of redemptions of Bonds selected for redemption, or (b) any Bonds
selected, called or being called for redemption in whole or in part except, in
the case of any Bond to be redeemed in part, the portion thereof
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<PAGE> 26
not so to be redeemed; provided that the foregoing shall not apply to the
registration of transfer of any Bond which has been tendered to the Tender Agent
pursuant to Section 3.06 hereof, and in any such case, for purposes of selection
for redemption, the Bond so tendered and the Bond issued to the transferee
thereof pursuant to Section 3.08 hereof shall be deemed and treated as the same
Bond. If any Bond shall be transferred and delivered pursuant to Section 3.08(b)
hereof after such Bond has been called for redemption, the Tender Agent shall
deliver to such transferee a copy of the applicable redemption notice,
indicating that the Bond delivered to such transferee has previously been called
for redemption.
The Authority, the Trustee, the Tender Agent and any paying agent may
deem and treat the person in whose name a Bond shall be registered as the
absolute owner thereof, whether the Bond shall be overdue or not, for the
purpose of receiving payment of, or on account of, the principal of the Bond and
for all other purposes, and all such payments so made to any such Registered
Owner or upon his order shall be valid and effectual to satisfy and discharge
the liability upon the Bond to the extent of the sum or sums so paid, and
neither the Authority nor the Trustee nor the Tender Agent shall be affected by
any notice to the contrary.
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Bonds. If any Bond
shall become mutilated, the Authority shall execute and the Trustee shall
thereupon authenticate and deliver a new Bond of like tenor and denomination in
exchange and substitution for the Bond so mutilated but only upon surrender to
the Trustee of such mutilated Bonds for cancellation, and the Authority and the
Trustee may require reasonable indemnity therefor, which indemnity shall, in any
event, name the Tender Agent as a beneficiary. If any Bond shall be reported
lost, stolen or destroyed, evidence as to the ownership and the loss, theft or
destruction thereof shall be submitted to the Authority and the Trustee; and if
such evidence shall be satisfactory to both and indemnity satisfactory to both
shall be given, which indemnity shall, in any event, name the Tender Agent as a
beneficiary, the Authority shall execute, and thereupon the Trustee shall
authenticate and deliver, a new Bond of like tenor and denomination. The cost of
providing any substitute Bond under the provisions of this Section shall be
borne by the Owner of the Bond for whose benefit such substitute Bond is
provided. If any such mutilated, lost, stolen or destroyed Bond shall have
matured, the Authority may, with the consent of the Trustee, pay to the Owner
the principal amount of such Bond and compliance with the aforesaid conditions
by such Owner, without the issuance of a substitute Bond therefor.
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Every substituted Bond issued pursuant to this Section 2.09 shall
constitute an additional contractual obligation of the Authority, whether or not
the Bond alleged to have been destroyed, lost or stolen may be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Bonds duly issued
hereunder.
All Bonds shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Bonds, and shall preclude any and all other
rights or remedies, notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments, investments or other securities without their surrender.
SECTION 2.10.Temporary Bonds. Pending preparation of definitive Bonds,
or by agreement with the purchasers of all of the Bonds, the Authority may issue
and, upon its request, the Trustee shall authenticate in lieu of definitive
Bonds one or more temporary printed or typewritten Bonds of substantially the
tenor recited above. Upon request of the Authority, the Trustee shall
authenticate definitive Bonds in exchange for and upon surrender of an equal
principal amount of temporary Bonds. Until so exchanged, temporary Bonds shall
have the same rights, remedies and security hereunder as definitive Bonds.
SECTION 2.11.Cancellation and Destruction of Surrendered Bonds. All
Bonds surrendered for payment or redemption and all Bonds purchased with moneys
available for that purpose in any Funds established under this Indenture, or
purchased by the Company and surrendered to the Trustee in lieu of mandatory
redemption pursuant to Section 8.04 hereof shall, at the time of such payment or
redemption, be cancelled and destroyed by the Trustee. The Trustee shall deliver
to the Authority a certificate of destruction in respect of all Bonds destroyed
in accordance with this Section.
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ARTICLE III
CONVERSION OF INTEREST RATE; DEMAND
PURCHASE OPTION
SECTION 3.01. Conversion of Interest Rate on Optional Conversion Date.
The interest rate on the Bonds shall be converted from the Floating Rate to the
Fixed Rate upon the exercise by the Company of the Conversion Option, and the
Bonds shall be subject to mandatory tender for purchase by the Owners thereof on
the Optional Conversion Date. To exercise the Conversion Option, the Company
shall deliver or mail by first class mail a notice at least twenty (20) days but
not more than thirty (30) days prior to the Optional Conversion Date to the
Owner of each Bond at the address shown on the registration books of the
Authority. Any notice given as provided in this Section shall be conclusively
presumed to have been duly given, whether or not the Owner receives the notice.
Said notice shall state in substance the following:
1. The Conversion Date.
2. The Fixed Rate which will take effect on the Conversion
Date.
3. That from and after the Conversion Date the Demand Purchase
Option will not be available to Owners of Bonds.
4. That all Owners of Bonds who have not given notice of their
desire to retain Bonds as provided in this Section shall be deemed to
have tendered their Bonds for purchase on the Conversion Date.
5. That the Letter of Credit will expire fifteen (15) days
after the Conversion Date.
Any Owner of Bonds desiring to retain Bonds after the Optional
Conversion Date must notify the Company and the Trustee in writing which notice
must be received no later than fifteen (15) days prior to the Optional
Conversion Date. Said notice shall state in substance the following:
(a) The Bond numbers and principal amounts of the Bonds which
the Owner thereof wishes to retain after the Conversion Date;
(b) That the Owner thereof recognizes that the events set
forth in 1 through 5 above will occur;
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(c) That the Owner thereof recognizes that the rating assigned
to the Bonds based on the Letter of Credit will no longer apply to the
Bonds; and
(d) That the Owner thereof wishes to continue to own the Bonds
specified in (a) above after the Conversion Date.
Owners of Bonds not providing the Trustee and the Company with the notice
described above shall be required to tender their Bonds to the Tender Agent for
purchase at the Purchase Price, and any such Bonds not delivered to the Tender
Agent on or prior to the Optional Conversion Date ("Undelivered Bonds"), for
which there has been irrevocably deposited in trust with the Trustee an amount
of moneys sufficient to pay the Purchase Price of the Undelivered Bonds, shall
be deemed to have been purchased pursuant to this Section 3.01. IN THE EVENT OF
A FAILURE BY AN OWNER OF BONDS (OTHER THAN AN OWNER OF BONDS WHO HAS GIVEN
NOTICE AS PROVIDED ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE OPTIONAL
CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY
INTEREST TO ACCRUE SUBSEQUENT TO THE OPTIONAL CONVERSION DATE) OTHER THAN THE
PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO
LONGER BE ENTITLED TO THE BENEFITS OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF
PAYMENT OF THE PURCHASE PRICE THEREFOR.
SECTION 3.02. Conversion of Interest Rate on Automatic Conversion Date.
The interest rate on the Bonds shall be converted from the Floating Rate to the
Fixed Rate on the Automatic Conversion Date, and the Bonds shall be subject to
mandatory tender for purchase by the Owners thereof on the Automatic Conversion
Date. The Company shall deliver or mail by first class mail a notice, conforming
to the requirements set forth in Section 3.01 above, at least twenty (20) days
but not more than thirty (30) days prior to the Automatic Conversion Date to the
Owner of each Bond at the address shown on the registration books of the
Authority. Any notice given as provided in this Section shall be conclusively
presumed to have been duly given, whether or not the Owner receives the notice.
Any Owner of Bonds desiring to retain Bonds after the Automatic
Conversion Date must notify the Company and the Trustee in writing which notice
must be received no later than fifteen (15) days prior to the Automatic
Conversion Date. Said notice shall conform to the requirements set forth in
Section 3.01 above. Owners of Bonds not providing the Trustee and the Company
with the notice described above shall be required to tender their Bonds to the
Tender Agent for purchase at the Purchase Price, and any such Bonds not
delivered to the Tender Agent on or prior to the Automatic
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Conversion Date ("Undelivered Bonds"), for which there has been irrevocably
deposited in trust with the Trustee an amount of moneys sufficient to pay the
Purchase Price of the Undelivered Bonds, shall be deemed to have been purchased
pursuant to this Section 3.02. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS
(OTHER THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE AS PROVIDED ABOVE) TO DELIVER
ITS BONDS ON OR PRIOR TO THE AUTOMATIC CONVERSION DATE, SAID OWNER SHALL NOT BE
ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE
AUTOMATIC CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED
BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF
THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR.
SECTION 3.03. Exchange of Bonds after Conversion Date. At any time
prior to the first interest payment date following the Conversion Date, an Owner
of Bonds who has given notice of its desire to continue to hold Bonds as
provided in Section 3.01 or 3.02 above may deliver said Bonds to the Trustee or
the Tender Agent, and upon such delivery, the Trustee or the Tender Agent, as
the case may be, shall exchange said Bonds for replacement Bonds in the form of
Exhibit B hereto. Such exchange shall be made by the Trustee or the Tender
Agent, as the case may be, without making any charge therefor to the Owner of
such Bonds.
SECTION 3.04. Condition to Conversion. As a condition to the giving of
notice as provided in Section 3.01 or 3.02 above, the Company shall provide the
Trustee with an opinion of nationally recognized bond counsel to the effect that
the proposed conversion of the interest rate on the Bonds will not adversely
affect the exemption of the interest on the Bonds from federal income taxation.
SECTION 3.05. Additional Notices. The Company shall provide the Tender
Agent with a copy of any notice delivered to the Owners of the Bonds pursuant to
Section 3.01 or 3.02 hereof. The Trustee shall provide the Tender Agent with a
copy of any notice received by the Trustee from any Owner of a Bond pursuant to
Section 3.01 or 3.02 hereof.
SECTION 3.06. Demand Purchase Option. Any Bond shall be purchased at
the Purchase Price from the Owner thereof upon:
(i) delivery to the Trustee at its Principal Office and to the
Remarketing Agent at its Principal Office of a notice (said notice to
be irrevocable and effective upon receipt) which (1) states the
aggregate principal amount and Bond numbers of the Bonds to be
purchased; and (2) states the date on which such Bonds are to be
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purchased, which date shall be a Business Day not prior to the seventh
(7th) day next succeeding the date of delivery of such notice and which
date shall be prior to the Conversion Date; and
(ii) delivery to the Tender Agent at its Delivery Office at or
prior to 10:00 A.M., New York City time, on the date designated for
purchase in the notice described in (i) above of such Bonds to be
purchased, with an appropriate endorsement for transfer or accompanied
by a bond power endorsed in blank, and if such Bonds are to be
purchased prior to the next succeeding interest payment date and after
the Record Date in respect thereof, a non-recourse due-bill, payable to
bearer, for interest due on such interest payment date.
SECTION 3.07. Funds for Purchase of Bonds. On the date Bonds are to be
purchased pursuant to Section 3.01, 3.02 or 3.06 hereof, such Bonds shall be
purchased at the Purchase Price only from the funds listed below. Subject to the
provisions of Section 6.09(b), funds for the payment of the Purchase Price shall
be derived from the following sources in the order of priority indicated:
(i) moneys deposited into the Bond Fund pursuant to Section
6.03(a) hereof which constitute Available Moneys;
(ii) the proceeds of the sale of such Bonds which have been
remarketed by the Remarketing Agent prior to 4:00 P.M., New York City
time, on the Business Day preceding the date such Bonds are to be
purchased, to any entity other than the Company or the Authority;
(iii) moneys drawn by the Trustee under the Letter of Credit;
and
(iv) any other moneys furnished to the Trustee and available
for such purpose.
SECTION 3.08. Delivery of Purchased Bonds.
(a) Bonds purchased with moneys described in Section 3.07(i)
hereof shall be delivered to the Trustee for cancellation.
(b) Bonds purchased with moneys described in Section 3.07(ii)
hereof shall be delivered by the Tender Agent, at its Delivery Office, to or
upon the order of the purchasers thereof.
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(c) Bonds purchased with moneys described in Section 3.07(iii)
hereof shall be delivered by the Tender Agent to or upon the order of the Bank
pursuant to the Pledge Agreement.
(d) Bonds purchased with moneys described in Section 3.07(iv)
shall, at the direction of the Company, be (A) delivered as instructed by the
Company or (B) delivered to the Trustee for cancellation; provided, however,
that any Bonds so purchased after the selection thereof by the Trustee for
redemption shall be delivered to the Trustee for cancellation.
(e) The Tender Agent shall deliver to the person to whom the
Tender Agent is to deliver such Bonds the non-recourse due-bills, if any,
delivered to the Tender Agent with such Bonds in accordance with Section 3.06
hereof.
Bonds delivered as provided in this Section shall be registered in the
manner directed by the recipient thereof.
SECTION 3.09. Delivery of Proceeds of Sale of Purchased Bonds.
(a) Except in the case of the sale of any Pledged Bonds, the
proceeds of the sale of any Bonds delivered to the Tender Agent pursuant to
Section 3.01, 3.02 or 3.06 hereof, to the extent not required to pay the
Purchase Price thereof in accordance with Section 3.07 hereof, shall be paid to
or upon the order of the Company.
(b) In the event the Remarketing Agent shall have remarketed
any Pledged Bonds and the Company shall have directed the Bank to deliver such
Pledged Bonds to the Tender Agent pursuant to Paragraph 2B of the Credit
Agreement, such Bonds shall be delivered by the Tender Agent in accordance with
Section 3.08(b) hereof and the proceeds of sale of such Bonds shall be delivered
to the Bank; provided that any accrued interest in excess of amounts then due to
the Bank pursuant to Paragraph 2A(i) of the Credit Agreement received upon the
sale of such Bonds shall be delivered by the Bank to or upon the order of the
Company.
SECTION 3.10. Duties of Trustee and Tender Agent with Respect to
Purchase of Bonds.
(a) The Tender Agent shall hold all Bonds delivered to it
pursuant to Section 3.01, 3.02 or 3.06 hereof in trust for the benefit of the
respective Owners of Bonds which shall have so delivered such Bonds until moneys
representing the Purchase Price of such Bonds shall have
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been delivered to or for the account of or to the order of such Owners of Bonds;
(b) The Trustee and the Tender Agent shall hold all moneys
delivered to them pursuant to this Indenture for the purchase of Bonds in a
separate account, in trust for the benefit of the person or entity which shall
have so delivered such moneys until the Bonds purchased with such moneys shall
have been delivered to or for the account of such person or entity;
(c) The Trustee shall deliver to the Tender Agent, the Company
and the Bank a copy of each notice delivered to it in accordance with Section
3.06 hereof;
(d) Immediately upon the delivery to it of Bonds in accordance
with Section 3.06, the Tender Agent shall give telephonic or telegraphic notice
to the Company, the Trustee and the Bank specifying the principal amount of the
Bonds so delivered; and
(e) The Trustee shall draw moneys under the Letter of Credit
in accordance with the terms thereof to the extent required by Sections 3.07 and
6.09 hereof to provide for timely payment of the Purchase Price of Bonds.
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ARTICLE IV
ACQUISITION AND CONSTRUCTION OF PROJECTS
SECTION 4.01. Covenant to Complete Project in Conformity to Plans and
Specifications; Changes. The Authority will cause the Company to proceed with
reasonable dispatch to complete the construction portions of the Project in
accordance with the plans and specifications therefor, copies of which shall be
filed with the Trustee before construction for each phase of the Project is
begun. The Authority shall allow the Company, as sublessee of the Authority, or
the Architect in connection with the Project, to issue change orders under
construction contracts, provided that each such change is in writing and is
verified by the Architect, approved by an authorized officer of the Company and
filed with the Authority and the Trustee. The Company shall be responsible for
any additional Costs attributable to such change orders.
SECTION 4.02. Compliance with Laws, etc. Authority will comply or cause
the Company and its agent to comply with all present and future laws, acts,
rules, regulations, orders and requirements lawfully made relating to any
acquisition or construction hereby undertaken.
SECTION 4.03. Performance by Authority under Construction Contracts.
The Authority will faithfully perform or will require the Company to perform all
agreements on their respective parts to be performed under construction
contracts and will not do or refrain from doing any act whereby any surety or
any bond may be released in whole or in part from any obligation assumed by it
or from any agreement to be performed by it under the bond.
SECTION 4.04. Builder's Risk, Liability, and Workmen's Compensation
Insurance. The Authority will maintain or cause the Company or the contractors
to maintain, builders risk (or equivalent coverage) insurance upon any work done
or materials furnished under construction contracts except excavations
foundations and any other structures not customarily covered by such insurance.
The policies shall be issued by responsible companies qualified to do business
in New Jersey and satisfactory to the Authority, Company and Insurance
Consultant, and shall be written in completed value form for 100% of the
insurable value of the contract or Project Facilities in the name of Company,
the Authority, the Trustee and any contractor or sub-contractor as their
interests may appear with loss payable to the Trustee. Any amounts payable to
the Company, the Authority, or the Trustee thereunder shall be deposited in the
Construction Fund.
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During the period of construction of the Project, the Authority will
also maintain or cause Company to maintain or cause to be maintained, (a)
workmen's compensation insurance and employer's liability insurance,
underwritten by responsible companies qualified to do business in New Jersey and
satisfactory to the Authority, the Company and the Insurance Consultant,
covering all employees of contractors and subcontractors in amounts required by
law, and (b) public liability and property insurance, including umbrella
coverage, in amounts not less than $1,000,000 for personal injury for each
occurrence and in the aggregate per annum and $100,000 for property damage for
each occurrence with an annual aggregate property damage limitation of not less
than $1,000,000, and (c) automobile liability insurance covering owned,
non-owned and hired automobiles in amounts not less than $500,000 liability for
injury to any one person, $500,000 liability for each occurrence, and $100,000
for property damage for each occurrence.
Each policy of insurance required by this Section, or a copy thereof,
or an insurance certificate in respect thereof, shall be deposited with the
Authority and the Trustee.
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ARTICLE V
CONSTRUCTION FUND
SECTION 5.01. Establishment of Construction Fund. There is hereby
created and established with the Trustee a Construction Fund for the payment of
Costs of the Project. The Construction Fund shall consist of the amounts
deposited therein pursuant to this Indenture and any other amounts the Authority
may deposit therein including contributions by Company. The amounts in the
Construction Fund, until applied as hereinafter provided, shall be held for the
security of all the Bonds Outstanding hereunder and invested as provided in
Article VII. Separate accounts within the Construction Fund shall be maintained
by the Trustee upon request of the Authority whenever, in the opinion of the
Authority, it is appropriate to have a separate accounting in respect of the
Costs of any designated portion of the Project. The Authority may permit the
Company, from time to time, to deposit moneys in the Construction Fund for the
purpose of paying the Costs of the Project.
The investment earnings on moneys deposited in the Construction Fund
shall be added to the Construction Fund and may be expended at any time or from
time to time to pay Costs of the Project in the same manner as the proceeds of
the Bonds are expended.
SECTION 5.02. Payments from Construction Fund. The Trustee shall make
payments from the Construction Fund only upon receipt of:
(1) in every case, a requisition signed by such officer or
officers of the Company as are authorized by a written certificate of
the Company submitted to the Trustee, and such requisition shall
certify that the work to which the payment relates has been
accomplished in a manner satisfactory to Company.
Such requisition shall state (a) the name and address of the
person to whom the payment is to be made (who may be the Authority or
Company if either is to be reimbursed for advances made or work done by
it and properly chargeable against the Construction Fund); (b) the
amount to be paid; (c) the obligation on account of which the payment
is to be made, showing the total obligation, any amount previously
paid, and the unpaid balance; (d) that the obligation was properly
incurred and is a proper charge against the Construction Fund; and (e)
that the amount requisitioned is due and unpaid;
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(2) in the case of payments under construction, renovation or
repair contracts, a certificate of the Architect certifying (a) his
approval of the requisition; (b) that the obligation was properly
incurred (c) that the amount requisitioned is due and unpaid; (d) that,
insofar as the payment is to be made for work, material, supplies or
equipment, the work has been performed and the materials supplied or
equipment have been installed in the Project Facilities or have been
delivered either at the Premises or at a proper place for fabrication;
and (e) that all work, material, supplies and equipment for which
payment is to be made are, in the signer's opinion, in accordance with
the plans and specifications or duly approved change orders; and
(3) in case the payment is to discharge indebtedness of the
Authority or Company, incurred in connection with payments properly
chargeable against the Construction Fund, or to reimburse the Company,
such notes or other evidences of the indebtedness, if any, upon
satisfaction thereof shall be thereupon cancelled by the Trustee and
returned to the issuer thereof.
SECTION 5.03. Payment to Relate to Underlying Obligations. Whenever
payments are to be made to reimburse the Authority or Company for advances
(except to discharge indebtedness of the Authority or Company) the requisition
and an Architect's certificate, if appropriate shall relate to the underlying
obligation for which the Authority or Company is being reimbursed or for the
payment of which the indebtedness was incurred.
SECTION 5.04. Procedure Upon Completion of Project. Upon the completion
of the Project, the Company shall promptly furnish the Trustee with its
certificate in accordance with the requirements of Section 3.07 of the Sublease.
The Trustee shall, as soon as practicable and in any event not more than sixty
days from the date of the certificate referred to in the preceding sentence,
transfer, without further authorization, the balance in the Construction Fund
not reserved for the payment of unpaid Costs to a separate sub-account of the
Bond Fund and thereafter apply such moneys in the manner provided in Section
3.07 of the Sublease.
SECTION 5.05. Use of Money in Construction Fund Upon Default. If the
principal of the Bonds shall have become due and payable pursuant to Article X
hereof, any balance remaining in the Construction Fund shall without further
authorization be transferred into the Bond Fund.
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ARTICLE VI
REVENUES OF THE AUTHORITY, RECEIPTS AND
REVENUES OF COMPANY, AND THE APPLICATION
THEREOF TO FUNDS
SECTION 6.01. Rentals, etc. to be Sufficient.
(a) The Authority shall fix the rentals under the Sublease and
other fees and charges derived from the Company so that the Trust Estate in any
Fiscal Year is sufficient, after giving effect to any credits available to the
Company under the terms of the Sublease:
(i) to pay the Administrative Expenses of the
Authority for said Fiscal Year; and
(ii) to pay when due the interest on and principal of
(whether at maturity or upon redemption or otherwise) the Bonds during
said Fiscal Year.
In determining the Authority's compliance with (ii) above, interest due
on the Bonds for the Fiscal Year in question shall be deemed exclusive of
interest requirements to be satisfied from moneys held in the Bond Fund
representing capitalized interest.
(b) The Authority shall cause the Company to operate the
Project Facilities for port and public related uses and to otherwise comply with
the covenants contained in the Sublease.
SECTION 6.02. Trust Estate to Be Paid Over to Trustee. The Authority
hereby pledges to the Trustee the Trust Estate, including but not limited to all
income and receipts earned on funds held by the Trustee under this Indenture and
the Sublease as security for the performance of any obligation of the Authority
under this Indenture. The pledge is made, and the covenants and agreements set
forth herein to be performed by or on behalf of the Authority shall be, for the
equal and ratable benefit, protection and security of the Owners of the Bonds,
all of which, regardless of their times of issue and maturity, shall be of equal
rank, without preference, priority or distinction of any Bond except as
expressly provided herein or permitted by this Indenture. The Trust Estate
including all income and receipts on funds held by the Trustee under this
Indenture shall immediately be subject to the lien of the pledge without any
physical delivery thereof or further act. Pursuant to the assignment of the
Authority's rights under the Sublease, the rentals owed by the Company under the
Sublease (except amounts payable under Sections 4.01(b), 9.03 or 9.05
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thereof) shall be paid directly to the Trustee by Company. Upon receipt of any
such rentals or other payments hereunder, the Trustee shall deposit the same in
the Bond Fund except as otherwise required pursuant to any other provision
hereof.
SECTION 6.03. Bond Fund. There is hereby created and established with
the Trustee a Bond Fund which shall be used as provided in this Section.
There shall be deposited in the Bond Fund from time to time the
following: (a) any amount in the Construction Fund directed to be paid into the
Bond Fund in accordance with the provisions of Section 5.04 or 5.05 hereof; (b)
any amount to be deposited in the Bond Fund pursuant to Section 6.04 hereof; (c)
all payments specified in Section 4.01(a) of the Sublease; (d) any moneys drawn
under the Letter of Credit which moneys shall be deposited in a separate account
of the Bond Fund and shall not be commingled with any other moneys held by the
Trustee; (e) amounts held by the Trustee pursuant to Section 3.10 hereof; and
(f) all other moneys received by the Trustee pursuant to Section 6.02 hereof.
Except as provided in Section 3.07, 3.10 and 6.08 hereof, moneys in the
Bond Fund shall be used solely for the payment of principal of, premium, if any,
and interest on the Bonds and for the redemption of the Bonds prior to maturity.
Subject to the provisions of Section 6.09 hereof, funds for such payments of
principal of and premium, if any, and interest on the Bonds shall be derived
from the following sources in the following order of priority indicated: (i)
amounts required to be transferred from the Construction Fund to the Bond Fund
in accordance with clause (a) of the preceding paragraph which constitute
Available Moneys; (ii) any amount deposited into the Bond Fund pursuant to
Section 6.04 hereof which constitutes Available Moneys; (iii) any moneys drawn
by the Trustee under the Letter of Credit; and (iv) any other moneys furnished
to the Trustee and available for such purpose.
The foregoing notwithstanding, amounts deposited into the Bond Fund in
accordance with Section 5.04 hereof shall be applied only to the payment of the
principal of, or the portion of the Purchase Price corresponding to the
principal of, the Bonds, and amounts deposited into the Bond Fund pursuant to
Section 6.04 hereof shall be applied only to the payment of the principal of the
Bonds.
SECTION 6.04. Custody of Separate Trust Fund. The Trustee is authorized
and directed to hold all proceeds from any insurance policies or condemnation
awards and disburse such proceeds in accordance with Article VI of the
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Sublease. If the Company directs that any Portion of such proceeds be applied to
redeem Bonds, the Trustee shall deposit such proceeds in a separate sub-account
of the Bond Fund, and the Authority covenants and agrees to take and cause to be
taken any action requested of the Authority to redeem on the earliest possible
redemption date the amount of Bonds so specified by the Company.
SECTION 6.05. Mandatory Redemption. The Trustee shall establish as part
of the Bond Fund a Mandatory Redemption Account. The Trustee shall use the
Mandatory Redemption Account to redeem Bonds as required by Section 8.04 hereof.
Sufficients funds shall be transferred to the Mandatory Redemption Account on
December I of each year from 1990 through 1998 to effect the redemptions
required by Section 8.04 hereof. If at any time all the Bonds shall have been
purchased, redeemed or paid, no further deposits shall be made to the Mandatory
Redemption Account.
SECTION 6.06. Moneys to be Held for all Owners of Bonds, With Certain
Exceptions. Moneys and investments in the various funds created under or
pursuant to this Article VI shall, until applied as provided with respect to the
fund in question, be held in trust by the Trustee for the benefit of the Owners
of all Outstanding Bonds except as otherwise provided herein.
SECTION 6.07. Nonpresentment of Bonds. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity, or at the date fixed for redemption thereof, or otherwise, if
Available Moneys sufficient to pay any such Bond shall have been made available
to the Trustee for the benefit of the Owner thereof, all liability of the
Authority to the Owner thereof for the payment of such Bond shall forthwith
cease, determine and be completely discharged, and thereupon it shall be the
duty of the Trustee to hold such funds, without liability for interest thereon,
for the benefit of the Owner of such Bond who shall thereafter be restricted
exclusively to such funds for any claim of whatever nature on his part under
this Indenture with respect to such Bond.
Any moneys so deposited with and held by the Trustee which remain
unclaimed five (5) years after the date payment thereof becomes due shall, upon
request of the Company, if the Company is not at the time, to the knowledge Of
the Trustee, in default with respect to any covenant in this Indenture or the
Bonds, be paid to the Company; and the Owners of the Bonds for which the deposit
was made shall thereafter be limited to a claim against the Company and all
liability of the Trustee with respect to such money shall thereupon cease and
the Company shall not be liable for any interest thereon and shall not be
regarded as a trustee of
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<PAGE> 41
such money; provided, however, that the Trustee, before making payment to the
Company, may, at the expense of the company, cause a notice to be mailed to
those Owners who have not claimed their payment, stating that the moneys
remaining unclaimed will be returned to the Company after a specified date.
SECTION 6.08. Repayment to the Bank and Company from Bond Fund or
Construction Fund. Any amounts remaining in the Bond Fund, Construction Fund, or
any other fund or account created hereunder after payment in full of the
principal of, premium, if any, and interest on the Bonds, the fees, charges and
expenses of the Trustee and all other amounts required to be paid hereunder,
shall be paid immediately to the Bank to the extent of any indebtedness of the
Company to the Bank under the Credit Agreement, and after repayment of all such
indebtedness, to the Company.
SECTION 6.09. Letter of Credit.
(a) During the term of the Letter of Credit, the Trustee shall
draw moneys under the Letter of Credit in accordance with the terms thereof (x)
to the extent moneys described in Section 6.03 (i) and (ii) hereof are not
available therefor, to pay when due (whether by reason of maturity, redemption,
acceleration or otherwise) the principal of, premium, if any, and interest on
the Bonds, and (y) to the extent that moneys described in Section 3.07 (i) and
(ii) hereof are not available therefor, to pay when due the Purchase Price of
Bonds.
(b) Notwithstanding any provision to the contrary which may be
contained in this Indenture, including without limitation, Section 6.09(a), (i)
in computing the amount to be drawn under the Letter of Credit on account of the
payment of the principal or Purchase Price of, or premium, if any, or interest
on the Bonds, the Trustee shall exclude any such amounts in respect of any Bonds
which are Pledged Bonds on the date such payment is due, and (ii) amounts drawn
by the Trustee under the Letter of Credit shall not be applied to the payment of
the principal or Purchase Price of, or premium, if any, or interest on, any
Bonds which are Pledged Bonds on the date such payment is due.
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<PAGE> 42
ARTICLE VII
SECURITY FOR AND INVESTMENT OF DEPOSIT OF FUNDS
SECTION 7.01. Deposits and Security Therefor. All moneys received by
the Trustee under this Indenture for deposit in any Fund established hereunder
shall be considered trust funds, shall not be subject to lien or attachment
(except the lien created hereunder) and shall, except as hereinafter provided,
be deposited with the Trustee, until or unless invested or deposited as provided
in Section 7.02. If at any time the Trustee is unwilling to accept such
deposits, the Trustee may deposit such moneys with any other depository which is
authorized to receive them and the deposits of which are insured by the Federal
Deposit Insurance Corporation or Federal Savings and Loan Insurance
Corporations.
SECTION 7.02. Investment or Deposit of Funds. The Trustee shall, at the
request of the Authority, as directed by the Company (or in the absence of such
request, on its own initiative), invest moneys held in the Construction Fund or
any other fund other than the Bond Fund in Investment Securities maturing, or
being subject to redemption by the Trustee without penalty, at the time when the
funds will foreseeably be needed for the purposes of this Indenture. Absent
specific instructions as aforesaid, all investments shall be subject to the
discretion and judgment of the Trustee, subject, however, to the limitations
contained herein, and subject however to the limitations contained in Section
9.15 hereof.
Moneys in any of the Funds, other than the Bond Fund, established
pursuant to the Indenture or Sublease when held by the Trustee shall be
continuously invested and reinvested and deposited or redeposited by the Trustee
in the highest yield that may be reasonably known to the Trustee, with a view to
maximizing yield and minimizing the instances of uninvested funds, and subject
to all written directions from the Authority and the Company, as aforesaid. All
investments shall mature or be subject to redemption by the owner at not less
than the principal amount thereof or the cost of acquisition, whichever is
lower, and all investments of the types set forth in subparagraph (f) of the
definition of Investment Securities shall be subject to withdrawal without
penalty not later than the date when the amounts will foreseeably be needed for
purposes of this Indenture.
Any moneys held as a part of the Bond Fund shall be invested or
reinvested by the Trustee, to the extent permitted by law, in United States
Treasury bills with maturities of no more than thirty days from the date of
acquisition thereof.
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<PAGE> 43
All securities securing investments under this Section shall be
deposited with a Federal Reserve Bank, with the trust department of the Trustee
as authorized by law, or with a bank or trust company having a combined net
capital and surplus of not less than $10,000,000. The interest and income
received from time to time upon such deposits and investments and any profit
realized or loss sustained from the sale of such securities shall be added or
charged to the appropriate Fund for computation of any surplus or deficiency in
any such Fund.
Upon request of the Authority as directed by Company, or on its own
initiative whenever payment is to be made out of any Fund, the Trustee shall
sell such securities as may be required to make the payment and restore the
proceeds to the Fund in which the securities were held. Neither the Trustee nor
the Authority shall be accountable for any depreciation in the value of any such
security or for any loss resulting from the sale thereof except as provided
hereinafter. Notwithstanding the foregoing provisions of this Section 7.02, the
Trustee shall not knowingly make any investment of any moneys held in any Fund
inconsistent with Section 9.15 hereof relating to "arbitrage bonds."
SECTION 7.03. Valuation of Funds. In computing the assets of any Fund
or account, investments and accrued interest thereon shall be deemed a part
thereof, subject to Section 7.02 hereof. Such investments shall be valued at the
face value or the current market value thereof, whichever is lower, or at the
redemption price thereof, if then redeemable at the option of the owner.
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<PAGE> 44
ARTICLE VIII
REDEMPTION OF BONDS BEFORE MATURITY
SECTION 8.01. Extraordinary Redemption. The Bonds are callable for
redemption in the event (1) the Premises or any portion thereof are damaged or
destroyed or taken in a condemnation proceeding to which Section 6.04(b) of the
Sublease is applied, or (2) the Company shall exercise its option to cause the
Bonds to be redeemed as provided in Section 6.05 of the Sublease. If called for
redemption at any time pursuant to (1) or (2) above, the Bonds shall be subject
to redemption by the Authority on any interest payment date, in whole or (in the
case of redemption pursuant to Section 6.04(b) of the Sublease) in part, less
than all of such Bonds to be selected in such manner as the Trustee may
determine (except as otherwise provided in Section 8.08 hereof), at a redemption
price equal to 100% of the principal amount thereof plus accrued interest to the
redemption date.
In addition, the Bonds are subject to mandatory redemption, in whole,
on the Automatic Conversion Date, at a redemption price equal to 100% of the
principal amount thereof, in the event that (a) the opinion of bond counsel
required to be furnished to the Trustee pursuant to Section 3.04 hereof shall
not have been furnished on or prior to the 20th day prior to the Automatic
Conversion Date or (b) the Fixed Rate has not been established on or prior to
the 20th day preceding the Automatic Conversion Date.
SECTION 8.02. Optional Redemption by the Company. On or prior to the
Conversion Date, the Bonds are subject to redemption by the Authority, at the
option of the Company, at any time on or after July 1, 1985, in whole or in
part, less than all of such Bonds to be selected in such manner as the Trustee
shall determine (except as otherwise provided in Section 8.08 hereof), at the
redemption price of 100% of the principal amount thereof plus accrued interest
to the redemption date.
After the Conversion Date, the Bonds are subject to redemption by the
Authority, at the option of the Company, on or after the First Optional
Redemption Date, in whole at any time or in part on any interest payment date,
less than all of such Bonds to be selected in such manner as the Trustee shall
determine (except as otherwise provided in Section 8.08 hereof), at the
redemption prices (expressed as percentages of principal amount) set forth in
the following table plus accrued interest to the redemption date:
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<PAGE> 45
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date through
the following November 30 103%
First Anniversary of the First Optional
Redemption Date through the following
November 30 102%
Second Anniversary of the First Optional
Redemption Date through the following
November 30 101%
Third Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
SECTION 8.03. Determination of Taxability. The Company is obligated,
under the Sublease, to give prompt notice to the Trustee of any Determination of
Taxability (as defined below) of which it is aware. The Trustee shall be
obligated to cause the Bonds to be redeemed within one hundred eighty (180) days
after a Determination of Taxability shall have occurred at a redemption price
equal to 100% of the principal amount thereof plus accrued interest to the
redemption date.
A "Determination of Taxability" shall be deemed to occur if a final
decree or judgment of any federal court or a final action of the Internal
Revenue Service determines that interest paid or payable on any Bond is or was
includable in the gross income of an Owner of the Bonds for federal income tax
purposes under the Code (other than an Owner who is a substantial user or
related person within the meaning of Section 103(b) of the Code). No such
decree, judgment, or action will be considered final for this purpose, however,
unless the Company has been given written notice and, if it is so desired and is
legally allowed, has been afforded the opportunity to contest the same, either
directly or in the name of any Owner of a Bond, and until conclusion of any
appellate review, if sought. If the Trustee receives written notice from any
Owner of Bonds stating that (i) the Owner of Bonds has been notified in writing
by the Internal Revenue Service that it proposes to include the interest on any
Bond in the gross income of such Owner of Bonds for the reasons described herein
or any other proceeding has been instituted against such Owner of Bonds which
may lead to a final decree, judgment, or action as described herein, and (ii)
such Owner of Bonds will afford the Company the opportunity to contest the same,
either directly or in the name of the owner of Bonds, until a conclusion of any
appellate review, if sought, then the Trustee shall promptly
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<PAGE> 46
give notice thereof to the Company, the Authority, the Bank and the Owner of
each Bond Outstanding. The Trustee shall thereafter coordinate any similar
requests or notices it may have received from other Owners of Bonds and shall
keep them informed of the progress of any administrative proceedings or
litigation. If a Determination of Taxability is made, the Trustee shall give
notice of the redemption of the Bonds at the earliest practicable date, but not
later than the date specified in this Section, and in the manner provided by
Section 8.05 of this Indenture.
SECTION 8.04. Mandatory Partial Redemption. There shall be called for
redemption on December 1 of each year from December 1, 1990 to and including
December 1, 1998, the following principal amounts of Bonds chosen in such manner
as the Trustee shall determine (subject to Section 8.08 hereof) at the principal
amount thereof plus accrued interest:
<TABLE>
<CAPTION>
Year Amount Year Amount
---- ------ ---- ------
(December 1) (December 1)
<S> <C> <C> <C>
1990 $250,000 1994 $250,000
1991 250,000 1995 250,000
1992 250,000 1996 250,000
1993 250,000 1997 250,000
1998 250,000
</TABLE>
At its option, to be exercised on or before the 45th day prior to each
of the mandatory redemption dates set forth in this Section 8.04, the Authority,
through (or at the direction of) the Company, may do any one or more of the
following: (a) deliver to the Trustee for cancellation Bonds or (b) receive a
credit in respect of its mandatory partial redemption obligation for any Bonds
which prior to said date have been redeemed or purchased (otherwise than through
the operation of such mandatory partial redemption) and cancelled by the Trustee
and not theretofore applied as a credit against such mandatory partial
redemption obligations. Each Bond so delivered, redeemed or purchased in
accordance with clauses (a) or (b) of this Section 8.04 shall be credited by the
Trustee at 100% of the principal amount thereof to the obligation of the
Authority with respect to the Mandatory Redemption Account; any excess over such
amount shall be credited to such future obligations with respect to the
Mandatory Redemption Account in accordance with the instructions of the Company.
The Authority, through (or at the direction of) the Company, will, on or before
the 45th day next preceding each mandatory partial redemption date, furnish the
Trustee with its certificate indicating to what extent, if any, the provisions
of clauses (a) or (b) of this paragraph are to be availed of with respect to
each such mandatory partial redemption payment.
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<PAGE> 47
SECTION 8.05. Notice of Redemption. Notice of the call for redemption,
identifying the Bonds or portions thereof to be redeemed, shall be given by the
Trustee by mailing a copy of the redemption notice by registered or certified
mail at least fifteen (15) days but not more than sixty (60) days prior to the
date fixed for redemption to the Owner of each Bond to be redeemed in whole or
in part at the address shown on the registration books. Any notice mailed as
provided in this Section shall be conclusively presumed to have been duly given,
whether or not the Owner receives the notice. The Trustee shall deliver a copy
of any such redemption notice to the Tender Agent. Notwithstanding the foregoing
provisions of this Section 8.05, delivery by the Tender Agent of a copy of a
redemption notice to a transferee of a Bond which has been called for
redemption, pursuant to the requirements of Section 2.08, shall be deemed to
satisfy the requirements of the first sentence of this Section 8.05 with respect
to any such transferee.
SECTION 8.06. Redemption Payments. Upon the giving of notice and the
deposit of Available Moneys for redemption at the required times on or prior to
the date fixed for redemption, as provided in this Article, interest on the
Bonds or portions thereof thus called shall no longer accrue after the date
fixed for redemption.
SECTION 8.07. Cancellation. All Bonds which have been redeemed shall
not be reissued but shall be canceled and cremated or otherwise destroyed by the
Trustee in accordance with Section 2.11 hereof.
SECTION 8.08. Partial Redemption of Bonds. (a) Upon surrender of any
Bond for redemption in part only, the Authority shall execute and the Trustee
shall authenticate and deliver to the Owner thereof a new Bond or Bonds of
authorized denominations, in an aggregate principal amount equal to the
unredeemed portion of the Bond surrendered.
(b) In case a Bond is of a denomination larger than $5,000, a
portion of such Bond ($5,000 or any integral multiple thereof) may be redeemed,
but Bonds shall be redeemed only in the principal amount of $5,000 or any
integral multiple thereof.
(c) Notwithstanding anything to the contrary contained in this
Indenture, whenever the Bonds are to be redeemed in part, Bonds which are
Pledged Bonds at the time of selection of Bonds for redemption shall be selected
for redemption prior to the selection of any other bonds. If the aggregate
principal amount of Bonds to be redeemed exceeds the aggregate principal amount
of Pledged Bonds at the time of selection, the Trustee may select for redemption
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<PAGE> 48
Bonds in an aggregate principal amount equal to such excess in such manner as
the Trustee may determine.
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<PAGE> 49
ARTICLE IX
COVENANTS OF AUTHORITY
Section 9.01. Payment of Principal and Interest on Bonds. The Authority
or cause to be paid the principal of and very Bond issued hereunder according to
the terms thereof, but shall be required to make such payment only out of the
Trust Estate. The Authority shall appoint one or more paying agents for such
purpose, each such agent to be a bank and trust company or a trust company or a
national banking association having trust powers. The Authority hereby appoints
the Trustee to act as plying agent and designates the Principal Office of the
Trustee as the place of payment of principal of the Bonds, such appointment and
designation to remain in effect until notice of change is filed with the
Trustee.
SECTION 9.02. Corporate Existence and Maintenance of Project
Facilities. The Authority shall maintain its corporate existence and its right
to operate or lease the Premises and shall provide for or cause the Company to
provide for (a) continuous operation of the same; (b) performance of all
repairs, renewals, replacements and improvements thereto necessary to maintain
adequate service; and (c) compliance with all valid and applicable laws, acts,
rules, regulations, permits, orders, requirements and direction of any competent
public authority.
SECTION 9.03. Subleasing, etc. of Facilities. Upon termination of the
Sublease, the Authority may sublease the Premises or any portions thereof to
third parties lawfully entitled to enter into such subleases, but the Authority
covenants that any such sublease shall be subject to, and shall not contain
terms inconsistent with, this Indenture and shall be approved by the Trustee.
The Authority may, at any time, enter into operating agreements in respect of
the Premises with the Company or with third parties lawfully entitled to enter
into such agreements, but the Authority covenants that any such agreement shall
be subject to, and shall not contain terms inconsistent with, this Indenture.
SECTION 9.04. Enforcement, Execution and Amendment of Sublease and
Other Contracts; Notice of Default. The Authority shall cause this Indenture to
be terms of the Sublease and of rentals and other amount any supplement or
amendment thereto, and any other sublease, agreement or other contract executed
pursuant to Section 9.03 or otherwise made subject to the lien and security
interest created by this Indenture, and shall otherwise
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<PAGE> 50
enforce all of its rights and privileges, and honor all of its obligations
thereunder, and subject to Section 10.02 hereof, shall require every party with
which it so contracts, including the Company under the Sublease, to perform all
of its contractual obligations and covenants. So long as no Event of Default
hereunder shall have occurred and be continuing, the Authority may exercise all
its rights under any sublease, agreement or contract, or supplement or amendment
thereto, but the Authority shall not, without the consent of the Trustee, amend
any of the same so as to affect adversely the Authority's ability to perform its
covenants under this Indenture. The Authority shall file with the Trustee copies
of the Sublease and other subleases, agreements and contracts of the nature
referred to in Section 9.03 (whether heretofore or hereafter executed), together
with all amendments or supplements thereto, whether or not the Trustee's consent
is required thereto, and shall give prompt notice to the Trustee of any default
by any of the parties thereto except defaults of minor importance to the
interests of the Authority therein.
SECTION 9.05. Insurance Requirements. The Authority shall keep the
Project Facilities, or cause the same to be kept, insured by one or more
insurance companies authorized and qualified to do business under the laws of
New Jersey against such risks and in such amounts as are specified in the
Sublease. The Authority will carry or cause to be carried liability and property
damage insurance in such amounts and in such manner as is described in the
Sublease or, if the Sublease has been terminated, as is otherwise customary in
the operation of similar facilities to the Project Facilities.
The insurance policies required hereunder or copies thereof or
insurance certificates with respect thereto shall be filed with the Trustee.
Any appraisal, adjustment or settlement agreed upon among the
Authority, the Company and any insurer which is evidenced by an Officers'
Certificate of the Company (if the amount is $50,000 or less) or otherwise by a
Certified Resolution of the Authority and approved by a Consultant and the
Company as evidenced by an Officers' Certificate may be accepted by the Trustee.
SECTION 9.06. Annual Certificate Regarding Insurance. The Authority
shall, on or before the execution and delivery hereof, and thereafter prior to
the beginning of each Fiscal Year, cause the Company to deliver to the Trustee,
a certificate of the Insurance Consultant listing the insurance policies,
coverage amounts and expiration dates, stating therein whether the Company is in
compliance with the insurance requirements of the Sublease and this
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<PAGE> 51
Indenture, stating the amounts and types of insurance which should be maintained
in the next ensuing Fiscal Year and specifying the insurance renewals and
replacements to be made during such next ensuing Fiscal Year.
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<PAGE> 52
SECTION 9.07. Sublease of Premises Prohibited; Exceptions. The
Authority shall not sublease (other than to the Company pursuant to the Sublease
or as provided in Section 9.03 hereof), nor shall it permit the Company to
sublease (except as provided in Section 7.14 of the Sublease) the Premises.
SECTION 9.08. Payment of Taxes; Discharge of Liens. The Authority shall
pay, or cause to be paid, all taxes, assessments, or other municipal or
governmental charges lawfully imposed upon the Authority or the Premises or any
revenues therefrom and will not suffer to be created or to exist any lien or
charge thereon except the lien and charge of the Sublease, this Indenture, and
the Bonds issued under this Indenture; provided, however, that the Authority
hereby consents to the granting of a lien on or security interest in the
Company's rights in the Premises by the Company to Simon Engineering, P.L.C., as
guarantor of the Company's obligations under the Credit Agreement. The Authority
shall pay or discharge or shall make adequate provision to satisfy and
discharge, or shall cause the same to occur, within thirty (30) days after the
same shall accrue, any such lien or charge and all lawful claims and demands for
labor, materials, supplies or other objects which, if unpaid, might become such
a lien or charge; provided, however, that this shall not require the Authority
to pay or discharge or make provision for any lien or charge so long as the
validity thereof is being contested in good faith and by appropriate legal
proceedings and neither the Premises nor any rent or income therefrom or
interest therein would be in any immediate danger of being sold, forfeited,
attached or lost.
SECTION 9.09. Extension of Time for Payment of Interest, etc.
Prohibited. The Authority shall not directly or indirectly extend or assent to
the extension of the time for payment of any claim for interest on, any of the
Bonds and shall not directly or indirectly be a party to or approve any
arrangement therefor by purchasing or funding or in any manner keeping alive any
such claim for interest; and no claim for interest which in any way at or after
maturity shall have been transferred or pledged apart from the Bond to which it
relates or which shall in any manner have been kept alive after maturity by
extension or by purchase thereof by or on behalf of the Authority shall be
entitled, in case of a default hereunder, to any benefit or security under this
Indenture except after the prior payment in full of the principal of all Bonds
and of all claims for interest appertaining thereto not so transferred, pledged,
kept alive or extended.
SECTION 9.10. Employment of an Architect. The Authority shall employ or
cause Company to employ an Ar-
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<PAGE> 53
chitect to the extent necessary to perform the services required hereunder and
to advise the Authority on questions relating to the Project Facilities.
SECTION 9.11. Employment of Certified Public Accountant. The Authority
shall employ or cause to be employed as required a Certified Public Accountant
to perform the accounting and auditing functions and duties required by the Act
and this Indenture.
SECTION 9.12. Annual Budget and Statements. The Authority shall furnish
or shall cause to be furnished to the Local Finance Board a budget of the
Authority for each fiscal year as required by the Act. The Authority shall
furnish to the Trustee a copy of all reports and other documents which the
Company or other third party is required to furnish the Authority under the
Sublease or similar agreement.
SECTION 9.13. Financing Statements and Other Action to Protect Security
Interests. The Authority shall cause this Indenture or a financing statement or
memorandum relating thereto to be filed, registered and recorded in such manner
and at such places as may be required by law to protect the security of the
Owners of the Bonds and the right, title and interest of the Trustee in and to
the Trust Estate or any part thereof. Concurrently with the execution and
delivery hereof and thereafter from time to time, as reasonably requested by the
Trustee, not less often than once every five (5) years, the Authority shall
obtain an opinion of Counsel and furnish a signed copy thereof to the Trustee,
setting forth what, if any, actions by the Authority or Trustee should be taken
to preserve such security. The Authority shall perform or shall cause to be
performed any such acts, and execute and cause to be executed any and further
instruments as may be required by law or as shall be reasonably requested by the
Trustee for such protection of the interests of the Trustee and the Owners of
the Bonds, and shall furnish satisfactory evidence to the Trustee for such
protection of the interests of the Trustee and the Owners of the Bonds, and
shall furnish satisfactory evidence to the Trustee of recording, registering,
filing and refiling of such instrument and of every additional instrument which
shall be necessary to preserve the lien of this Indenture upon the Trust Estate
or any part thereof until the principal of and interest on the Bonds secured
hereby shall have been paid. The Trustee shall execute or join in the execution
of any such further or additional instrument and file or join in the filing
thereof at such time or times and in such place or places as it may be advised
by an opinion of Counsel will preserve the lien of this Indenture upon the Trust
Estate or any part thereof until the aforesaid principal and interest shall have
been paid.
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<PAGE> 54
SECTION 9.14. Further Assurances; Additional Revenues. The Authority
shall not enter into any contract or take any action by which the rights of the
Trustee or the Owners of the Bonds may be impaired and shall, from time to time,
execute and deliver such further instruments and take such further action as may
be required to carry out the purposes of this Indenture. If at any time the
Authority receives any income or payment from or in respect of the Premises or
the Bonds which is not assigned to the Trustee (other than payments made
pursuant to Sections 4.01(b), 9.03 or 9.05 of the Sublease), it shall promptly
pay the same to the Trustee for deposit in the Bond Fund and, at the request of
the Trustee, shall execute and deliver an assignment of its right, title and
interest in and to future income or payments of the same type to the Trustee to
be held as part of the Trust Estate and file or record such assignment as may be
appropriate to perfect the security interest created thereby.
SECTION 9.15. Investments to Comply with Internal Revenue Code. The
Authority covenants to the Owners of the Bonds that it will make no investment
or other use of the proceeds of the Bonds issued hereunder which would cause the
Bonds to be "arbitrage bonds" as that term is defined in Section 103(c) of the
Code and all applicable regulations promulgated with respect thereto, and that
it will comply with the requirements of the Code and regulations throughout the
term of the Bonds.
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<PAGE> 55
ARTICLE X
EVENTS OF DEFAULTS AND REMEDIES
SECTION 10.01. Events of Default Defined. Each of the following shall
be an "Event of Default" hereunder:
(a) if payment of any installment of interest on any Bond is
not made within three days of when it becomes due and payable; or
(b) if payment of the principal of or premium, if any, on any
Bond is not made when it becomes due and payable at maturity or upon
call for redemption or upon maturity thereof by declaration; or
(c) if payment of the Purchase Price of any Bond is not made
at the time required by Section 3.01, 3.02 or 3.06 hereof;
(d) at any time prior to the Letter of Credit Termination
Date, receipt by the Trustee, within 10 "business days" (as defined in
the Letter of Credit) following a drawing under the Letter of Credit to
pay interest or the portion of the Purchase Price corresponding to
interest on the Bonds, of notice from the Bank that the Letter of
Credit will not be reinstated (in respect of interest) to an amount
equal to at least 120 days' interest on all Outstanding Bonds;
(e) receipt by the Trustee of notice from the Bank that an
"Event of Default" has occurred under the Credit Agreement;
(f) at any time after the Letter of Credit Termination Date,
the occurrence of an "Event of Default" under the Sublease;
(g) at any time after the Letter of Credit Termination Date,
if the Authority defaults in the due and punctual performance of any
other covenant in the Bonds or in this Indenture and such default
continues for thirty (30) days after written notice requiring the same
to be remedied shall have been given to the Authority and the Company
by the Trustee, which may give such notice in its discretion and shall
give such notice at the written request of the Owners of not less than
25% in aggregate principal amount of Bonds then Outstanding; provided,
however, that if such performance requires work to be done, actions to
be taken, or
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<PAGE> 56
conditions to be remedied, which by their nature cannot reasonably be
done, taken or remedied, as the case may be, within such thirty (30)
day period, no Event of Default shall be deemed to have occurred or
exist if, and so long as, the Authority or the Company shall commence
such performance within such thirty (30) day period and shall
diligently and continuously prosecute the same to completion.
SECTION 10.02. Acceleration. Upon the occurrence of (i) any Event of
Default under subsection (a), (b), (c), (f) or (g) of Section 10.01, the Trustee
may, and upon written request of the Owners of not less than 25% in aggregate
principal amount of the Bonds then Outstanding, shall, or (ii) any Event of
Default under subsection (d) or (e) of Section 10.01, the Trustee shall, by
notice in writing delivered to the Authority and the Company, declare the
principal of all Bonds then Outstanding to be immediately due and payable, and
upon such declaration the said principal, together with interest accrued
thereon, shall become due and payable immediately at the place of payment
provided therein, anything in this Indenture or in the Bonds to the contrary
notwithstanding.
Upon any declaration of acceleration hereunder, the Trustee shall
immediately declare the payments required to be made by the Company under
Section 4.01 of the Sublease to be immediately due and payable and, prior to the
Letter of Credit Termination Date, shall draw moneys under the Letter of Credit
to pay the principal of all Outstanding Bonds and the accrued interest thereon
to the date of acceleration to the extent required by Section 6.09(a) hereof.
SECTION 10.03. Entry by Trustee. If any Event of Default has occurred
and is continuing, the Trustee, subject to Section 10.02 hereof, and, so long as
the Letter of Credit is in effect or any amount is owed to the Bank under the
Credit Agreement, only with the consent of the Bank, (a) may enforce each and
every right granted to the Authority under the Sublease, and all other
subleases, agreements and contracts and any supplements or amendments thereto
executed as provided in Section 9.03 hereof, and (b) insofar as such right may
be lawfully conferred upon the Trustee, may, by its agents or attorneys, with or
without process of law, enter upon and take and maintain possession of all or
any part of the Project Facilities, together with all records, documents, books,
papers and accounts of the Authority relating thereto, and may, as the attorney
in fact or agent of the Authority, being duly authorized, or in its own name as
Trustee, hold, manage, and operate such Project Facilities and collect the
amounts payable by reason of such operation. After paying the expenses of
operation and
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maintenance, including such repairs, replacements, alterations, additions and
improvements as it deems proper, the Trustee shall apply the balance of the
revenues as provided in Section 10.11 hereof.
SECTION 10.04. Legal Proceedings by Trustee. Subject to the provisions
of Section 10.02 hereof, if any Event of Default has occurred and is continuing,
the Trustee in its discretion may, and upon the written request of the Owners of
not less than 25% in aggregate principal amount of the Bonds then Outstanding
and receipt of indemnity to its satisfaction shall, in its own name:
(a) by mandamus, or other suit, action or proceeding at law or
in equity, enforce all rights of the Owners of the Bonds, including the
right to require the Authority to charge and collect rates, rentals and
other charges adequate to carry out the terms of this Indenture and to
require the Authority to carry out any other agreements with, or for
the benefit of, the Owners of the Bonds and to perform it or their
duties under the Act;
(b) bring suit upon the Bonds;
(c) by action or suit in equity require the Authority to
account as if it were the trustee of an express trust for the Owners of
the Bonds; and
(d) by action or suit in equity enjoin any acts or things
which may be unlawful or in violation of the rights of the Owners of
the Bonds.
SECTION 10.05. Discontinuance of Proceedings by Trustee. If any
proceeding taken by the Trustee on account of any default is discontinued or is
determined adversely to the Trustee, the Authority, the Trustee and the Owners
of the Bonds shall be restored to their former positions and rights hereunder as
though no such proceeding had been taken.
SECTION 10.06. Owners of Bonds May Direct Proceedings. Subject to the
provisions of Section 10.02 hereof, the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding hereunder shall have the right to
direct the method and place of conducting all remedial proceedings by the
Trustee hereunder, provided such directions shall not be otherwise than in
accordance with law or the provisions of this Indenture, and that the Trustee
shall have the right to decline to follow any such directions which in the
opinion of the Trustee would be unjustly prejudicial to Owners of the Bonds not
parties to such directions.
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SECTION 10.07. Limitations on Actions by Owners of Bonds. Subject to
the provisions of Section 10.02 hereof, no Owner of Bonds shall have any right
to pursue any remedy hereunder unless (a) the Trustee shall have been given
written notice of an Event of Default, (b) the Owners of at least 25% in
aggregate principal amount of the Bonds then Outstanding shall have requested
the Trustee, in writing, to exercise the powers granted in this Indenture or to
pursue such remedy in its or their name or names, (c) the Trustee shall have
been offered indemnity satisfactory to it against costs, expenses and
liabilities, and (d) the Trustee shall have failed to comply with such request
within a reasonable time.
SECTION 10.08. Trustee May Enforce Rights Without Possession of Bonds.
All rights under this Indenture and the Bonds may be enforced by the Trustee
without the possession of any Bonds or the production thereof at the trial or
other proceedings relative thereto, and any proceeding instituted by the Trustee
shall be brought in its name for the ratable benefits of the Owners of the
Bonds.
SECTION 10.09. Remedies Not Exclusive. Subject to the provisions of
Section 10.02 hereof and except as limited under Section 15.01 and 15.02 of this
Indenture, no remedy herein conferred is intended to be exclusive of any other
remedy or remedies, and each remedy is in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.
SECTION 10.10. Delays and Omissions Not to Impair Rights. No delay or
omission in respect of exercising any right or power accruing upon any default
shall impair such right or power or be a waiver of such default, and every
remedy given by this Article X may be exercised from time to time and as often
as may be deemed expedient.
SECTION 10.11. Application of Moneys in Event of Default. Any moneys
received by the Trustee under this Article shall be applied,
First: to the payment of the costs of the Trustee, including
counsel fees, any disbursements of the Trustee with interest thereon
and its reasonable compensation; and
Second: to the payment of principal or redemption price (as
the case may be) and interest then owing on the Bonds and in case such
moneys shall be insufficient to pay the same in full, then to the
payment of principal or redemption price and interest ratably, without
preference or priority of one over another or of any installment
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of interest over any other installment of interest.
The surplus, if any, shall be paid to the Company or the Bank, as
provided in Section 6.08 hereof.
Notwithstanding anything to the contrary herein or otherwise, moneys
drawn under the Letter of Credit shall be applied only to the payment of
principal or Purchase Price of, premium, if any, and accrued interest on the
Bonds.
SECTION 10.12. Trustee's Right to Receiver; Compliance with Act. As
provided by the Act, the Trustee shall be entitled as of right to the
appointment of a receiver; and the Trustee, the Owners of the Bonds and any
receiver so appointed shall have such rights and powers and be subject to such
limitations and restrictions as are contained in the Act.
SECTION 10.13. Waivers of Default. The Trustee shall waive any Default
hereunder and its consequences and rescind any declaration of acceleration of
principal upon the written request of the Owners of (1) more than two-thirds
(2/3) in aggregate principal amount of all Outstanding Bonds in respect of which
default in the payment of principal or interest, or both, exists or (2) more
than two-thirds (2/3) in aggregate principal amount of Outstanding Bonds in the
case of any other Event of Default; provided, however, that any Event of Default
under subsection (e) of Section 10.01 hereof may only be waived upon the written
request of the Bank (and in such case the consent of the Owners of the Bonds
shall not be required); and provided further that there shall not be waived any
Event of Default specified in subsection (a) or (b) of Section 10.01 hereof
unless prior to such waiver or rescission, all arrears of principal and interest
(other than principal of or interest on the Bonds which became due and payable
by declaration of acceleration), with interest at the Late Payment Rate on
overdue installments, to the extent permitted by law, and all expenses of the
Trustee in connection with such Event of Default shall have been paid or
provided for. In case of any waiver or rescission described above, or in case
any proceeding taken by the Trustee on account of any such Event of Default
shall have been discontinued or concluded or determined adversely, then and in
every such case the Authority, the Trustee and the Owners of Bond shall be
restored to their former positions and rights hereunder, respectively, but no
such waiver or rescission shall extend to any subsequent or other Event of
Default, or impair any right consequent thereon.
Notwithstanding the foregoing, no waiver, rescission or annulment of an
Event of Default hereunder shall be
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made if the Bank shall theretofore have honored in full a drawing under the
Letter of Credit in respect of such Event of Default.
SECTION 10.14. Trustee and Owners of Bonds Entitled to All Remedies
under Act. It is the purpose of this Article to provide such remedies to the
Trustee and Owners of the Bonds as may be lawfully granted under the provisions
of the Act; but should any remedy herein granted be held unlawful, the Trustee
and the Owners of the Bonds shall nevertheless be entitled, subject to Section
10.02 hereof, to every other remedy provided by the Act. It is further intended
that, insofar as lawfully possible, the provisions of this Article shall apply
to and be binding upon the trustee or receiver appointed under the Act.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Acceptance of Trust. The Trustee accepts and agrees to
execute the trusts hereby created, but only upon the additional terms set forth
in this Article, to all of which the parties hereto and the Owners of the Bonds
agree.
SECTION 11.02. No Responsibilities for Recitals, etc. The recitals,
statements and representations in this Indenture or in the Bonds, save only
Trustee's Authentication Certificate upon the Bonds, have been made by the
Authority and not by the Trustee; and the Trustee shall be under no
responsibility for the correctness thereof.
SECTION 11.03. Trustee May Act Through Agents; Answerable Only for
Willful Misconduct or Negligence. The Trustee may execute any powers hereunder
and perform any duties required of it through attorneys, agents, officers, or
employees, and shall be entitled to advice of counsel concerning all questions
hereunder; and the Trustee shall not be answerable for the default or misconduct
of any attorney, agent or employee selected by it with reasonable care, except
that the Trustee shall at all times be answerable and responsible for any
liability to the Authority and Company resulting from any theft or loss of, or
unauthorized or wrongful issuance of, Bonds held by it or after an exchange as
set forth in Section 2.08 hereof. The Trustee shall not be answerable for the
exercise of any discretion or power under this Indenture nor for anything
whatever in connection with the trust hereunder, except only its own willful
misconduct or negligence or the theft or loss, for any reason whatsoever, or
unauthorized or wrongful issuance of Bonds held by the Trustee in accordance
with Section 2.08 hereof.
SECTION 11.04. Compensation and Indemnity. The Authority shall pay the
Trustee reasonable compensation for its services hereunder, and also all of its
reasonable expenses and disbursements, and shall indemnify the Trustee against
any liabilities which it may incur in the exercise and performance of its powers
and duties hereunder except with respect to any theft or loss of, or
unauthorized or wrongful issuance of, Bonds held by the Trustee in accordance
with Section 2.08 hereof. If the Authority defaults in respect of the foregoing
obligations, the Trustee may deduct the amounts owing to it from any moneys
coming into its hand (exclusive of the proceeds of any draw under the Letter of
Credit) before making any payment on any Bonds.
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SECTION 11.05. No Duty as to Insurance. The Trustee shall be under no
duty to effect or to renew any insurance policy nor shall it incur any liability
for the failure of the Authority to require or effect or renew insurance or to
report or file claims of loss thereunder.
SECTION 11.06. Notice of Default; Right to Investigate. The Trustee
shall, within ninety (90) days after the occurrence thereof, give written notice
by first class mail to the Bank and the Owners of Bonds of all defaults known to
the Trustee, unless such defaults have been remedied (the term "defaults" for
purposes of this Section being defined to include the events specified in
clauses (a) through (g) of Section 10.01, not including any notice or periods of
grace provided for therein); provided that, in the case of a default described
in clause (f) or (g), the Trustee may withhold such notice so long as it in good
faith determines that such withholding is in the interest of the Owners of the
Bonds.
The Trustee shall not be deemed to have notice of any default under
clauses (f) and (g) of Section 10.01 unless notified in writing of such default
by the Authority, the Bank or the Owners of at least 25% in aggregate principal
amount of the Bonds then Outstanding. The Trustee may, however, at any time
require of the Authority full information as to the performance of any covenant
hereunder; and if information satisfactory to it is not forthcoming, the Trustee
may make or cause to be made, at the expense of the Authority, an investigation
into the affairs of the Authority related to this Indenture and the Project
Facilities.
SECTION 11.07. Reliance on Requisitions, etc. The Trustee may act on
any requisition, resolution, notice, telegram, request, consent, waiver,
certificate, statement, affidavit, voucher, bond, or other paper or document
which it in good faith believes to be genuine and to have been passed or signed
by the proper persons or to have been prepared and furnished pursuant to any of
the provisions of this Indenture; and the Trustee shall be under no duty to make
any investigation as to any statement contained in any such instrument but may
accept the same as conclusive evidence of the accuracy of such statement.
SECTION 11.08. Trustee May Deal in Bonds. The Trustee may in good faith
buy, sell, own, hold and deal in any of the Bonds and may join in any action
which any Owners of the Bonds may be entitled to take with like effect as if the
Trustee were not a party to this Indenture. The Trustee may also engage in or be
interested in any financial or other transaction with the Authority, provided
that if the Trustee determines that any such relation is in conflict
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with its duties under this Indenture, it shall eliminate the conflict or resign
as Trustee.
SECTION 11.09. Allowance of Interest. Upon request of the Authority the
Trustee shall, to the extent permitted by law, allow interest upon any moneys
which it receives under this Indenture at such rate as it customarily allows
upon funds deposited under similar conditions.
SECTION 11.10. Construction of Ambiguous Provisions. The Trustee may
construe any ambiguous or inconsistent provisions of this Indenture, and any
construction by the Trustee shall be binding upon the Owners of the Bonds.
SECTION 11.11. Intervention by the Trustee. In any judicial proceeding
which in the opinion of the Trustee and its Counsel has a substantial bearing on
the interests of the Owners of the Bonds, the Trustee may intervene on behalf of
the Owners of the Bonds and shall do so if requested in writing by the Bank or
the Owners of at least twenty-five percent (25%) aggregate principal amount of
Bonds Outstanding.
SECTION 11.12. Resignation of Trustee. The Trustee may resign and be
discharged of the trusts created by this Indenture by written resignation filed
with the Secretary of the Authority not less than sixty (60) days before the
date when such resignation is to take effect; provided notice of such
resignation is also mailed to the Owners not less than three (3) weeks prior to
the date when the resignation is to take effect. Such resignation shall take
effect on the day specified therein unless a successor trustee is previously
appointed, in which event the resignation shall take effect immediately on the
appointment of such successor.
SECTION 11.13. Removal of Trustee. Any Trustee hereunder may be removed
at any time by an instrument appointing a successor to the Trustee so removed,
executed by the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding and filed with the Trustee and the Authority.
SECTION 11.14. Appointment of Successor Trustee. If the Trustee or any
successor trustee resigns or is removed or dissolved, or if its property or
business is taken under the control of any state or federal court or
administrative body, a vacancy shall forthwith exist in the office of the
Trustee, and the Authority shall appoint a successor and shall mail a notice of
such appointment to the Owners of the Bonds. If the Authority fails to make such
appointment within thirty (30) days, the Owners of a
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majority in aggregate principal amount of the Bonds then Outstanding may do so.
SECTION 11.15. Qualification of Successor. A successor trustee shall be
a national bank with trust powers, a bank with trust powers, or a bank and trust
company or a trust company organized under the laws of the State having reported
capital and surplus of at least $50,000,000.
SECTION 11.16. Instruments of Succession. Any successor trustee shall
execute, acknowledge and deliver to the Authority an instrument accepting such
appointment hereunder; and thereupon such successor trustee, without any further
act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessor in
the trust hereunder, with like effect as if originally named Trustee herein. The
Trustee ceasing to act hereunder shall pay over to the successor trustee all
moneys held by it hereunder; and, upon request of the successor trustee, the
Trustee ceasing to act and the Authority shall execute and deliver an instrument
transferring to the successor trustee all the estates, properties, rights,
powers and trusts hereunder of the Trustee ceasing to act.
SECTION 11.17. Merger of Trustee. Any corporation into which any
Trustee hereunder may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which any Trustee
hereunder shall be a party, shall be the successor trustee under this Indenture,
without the execution or filing of any paper or any further act on the part of
the parties hereto, anything herein to the contrary notwithstanding, provided,
however, that any such successor corporation continuing to act as Trustee
hereunder shall meet the requirements of Section 11.15 hereof, and if such
corporation does not meet the aforesaid requirements, a successor Trustee shall
be appointed pursuant to this Article XI.
SECTION 11.18. Reports of Trustee. The Trustee shall provide such
reports as may be reasonably required by Company or the Authority including
satisfactory evidence of the securing of any certificates of deposit issued by
its commercial department.
SECTION 11.19. Successor Tender Agent.
(a) Any corporation or association into which the Tender Agent
may be converted or merged, or with which it may be consolidated, or to which it
may sell or transfer its trust business and assets as a whole or substantially
as a whole, or any corporation or association resulting from any such
conversion, sale, merger,
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consolidation or transfer to which it is a party, shall be and become the
successor Tender Agent hereunder, without the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
(b) The Tender Agent may at any time resign by giving thirty
(30) days' notice to the Authority, the Trustee, the Company and the Remarketing
Agent. Such resignation shall not take effect until the appointment of a
successor Tender Agent.
(c) The Tender Agent may be removed at any time by an
instrument in writing delivered to the Trustee and the Tender Agent by the
Company, with the prior written approval of the Bank. In no event, however,
shall any removal of the Tender Agent take effect until a successor Tender Agent
shall have been appointed.
(d) In case the Tender Agent shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise
become incapable of acting as Tender Agent, or in case it shall be taken under
the control of any public officer or officers, or of a receiver appointed by a
court, a successor may be appointed by the Company with the prior written
approval of the Authority and the Bank. Every successor Tender Agent appointed
pursuant to the provisions of this Section shall be, if there be such an
institution willing, qualified and able to accept the duties of the Tender Agent
upon customary terms, a bank or trust company within or without the State, in
good standing and having reported capital and surplus of not less than
$50,000,000. Any such successor shall have an office in the City of New York,
New York, and shall be acceptable to the Trustee. Written notice of such
appointment shall immediately be given by the Company to the Trustee and the
Trustee shall cause written notice of such appointment to be given to the Owners
of the Bonds. Any successor Tender Agent shall execute and deliver an instrument
accepting such appointment and thereupon such successor, without any further
act, deed or conveyance, shall become fully vested with all rights, powers,
duties and obligations of its predecessor, with like effect as if originally
named as Tender Agent, but such predecessor shall nevertheless, on the written
request of the Company, the Trustee or the Authority, or of the successor,
execute and deliver such instruments and do such other things as may reasonably
be required to more fully and certainly vest and confirm in such successor all
rights, powers, duties and obligations of such predecessor. If no successor
Tender Agent has accepted appointment in the manner provided above within 90
days after the Tender Agent has given notice of its resignation as provided
above, the Tender Agent may petition any court of competent jurisdiction
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for the appointment of a temporary successor Tender Agent; provided that any
Tender Agent so appointed shall immediately and without further act be
superseded by a Tender Agent appointed by the Company as provided above.
SECTION 11.20. Notice to Rating Agencies. The Trustee shall provide
Moody's or S&P, as appropriate, with written notice prior to the effective date
of such event of (i) any successor Trustee, (ii) any Substitute Bank, (iii) any
material amendments to this Indenture or the Sublease, (iv) the termination of
any Letter of Credit, (v) the redemption in whole of the Bonds, or (vi) any
amendment to the Credit Agreement or the Letter of Credit of which the Trustee
is aware.
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ARTICLE XII
ACTS OF OWNERS OF BONDS;
EVIDENCE OF OWNERSHIP OF BONDS
SECTION 12.01. Acts of Owners of Bonds; Evidence of Ownership. Any
action to be taken by the Owners of Bonds may be evidenced by one or more
concurrent written instruments of similar tenor signed or executed by such
Owners of Bonds in person or by agent appointed in writing. The fact and date of
the execution by any person of any such instrument may be proved by
acknowledgment before a notary public or other officer empowered to take
acknowledgments or by an affidavit of a witness to such execution. The fact of
the ownership of Bonds, the amount and numbers of the Bonds held, and the date
of the holding shall be conclusively determined by the books kept by, or caused
to be kept by, the Authority at the Principal Office of the Trustee for the
registration and transfer of the Bonds. Any action by the Owner of any Bond
shall bind all future Owners of the same Bond in respect of anything done or
suffered by the Authority or the Trustee in pursuance thereof.
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ARTICLE XII
AMENDMENTS AND SUPPLEMENTS
SECTION 13.01. Amendments and Supplements without Consent of Owners of
Bonds. This Indenture may the consent of the Bank, amended or supplemented from
time to time without the consent of the Owners of the Bonds by a Supplemental
Indenture authorized by a Certified Resolution of the Authority filed with the
Trustee, for one or more of the following purposes:
(a) to add additional covenants of the Authority or to
surrender any right or power herein conferred upon the Authority or to
grant or confer upon the Trustee for the benefit of the Owners of Bonds
any additional rights, remedies, powers or authorities that may
lawfully be granted to or conferred upon the Owners of Bonds or the
Trustee;
(b) to cure any ambiguity or to cure, correct or supplement
any defective provision of this Indenture in such manner as shall not
be inconsistent with this Indenture and shall not impair the security
hereof or adversely affect the Owners of the Bonds;
(c) to reflect changes in applicable law;
(d) to subject to this Indenture additional revenues,
properties or collateral;
(e) to modify, amend or supplement this Indenture to permit
qualification of the Bonds for sale under the securities laws of any
state of the United States of America;
(f) to evidence appointment of a separate or Co-Trustee or the
succession of a new Trustee hereunder; and
(g) to effect any other change herein which, in the judgment
of the Trustee, is not to the prejudice of the Trustee or Owners of the
Bonds, including any such change which is necessary to receive an
initial rating from Moody's or S&P on the Bonds.
SECTION 13.02. Amendments With Consent of the Owners of Bands. This
Indenture may be amended from time to time, as set forth below except with
respect to (1) the interest payable upon any Bonds, (2) the dates of maturity or
redemption or purchase provisions of the Bonds, (3) this
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Article XII, and (4) the security provisions hereunder, by a Supplemental
Indenture approved by the Bank and the Owners of at least 66-2/3% in aggregate
principal amount of the Bonds then Outstanding; provided, that no amendment
shall be made which affects the rights of some but less than all the Outstanding
Bonds without the consent of the Owners of 66-2/3% of the Bonds so affected.
Amendments with respect to items (1), (2), (3) and (4) of this Section 13.02
shall be effected only with the consent of the Bank and the Owners of all Bonds
then outstanding and affected by such amendments.
SECTION 13.03. Amendments to Sublease Without Consent of Owners of
Bonds. TO Sublease may, with the consent of the Bank, be amended or supplemented
from time to time, without the consent of the Owners of Bonds, for the purpose
of:
(a) curing any ambiguity or formal defect or omission in the
Sublease;
(b) more precisely identifying the Project, or to substitute
or add additional improvements or equipment to the Project or
additional rights or interests in property acquired in accordance with
the provisions of the Sublease;
(c) to effect any other change therein which, in the judgment
of the Trustee, is not to the prejudice of the Trustee or the Owners of
the Bonds, including any such change which is necessary to receive an
initial rating from Moody's or S&P on the Bonds.
SECTION 13.04. Amendments to Agreement With Consent of Owners of Bonds.
Except for the amendments, changes or modifications as provided in Section 13.03
hereof, the Sublease shall not be amended without the written approval or
consent of the Bank and the owners of at least two-thirds (2/3) in aggregate
principal amount of the Outstanding Bonds, provided that the consent of the Bank
and the Owners of all Bonds Outstanding is required for any amendment, change or
modification of the Sublease that would permit the termination or cancellation
of the Sublease or a reduction in or postponement of the payments under the
Sublease or any change in the provisions relating to payment thereunder.
SECTION 13.05. Trustee Authorized to Join in Amendments and
Supplements; Reliance on Counsel. The Trustee is authorized to join with the
Authority in the execution and delivery of any Supplemental Indenture or
amendment permitted by this Article XII and in so doing shall be fully protected
by an opinion of Counsel that such Supplemental Indenture or amendment is so
permitted and has been duly
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authorized by the Authority and that all things necessary to make it a valid and
binding agreement have been done.
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ARTICLE XIV
DEFEASANCE
SECTION 14.01. Discharge of Indenture. If the Authority shall pay or
cause to be paid of Available Moneys, in accordance with the provisions of this
Indenture, to the Owners of the Bonds, the principal of, premium, if any, and
interest due thereon at the times and in the manner stipulated therein, and if
the Authority shall not then be in default in any of the other covenants and
promises in the Bonds and in this Indenture to be kept, performed and observed
by it or on its part and if the Authority shall pay or cause to be paid to the
Trustee all sums of money due according to the provisions hereof, then these
presents and the estate and rights hereby granted shall cease, determine and be
void, whereupon the Trustee shall cancel and discharge the lien of this
Indenture, and execute and deliver to the Authority such instruments in writing
as shall be requisite to release the lien hereof and reconvey, release, assign
and deliver unto the Authority any and all of the estate, right, title and
interest in and to any and all rights or property conveyed, assigned or pledged
to the Trustee or otherwise subject to the lien of this Indenture, except
amounts in the Bond Fund or Construction Fund required to be paid to the Bank or
the Company under Section 6.08 hereof and except cash held by the Trustee for
the payment of the principal or Purchase Price of, premium, if any, or interest
on particular Bonds.
Section 14.02. Defeasance of Bonds. The following provisions of this
Section 14.02 shall apply only from and after the Letter of Credit Termination
Date:
Any Bond shall be deemed to be paid within the meaning of this Article
and for all purposes of this Indenture when (a) payment of the principal of and
premium, if any, on such Bond, plus interest thereon to the due date thereof
(whether such due date is by reason of maturity or upon redemption as provided
herein) either (i) shall have been made or caused to be made in accordance with
the terms thereof, or (ii) shall have been irrevocably deposited with the
Trustee, in trust and irrevocably set aside exclusively for such payment, (1)
moneys sufficient to make such payment or (2) Government Obligations maturing as
to principal and interest in such amounts and at such times as will insure the
availability of sufficient moneys to make such payment, and (b) all necessary
and proper fees, compensation and expenses of the Trustee and the Authority
pertaining to the Bonds with respect to which such deposit is made shall have
been paid or the payment thereof provided for to the satisfaction of the
Trustee. At such time as a Bond shall be deemed to be paid hereunder, as
aforesaid, such Bond shall
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no longer be secured by or entitled to the benefits of this Indenture, except
for the purposes of any such payment from such moneys or Government Obligations.
Notwithstanding the foregoing, no deposit under clause (a)(ii) of the
immediately preceding paragraph shall be deemed payment of such Bonds as
aforesaid until (a) proper notice of redemption of such Bonds shall have been
previously given in accordance with Article VIII of this Indenture, or in the
event said Bonds are not by their terms subject to redemption within the next
succeeding sixty (60) days, until the Company shall have given the Trustee, in
form satisfactory to the Trustee, irrevocable instructions to notify, as soon as
practicable, the Owners of the Bonds, that the deposit required by (a)(ii) above
has been made with the Trustee and that said Bonds are deemed to have been paid
in accordance with this Section 14.02 and stating the maturity or redemption
date upon which moneys are to be available for the payment of the principal of
and the applicable redemption premium, if any, on said Bonds, plus interest
thereon to the due date thereof; or (b) the maturity of such Bonds.
All moneys so deposited with the Trustee as provided in this Section
14.02 may also be invested and reinvested, at the direction of the Company, in
Government Obligations, maturing in the amounts and times as hereinbefore set
forth, and all income from all Government Obligations in the hands of the
Trustee pursuant to this Section 14.02 which is not required for the payment of
the Bonds and interest and premium, if any, thereon with respect to which such
moneys shall have been so deposited shall be deposited in the Bond Fund as and
when realized and collected for use and application as are other moneys
deposited in the Bond Fund.
Notwithstanding any provision of any other Article of this Indenture
which may be contrary to the provisions of this Section 14.02, all moneys or
Government Obligations set aside and held in trust pursuant to the provisions of
this Section 14.02 for the payment of Bonds (including interest and premium
thereon, if any) shall be applied to and used solely for the payment of the
particular Bonds (including the interest and premium thereon, if any) with
respect to which such moneys or Government Obligations have been so set aside in
trust.
Anything in Article XII hereof to the contrary notwithstanding, if
moneys or Government Obligations have been deposited or set aside with the
Trustee pursuant to this Section 14.02 for the payment of Bonds and such Bonds
shall not have in fact been actually paid in full, no amendment to the
provisions of this Section 14.02 shall be made
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without the consent of the Owner of each Bond affected thereby.
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<PAGE> 74
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.01. No Recourse. No personal recourse shall be had for any
claim based on this Indenture or the Bonds against any member, officer or
employee, past, present or future, of the Authority or of any successor body as
such, either directly or through the Authority or any successor body, under any
constitutional provision, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise.
The Bonds are payable solely from the Trust Estate, the moneys received
under the Letter of Credit, and any other moneys held by the Trustee hereunder
for such purpose. There shall be no other recourse, under the Bonds, this
Indenture, or Sublease, or otherwise, against the Authority or any other
property now or hereafter owned by it. The Authority shall be deemed to have
complied with all of its covenants and other obligations hereunder, including
but not limited to those set forth in Articles IV, V, VI and IX hereof, upon
requiring the Company in the Sublease to agree to perform such Authority
covenants and other obligations (excepting only any approvals or consents
permitted or required to be given by the Authority hereunder) and the Authority
shall have no liability for any failure to fulfill, or breach, by the Company of
the Company's obligations under the Bonds, this Indenture, the Sublease, or
otherwise, including Company's obligation to fulfill the Authority's covenants
and other obligations under this Indenture.
SECTION 15.02. No Recourse against State or Authority, etc. No recourse
shall be had for the payment of the principal of, the interest on, or the
premium (if any) payable upon the redemption of, any Bond or for any claim based
thereon or on the Indenture or any Indenture supplemental hereto, against the
State of New Jersey or any political subdivision thereof, it being expressly
agreed and understood that the Indenture and any Indenture supplemental hereto
and the Bonds are solely corporate obligations of the Authority payable out of
the Trust Estate and from such moneys as may be made available for the purpose
and do not pledge the credit or taxing power of the State of New Jersey or of
any political subdivision thereof.
SECTION 15.03. No Rights Conferred on Others. Nothing herein contained
shall person, other than the parties hereto, the Tender Agent, the Bank and the
Owners of the Bonds.
SECTION 15.04. Illegal, etc. Provisions Disregarded. If any term or
provision of this Indenture or the
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<PAGE> 75
SECTION 15.08. Successors and Assigns. All the covenants, promises and
agreements in this Indenture contained by or on behalf of the Authority or by or
on behalf of the Trustee shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.
SECTION 15.09. Headings for Convenience 0nly. The table of contents and
descriptive headings in this Indenture are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 15.10. Counterparts. This Indenture may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 15.11. Information Under Commercial Code. The following
information is supplied to under the Uniform Commercial Code:
The secured party is The Farmers and Merchants National Bank of
Bridgeton, Trustee. Its address from which information concerning the security
interest may be obtained and its mailing address is 53 South Laurel Street,
Bridgeton, New Jersey 08302, Attention: Corporate Trust Department. The debtor
is City of Salem Municipal Port Authority, and its address is 62 Front Street,
Salem, New Jersey 08079.
SECTION 15.12. Payments Due on Saturdays Sundays and Holidays. In any
case where the date of maturity of interest on or principal of the Bonds or the
date fixed for purchase or redemption of any Bonds shall not be a Business Day,
then payment of principal, Purchase Price, premium, if any, or interest need not
be made on such date but may be made on the next succeeding Business Day with
the same force and effect as if made on the date of maturity or the date fixed
for purchase or redemption.
SECTION 15.13. Certain References Ineffective After Letter of Credit
Termination Date. From and after the Letter of Credit Termination Date, upon
receipt by the Trustee of a certificate from the Bank stating that all amounts
payable to the Bank under the Credit Agreement have been paid in full, all
references to the Bank, the Credit Agreement, or the Letter of Credit in the
Sublease, this Indenture and the Bonds shall be ineffective.
IN WITNESS WHEREOF, the CITY OF SALEM MUNICIPAL PORT AUTHORITY has
caused this Indenture to be executed by its Chairman or Vice-Chairman and its
corporate seal to be
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<PAGE> 76
hereunto affixed, attested by its Secretary or Assistant Secretary and The
Farmers and Merchants National Bank of Bridgeton has caused this Indenture to be
executed by one of its Authorized Officers and its seal to be hereunto affixed,
attested by one of its Authorized Officers, all as of the day and year first
above written.
CITY OF SALEM MUNICIPAL PORT
AUTHORITY
By: /s John N. Acton
----------------------------------
Chairman
[SEAL]
Attest
/s/ [SIG]
- ----------------------------------
THE FARMERS AND MERCHANTS NATIONAL
BANK OF BRIDGETON, Trustee
[SEAL] By /s/ John D. Catalano
----------------------------------
Vice President and
Trust Officer
Attest:
/s/ [SIG]
- ----------------------------------
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<PAGE> 77
ACKNOWLEDGMENTS
STATE OF NEW JERSEY :
: ss
COUNTY OF SALEM :
BE IT REMEMBERED, that on this day of December, 1984, before me, the
subscriber, personally appeared, James N. Acton, the Chairman of City of Salem
Municipal Port Authority who I am satisfied is the person who executed the
foregoing instrument on behalf of the said Corporation; and he thereupon
acknowledged that he signed, sealed with the corporate seal and delivered said
instrument as such officer, as that said instrument is the voluntary act and
deed of said Corporation, made by virtue of authority from its Board of
Directors.
/s/ [SIG]
----------------------------------
NOTARY PUBLIC
Attorney at Law
STATE OF NEW JERSEY :
: ss
COUNTY OF SALEM :
BE IT REMEMBERED, that on this day of December, 1984, before me, the
subscriber, personally appeared John D. Catalano, the Vice President & Trust
Officer of The Farmers and Merchants National Bank of Bridgeton, who I am
satisfied is the person who executed the foregoing instrument on behalf of the
said Corporation; and he thereupon acknowledged that he signed, sealed with the
corporate seal and delivered said instrument as such officer, as that said
instrument is the voluntary act and deed of said Corporation, made by virtue of
authority from its Board of Directors.
/s/ [SIG]
----------------------------------
NOTARY PUBLIC
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<PAGE> 78
EXHIBIT A
(FLOATING RATE FORM OF BOND)
UNITED STATES OF AMERICA
CITY OF SALEM MUNICIPAL PORT AUTHORITY
(Salem, New Jersey)
PORT DEVELOPMENT REVENUE BOND
(SOUTH JERSEY PROCESS TECHNOLOGY, INC. PROJECT)
SERIES OF 1984
No. R- $
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME AND
IN THE MANNER HEREINAFTER DESCRIBED, AND MUST BE SO TENDERED OR WILL BE DEEMED
TO HAVE BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES DESCRIBED HEREIN.
KNOW ALL MEN BY THESE PRESENTS that the City of Salem Municipal Port Authority
(the "Issuer"), for value received, promises to pay from the source and as
hereinafter provided, to
________________________________________________________ or registered assigns,
on December 1, 1999, upon surrender hereof, the principal sum of
__________________________ Dollars, and in like manner to pay interest on said
sum at the rate described below on March 1, June 1, September 1 and December 1
of each year and on the Conversion Date (hereinafter defined), commencing March
1, 1985, from the interest payment date next preceding the date hereof to which
interest has been paid or duly provided for, unless the date hereof is an
interest payment date to which interest has been paid or duly provided for, in
which case from the date hereof, or unless no interest has been paid or duly
provided for on the Bonds (as hereinafter defined), in which case from December
21, 1984, until payment of the principal hereof has been made or duly provided
for. Notwithstanding the foregoing, if this Bond is dated after any date which
is the fifth Business Day (as hereinafter defined) next preceding any interest
payment date (a "Record Date") and before the following interest payment date,
this Bond shall bear interest from such interest payment date; provided,
however, that if the Issuer shall default in the payment of interest due on such
interest payment date, then this Bond shall beat interest from the next
preceding interest payment date to which interest has been paid or duly provided
for, or, if no interest has been paid or duly provided for on the Bonds, from
December 21, 1984. The principal of this Bond is payable in
<PAGE> 79
lawful money of the United States of America at the principal corporate trust
office of The Farmers and Merchants National Bank of Bridgeton, as trustee
(together with its successors in trust, the "Trustee") or at the duly designated
office of any successor Trustee under the Trust Indenture dated as of December
1, 1984 between the Issuer and the Trustee (which indenture, as from time to
time amended and supplemented, is hereinafter referred to as the "Indenture").
Payment of interest on this Bond shall be made on each interest payment date to
the registered Owner hereof as of the applicable Record Date and shall be paid
by check mailed by the Trustee to such registered Owner at his address as it
appears on the registration books of the Issuer or at such other address as is
furnished to the Trustee in writing by such registered Owner, or in such other
manner as may be mutually acceptable to the Trustee and the registered Owner of
this Bond. The Purchase Price (hereinafter defined) of this Bond shall be
payable by Bankers Trust Company, New York, New York (together with any
successor Tender Agent, the "Tender Agent") to the registered Owner hereof at
his address as it appears on the registration books of the Issuer or at such
other address as may be specified by such Owner at least 24 hours prior to the
time such Purchase Price is due. As used herein, the term "Business Day" means a
day on which the Bank (as hereinafter defined), the Trustee and banks located in
New York City are open for the purpose of conducting a commercial banking
business.
This Bond shall bear interest as follows:
(A) Prior to the Conversion Date, this Bond shall bear
interest at the "Floating Rate." The "Floating Rate" shall be a variable rate of
interest equal to TENR plus an amount (as adjusted from time to time as
hereinafter provided, the "TENR Amount") initially equal to one-half of one
percent (1/2 of 1%), provided that:
(i) if the Trustee and Bankers Trust Company (in such
capacity, the "Remarketing Agent") shall have received a notice
requiring the purchase of any Bond pursuant to the exercise of the
Demand Purchase Option (hereinafter defined) and if the Remarketing
Agent shall remarket all or a portion of such Bond pursuant to the TENR
Services and Remarketing Agreement dated as of December 1, 1984 between
South Jersey Process Technology, Inc., a New Jersey corporation (the
"Company") and the Remarketing Agent (which remarketing agreement, as
from time to time amended and supplemented, is hereinafter referred to
as the "Remarketing Agreement"), the TENR Amount for all Bonds shall be
the TENR Amount required for the Remarketing Agent to remarket such
Bonds ar par, which adjusted TENR Amount shall become effective as of
the day next following the next
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<PAGE> 80
announcement of TENR, unless such announcement of TENR occurs during
the period of five Business Days prior to an interest payment date or a
date fixed for redemption, in which case such adjusted TENR Amount
shall become effective as of the day next following the first
announcement of TENR subsequent to such interest payment date or date
fixed for redemption, as the case may be. In connection with any such
remarketing, the Remarketing Agent shall determine what increments of
1/8th of 1% per annum will, when added to or subtracted from the TENR
Amount at the time applicable to the Bonds, produce the minimum
interest rate per annum necessary to enable the Remarketing Agent to
remarket such Bonds at par; provided, that the TENR Amount shall not be
more than two and one-half percent (2-1/2%);
(ii) if the TENR Amount is adjusted pursuant to the
preceding clause (i), such adjusted TENR Amount shall remain in effect
until a further adjustment to the TENR Amount is made pursuant to such
clause (i) or until the interest rate hereunder is otherwise determined
as provided for in the Indenture; provided that if the Remarketing
Agent shall have advised the Company, the Issuer and the Trustee at
least two Business Days prior to any interest payment date that the
Bonds are bearing interest at a rate higher than the minimum interest
rate per annum necessary to enable the Remarketing Agent to remarket
the Bonds at par, as of such interest payment date, the TENR Amount
shall be such amount as the Remarketing Agent shall specify as being
the minimum amount necessary to enable the Remarketing Agent to
remarket the Bonds at par;
(iii) if the TENR Amount is adjusted pursuant to the
preceding clause (ii), such adjusted TENR Amount shall remain in effect
until such time as the TENR Amount may again be adjusted pursuant to
the preceding clause (i) or clause (ii) or until the interest rate
hereunder is otherwise determined as provided for in the Indenture; and
(iv) notwithstanding the foregoing, no adjustment
shall be made to the Floating Rate during the period of five Business
Days (as defined in the Indenture) prior to an interest payment date or
a date fixed for redemption.
TENR is the rate announced by Bankers Trust Company, New York, New York
at its principal office as the annual rate of interest which is indicative of
current bid-side yields on high-quality, short-term, tax-exempt obligations,
which rate shall be announced by Bankers Trust Company as of the close of
business on Wednesday in each calendar week
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<PAGE> 81
until the earlier of the Conversion Date or payment in full of the Bonds or, if
Wednesday in any calendar week shall not be a business day in New York, New
York, on the next succeeding business day in New York, New York. TENR shall be
effective during the period from and including the day next succeeding the day
on which Bankers Trust Company announces TENR, to and including the day on which
Bankers Trust Company next announces TENR. TENR is a Service Mark of Bankers
Trust Company, New York, New York.
Anything herein to the contrary notwithstanding, the Floating Rate
shall in no event exceed 15% per annum.
The announcement of TENR and the determination of any adjustments to
the TENR Amount as contemplated by the foregoing paragraphs shall be conclusive
and binding upon the Trustee, the Tender Agent, the Issuer, the Company and the
Owners of the Bonds.
(B) The Bonds shall bear interest at the "Fixed Rate" from and after
the Conversion Date. In such event, the Fixed Rate shall be applicable until the
maturity of the Bonds. The "Fixed Rate" shall be a fixed annual interest rate on
the Bonds established by the Remarketing Agent as the rate of interest for which
the Remarketing Agent has received commitments on or prior to the 20th day
preceding the Conversion Date, at a price of par without discount or at a
premium not to exceed the then customary underwriting discount (but in no event
may the premium exceed 3 percent).
Prior to the Conversion Date, interest on the Bonds shall be computed
on the basis of a 360-day year, actual number of days elapsed. On and after the
Conversion Date, interest on the Bonds shall be computed on the basis of a
360-day year of twelve 30-day months.
As used herein, the term "Conversion Date" means the earlier to occur
of either the Optional Conversion Date or the Automatic Conversion Date; the
term "Automatic Conversion Date" means the interest payment date immediately
preceding the Letter of Credit Termination Date; the term "Letter of Credit
Termination Date" means the later of (i) that date upon which the Letter of
Credit (hereinafter defined) shall expire or terminate pursuant to its terms, or
(ii) that date to which the expiration or termination of the Letter of Credit
may be extended, from time to time, either by extension or renewal of the
existing Letter of Credit or the issuance of a Substitute Letter of Credit (as
defined in the Indenture); the term "Optional Conversion Date" means that date
on or after July 1, 1985, which shall be a Business Day, from and after which
the interest rate on the, Bonds is converted from the Floating Rate as a result
of the exercise by the Company of the Conversion Option; the term
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<PAGE> 82
"Conversion Option" means the option granted to the Company in the
Indenture pursuant to which the interest rate on the Bonds is converted from the
Floating Rate to the Fixed Rate as of the Optional Conversion Date; the term
"Purchase Price" means an amount equal to 100% of the principal amount of any
Bond tendered or deemed tendered for purchase pursuant to the Indenture or with
respect to which the Demand Purchase Option has been exercised, plus, in the
case of a purchase pursuant to the exercise of such Demand Purchase Option,
accrued and unpaid interest thereon to the date of purchase.
The interest rate on the Bonds may be converted from the Floating Rate
to the Fixed Rate upon satisfaction of certain conditions and notice given by
the Company in accordance with the requirements of the Indenture, and the Bonds
shall be subject to mandatory tender by the Owners thereof on the Conversion
Date. On and after the Conversion Date the Demand Purchase Option will not be
available to the Owners of the Bonds. Any Owner of Bonds who desires to retain
Bonds after the Conversion late must notify the Company and the Trustee in
writing received no less than fifteen days prior to the Conversion Date in the
form described in the notice given by the Company at least twenty days but not
more than thirty days prior to the Conversion Date. Owners of Bonds who do not
provide the Trustee and the Company with said notice shall be required to tender
their Bonds to the Tender Agent for purchase at the Purchase Price. Accrued
interest on the Bonds will be payable on the Conversion Date to the Owners of
Bonds as of the applicable Record Date. Any Bonds not delivered to the Tender
Agent on or prior to the Conversion Date ("Undelivered Bonds"), for which there
has been irrevocably deposited in trust with the Trustee an amount of moneys
sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed
to have been purchased at the Purchase Price. IN THE EVENT OF A FAILURE BY AN
OWNER OF BONDS (OTHER THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE AS PROVIDED
ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE CONVERSION DATE, SAID OWNER SHALL
NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO
THE CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS,
AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE
INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR.
At any time prior to the first interest payment date following the
Conversion Date, an Owner of Bonds who has given notice of its desire to
continue to hold Bonds as provided above, may deliver this Bond to the Trustee
or the Tender Agent, and upon such delivery, the Trustee or the Tender Agent
shall exchange this Bond for a replacement Bond evidencing interest at the Fixed
Rate.
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<PAGE> 83
This Bond shall be purchased, at the option of the Owner hereof
("Demand Purchase Option") at the Purchase Price, upon:
(a) delivery to the Trustee at its principal corporate trust
office and to the Remarketing Agent at its principal office of a notice
(said notice to be irrevocable and effective upon receipt) which states
(i) the aggregate principal amount and the numbers of Bonds to be
purchased; and (ii) the date on which such Bonds are to be purchased,
which date shall be a Business Day not prior to the seventh (7th) day
next succeeding the date of delivery of such notice and which date
shall be prior to the Conversion Date; and
(b) delivery to the Tender Agent at its office designated
below at or prior to 10:00 A.M., New York City time, on the date
designated for purchase in the notice described in (a) above of such
Bonds to be purchased with an appropriate endorsement for transfer or
accompanied by a bond power endorsed in blank, and if such Bonds are to
be purchased prior to the next succeeding interest payment date and
after the Record Date in respect thereof, a non-recourse due-bill,
payable to bearer, for interest due on such interest payment date.
Any delivery of a notice required to be made to the Trustee at its
principal corporate trust office pursuant to (a) above shall be delivered to the
Trustee at 53 South Laurel Street, Bridgeton, New Jersey 08302, Attention:
Corporate Trust Department, or to the office designated for such purpose by any
successor Trustee; any delivery of a notice required to be made to the
Remarketing Agent at its principal office pursuant to (a) above shall be
delivered to the Remarketing Agent at One Bankers Trust Plaza, 31st Floor, New
York, New York 10015, Attention: Public Finance Group, or to the office
designated for such purpose by any successor Remarketing Agent; and any delivery
of Bonds required to be made to the Tender Agent pursuant to (b) above shall be
delivered to the Tender Agent at 123 Washington Street, First Floor, New York,
New York 10006, Attention: Securities Services Division, or to the office
designated for such purpose by any successor Tender Agent.
This Bond is one of an authorized issue of Bonds limited in aggregate
principal amount to $2,500,000 (the "Bonds") issued for the purpose of providing
funds to finance the acquisition, construction and improving of an agricultural
products processing facility to be located in the City of Salem, New Jersey
(which facility is hereinafter referred to as the "Project"), and paying
necessary expenses incidental thereto. The Authority has entered into a
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<PAGE> 84
Sublease and Security Agreement with the Company dated as of December 1, 1984
(the "Sublease") under which the Company has agreed to construct the Project and
to pay as rentals amounts which are sufficient to pay, inter alia, the principal
and Purchase Price of, premium, if any, and interest on the Bonds as the same
shall become due in accordance with their terms and provisions and the terms and
provisions of the Indenture.
The Bonds are all issued under and are equally and ratably secured by
and entitled to the protection of the Indenture, pursuant to which all payments
due from the Company to the Issuer under the Sublease (other than certain
indemnification payments and the payment of certain expenses of the Issuer) are
assigned to the Trustee to secure the payment of the principal and Purchase
Price of, and premium, if any, and interest on the Bonds. The Company has caused
to be delivered to the Trustee an irrevocable Letter of Credit (together with
any Substitute Letter of Credit, the "Letter of Credit") issued by Bankers Trust
Company (in such capacity, the "Bank") and dated the date of original issuance
of the Bonds, which will expire, unless earlier terminated or extended, on
December 15, 1994. Subject to certain conditions, the Letter of Credit may be
replaced by a Substitute Letter of Credit of another commercial bank or savings
and loan association. Under the Letter of Credit, the Trustee will be entitled
to draw up to an amount sufficient to pay (a) the principal of the Bonds or the
portion of the Purchase Price corresponding to the principal of the Bonds and
(b) up to 120 days' accrued interest (at maximum rate of 15% per annum) on the
Bonds or the portion of the Purchase Price of the Bonds corresponding to accrued
interest thereon. Reference is hereby made to the Indenture for a description of
the property pledged and assigned, the provisions, among others, with respect to
the nature and extent of the security, the rights, duties and obligations of the
Issuer, the Trustee and the Owners of the Bonds and the terms upon which the
Bonds are issued and secured.
This Bond is transferable by the registered Owner hereof in person or
by his attorney duly authorized in writing, at the principal corporate trust
office of the Trustee or at the principal corporate trust office of the Tender
Agent, but only in the manner, subject to the limitations and upon payment of
the charges provided in the Indenture, and upon surrender and cancellation of
this Bond. Upon such transfer a new registered Bond or Bonds of authorized
denomination or denominations for the same aggregate principal amount will be
issued to the transferee in exchange herefor. The Issuer, the Tender Agent and
the Trustee may deem and treat the registered Owner hereof as the absolute Owner
hereof (whether or not this Bond shall be overdue) for all purposes, and neither
the Issuer, the Tender Agent nor the
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<PAGE> 85
Trustee shall be bound by any notice or knowledge to the contrary.
Prior to the Conversion Date, the Bonds are issuable as fully
registered bonds without coupons in the denominations of $100,000 or any
integral multiple of $5,000 in excess thereof. From and after the Conversion
Date, the Bonds shall be issuable as fully registered bonds without coupons in
the denominations of $5,000 or any integral multiple thereof.
The Bonds are callable for redemption in the event (1) the Project or
any portion thereof is damaged or destroyed or taken in a condemnation
proceeding to which Section 6.04(b) of the Sublease is applied, or (2) the
Company shall exercise its option to cause the Bonds to be redeemed as provided
in Section 6.05 of the Sublease; or (3) the Bonds are required to be redeemed as
provided in Section 8.03 of the Indenture. If called for redemption at any time
pursuant to (1) or (2) above, the Bonds shall be subject to redemption by the
Issuer on any interest payment date, in whole or (in the case of a redemption
pursuant to Section 6.04(b) of the Sublease) in part, less than all of such
Bonds to be selected in such manner as the Trustee may determine (except as
otherwise provided in the Indenture), at a redemption price of one hundred
percent (100%) of the principal amount thereof plus accrued interest to the
redemption date. If called for redemption at any time pursuant to (3) above, the
Bonds shall be subject to redemption by the Issuer prior to maturity in whole
within one hundred eighty (180) days after a "Determination of Taxability", as
that term is defined in Article VIII of the Indenture, at one hundred percent
(100%) of the aggregate principal amount of Bonds outstanding plus accrued
interest to the redemption date. Reference is hereby made to Section 6.04 of the
Sublease for a description of the circumstances under which the net proceeds of
insurance or condemnation may be paid into the Bond Fund (as defined in the
Indenture) for full or partial redemption of the Bonds and to Sections 6.04,
6.05 and 6.06 of the Sublease for a description of the circumstances under which
the Company may cause the Bonds to be redeemed and to Section 8.03 of the
Indenture for a description of the circumstances under which the Bonds are
required to be redeemed upon the occurrence of a Determination of Taxability.
In addition, the Bonds are subject to mandatory redemption, in whole,
on the Automatic Conversion Date, at 100% of the principal amount thereof, if on
or prior to the 20th day prior to the Automatic Conversion Date (i) the Company
has failed to provide the Trustee with an opinion of nationally recognized bond
counsel to the effect that the proposed conversion of the interest rate on the
Bonds to the
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<PAGE> 86
Fixed Rate on the Automatic Conversion Date will not adversely affect the
exemption of the interest on the Bonds from federal income taxation, or (ii) the
Fixed Rate of interest to be borne by the Bonds on and after the Automatic
Conversion Date has not been established in accordance with the terms of the
Indenture.
On or prior to the Conversion Date, the Bonds are subject to redemption
by the Issuer, at the option of the Company, at any time on or after July 1,
1985, in whole or in part, less than all of such Bonds to be selected in such
manner as the Trustee shall determine (except as otherwise provided in the
Indenture), at a redemption price of 100% of the principal amount thereof plus
accrued interest to the date of redemption.
After the Conversion Date, the Bonds are subject to redemption by the
Issuer, at the option of the Company, on or after the First Optional Redemption
Date (hereinafter defined), in whole at any time or in part on any interest
payment date, less than all of the Bonds to be selected in such manner as the
Trustee shall determine (except as otherwise provided in the Indenture), at the
redemption prices (expressed as percentages of principal amount) set forth in
the following table plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
---------------- ----------
<S> <C>
First Optional Redemption Date
through the following November 30 103%
First Anniversary of the First
Optional Redemption Date through
the following November 30 102%
Second Anniversary of the First
Optional Redemption Date through
the following November 30 101%
Third Anniversary of the First
Optional Redemption Date and
thereafter 100%
</TABLE>
As used herein, the term "First Optional Redemption Date" means the December 1
occurring in the year which is a number of years after the Conversion Date equal
to the number of years between the December 1 immediately following the
Conversion Date (unless the Conversion Date is December 1, in which case from
such December 1) and December 1, 1999, multiplied by 1/2 and rounded up to the
nearest whole number.
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<PAGE> 87
In addition, the Bonds are subject to mandatory partial redemption by
the Issuer prior to maturity, in part, in the principal amount of $250,000, on
December 1, 1990 and on each December 1 thereafter, through and including
December 1, 1998, such Bonds to be selected in such manner as the Trustee may
determine (except as otherwise provided in the Indenture), at a redemption price
equal to the principal amount thereof, plus interest accrued thereon to the date
of redemption.
In the event any of the Bonds or portions thereof are called for
redemption as aforesaid, notice of the call for redemption, identifying the
Bonds or portions thereof to be redeemed, shall be given by the Trustee by
mailing a copy of the redemption notice by registered or certified mail at least
fifteen (15) days but not more than sixty (60) days prior to the date fixed for
redemption to the owner of each bond to be redeemed in whole or in part at the
address shown on the registration books. Any notice mailed as provided above
shall be conclusively presumed to have been duly given, whether or not the owner
receives the notice. No further interest shall accrue on the principal of any
Bond called for redemption after the redemption date if Available Moneys (as
defined in the Indenture) sufficient for such redemption have been deposited
with the Trustee. Notwithstanding the foregoing, the notice requirements
contained in the first sentence of this paragraph may be deemed satisfied with
respect to a transferee of a Bond which has been purchased pursuant to the
Demand Purchase Option after such Bond has previously been called for
redemption, notwithstanding the failure to satisfy the notice requirements of
the first sentence of this paragraph with respect to such transferee, as more
fully provided in Section 8.05 of the Indenture.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of New Jersey, particularly the Municipal
Port Authorities Law contained at N.J. State. Ann. Sec. 40:68A-29, et seq.,
(West) (the "Act"), and by appropriate action duly taken by the Issuer which
authorizes the execution and delivery of the Sublease and the Indenture. The
Bonds have been issued under the provisions of the Act.
No owner of any Bond has the right to compel any exercise of taxing
power of the Issuer to pay the Bonds or the interest thereon, and the Bonds do
not constitute an indebtedness of the Issuer or a loan of credit thereof within
the meaning of any constitutional or statutory provision.
Notwithstanding anything to the contrary contained herein or in the
Indenture, the Sublease, or in any other instrument or document executed by or
in behalf of the
-10-
<PAGE> 88
Issuer in connection herewith, no stipulation, covenant, agreement or obligation
contained herein or therein shall be deemed or construed to be a stipulation,
covenant, agreement or obligation of any present or future member, commissioner,
director, trustee, officer, employee or agent of the Issuer, or of any
incorporator, member, commissioner, director, trustee, officer, employee or
agent of any successor to the Issuer, in any such person's individual capacity,
and no such person, in his individual capacity, shall be liable personally for
any breach or non-observance of or for any failure to perform, fulfill or comply
with any such stipulations, covenants, agreements or the principal of, premium,
if any, or interest on any of the Bonds or for any claim based thereon or on any
such stipulation, covenant, agreement or obligation, against any such person, in
his individual capacity, either directly or through the Issuer or any successor
to the Issuer, under any rule of law or equity, statute or constitution or by
the enforcement of any assessment or penalty or otherwise, and all such
liability of any such person, in his individual capacity, is hereby expressly
waived and released.
The Owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any default under the Indenture, or to
institute, appear in or defend any suit or other proceedings with respect
thereto, unless certain circumstances described in the Indenture shall have
occurred. In certain events, on the conditions, in the manner and with the
effect set forth in the Indenture, the principal of all the Bonds issued under
the Indenture and then outstanding may become or may be declared due and payable
before the stated maturity thereof, together with interest accrued thereon.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Owners of the Bonds at any time by the Issuer with
the consent of the Bank and the Owners of two-thirds in aggregate principal
amount of the Bonds at the time outstanding. Any such consent or any waiver by
the Bank and the Owners of two-thirds in aggregate principal amount of the Bonds
shall be conclusive and binding upon the Owner and upon all future Owners of
this Bond and of any Bond issued in replacement hereof whether or not notation
of such consent or waiver is made upon this Bond. The Indenture also contains
provisions which, subject to certain conditions, permit or require the Trustee
to waive certain past defaults under the Indenture and their consequences.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen
-11-
<PAGE> 89
and be performed precedent to and in the execution and delivery of the Indenture
and the issuance of this Bond do exist, have happened and have been performed in
due time, form and manner as required by law; that the issuance of this Bond and
the issue of which it forms a part, together with all other obligations of the
Issuer, does not exceed or violate any constitutional or statutory limitation;
and that the amounts payable under the Agreement and pledged to the payment of
the principal of and premium, if any, and interest on this Bond and the issue of
which it forms a part, as the same become due, will be sufficient in amount for
that purpose.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee or the Tender Agent,
as authenticating agent.
IN WITNESS WHEREOF, the City of Salem Municipal Port Authority has
caused this Bond to be executed in its name by the manual or facsimile signature
of its Chairman and its corporate seal or a facsimile thereof to be imprinted
hereon and attested by the manual or facsimile signature of its Secretary.
CITY OF SALEM MUNICIPAL PORT
[SEAL] AUTHORITY
Attest:_____________________ By___________________________________
Secretary Chairman
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<PAGE> 90
(Form of Certificate of Authentication)
CERTIFICATE OF AUTHENTICATION
Date of Authentication and Registration:
This Bond is one of the Bonds of the issue described in the
within-mentioned Trust Indenture.
BANKERS TRUST COMPANY, THE FARMERS AND MERCHANTS
as Authenticating Agent NATIONAL BANK OF BRIDGETON,
as Trustee
OR
By: __________________________ By: _________________________
Authorized Officer Authorized Officer
(Form for Transfer)
FOR VALUE RECEIVED, __________________________, the
undersigned, hereby sells, assigns and transfers unto ________________________
(Tax Identification or Social Security No. _______________) the within Bond and
all rights thereunder, and hereby irrevocably constitutes and appoints
_______________________ attorney to transfer the within Bond on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: __________________ _______________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of the
within Bond in every particular,
without alteration or enlargement or
any change whatever.
<PAGE> 91
EXHIBIT B
(FIXED RATE FORM OF BOND)
UNITED STATES OF AMERICA
CITY OF SALEM MUNICIPAL PORT AUTHORITY
(Salem, New Jersey)
PORT DEVELOPMENT REVENUE BOND
(SOUTH JERSEY PROCESS TECHNOLOGY, INC. PROJECT)
SERIES OF 1984
No. R- $
KNOW ALL MEN BY THESE PRESENTS that the City of Salem Municipal Port
Authority (the "Issuer"), for value received, promises to pay from the source
and as hereinafter provided, to _____________________ or registered assigns, on
December 1, 1999, upon surrender hereof, the principal sum of __________________
Dollars, and in like manner to pay interest (calculated A the basis of a 360-day
year of twelve 30-day months) on said sum at the rate of ____ % per annum on
March 1, June 1, September I and December 1 of each year, commencing
_____________________, from the interest payment date next preceding the date
hereof to which interest has been paid or duly provided for, unless the date
hereof is an interest payment date to which interest has been paid or duly
provided for, in which case from the date hereof, or unless no interest has been
paid or duly provided for on the Bonds (as hereinafter defined), in which case
from December 21, 1984, until payment of the principal hereof has been made or
duly provided for. Notwithstanding the foregoing, if this Bond is dated after
any date which is the fifth Business Day (as hereinafter defined) next preceding
any interest payment date (a "Record Date") and before the following interest
payment date, this Bond shall bear interest from such interest payment date;
provided, however, that if the Issuer shall default in the payment of interest
due on such interest payment date, then this Bond shall bear interest from the
next preceding interest payment date to which interest has been paid or duly
provided for, or, if no interest has been paid or duly provided for on the
Bonds, from December 21, 1984. The principal of this Bond is payable in lawful
money of the United States of America at the principal corporate trust office of
The Farmers and Merchants National Bank of Bridgeton, as trustee (together with
its successors in trust, the "Trustee") or at the duly designated office of any
successor Trustee under the Trust Indenture dated as of
<PAGE> 92
December 1, 1984 between the Issuer and the Trustee (which indenture, as from
time to time amended and supplemented, is hereinafter referred to as the
"Indenture"). Payment of interest on this Bond shall be made on each interest
payment date to the registered Owner hereof as of the applicable Record Date and
shall be paid by check mailed by the Trustee to such registered Owner at his
address as it appears on the registration books of the Issuer or at such other
address as is furnished to the Trustee in writing by such registered owner, or
in such other manner as may be mutually acceptable to the Trustee and the
registered Owner of this Bond. As used herein the term "Business Day" means a
day on which the Trustee and banks located in New York City are open for the
purpose of conducting a commercial banking business,
This Bond is one of an authorized issue of Bonds limited in aggregate
principal amount to $2,500,000 (the "Bonds") issued for the purpose of providing
funds to finance the acquisition, construction and improving of an agricultural
products processing facility to be located in the City of Salem, New Jersey
(which facility is hereinafter referred to as the "Project"), and paying
necessary expenses incidental thereto. The Authority has entered into a Sublease
and Security Agreement with the Company dated as of December 1, 1984 (the
"Sublease") under which the Company has agreed to construct the Project and to
pay as rentals amounts which are sufficient to pay, inter alia, the princi -----
- ---- pal of, premium, if any, and interest on the Bonds as the same shall become
due in accordance with their terms and provisions and the terms and provisions
of the Indenture.
The Bonds are all issued under and are equally and ratably secured by
and entitled Co the protection of the Indenture, pursuant to which all payments
due from the Company to the Issuer under the Sublease (other than certain
indemnification payments and the payment of certain expenses of the Issuer) are
assigned to the Trustee to secure the payment of the principal of, and premium,
if any, and interest on the Bonds. Reference is hereby made to the Indenture for
a description of the property pledged and assigned, the provisions, among
others, with respect to the nature and extent of the security, the rights,
duties and obligations of the Issuer, the Trustee and the Owners of the Bonds
and the terms upon which the Bonds are issued and secured.
This Bond is transferable by the registered Owner hereof in person or
by his attorney duly authorized in writing, at the principal corporate trust
office of the Trustee, but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of
authorized denomination or denominations for the same aggregate principal amount
will
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<PAGE> 93
be issued to the transferee in exchange herefor. The Issuer, and the Trustee may
deem and treat the registered Owner hereof as the absolute Owner hereof (whether
or not this Bond shall be overdue) for all purposes, and neither the Issuer, nor
the Trustee shall be bound by any notice or knowledge to the contrary.
The Bonds shall be issuable as fully registered Bonds without coupons
in the denomination of $5,000 or any integral multiple thereof.
The Bonds are callable for redemption in the event (1) the Project or
any portion thereof is damaged or destroyed or taken in a condemnation
proceeding to which Section 6.04(b) of the Sublease is applied, or (2) the
Company shall exercise its option to cause the Bonds to be redeemed as provided
in Section 6.05 of the Sublease, or (3) the Bonds are required to be redeemed as
provided in Section 8.03 of the Indenture. If called for redemption at any time
pursuant to (1) or (2) above, the Bonds shall be subject to redemption by the
Issuer on any interest payment date, in whole or (in the case of redemption
pursuant to Section 6.04(b) of the Sublease) in part, less than all of such
Bonds to be selected in such manner as the Trustee may determine (except as
otherwise provided in the Indenture), at a redemption price of one hundred
percent (100%) of the principal amount thereof plus accrued interest to the
redemption date. If called for redemption at any time pursuant to (3) above, the
Bonds shall be subject to redemption by the Issuer prior to maturity in whole
within one hundred eighty (180) days after a "Determination of Taxability", as
that term is defined in Article VIII of the Indenture, at one hundred percent
(100%) of the aggregate principal amount of Bonds outstanding plus accrued
interest to the redemption date. Reference is hereby made to Section 6.04 of the
Sublease for a description of the circumstances under which the net proceeds of
insurance or condemnation may be paid into the Bond Fund (as defined in the
Indenture) for full or partial redemption of the Bonds and to Sections 6.04,
6.05 and 6.06 of the Sublease for a description of the circumstances under which
the Company may cause the Bonds to be redeemed and to Section 8.03 of the
Indenture for a description of the circumstances under which the Bonds are
required to be redeemed upon the occurrence of a Determination of Taxability.
The Bonds are subject to redemption by the Issuer, at the option of the
Company, on or after _____________ 1,198 , in whole at any time or in part on
any interest payment date, less than all of the Bonds to be selected in such
manner as the Trustee shall determine (except as otherwise provided in the
Indenture), at the redemption prices (expressed as percentages of principal
amount) set forth in the
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<PAGE> 94
following table plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
Redemption
Redemption Dates Prices
--------------- ----------
<S> <C>
December 1,
through November 30 103%
December 1,
through November 30 102%
December 1,
through November 30 101%
December 1,
and thereafter 100%
</TABLE>
In addition, the Bonds are subject to mandatory partial redemption by
the Issuer prior to maturity, in part, in the principal amount of $250,000, on
December 1 thereafter, through and including December 1, 1998, such Bonds to be
selected in such manner as the Trustee may determine (except as otherwise
provided in the Indenture), at a redemption price equal to the principal amount
thereof, plus interest accrued thereon to the date of redemption.
In the event any of the Bonds or portions thereof are called for
redemption as aforesaid, notice of the call for redemption, identifying the
Bonds or portions thereof to be redeemed, shall be given by the Trustee by
mailing a copy of the redemption notice by registered or certified mail at least
fifteen (15) days but not more than sixty (60) days prior to the date fixed for
redemption to the owner of each bond to be redeemed in whole or in part at the
address shown on the registration books. Any notice mailed as provided above
shall be conclusively presumed to have been duly given, whether or not the owner
receives the notice. No further interest shall accrue on the principal of any
Bond called for redemption after the redemption date if moneys sufficient for
such redemption have been deposited with the Trustee.
The Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of New Jersey, particularly the Municipal
Port Authorities Law contained at N.J., State. Ann. Section 40:68A-29, et seq.,
(West) (the "Act"), and by appropriate action duly taken by the Issuer which
authorizes the execution and delivery of the Sublease and the Indenture.
The Bonds have been issued under the provisions of the Act.
-4-
<PAGE> 95
No owner of any Bond has the right to compel any exercise of taxing
power of the Issuer to pay the Bonds or the interest thereon, and the Bonds do
not constitute an indebtedness of the Issuer or a loan of credit thereof within
the meaning of any constitutional or statutory provision.
Notwithstanding anything to the contrary contained herein or in the
Indenture, the Sublease, or in any other instrument or document executed by or
in behalf of the Issuer in connection herewith, no stipulation, covenant,
agreement or obligation contained herein or therein shall be deemed or construed
to be a stipulation, covenant, agreement or obligation of any present or future
member, commissioner, director, trustee, officer, employee or agent of the
Issuer, or of any incorporator, member, commissioner, director; trustee,
officer, employee or agent of any successor to the Issuer, in any such person's
individual capacity, and no such person, in his individual capacity, shall be
liable personally for any breach or non-observance of or for any failure to
perform, fulfill or comply with any such stipulations, covenants, agreements or
the principal of, premium, if any, or interest on any of the Bonds or for any
claim based thereon or on any such stipulation, covenant, agreement or
obligation, against any such person, in his individual capacity, either directly
or through the Issuer or any successor to the Issuer, under any rule of law or
equity, statute or constitution or by the enforcement of any assessment or
penalty or otherwise, and all such liability of any such person, in his
individual capacity, is hereby expressly waived and released.
The Owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any default under the Indenture, or to
institute, appear in or defend any suit or other proceedings with respect
thereto, unless certain circumstances described in the Indenture shall have
occurred. In certain events, on the conditions, in the manner and with the
effect set forth in the Indenture, the principal of all the Bonds issued under
the Indenture and then outstanding may become or may be declared due and payable
before the stated maturity thereof, together with interest accrued thereon.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Owners of the Bonds at any time by the Issuer with
the consent of the Bank and the Owners of two-thirds in aggregate principal
amount of the Bonds at the time outstanding. Any such consent or any waiver by
the Bank and the Owners of two-thirds in aggregate principal amount of the Bonds
shall be conclusive and binding upon the Owner and
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<PAGE> 96
upon all future Owners of this Bond and of any Bond issued in replacement hereof
whether or not notation of such consent or waiver is made upon this Bond. The
Indenture also contains provisions which, subject to certain conditions, permit
or require the Trustee to waive certain past defaults under the Indenture and
their consequences.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture and the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required
by law; that the issuance of this Bond and the issue of which it forms a part,
together with all other obligations of the Issuer, does not exceed or violate
any constitutional or statutory limitation; and that the amounts payable under
the Agreement and pledged to the payment of the principal of and premium, if
any, and interest on this Bond and the issue of which it forms a part, as the
same become due, will be sufficient in amount for that purpose.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee or a duly appointed
authenticating agent pursuant to the Indenture.
IN WITNESS WHEREOF, the City of Salem Municipal Port Authority has
caused this Bond to be executed in its name by the manual or facsimile signature
of its Chairman and its corporate seal or a facsimile thereof to be imprinted
hereon and attested by the manual or facsimile signature of its Secretary.
CITY OF SALEM MUNICIPAL PORT
AUTHORITY
[SEAL]
Attest:____________________ By___________________________
Secretary Chairman
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<PAGE> 97
(Form of Certificate of Authentication)
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in the
within-mentioned Trust Indenture.
Date of Authentication THE FARMERS AND MERCHANTS
and Registration: NATIONAL BANK OF BRIDGETON,
as Trustee
By:_________________________
Authorized Officer
(Form for Transfer)
FOR VALUE RECEIVED, _____________________________________ the
undersigned, hereby sells, assigns and transfers unto ___________ (Tax
Identification or Social Security No. _____________________ the within Bond and
all rights thereunder, and hereby irrevocably constitutes and appoints
_______________________ attorney to transfer the within Bond on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: _______________________ ________________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of the
within Bond in every particular,
without alteration or enlargement or
any change whatever.
<PAGE> 1
EXHIBIT 10.54
SUBLEASE AND SECURITY AGREEMENT
Dated as of December 1, 1984
between
CITY OF SALEM MUNICIPAL PORT AUTHORITY
as Sublessor
and
SOUTH JERSEY PROCESS TECHNOLOGY, INC.
as Sublessee
(and Assignment of Sublessor's Interest to
THE FARMERS AND MERCHANTS NATIONAL BANK OF BRIDGETON,
as Trustee)
Prepared By:
Drinker Biddle & Reath
1100 PNB Building
Philadelphia, PA 19107
Elizabeth J. Youse, Esq.
<PAGE> 2
TABLE OF CONTENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties ................................................................... 1
Recitals .................................................................. 1
Article I - Definitions ................................................... 3
Article II - Sublease of Project Facilities
and Term Thereof ........................................... 4
Article III - Construction of the Projects ................................ 5
Article IV - Concerning Rentals and Additional
Sums ......................................................... 9
Article V - Consultants ................................................... 14
Article VI - Insurance, Insurance Consultant,
Casualty and Condemnation ............................... 15
Article VII - Additional Covenants of the Company ......................... 23
Article VIII - Events of Default and Remedies ............................. 28
Article IX - Miscellaneous ................................................ 32
</TABLE>
-1-
<PAGE> 3
THIS SUBLEASE AND SECURITY AGREEMENT, dated as of December 1, 1984 (the
"Sublease"), by and between CITY OF SALEM MUNICIPAL PORT AUTHORITY, a body
corporate and politic organized and existing under the laws of the State of New
Jersey (the "Authority"), as Sublessor, and SOUTH JERSEY PROCESS TECHNOLOGY,
INC., a corporation organized and existing under the laws of the State of New
Jersey (the "Company"), as Sublessee.
WITNESSETH:
WHEREAS, the Authority is a public body corporate and politic constituting
a political subdivision of the State of New Jersey established as an
instrumentality exercising public and essential governmental functions under the
provisions of the New Jersey Municipal Port Authorities Law (N.J. State. Ann.
Sec. 40:68A 29 et seq. (West)) (the "Act"); and
WHEREAS, the Authority is empowered pursuant to the Act to issue bonds for
the purpose of raising funds to pay the cost of any part of its port system; and
WHEREAS, pursuant to the Act, and in order to obtain funds necessary to
pay the costs of the Project (hereinafter defined), the Authority has duly
adopted a resolution authorizing the execution and delivery of a Trust Indenture
dated as of December 1, 1984 between the Authority and The Farmers and Merchants
National Bank of Bridgeton and the issuance of $2,500,000 principal amount of
its Port Development Revenue Bonds, Series of 1984 (South Jersey Process
Technology, Inc. Project) (the "Bonds"), to be issued pursuant to the Indenture;
and
WHEREAS, in furtherance of the purposes of the Act, the Authority proposes
to undertake a project (the "Project") consisting of, inter alia, the
application of the proceeds of the Bonds to the cost of (1) constructing,
improving and equipping a radiation processing system, with related facilities
(collectively the "Project Facilities"), for the irradiation of agricultural
products prior to shipping thereof, to be situated on certain real estate more
particularly described in Exhibit A hereof (the "Premises"), and (2) the payment
of costs of issuance of the Bonds; and
WHEREAS, the Authority and the Company desire to enter into this Sublease,
pursuant to which the Authority will sublease the Premises to the Company, to
permit the Company to operate the Project Facilities and to provide, inter alia,
for the payment of the interest on and the principal of the Bonds; and
<PAGE> 4
WHEREAS, certain rights of the Authority under this Sublease are being
assigned to the Trustee for the benefit of the Owners of the Bonds pursuant to
an Assignment attached hereto (the "Assignment"); and
WHEREAS, the Bonds are being issued for the purpose of providing funds to:
(i) pay the costs of the Project; and (ii) pay the costs of issuance of the
Bonds; and
WHEREAS, the Bonds are to be secured by a pledge and assignment of certain
rentals payable by the Company hereunder, which rentals are intended to be in an
amount sufficient to pay, inter alia, the debt service on the Bonds and the
Administrative Expenses of the Authority;
NOW, THEREFORE, THIS SUBLEASE AND SECURITY AGREEMENT WITNESSETH:
That the parties hereto, intending to be legally bound hereby and in
consideration of the mutual covenants hereinafter contained, DO HEREBY AGREE to
all provisions contained in this Sublease.
-2-
<PAGE> 5
ARTICLE I.
DEFINITIONS.
The terms defined in this Article I shall have the following meanings,
unless the context clearly otherwise requires:
SECTION 1.01 Definitions. In this Sublease and any supplement hereto
(except as otherwise expressly provided or unless the context otherwise
requires) terms used as defined terms in the recitals hereto shall have the same
meanings throughout this Sublease, and, in addition, the following terms shall
have the meanings specified below:
"Event of Default" shall mean any of the events described in Section 8.01
hereof.
"Indenture" shall mean the Trust Indenture dated as of December 1, 1984
between the Authority and the Trustee, as amended or supplemented at the time in
question.
All words importing persons include firms, associations and corporations,
and all words importing the singular number include the plural number and vice
versa.
A reference herein to a statute or to a regulation issued by a
governmental agency includes the statute or regulation in force as of the date
hereof, together with all amendments and supplements thereto and any statute or
regulation substituted for such statute or regulation, unless the specific
language or the context of the reference herein clearly includes only the
statute or regulation in force as of the date hereof.
A reference herein to a governmental agency, department, board,
commission, or other public body or to a public officer includes an entity or
officer which or who succeeds to substantially the same functions as those
performed by such public body or officer as of the date hereof, unless the
specific language or the context of the reference herein clearly includes only
such public body or public officer as of the date hereof.
All words and terms used in the Sublease and not defined above or
elsewhere herein shall have the same meanings as set forth in the Indenture, if
defined therein.
-3-
<PAGE> 6
ARTICLE II.
SUBLEASE OF PROJECT FACILITIES AND TERM THEREOF
Section 2.01. The Authority, as lessor, does hereby demise and lease the
Premises, as described in Exhibit A hereto, to the Company, as lessee, for
operation and use, and the Company does hereby lease, hire and take the same
hereby from the Authority.
TO HAVE AND HOLD the same unto the Company, as lessee, for a term
beginning as of December 1, 1984, and ending December 1, 2004, unless extended
or sooner terminated in accordance with the terms hereof or in accordance with
the terms of that certain operating agreement among the Authority, the Company
and Radiation Technology, Inc. dated as of December 28, 1984.
Section 2.02. The Company shall construct or cause to be constructed that
part of the Project requiring construction in accordance with the plans and
specifications therefor and shall provide and maintain all fixtures,
furnishings, equipment and other related facilities necessary for the proper
operation and use of the Project Facilities and meeting standards no less than
the minimum standards lawfully established by regulatory bodies having
jurisdiction; provided, however, that nothing herein shall prevent or prohibit
the Company from contesting in good faith and by appropriate proceedings the
legality or reasonableness of any such standards, or the imposition of any such
standards upon it with respect to the Project Facilities, so long as the
operation of the Project Facilities would not be adversely affected by reason
thereof.
Section 2.03. The Sublease is executed in part to induce the purchase by
others of the Bonds and, accordingly, all covenants and agreements on the part
of the Company and the Authority, as set forth in the Sublease, are hereby
declared to be for the benefit of the Owners from time to time of the Bonds
Outstanding under the Indenture.
Section 2.04. The Authority makes no warranty, either express or implied,
as to the Premises or the condition thereof, or that the Premises will be
suitable for the purposes or needs of the Company. The Authority covenants that
the Company on paying the rent and additional rent provided for herein and
performing the terms, covenants and conditions hereof, shall and may have quiet
and peaceful possession of the Premises for the term of this Sublease. The
Company accepts the Premises in their present condition, with no assurances as
to riparian rights, and subject to any present conditions or restrictions as to
Wetlands Restrictions, Coastal Area Regulations, Flood Hazard area, as
-4-
<PAGE> 7
well as any limitations upon the property by virtue of being a former landfill
area.
-5-
<PAGE> 8
ARTICLE III.
CONSTRUCTION OF THE PROJECT
Section 3.01. The Company, as lessee, shall cause that portion of the
Project requiring construction to be constructed in accordance with the plans
and specifications and in connection therewith shall cause to be purchased the
materials therefor. Copies of the plans, specifications and architectural
renderings and all amendments thereto shall be filed with the Trustee and the
Authority.
Section 3.03. The construction schedule of that portion of the Project
requiring construction and the estimated costs shall be filed with the Trustee.
The construction and installation of the Project shall conform to the schedule
on file with the Trustee and to the plans and specifications prepared and
approved by the Company and the Authority and filed with the Trustee, as
hereinafter mentioned, provided, however, that the schedule on file with the
Trustee and said plans and specifications may from time to time be amended,
modified or changed and deletions may be made therefrom, but no change orders
with respect to construction contracts shall be made unless the conditions and
requirements of Section 4.01 of the Indenture shall have been complied with in
full. The Company shall pay the Costs of completing the Project to the extent
moneys in the Construction Fund are not sufficient.
Section 3.04. The Company and the Authority will comply with all present
and future laws, acts, rules, regulations, orders and requirements lawfully made
relating to any acquisition or construction undertaken hereby.
Section 3.05. (a) All payments to suppliers and contractors due under the
construction contracts shall be made, upon order or requisition of the Company,
by the Trustee in accordance with the terms of the Indenture.
(b) The Company shall enforce any construction contracts and will cause
the Project to be constructed and installed substantially in accordance with the
plans and specifications therefor, subject, however, to the right of the parties
hereto to make amendments, modifications and changes in the schedule on file
with the Trustee, and in the plans and specifications as provided in Section
3.03 hereof. The Company and the Authority will not do or refrain from doing any
act whereby any surety on any bond may be released in whole or in part from any
obligations assumed by it or from any agreement to be performed by it under any
surety bond.
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<PAGE> 9
(c) The Company and the Authority will use their best efforts to cause
the construction portions of the Project to be completed in accordance with the
schedule on file with the Trustee, or as soon thereafter as may be practicable,
except for delays incident to riots, sabotage, fire, floods, differences with
workmen, insurrections, acts of God, war, governmental acts, difficulties with
contractors or suppliers, inability to obtain material or supplies or to
transport the same to the Premises, shortages of energy or other cause beyond
the reasonable control of the parties hereto; but if for any reason such
acquisition, construction and installation is not completed by said date there
shall be no resulting liability on the part of the Authority and no diminution
in or postponement of the rent required by Article IV hereof to be paid by the
Company.
(d) In the event of default of any contractor or subcontractor or
supplier under any contract made by it in connection with the Project, or in the
event of a breach of warranty with respect to any materials, workmanship or
performance guaranty, the Company will notify the Authority and the Trustee and
will proceed, either separately or in conjunction with others, to pursue such
remedies against the contractor or subcontractor or supplier so in default and
against each surety for the performance of such contract as it may deem
advisable. The Company agrees to advise the Authority of the steps it intends to
take in connection with any such default. If the Company shall so notify the
Authority, the Company may, and, at the direction of the Authority, shall in its
own name or in the name of the Authority, prosecute any action or proceeding or
take any other action involving any such contractor, subcontractor, supplier, or
surety which the Company deems reasonably necessary, and in such event the
Authority hereby agrees to cooperate fully with the Company. If the Company,
after direction from the Authority, refuses to prosecute any action or
proceeding or take any other action against such contractor, subcontractor,
supplier or surety, the Authority may proceed to take all such action in the
name of the Company or in its own name and the Company shall pay all
administrative expenses in connection therewith.
Section 3.06. The Company will maintain or cause to be maintained
builder's risk (or equivalent coverage) insurance upon any work done or
materials furnished with respect to construction phases of the Project except
excavations, foundations and any other structures not customarily covered by
such insurance. The policies shall be issued by responsible companies qualified
to do business in New Jersey and satisfactory to the Company and the Insurance
Consultant and shall be written in completed value form for 100% of the
insurable value of the construction in the names of the Company, the Authority,
the Trustee, the contractor
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<PAGE> 10
and subcontractors as their interests may appear. Any amounts payable to the
Company or the Authority thereunder shall be deposited in the Construction Fund,
During the period of any construction, the Company will also maintain or
cause to be maintained (a) workmen's compensation insurance and employer's
liability insurance underwritten by responsible companies qualified to do
business in New Jersey and satisfactory to the Company and the Insurance
Consultant, covering all employees of contractors and subcontractors in amounts
required by law, (b) general liability insurance, including umbrella coverage,
in amounts not less than $1,000,000 liability for personal injury for each
occurrence and in the aggregate per annum, and $100,000 for property damage for
each occurrence with an annual aggregate of not less than $1,000,000; and (c)
comprehensive automobile liability insurance covering owned, non-owned and hired
automobiles in amounts not less than $500,000 liability for injury to any one
person, $500,000 liability for each occurrence, and $100,000 for property damage
for each occurrence.
Each policy of insurance required by this Section 3.06, or a copy thereof,
or an insurance certificate in respect thereof, shall be deposited with the
Trustee and the Authority.
Section 3.07. (a) The Completion Date shall be evidenced to the Authority
and the Trustee by an Officers Certificate of the Company approved by a
Consulting Engineer stating that, except for amounts retained by the Trustee at
the Company's direction to pay any Cost of the Project not then due and payable,
(i) construction of the Project Facilities has been completed and all costs of
labor, services, materials and supplies used in such construction have been
paid, (ii) all equipment for the Project Facilities has been installed, such
equipment so installed is suitable and sufficient for the operation of the
Project Facilities, and all costs and expenses incurred in the acquisition and
installation of such equipment have been paid, and (iii) all other facilities
necessary in connection with the Project Facilities have been acquired,
constructed, improved, and equipped and all costs and expenses incurred in
connection therewith have been paid. Notwithstanding the foregoing, such
Certificate shall state that it is given without prejudice to any rights against
third parties which exist at the date of such Certificate or which may
subsequently come into being. Forthwith upon completion of the acquisition,
construction, improving, and equipping of the Project Facilities, the Company
agrees to cause such Certificate to be furnished to the Authority and the
Trustee. Upon receipt of such Certificate, the Trustee shall retain in the
Construction Fund a sum equal to the amounts necessary for
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<PAGE> 11
payment of the Costs of the Project not then due and payable according to such
Certificate. If any such amounts so retained are not subsequently used, prior to
any transfer of said amounts to the Bond Fund as provided below, the Trustee
shall give notice to the Company of the failure to apply said funds for payment
of the Costs of the Project. Any amount not to be retained in the Construction
Fund for payment of the Costs of the Project, and all amounts so retained but
not subsequently used, shall be transferred by the Trustee into the Bond Fund.
(b) If at least ninety-five percent (95%) of the sum of (a) the actual
amount of the proceeds received by the Authority from the sale of the Bonds less
amounts expended for issuance expenses and (b) any investment earnings on moneys
in the Construction Fund, have not been used (i) for the acquisition,
construction, reconstruction or improvement of land or property of a character
subject to the allowance for depreciation under the Code, or (ii) for payment of
amounts which are, for federal income tax purposes, chargeable to the Project
Facilities' capital account or would be so chargeable either with a proper
election by the Company or but for a proper election by the Company to deduct
such amounts, any amount (exclusive of amounts retained by the Trustee in the
Construction Fund for payment of Costs of the Project not then due and payable)
remaining in the Construction Fund shall be segregated by the Trustee in a
separate sub-account of the Bond Fund and used by the Trustee at such time as
such amounts become Available Moneys (a) to redeem Bonds on the earliest
redemption date permitted by the Indenture without a premium, (b) to purchase
Bonds on the open market prior to such redemption date at prices not in excess
of one hundred percent (100%) of the principal amount of such Bonds, or (c) for
any other purpose provided that the Trustee is furnished with an opinion of
nationally recognized bond counsel to the effect that such use is lawful under
the Act and will not adversely affect the exclusion from federal income taxation
of interest on any of the Bonds. Until used for one or more of the foregoing
purposes, such segregated amount may be invested as permitted by the Indenture
provided that prior to any such investment the Trustee is provided with an
opinion of nationally recognized bond counsel to the effect that such investment
will not adversely affect the exclusion from federal income taxation of interest
on any of the Bonds.
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ARTICLE IV.
CONCERNING RENTALS AND ADDITIONAL SUMS
Section 4.01. The Company shall pay on the dates hereinafter set forth to
the Authority or its assigns the following sums as rent hereunder at the
following times:
(a) on or before any interest payment date for the Bonds or any
other date that any payment of interest, premium, if any, or principal is
required to be made in respect of the Bonds pursuant to the Indenture,
until the principal of, premium, if any, and interest on the Bonds shall
have been fully paid or provision for the payment thereof shall have been
made in accordance with the Indenture, in immediately available funds, a
sum which, together with any Available Moneys available for such payment
in the Bond Fund, will enable the Trustee to pay the amount payable on
such date as principal of (whether at maturity or upon redemption or
acceleration or otherwise), premium, if any, and interest on the Bonds as
provided in the Indenture; provided, however, that the obligation of the
Company to make any payment hereunder shall be deemed satisfied and
discharged to the extent of the corresponding payment made by the Bank to
the Trustee under the Letter of Credit.
It is understood and agreed that all payments payable by the Company
under subsection (a) of this Section 4.01 are assigned by the Authority to
the Trustee for the benefit of the Owners of the Bonds. The Company
assents to such assignment. The Authority hereby directs the Company and
the Company hereby agrees to pay to the Trustee at the Principal Office of
the Trustee all payments payable by the Company pursuant to this
subsection.
(b) The Company shall pay as due any Administrative Expenses of the
Authority and the fees of the Trustee.
(c) The Company covenants, for the benefit of the Owners of the
Bonds, to pay or cause to be paid, to the Tender Agent, such amounts as
shall be necessary to enable the Tender Agent to pay the Purchase Price of
Bonds delivered to it for purchase, all as more particularly described in
Sections 3.01, 3.02 and 3.06 of the Indenture; provided, however, that the
obligation of the Company to make any such payment under this subsection
(c) shall be reduced by the amount of
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<PAGE> 13
moneys available for such payment described in subsections (i) or (ii) of
Section 3.07 of the Indenture; and provided; further, that the obligation
of the Company to make any payment under this subsection (c) shall be
deemed to be satisfied and discharged to the extent of the corresponding
payment made by the Bank under the Letter of Credit.
(d) In the event the Company should fail to make any of the payments
required in this Section 4.01, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall
have been fully paid, and the Company agrees to pay the same with interest
thereon, to the extent permitted by law, from the date when such payment
was due, at the Late Payment Rate.
Additionally, from time to time, the Company shall be required to make
payments necessary to make up any deficiency in the funds established under the
Indenture or to pay for any cost overruns with respect to the Project.
Section 4.02. As additional rent hereunder, the Company during the term of
the Sublease shall pay or cause to be paid to the public officers charged with
the collection thereof promptly as the same become due, all taxes (or
contributions or payments in lieu thereof), including but not limited to income,
profits or property taxes, which may now or hereafter be imposed by the United
States of America, any state or municipality or any political subdivision or
subdivisions thereof, and all assessments for public improvements or other
assessments, levies, license fees, charges for publicly supplied water or sewer
services, excises, franchises, imposts and charges, general and special,
ordinary and extraordinary (including interest, penalties and all costs
resulting from delayed payment of any of the foregoing) of whatever name, nature
and kind and whether or not now within the contemplation of the parties hereto
which are now or may hereafter be levied, assessed, charged or imposed upon or
which are or may become a lien upon the Sublease, the Premises, the Project
Facilities, the use or occupation thereof or upon the owner or occupants in
respect of or upon the basis of the rent or the estate hereby created, or upon
the Company or the Authority, or upon any franchises, businesses, transactions,
income, earnings and receipts (gross, net or otherwise) of the Authority in
connection with the Premises or Project Facilities, for payment or collection of
which the Authority otherwise would be liable or accountable under any lawful
authority whatever by reason of the Sublease, or its earnings, profits or
receipts from, or its subleasing of, the Premises or Project
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<PAGE> 14
Facilities; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any tax, assessment, lien or other
matter hereunder so long as the validity thereof is being contested in good
faith and by appropriate legal proceedings diligently pursued and neither the
Premises nor any rent or income therefrom or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost. The Company will,
upon request, provide the Authority or the Trustee with copies of any tax
returns and receipts for payments of taxes.
Section 4.03. The Company may make payments in advance from time to time,
on account of rentals payable hereunder, in installments, which amounts shall be
credited against the rental at the time next due. All such payments made in
respect of amounts due under Section 4.0l(a) hereof shall be made directly to
the Trustee and shall be deposited by the Trustee in the Bond Fund created under
the Indenture.
Section 4.04. The Company shall pay rentals and additional sums required
hereunder without suspension or abatement of any nature, notwithstanding that
all or any part of the Project Facilities shall have been wholly or partially
destroyed, damaged or injured and shall not have been repaired, replaced or
rebuilt. So long as any of the Bonds remain Outstanding or sufficient Available
Moneys for the payment of the Bonds, in full, including principal, interest and
premium for redemption, if any, shall not be held by the Trustee in trust
therefor, the obligation of the Company to pay rentals shall be absolute and
unconditional and shall not be suspended, abated, reduced, abrogated, waived,
diminished or otherwise modified in any manner or to any extent whatsoever,
regardless of any rights of setoff, recoupment or counterclaim that the Company
might otherwise have against the Authority or the Trustee or any other party or
parties and regardless of any contingency, act of God, event or cause whatsoever
and notwithstanding any circumstances or occurrence that may arise or take place
after the date hereof, including but without limiting the generality of the
foregoing:
(a) any damage to or destruction of any part or all of the Project
Facilities;
(b) the taking or damaging of any part or all of the Premises or
Project Facilities, by any public authority or agency in the exercise of
the power of or in the nature of eminent domain or through a conveyance in
lieu of such exercise or otherwise;
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<PAGE> 15
(c) any assignment, novation, merger, consolidation, transfer of
assets, subleasing or other similar transaction of or affecting the
Company, whether with or without the approval of the Authority or the
Trustee;
(d) the expiration of the term of this Sublease pursuant to the
provisions hereof;
(e) any failure of the Authority or the Trustee to perform or
observe any agreement or covenant, whether express or implied, or any
duty, liability or obligation arising out of or connected with this
Sublease, the Indenture or the Bonds;
(f) any acts or circumstances that may constitute an eviction or
constructive eviction;
(g) failure of consideration, failure of title or commercial
frustration;
(h) any change in the tax or other laws of the United States or of
any state or other governmental authority; and
(i) any determination that the Bonds are subject to federal
taxation.
Except to the extent provided in and subject to this Section 4.04, nothing
contained herein shall be construed to prevent or restrict the Company from
asserting any rights which it may have under this Sublease or any provision of
law against the Authority or the Trustee.
Section 4.05. Rentals and additional sums required to be paid by the
Company shall be received by the Authority or its assigns as net sums and the
Company covenants to pay all charges against or which might diminish such net
sums.
Section 4.06. The Company may provide for the delivery to the Trustee of a
Substitute Letter of Credit. Any Substitute Letter of Credit shall be delivered
to the Trustee not less than sixty (60) days prior to the expiration of the
Letter of Credit it is being issued to replace; provided, however, that on or
before the date of such delivery of a Substitute Letter of Credit to the
Trustee, the Company shall furnish to the Trustee written evidence from each
rating agency by which the Bonds are then rated, to the effect that such rating
agency has reviewed the proposed substitute Letter of Credit and that the
substitution of the proposed Substitute Letter of Credit will not, by itself,
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result in the reduction of the then applicable rating(s) of the Bonds.
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<PAGE> 17
ARTICLE V.
CONSULTANTS
Section 5.01. The Company covenants to employ, or to cause to be employed,
such consultants from time to time as may be required to carry out the
provisions hereof. Such consultants shall be approved by the Authority, which
approval shall not be unreasonably withheld. As provided herein, such
consultants consist of a Certified Public Accountant and a Consulting Engineer.
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ARTICLE VI.
INSURANCE, INSURANCE CONSULTANT, CASUALTY
AND CONDEMNATION
Section 6.01. The Company covenants to provide and maintain continuously
unless otherwise provided herein, the following:
(a) Insurance against loss and/or damage to the Project Facilities
(which may also cover other property of the Company) under a policy or
policies in form and amount covering such risks as are ordinarily insured
against by similar companies including without limiting the generality of
the foregoing, fire and uniform standard extended coverage endorsements,
limited only as may be provided in the standard form of extended coverage
endorsements at the time in use in the State. Such insurance shall be for
an amount at least equal to the amount required to pay the principal of,
and interest on, the Bonds and any other indebtedness from the Company to
the Authority as they mature and come due, or for the full insurable value
of the Project Facilities if such insurable value is less than the
aforesaid amount. No policy of insurance shall be so written that the
proceeds thereof will produce less than the minimum coverage required by
the preceding sentence, by reason of co-insurance provisions or otherwise,
without the prior consent thereto in writing by the Trustee, except that
each policy of insurance required hereunder may contain a loss deductible
clause specifying such sum or sums as the Company may determine and as are
acceptable to an Insurance Consultant as the sum or sums to be deducted
from the amount of loss resulting from particular perils. The Authority
will request the Trustee to consent to such co-insurance or other like
reductions upon approval thereof by an Insurance Consultant.
(b) (i) General liability insurance protecting the Company against
injuries to persons in the minimum amount of $500,000 per occurrence and
$500,000 in the aggregate per annum, and for property damage in amounts of
$100,000 per occurrence and $500,000 in the aggregate per annum; and (ii)
Comprehensive automobile liability insurance protecting the Company
against liability for injuries to any one person in amounts not less than
$500,000, $500,000 liability for each
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<PAGE> 19
occurrence and $100,000 for property damage for each occurrence.
(c) Workmen's Compensation and employer's liability insurance
meeting the Company's statutory obligations; provided, however, that, if
the Company becomes an approved self-insured, employer's liability
coverage in the amount of at least $100,000 shall be purchased.
(d) Boiler and machinery coverage (direct damage) on a replacement
cost basis where deemed advisable by the Insurance Consultant, or when
required by ordinance or law.
(e) Excess liability coverage, either straight excess or umbrella
excess, covering excess of subsection (b)(i) above to be maintained in
force so that the total coverage available under the aforementioned
subsection, including this subsection, is not less than $2,000,000 for any
one occurrence and $2,000,000 in the aggregate per annum for personal
injury, and $2,000,000 for any one occurrence and $2,000,000 in the
aggregate, per annum, for property damage, which requirements may be met
by any State mandated insurance fund.
(f) Insurance, if any available, against any claims under the Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11, et. seq., the
Environmental Cleanup Responsibility Act, N.J.S.A. 13:1(k)-6, et. seq.,
and any similar state or federal laws or regulations now or hereafter
applicable thereto.
All policies of insurance and bonds required by this Section 6.01 shall be
in such amounts and contain such provisions as comply with the foregoing
requirements or as shall have been recommended in writing by an Insurance
Consultant, if higher; provided, however, that the Company shall not be required
to insure for risks not normally covered or carry insurance coverage in excess
of standard requirements for companies of similar size and nature engaged in
similar activities. All such policies and bonds shall provide, to the extent
obtainable, that coverage shall not be reduced or cancelled without 30 days
prior written notice to the Authority and the Trustee.
All policies of insurance and fidelity bonds shall be issued by
responsible insurance or fidelity bonding companies, acceptable to the Company,
qualified to do business in the State and qualified under the laws of the State
to
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<PAGE> 20
assume risks covered by such policy or policies or bond or bonds and shall be
nonassessable.
All policies of insurance, trusts evidencing insurance and fidelity bonds
required under subparagraphs (a) through and including (f) above shall be for
the benefit of the Authority, the Company and the Trustee, as their respective
interests may appear. All policies of insurance required under subparagraphs (a)
and (d) above shall be made payable to the Trustee and the Trustee shall have
the exclusive right to receive the proceeds from such insurance. The Company,
with the consent of the Authority and the Trustee which consent shall not be
unreasonably withheld shall have the right to settle all claims thereunder. The
Company shall have the right to receive payments due and to receipt for claims
under policies of insurance required by subparagraphs (b) and (e) above. The
original or a copy of each policy or a copy of any self-insurance trust or
fidelity bond or a certificate that the same has been issued and is currently in
effect, shall be delivered to the Trustee.
In the event that any insurance required by this Section 6.01 is
commercially unavailable at a reasonable cost or has been otherwise provided, as
evidenced by an Officer's Certificate of the Company, the Authority, with the
approval of the Company, may accept such substitute coverage as is recommended
by the Insurance Consultant.
Section 6.02. If the Premises shall be wholly or partially destroyed or
damaged by fire or other casualty covered by insurance required under Section
6.01(a), or shall be wholly or partially condemned, taken or injured by any
Person, including any Person possessing the right to exercise the power of or a
power in the nature of eminent domain or transferred to such a Person by way of
a conveyance in lieu of the exercise of such a power by such a Person, the
Authority and the Company covenant that they will take all actions and will do
all things which may be necessary to enable recovery to be made upon such
policies of insurance or on account of such taking, condemnation, conveyance,
damage or injury in order that moneys due on account of losses suffered may be
collected and paid to the Trustee. The Company is authorized, in its own name,
but only upon consent of the Trustee, which shall not be unreasonably withheld,
to demand, collect, sue, settle claims, receipt and release moneys which may be
due and payable under such policies of insurance or on account of such
condemnations, damage or injury.
Any appraisement or adjustment of loss or damage and any settlement or
payment therefor, which may be agreed upon by the Authority, the Company and the
appropriate insurer or condemnor or Person, shall be evidenced to the
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Trustee by the certificate and approvals set forth in Section 9.05 of the
Indenture. The Trustee may rely conclusively upon such certificates.
Section 6.03. Unless the Company shall have exercised its option to redeem
the Bonds in whole pursuant to the provisions of Section 6.05(a) or Section
6.05(b) hereof, if prior to the full payment of the Bonds (or prior to provision
for payment thereof having been made in accordance with the provisions of the
Indenture)(i) the Premises or any portion thereof is destroyed (in whole or in
part) or is damaged by fire or other casualty or (ii) title to or any interest
in, or the temporary use of, the Premises or any part thereof shall be taken
under the exercise of the power of eminent domain by any governmental body or by
any Person acting under governmental authority, the Company shall be obligated
to continue to pay the amounts specified in Section 4.01 hereof.
Section 6.04. if moneys are collected under policies of insurance required
under Section 6.01(a) or (d) or on account of any event described in Section
6.03 hereof, such moneys shall be paid to the Trustee for deposit in the
Construction Fund, if received prior to the Completion Date, or in a separate
trust fund if received subsequent to the Completion Date, and applied in one or
more of the following ways as shall be elected by the Company in a written
notice to the Trustee:
(a) to the prompt repair, restoration, modification or improvement
of the Premises, and the Authority has, in the Indenture, authorized and
directed the Trustee to make disbursements from such separate trust fund
for such purposes. Such disbursements shall be made by the Trustee only
upon receipt of proper requisitions therefor. Any balance of the insurance
or condemnation proceeds remaining after such work has been completed
shall be transferred into the Bond Fund to be applied in accordance with
subsection (b) below, or if the Bonds have been fully paid (or provision
for payment thereof has been made in accordance with the provisions of the
Indenture), any balance remaining in such separate trust fund shall be
paid in accordance with Section 6.08 of the Indenture.
(b) at such time as such funds constitute Available Moneys, to the
redemption of Bonds on the earliest practicable redemption date as
specified in a written notice by the Company to the Trustee, provided that
no part of such insurance or condemnation proceeds may be applied for such
redemption unless (1) all of the Bonds are to be
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<PAGE> 22
redeemed in accordance with the Indenture upon exercise by the Company of
its option to redeem the Bonds in whole pursuant to the provisions of
Section 6.05(a) or Section 6.05(b) hereof or (2) in the event that less
than all of the Bonds are to be redeemed, the Company shall furnish to the
Bank and the Trustee an Officer's Certificate of the Company stating that
(i) the property forming the part of the Premises that was damaged or
destroyed by such casualty or was taken by such condemnation proceedings
is not essential to the use or possession of the Premises by the Company
or (ii) the Premises have been repaired, restored, modified or improved to
operate as designed.
Section 6.05. The Authority and the Company agree that the Bonds shall be
subject to extraordinary redemption in whole, at the option of the Company upon
the occurrence of any of the events set forth below:
(a) The Premises shall have been damaged or destroyed (i) to such
extent that they cannot, in the Company's judgment, be reasonably restored
within a period of six (6) months to the condition thereof immediately
preceding such damage or destruction, or (ii) to such extent that the
Company is thereby prevented, in the Company's judgment, from carrying on
its normal operations at the Project Facilities for a period of six (6)
months or more.
(b) Title to, or the temporary use for a period of six (6) months or
more of, all or substantially all the Premises, or such part thereof as
shall materially interfere, in the Company's judgment, with the operation
of the Project Facilities for the purpose for which the Project Facilities
are designed, shall have been taken under the exercise of the power of or
power in the nature of eminent domain by any governmental body or by any
Person acting under governmental authority or transferred to such Person
by way of a conveyance in lieu of the exercise of such power by such
Person (including such a taking or takings as results in the Company being
thereby prevented from carrying on its normal operations at the Project
Facilities for a period of six (6) months or more).
(c) Changes which the Company cannot reasonably control or overcome
in the economic availability of materials, supplies, labor, equipment and
other properties and things neces-
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<PAGE> 23
sary for the efficient operation of the Project Facilities for the
purposes contemplated by this Sublease shall have occurred, or
technological or other changes shall have occurred which in the judgment
of the Company render the continued operation of the Project Facilities
uneconomic for such purposes.
(d) As a result of any changes in the Constitution of the State or
the Constitution of the United States of America or of legislative or
administrative action (whether state or federal) or by final decree,
judgment or order of any court or administrative body (whether state or
federal) entered after the contest thereof by the Company in good faith,
this Sublease shall have become void or unenforceable or impossible of
performance in accordance with the intent and purposes of the parties as
expressed in this Sublease, or unreasonable burdens or excessive
liabilities shall have been imposed on the Company in respect of the
Project Facilities, including, without limitation, federal, state or other
ad-valorem, property, income, or other taxes not being imposed on the date
of this Sublease.
Section 6.06. To exercise its option to effect an extraordinary redemption
of all Bonds then Outstanding pursuant to Section 6.05 hereof, the Company shall
within ninety (90) days following the event authorizing such redemption, give
written notice to the Authority, the Bank and the Trustee and shall specify
therein the date of redemption of Bonds pursuant to Section 8.01 of the
Indenture, which date shall be the next interest payment date in respect of the
Bonds for which the required notice of redemption can practicably be given, and
shall make arrangements satisfactory to the Trustee for the giving of the
required notice of redemption. In order to exercise such option, the Company
shall pay, or cause to be paid, on or prior to the applicable redemption date,
to the Trustee, an amount equal to the sum of the following:
(1) An amount of money which, when added to the amount then on
deposit and available in the Bond Fund, will be sufficient to retire
and redeem all the Outstanding Bonds on the earliest possible
redemption date after notice as provided in the Indenture,
including, without limitation, the principal amount thereof, all
interest to accrue to said redemption date, and the applicable
redemption premium, if any, plus
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<PAGE> 24
(2) An amount of money equal to the Trustee's fees and
expenses under the Indenture accrued and to accrue until such final
payment and redemption of the Bonds, plus
(3) An amount of money equal to the Authority's fees and
expenses under this Sublease accrued and to accrue until such final
payment and redemption of the Bonds.
The Company's obligation to make any payments under this Section 6.06 shall be
deemed satisfied and discharged to the extent of the corresponding payment made
by the Bank under the Letter of Credit.
Section 6.07. The proceeds of all general liability and comprehensive
automobile liability insurance shall be applied by the Company to the payment of
any judgment, settlement or liability incurred for risks covered by such
insurance. The proceeds of insurance obtained pursuant to 6.01(f) hereof shall
be used to satisfy claims under the Spill Compensation Control Act, the
Environmental Cleanup Responsibility Act, or other similar laws or regulations,
as applicable.
Section 6.08. The Company covenants to furnish to the Authority and the
Trustee on or before the execution and delivery hereof, and thereafter prior to
the beginning of each Fiscal Year, an Insurance Consultant's Certificate,
setting forth amounts and types of insurance then in force with respect to the
Project Facilities and operation thereof, stating whether in the opinion of such
Consultant, such insurance then in force is in compliance with such Consultant's
recommendations made in fulfillment of the requirements of Section 6.01 hereof,
and stating the amounts and types of insurance to be maintained during the next
ensuing Fiscal Year. The Company covenants to maintain such amounts and types of
insurance.
Section 6.09. If the proceeds of insurance as a result of damage or injury
to the Premises or condemnation awards resulting from condemnation of the
Premises are insufficient to pay in full the cost of any repair, restoration,
modification or improvement referred to in Section 6.04(a) hereof, the Company
will nonetheless complete the work and will pay any cost in excess of the amount
of such proceeds or awards held by the Trustee. The Company agrees that if by
reason of any such insufficiency the Company shall make any payments pursuant to
the provisions of this Section, the Company shall not be entitled to any
reimbursement therefor from the Authority, the Trustee or the Owners of any of
the Bonds, nor shall the Company be entitled to
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<PAGE> 25
any diminution of the amounts payable under Section 4.01 hereof.
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<PAGE> 26
ARTICLE VII.
ADDITIONAL COVENANTS OF THE COMPANY
Section 7.01. The Company covenants and agrees that whenever the services
of an Architect or Consulting Engineer are required to carry out the provisions
hereof, it will, upon request of the Authority, retain or cause to be retained
an Architect or Consulting Engineer.
Section 7.02. The Company covenants to keep accurate records and books of
account, and to have made a certified audit of such records and accounts by a
Certified Public Accountant for each Fiscal Year. Within 120 days after the end
of the Fiscal Year, a signed counterpart of such audit shall be furnished to the
Authority and the Trustee and copies thereof shall be available for inspection
at reasonable times by Owners of the Bonds.
Section 7.03. The Company covenants to maintain the Premises in good
repair and operating condition, to operate the same continuously in an
economical and efficient manner in accordance with applicable laws, and to make
all ordinary repairs, renewals, replacements and improvements required to
continuously operate the Premises. The Company further covenants that it will
not commit or suffer any stripping or waste of the Premises.
Section 7.04. The Company covenants that all actions heretofore and
hereafter taken by the Company or by the Authority upon the recommendation or
request of any officer of the Company to acquire and carry out the Project,
including the making of contracts, have been and will be in full compliance with
all pertinent laws, ordinances, rules, regulations and orders applicable to the
Company. In connection with the construction, operation, maintenance, repair and
replacement of the Premises, the Company covenants that it shall comply with all
applicable ordinances, laws, rules, regulations and orders of the government of
the United States of America, the State and any department, agency or political
subdivision thereof, and any requirement of any board of fire underwriters
having jurisdiction or of any insurance company writing insurance on the
Premises. Provided, however, that nothing herein shall prevent or prohibit the
Company from contesting in good faith and by appropriate proceedings the
legality or reasonableness of any such standards, or the imposition of any such
standards upon it with respect to the Premises so long as the operation of the
Premises or the receipt of income therefrom would not be adversely affected by
reason thereof. The Company covenants that it shall not take any action or
request the Authority to execute any release which would cause the Premises to
be in violation of such laws or ordinances or such that a convey-
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<PAGE> 27
ance of the Premises or of any portion of the Premises would create a violation
of such laws and ordinances. The Company acknowledges that any review by the
Authority's staff or Counsel of any action heretofore or hereafter taken by the
Company has been or will be solely for the protection of the Authority, Such
reviews shall not prevent the Authority from enforcing any of the covenants made
by the Company. The Authority hereby covenants that it will use its best efforts
to assist the Company in obtaining necessary permits, approvals and consents
from appropriate governmental authorities in connection with the construction,
operation, maintenance, repair or replacement of the Premises.
Section 7.05. The Company covenants to preserve and to maintain its
existence as a corporation under the laws of the State, and to preserve and
maintain its authority to operate the Premises. The Company covenants that
during the term of the Sublease it shall not initiate any proceedings or take
any action whatsoever to dissolve, liquidate or to terminate its existence as a
corporation or otherwise dispose of substantially all of its assets, except as
otherwise provided herein or in the Indenture, except to consolidate or to merge
with any other corporation as provided herein. The Company covenants that during
the term of the Sublease it shall not consolidate with or merge into any other
corporation, unless the following conditions shall be met:
(a) the successor formed by such consolidation or merger shall be a
legal entity organized under the laws of the United States or any state,
district or territory thereof;
(b) such successor corporation shall be financially capable of
fulfilling, and agrees to fulfill, the obligations of the Company under
this Sublease, the Remarketing Agreement, the Credit Agreement, the Tender
Agent Agreement and the Pledge Agreement;
(c) the successor formed by such consolidation or merger shall have
a net worth immediately subsequent to such consolidation or merger at
least equal to that of the Company immediately prior to such consolidation
or merger;
(d) immediately after such consolidation or merger, the Company, or
such successor corporation, shall not be in default in the performance or
observance of any duties, obligations or covenants of the Company under
the Sublease; and
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<PAGE> 28
(e) The Authority and Trustee shall have received an opinion of
Counsel satisfactory to each of them that the exemption from federal
income taxes of the interest on the Bonds will not be affected by the
merger, transfer or consolidation.
Section 7.06. The Company will fully and faithfully perform all the duties
and obligations which the Authority has covenanted and agreed in the Indenture
to cause the Company to perform and any duties and obligations which the Company
is required in the Indenture to perform. The foregoing shall not apply to any
duty or undertaking of the Authority which by its nature cannot be delegated or
assigned.
Section 7.07. The Company covenants and represents that it is a
corporation duly organized and existing in good standing under New Jersey law
with full power and legal right to enter into the Sublease and perform its
obligations hereunder. The making and performance of the Sublease, the
Remarketing Agreement, the Credit Agreement, the Tender Agent Agreement and the
Pledge Agreement on the Company's part have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of
or default under its Articles of Incorporation, By-Laws or any bond, contract,
indenture, agreement or any other instrument by which the Company or its
property is bound.
Section 7.08. The Company will not take any action or permit any action to
be taken on its behalf, or cause or permit any circumstances within its control
to arise or continue, if such action or circumstances would cause the interest
paid by the Authority on the Bonds to be subject to federal income tax in the
hands of the Owners thereof.
Section 7.09. The Company covenants that the Authority, the Bank and the
Trustee by their duly authorized representatives, at reasonable times, for
purposes of determining compliance with the Sublease may inspect any part of the
Premises.
Section 7.10. The Company agrees, whenever requested by the Authority, the
Bank or the Trustee to provide and certify or cause to be provided and certified
such information concerning the Premises, the Company, the finances of the
Company, and other topics as the Authority, the Bank or the Trustee consider
necessary to enable it to make any reports or supply any information required by
the Indenture, law, governmental regulation or otherwise.
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<PAGE> 29
Section 7.11. Upon termination hereof, or upon termination of all rights
of the Company hereunder, either by reason of default or expiration of the term,
the Company covenants that it will deliver up peaceable possession of the
Premises, without delay, in case of such termination, upon demand made by the
Authority or, in case of such default, upon demand made by the Authority or the
Trustee, in good repair and operating condition, excepting reasonable wear and
tear and damage, injury or destruction by fire or other casualty which, under
terms hereof, shall not have been repaired, reconstructed or replaced.
Section 7.12. Promptly after the Company first becomes aware of any
Determination of Taxability (as defined in the Indenture), the Company shall
give written notice thereof to the Authority and the Trustee. The Company shall
be obligated to cause the Bonds to be redeemed within one hundred eighty (180)
days after any such Determination of Taxability shall have occurred.
Section 7.13. The Company agrees to execute and file or cause to be
executed and filed any and all financing statements or amendments thereof or
continuation statements necessary to perfect and continue the perfection of the
security interests granted in the Indenture. The Company shall pay all costs of
filing such instruments.
Section 7.14. The Company covenants not to sublease the Premises or any
portion thereof without the prior written consent of the Authority or the
Trustee and without obtaining the opinion of nationally recognized bond counsel
described in Section 9.13 hereof, and any sublease shall be subject to the
following conditions:
(a) No such sublease shall relieve the Company of its obligation to
make the payments required under Sections 4.01 or 4.02 hereof or its
obligation for the performance of all other covenants hereunder, for which
the Company shall remain primarily liable;
(b) The Company shall deliver to the Authority and the Trustee a
copy of any sublease within 15 days subsequent to the execution of any
sublease;
(c) Any tenant or any person "rela such tenant within the meaning of
Section 103(b)(6)(C) of the Code, shall not have shall covenant not to
make any "capital expenditures" as defined in Section 103 (of the Code and
the regulations thereunder
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<PAGE> 30
would cause a violation of Section 7.08 of this Agreement;
(d) If any tenant shall be deemed a "principal user" of the Project
Facilities within the meaning of Section 103(b)(6)(D) of the Code, such
tenant shall covenant to file such statements of capital expenditures as
are required by any regulations promulgated under Section 103(b)(6) of the
Code, and to provide the Company, the Authority and the Trustee with
copies of such statements; and
(e) The tenant shall covenant in the sublease not to make any use of
the Premises which violates Section 103(b)(6) of the Code.
Section 7.15. The Company shall at all times comply with all environmental
requirements of applicable governmental authorities, and shall, at its own cost
and expense, cure, clean-up, and/or correct, any environmental deficiencies
caused by, arising from or relating to the operation of the Company's business
on the Premises or in the Port District, or any part thereof, wherever the
alleged contamination may be located, whether on the Premises, or within or
without the Port District, and the Company shall pay all charges which are or
may be chargeable by reason thereof to the Authority, the Premises, the Port
District, or any part thereof under the Spill Compensation and Control Act,
N.J.S.A. 58:10-23.11, et seq., and any similar state or Federal laws or
regulations now or hereafter applicable thereto. In the event any meritorious
claim is made by or through any governmental authority as to any environmental
deficiency above described, the Company on ten (10) days' written notice from
the Authority shall make, execute and deliver to the Authority a bond with a
cash deposit, or in lieu thereof a surety company bond satisfactory to the
Authority, in the estimated amount to cover the alleged claim.
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<PAGE> 31
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. If any of the following events (herein called "Events of
Default") shall happen,
(a) if the Company fails to make any payment required by Section
4.01 (a) or (c) hereof when the same shall become due and payable, except,
in the case of any payment under subsection (a) of Section 4.01 hereof
corresponding to interest on the Bonds, the Company shall not be in
default if such payment is made within three (3) days following the due
date thereof; or
(b) if the Company fails to pay any other payment required hereby
and such failure continues for 30 days after the Authority or the Trustee
gives notice that such other payment is due and unpaid; or
(c) if the Company fails to perform any of its other covenants or
conditions or fails to perform any of its obligations hereunder and such
failure continues for 30 days after the Authority or the Trustee gives the
Company written notice thereof; provided, however, that if such
performance requires work to be done, actions to be taken, or conditions
to be remedied, which by their nature cannot reasonably be done, taken or
remedied, as the case may be, within such 30 day period, no Event of
Default shall be deemed to have occurred or to exist if, and so long as,
the Company shall commence such performance within such 30 day period and
shall diligently and continuously prosecute the same to completion; or
(d) if the Company commits any act of bankruptcy under Federal or
state bankruptcy laws or laws providing for reorganization or relief for
debtors or files or has filed against it a petition of bankruptcy or for
arrangement or for reorganization pursuant to the Federal Bankruptcy Code
or other similar laws, Federal or state, or if, by the decree of a court
of competent jurisdiction, it is adjudicated bankrupt or declared
insolvent, or makes an assignment for the benefit of creditors, or admits
in writing its inability to pay its debts generally when or as they become
due, or consents to the appointment of a trustee, receiver or liquidation
of all or any part of the Company or any of its facilities or the Project
Fa-
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<PAGE> 32
cilities, provided that, if any such proceeding is commenced by a person
other than the Company, there shall be no Event of Default if such
proceedings are dismissed within 60 days of the filing of initial
pleadings therein; or
(e) the occurrence of an Event of Default under the Indenture.
then and at any time thereafter while such Event of Default is continuing, the
Authority may in addition to its other remedies at law or equity or provided for
in this Sublease, with the consent of the Bank by notice to the Company
specifying the Event of Default, terminate this Sublease. Anything in this
Sublease to the contrary notwithstanding, if, the Trustee under the Indenture
shall, pursuant to Section 10.02 thereof, declare the principal of the then
Outstanding Bonds immediately due and payable then there shall become
immediately due and payable hereunder as then current damages of the Authority
under this Sublease an amount equal to all amounts then due and payable by the
Authority under said Section 10.02 of the Indenture. Until said amount is paid
by the Company at the time or times and in the manner required to permit the
Authority to meet its obligations pursuant to the Indenture, the Authority shall
continue to have all of the rights, powers and remedies herein set forth, and,
for such time as may be necessary to enable the Authority to satisfy in full its
obligations under the Indenture, the term of this Sublease shall be extended as
a tenancy at the will of the Authority, and the Company's obligations hereunder
shall continue in full force and effect.
Section 8.02. If this Sublease is terminated under Section 8.01,
(a) such termination shall not relieve the Company of previously
accrued obligations under the Sublease; and
(b) the Company shall peaceably surrender the Premises failing
which, the Authority shall have the right to enter upon and repossess the
Premises by force, ejectment or otherwise; and
(c) the Authority may relet any or all of the Premises on such terms
as it elects, but the Authority shall not be liable for any failure to
relet or to collect any rent due upon reletting; and
(d) thereafter, as liquidated current damages for its default, the
Company shall pay to the Authority, on the dates on which payments
required
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hereunder or under the Indenture would have been payable, amounts equal to
such installments less the net proceeds of any reletting effected under
(c) above.
Additionally, it is understood that in determining "net proceeds" the
Authority shall deduct from all sums collected amounts equal to all charges,
expenses or commissions reasonably incurred in collecting such sums and/or
operating and administering the Project Facilities.
Section 8.03. In case of any proceeding of the Authority:
(1) to foreclose or terminate the estate or interest of the Company,
based upon a default hereunder (if the Authority shall elect so to
proceed); or
(2) wherein appointment of a receiver may be permissible, the
Authority, as a matter of right and immediately upon institution of
each proceeding, upon written notice to the Company, shall be
entitled to appointment of a receiver of the Premises with such
powers as the court making such appointment can confer; subject,
however, to limitations and restrictions of the Act.
Section 8.04. As part of the consideration for the Sublease, the Company
hereby waives any applicable exemption laws now or hereafter in force. No
failure by either party to insist upon strict performance hereof or to exercise
any remedy upon the occurrence of an Event of Default shall constitute a waiver
of such default, or a waiver or modification of any provision hereof. Upon the
occurrence of an Event of Default, the Authority may exercise any one or more of
the remedies available to it separately or concurrently and as often as required
to enforce the Company's obligations. In addition to the other remedies provided
herein, the Authority shall be entitled to the restraint by injunction of the
violation, or attempted or threatened violation by the Company of any of the
covenants, conditions or provisions hereof, or to a decree compelling specific
performance of any of such covenants, conditions or provisions.
Section 8.05. With respect to any amounts payable by the Company to the
Authority hereunder, the Authority shall have, in addition to any other rights
and remedies, the same rights and remedies as are provided by law and in
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this Sublease in the case of default by the Company in the payment of rentals.
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<PAGE> 35
ARTICLE IX.
MISCELLANEOUS
Section 9.01. The Company acknowledges that it has receive an executed
copy of the Indenture, and that it is familiar with its provisions, and agrees
that, as sublessee hereunder, it will take all such actions as are required or
contemplated of it under the Indenture to preserve and protect the rights of the
Trustee and of the Owners of Bonds thereunder and that it will not take any
action which would cause a default thereunder. It is agreed by the Company and
the Authority that payment of all costs relating to the exchange or transfer of
Bonds and which are not paid by the Owner of such Bonds will be paid by the
Company.
Section 9.02. The Authority and the Company agree that all repairs,
renewals, replacements, improvements, additions and extensions, extraordinary
repairs and capital additions or property in the nature thereof, which shall be
made or acquired by the Authority or the Company during the term hereof in
connection with the Project Facilities shall become part of the leasehold estate
of the Authority and the Project Facilities; and the Company agrees to execute
such instruments as may be required, from time to time, by the Authority to
effect the foregoing.
Section 9.03. If the Company at any time fails to pay any taxes or other
impositions payable by it in accordance with Section 4.02 hereof, or to take
out, pay for, maintain or deliver any of the bonds or insurance or surety
policies provided for in Articles III and VI, or shall fail, within the time
provided for in Article VIII after the notice therein specified of any Event or
Default, as therein defined, has been given thereunder, to make any other
payment or perform any other act on its part to be made or performed, then the
Authority may, but shall not be obligated so to do, upon prior written notice to
the Company and without waiving or releasing the Company from any of its
obligations in this Sublease contained, (a) pay any taxes or other impositions
payable by the Company in accordance with Section 4.02 hereof, (b) take out, pay
for and maintain any of the insurance policies provided for in Articles III and
VI, or (c) make any other payment or perform any other act on the Company's part
to be made or performed as in this Sublease provided. All sums so paid by the
Authority and all necessary incidental costs and expenses in connection with the
performance of any such act by the Authority shall be payable to the Authority,
on demand or at the option of the Authority may be added to any installment of
rent then due or thereafter becoming due under the Sublease, and the Company
covenants to pay any such sums.
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<PAGE> 36
Section 9.04. If any term or provision hereof or the application thereof
for any reason or circumstances shall to any extent be held to be invalid or
unenforceable, the remaining provisions or the application of such term or
provision to persons other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision hereof
shall be valid and enforced to the fullest extent permitted by law.
Section 9.05. In the exercise of the power of the Authority and its
members, officers, employees and agents hereunder including (without limiting
the foregoing) the application of moneys, the investment of funds and the
letting or other disposition of the Premises in the event of default by the
Company, neither the Authority nor its members, officers, employees, or agents
shall be accountable to the Company for any action taken or omitted by it or its
members, officers, employees and agents in good faith and believed by it or them
to be authorized or within the discretion or rights or powers conferred. The
Authority shall be protected in its or their acting upon any paper or document
believed by it or them to be genuine, and it or they may conclusively rely upon
the advice of Counsel and may (but need not) require further evidence of any
fact or matter before taking any action. No recourse shall be had by the Company
for any claims based hereon or on the Indenture against any member, officer,
employee or agent of the Authority alleging personal liability on the part of
such person unless such claims are based upon the bad faith, fraud or deceit of
such person.
The Company will indemnify and hold harmless the Authority and each
member, officer, and employee of the Authority against any and all claims,
losses, damages or liabilities, joint and several, to which the Authority or any
member, officer or employee of the Authority may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of the Project or are based upon any other alleged act or omission in connection
with the Project by the Authority unless the losses, damages or liabilities
arise from an adjudication of malfeasance or nonfeasance in office, bad faith,
fraud, negligence or deceit of the member, officer or employee of the Authority.
In the event any claim is made or action brought against the Authority, or any
member, officer, or employee of the Authority, the Authority may direct the
Company to assume the defense of the claim and any action brought thereon and
pay all reasonable expenses incurred therein; or the Authority may assume the
defense of any such claim or action, the reasonable costs of which shall be paid
in the same manner as other Administrative Expenses of the Authority; provided,
however, that counsel selected by the Authority to conduct such defense shall be
approved by the Company, which
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approval shall not be unreasonably withheld, and further provided that the
Company may engage its own counsel to participate in the defense of any such
action. The defense of any such claim shall include the taking of all actions
necessary or appropriate thereto. In the event of adjudication of malfeasance or
nonfeasance in office, bad faith, fraud, negligence or deceit, the Authority
shall pay or reimburse the Company for the defense.
Section 9.06. A reference herein to a statute or to a regulation issued by
a governmental agency includes the statute or regulation in force as of the date
hereof, together with all amendments and supplements thereto and any statute or
regulation substituted for such statute or regulations, unless the specific
language or the context of the reference herein clearly includes only the
statute or regulation in force as of the date hereof.
A reference herein to a governmental agency, department, board, commission
or other public body or to a public officer includes an entity or officer which
or who succeeds to substantially the same functions as those performed by such
public body or officer as of the date hereof, unless the specific language or
the context of the reference herein clearly includes only such public body or
public officer as of the date hereof.
Section 9.07. Laws of the State shall govern construction hereof.
Section 9.08. The parties hereto, from time to time may enter into any
amendments hereto (which thereafter shall form a part hereof) to the extent set
forth in Article XIII of the Indenture.
Section 9.09. All notices required or authorized to be given by the
Company, the Authority or the Trustee pursuant to this Sublease shall be in
writing and shall be sent by registered or certified mail, postage prepaid to
the following addresses:
to the Company to:
South Jersey Process
Technology, Inc.
c/o Radiation Technology, Inc.
P.O. Box 185
108 Lake Denmark Rd.
Rockaway, NJ 07866
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<PAGE> 38
to the Authority to:
City of Salem Municipal
Port Authority
62 Front Street
Salem, N.J. 08079
to the Trustee to:
The Farmers and Merchants
National Bank of Bridgeton
53 South Laurel Street
Bridgeton, NJ 08302
or to such other addresses as may from time to time be furnished to the parties,
effective upon the receipt of notice thereof given as set forth above. Each of
the above agrees that it shall send a duplicate copy or executed copy of all
certificates, notices, correspondence or other data and materials sent one of
the above to both other parties.
Section 9.10. The Sublease may be executed in multiple counterparts, each
of which shall be regarded for all purposes as an original, and such
counterparts shall constitute but one and the same instrument.
Section 9.11. Headings are for convenience of reference only and shall not
affect the interpretation of the Sublease.
Section 9.12. Either party may record this Sublease or a memorandum
thereof.
Section 9.13. This Sublease may not be assigned by the Company and the
Premises may not be subleased by the Company, as a whole or in part, except as
provided in Section 7.05 hereof, without obtaining the consent of either the
Authority or the Trustee and the opinion of nationally recognized bond counsel
that such assignment or sublease shall not result in interest on any of the
Bonds becoming subject to federal income taxation, or otherwise violate any
provisions of the Act; provided further, however, that no such sublease shall
relieve the Company of any of its obligations under this Sublease. Nothing
herein contained shall be construed as prohibiting the Company from granting to
Simon Engineering P.L.C., as guarantor of the Company's obligations under the
Credit Agreement, a lien on or security interest in, the Company's rights in the
Premises.
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<PAGE> 39
Section 9.14. The Company shall have and is hereby granted the option to
cause all or a portion of the Bonds to be redeemed at the times permitted by the
Indenture. The Authority, at the request of the Company, shall forthwith take
all steps (other than the payment of the money required for such redemption)
necessary under the applicable redemption provisions of the Indenture to effect
redemption of all or part of the Outstanding Bonds, as may be specified by the
Company, on the date established for such redemption.
Section 9.15. The parties hereto agree that the Authority shall assign to
the Trustee, in order to secure payment of the Bonds, all of the Authority's
right, title and interest in and to this Agreement, except for the Authority's
rights under Sections 4.01(b), 9.03 and 9.05 hereof.
Section 9.16. The Company shall and hereby agrees to indemnify the Trustee
for, and hold the Trustee harmless against, any loss, liability or expense
(including the costs and expenses of defending against any claim or liability)
incurred without gross negligence or willful misconduct by the Trustee and
arising out of or in connection with its acting as Trustee under the Indenture.
Section 9.17. The Authority covenants that it will not pledge the amounts
derived from this Sublease other than as contemplated herein or in the
Indenture.
Section 9.18. The Authority covenants, during the term of this Sublease,
not to terminate, or amend in any way which would interfere with the Company's
ability to operate the Project Facilities, the lease dated March 16, 1983
between the Authority, as tenant, and the Mayor and Common Council of the City
of Salem, as landlord (the "Lease"). The Authority further covenants to perform
its obligations under the Lease during the term of the Sublease. In the event
the Authority fails to pay any amount owed under the Lease, the Company may, but
shall not be required to, pay such amounts and shall be entitled to
reimbursement for such amounts from the Authority.
Section 9.19. Subject to the provisions of Section 6.08 of the Indenture,
it is agreed by the parties hereto that any amounts remaining in the Bond Fund,
the Construction Fund, or any other fund created under the Indenture upon
expiration or earlier termination of this Sublease, as provided in this
Sublease, after payment in full of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Indenture) and
repayment of any funds loaned by the Authority to the Company, and the fees and
expenses of the Trustee in accordance
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with the Indenture, shall belong to and be paid to the Company by the Trustee.
IN WITNESS WHEREOF, CITY OF SALEM MUNICIPAL PORT AUTHORITY has caused this
Sublease to be executed in its name and on its behalf by its Chairman or Vice
Chairman and its official seal to be affixed hereunto and attested by its
Secretary or Assistant Secretary, and SOUTH JERSEY PROCESS TECHNOLOGY, INC. has
caused this Sublease to be executed in its name and on its behalf by the
President of the Company and its corporate seal to be affixed hereunto and
attested by its Secretary, all as of the day and year first above written.
CITY OF SALEM MUNICIPAL
PORT AUTHORITY
By /s/ signature unreadable
Chairman
[CORPORATE SEAL]
Attest:
/s/ signature unreadable
Secretary
SOUTH JERSEY PROCESS
TECHNOLOGY, INC.
By /s/ signature unreadable
President
[CORPORATE SEAL]
Attest:
/s/ signature unreadable
Vice President
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STATE OF NEW JERSEY :
: SS:
COUNTY OF SALEM :
BE IT REMEMBERED, that on this 28th day of December, 1984, before me, the
subscriber, personally appeared James N. Acton, Jr. , the Chairman of the City
of Salem Municipal Port Authority, who I am satisfied is the person who executed
the foregoing instrument on behalf of the said Corporation; and he thereupon
acknowledged that he signed, sealed with the corporate seal and delivered said
instrument as such officer, as that said instrument is the voluntary act and
deed of said Corporation, made by virtue of authority from its Board of
Directors.
/s/ signature unreadable
Attorney at Law
STATE OF NEW YORK :
: ss: COUNTY OF NEW YORK
BE IT REMEMBERED, that on this 28th day of December, 1984, before me, the
subscriber, personally appeared Martin A. Welt, the President of South Jersey
Pro-Technology, Inc., who I am satisfied is the person who executed the
foregoing instrument on behalf of the said Corporation; and he thereupon
acknowledged that he signed, sealed with the corporate seal and delivered said
instrument as such officer, as that said instrument is the voluntary act and
deed of said Corporation, made by virtue of authority from its Board of
Directors.
/s/ Connie Liccione
NOTARY PUBLIC
-39-
<PAGE> 42
EXHIBIT "A"
TO
SUBLEASE
Dated as of December 1, 1984
Between
CITY OF SALEM MUNICIPAL PORT AUTHORITY, As Lessor
and
SOUTH JERSEY PROCESS TECHNOLOGY, INC., As Lessee
The "Premises" referred to in this Sublease consist of that part of the
property known as Block 46, Lot 1 and Block 46, Lot 11 that is included in the
area bounded by Grieves Parkway on the East, Tilbury Road on the North, Second
Oak Creek on the South, and Block 46, Lot 6 on the West, as shown on the City of
Salem Tax Duplicate.
<PAGE> 43
[IMAGE OMITTED]
<PAGE> 44
ASSIGNMENT
KNOW ALL MEN BY THESE PRESENTS that CITY OF SALEM MUNICIPAL PORT AUTHORITY
(the "Authority"), pursuant to a Resolution of its Board heretofore duly
adopted, does hereby sell, assign, transfer and set over to The Farmers and
Merchants National Bank of Bridgeton, organized and existing under the laws of
the United States of America, having its principal corporate trust office in
Bridgeton, New Jersey, as Trustee under the Trust Indenture dated as of December
1, 1984, of the Authority, all the right, title and interest of the Authority in
and to the Sublease and Security Agreement dated as of December 1, 1984, between
the Authority and South Jersey Process Technology, Inc., as well as all fixed
rentals and other payments payable or which may become payable thereunder
(except for amounts payable pursuant to Sections 4.01(b), 9.03 and 9.05 thereof)
and all security therefor, the same to be held in trust and applied by said
Trustee as provided in said Indenture; and the Authority does hereby constitute
and appoint Trustee as aforesaid, its true and lawful attorney for it and in its
name to collect and receive payment of any and all of said fixed rentals and
other payments and to give good and sufficient receipts therefor, hereby
ratifying and confirming all that said attorney may do in the premises. Said
Trustee may, but, except as otherwise provided in said Indenture shall not be
required to, institute any proceedings or take any action in its name or in the
name of the Authority to enforce payment or collection of any or all of such
rentals and contributions and payments on accounts of such rentals.
Notwithstanding such assignment and transfer, so long as the Authority
shall not be in default under the Indenture:
(a) the Authority shall have the right and duty to give all
approvals and consents permitted or required under the Sublease;
(b) the Authority shall have the right to execute supplements and/or
amendments to the Sublease to the extent and in the manner permitted by
the Indenture;
(c) the Authority shall have the right to execute supplements and/or
amendments to the Sublease containing terms not adversely inconsistent
with the Sublease or the Indenture; provided, however, that the Sublease,
as so supplemented and/or amended, shall provide at least the same
security for Owners of Bonds of the Authority issued under the Indenture
as the Sublease in the foregoing form; and
-42-
<PAGE> 45
(d) there shall be no responsibility on the part of the Trustee for
duties or responsibilities of the Authority contained in the Sublease and
in any supplements and/or amendments thereto.
IN WITNESS WHEREOF, CITY OF SALEM MUNICIPAL PORT AUTHORITY has caused this
Assignment to be duly executed in its name by its Chairman or Vice Chairman, and
its corporate seal to be hereunto affixed, attested by its Secretary or
Assistant Secretary, and this Assignment to be dated as of the day and year
above written, and this Assignment has been accepted by the Trustee.
CITY OF SALEM MUNICIPAL
PORT AUTHORITY
By /s/ signature unreadable
Chairman
[SEAL]
Attest:
/s/ signature unreadable
Secretary
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON
By /s/ John D. Catalano
Vice President and
Trust Officer
[SEAL]
Attest:
/s/ signature unreadable
-43-
<PAGE> 46
STATE OF NEW JERSEY :
: ss:
COUNTY OF SALEM :
BE IT REMEMBERED, that on this 28th day of December, 1984, before me, the
subscriber, personally appeared James N. Acton, Jr., the (Chairman of the City
of Salem Municipal Port Authority, who I am satisfied is the person who executed
the foregoing instrument on behalf of the said Corporation; and he thereupon
acknowledged that he signed, sealed with the corporate seal and delivered said
instrument as such officer, as that said instrument is the voluntary act and
deed of said Corporation, made by virtue of authority from its Board of
Directors.
/s/ signature unreadable
Attorney at Law
-44-
<PAGE> 1
EXHIBIT 10.55
[BANKERS TRUST COMPANY LETTERHEAD]
IRREVOCABLE LETTER OF CREDIT
BANKERS TRUST COMPANY
One Bankers Trust Plaza
New York, New York 10015
December 28, 1984
IRREVOCABLE LETTER OF CREDIT No. V 65986-S
The Farmers and Merchants
National Bank of Bridgeton
53 South Laurel Street
Bridgeton, New Jersey 08302
Attention: Corporate Trust Department
Dear Sirs:
At the request and on the instructions of our customer, South Jersey
Process Technology, Inc., a New Jersey corporation (the "Company"), we hereby
establish in your favor, as Trustee under the Trust Indenture, dated as of
December 1, 1984 (the "Indenture") from the City of Salem Municipal Port
Authority (the "Authority") to you pursuant to which $2,500,000 in aggregate
principal amount of the Authority's Port Development Revenue Bonds, (South
Jersey Process Technology, Inc. Project) Series of 1984 (The "Bonds") are being
issued, this Irrevocable Letter of Credit in the amount of $2,625,000
hereinafter as reduced time to time in accordance with the provisions hereof,
the "Stated Amount") of which an amount not exceeding 2,500,000 (as reduced from
time to time in accordance with the terms hereof, the "Principal Component") may
be drawn upon with respect to payment of the unpaid principal amount or the
portion of Purchase Price corresponding to principal of the Bonds, and an amount
not exceeding $125,000 (as reduced from time to time in accordance with the
terms hereof, the "Interest Component") may be drawn upon with respect to
payment of interest accrued or the portion of Purchase Price corresponding to
interest accrued on the Bonds on or prior to their stated maturity date,
effective immediately and expiring on December 15, 1994 unless terminated
earlier in ac-
<PAGE> 2
[BANKERS TRUST COMPANY LETTERHEAD]
page 2
cordance with the provisions hereof or unless otherwise extended. All drawings
under this Letter of Credit will be paid with our own funds.
Funds under this Letter of Credit will be made available to you against
receipt by us of the following items at the time required below: (A) if the
drawing is being made with respect to payment of the portion of the Purchase
Price of Bonds delivered to the Tender Agent (as defined in the Indenture)
pursuant to Section 3.01, 3.02 or 3.06 of the Indenture corresponding to the
Principal thereof (an "A Drawing"), (i) receipt by us of Bonds ("Pledged Bonds")
in an aggregate outstanding principal amount equal to the total amount specified
in your certificate referred to in clause (iii) below, (ii) receipt by us of any
and all due-bills for interest due on the next succeeding interest payment date
delivered pursuant to Section 3.06 of the Indenture in respect of such Pledged
Bonds and (iii) receipt by us of your written certificate in the form of Exhibit
A attached hereto appropriately completed and signed by Authorized Officer; (B)
if the drawing is being made with respect to principal of the Bonds (a "B
Drawing"), receipt by us of your written certificate in the form of Exhibit B
attached hereto appropriately completed and signed by an Authorized officer; and
(C) if the drawing is being made with respect to the payment of interest or the
portion of Purchase Price corresponding to interest , on the Bonds (a "C
Drawing") , receipt by us of your written certificate in the form of Exhibit C
attached hereto appropriately completed and signed by an Authorized Officer.
Such certificate(s), Pledged Bonds and due-bills shall be (x) presented at our
office located at One Bankers Trust Plaza, New York, New York, Attention: Letter
of Credit Division or at any other office in the City and State of New York
which may be designated by us by written notice delivered to you or (y) in the
case of such certificate(s), sent to us by tested telex (Telex No. 126600,
126699, 126642, or 126609).
If a drawing is made by you hereunder at or prior to 11:00 A.M., New York
time, on a business day, and provided that such drawing and the documents and
other items presented in connection therewith conform to the terms and
conditions hereof, payment shall be made to you, or to your designee, of the
amount specified, in immediately available funds, not later than 3:00 P.M., New
York time, on the same business day or not later than 12:00 Noon, New York time,
on such later business day as you may specify. If requested by you, payment
under this Letter of Credit will be made by
<PAGE> 3
[BANKERS TRUST COMPANY LETTERHEAD]
page 3
deposit of immediately available funds into a designated account that you
maintain with us. If a demand for payment made by you hereunder does not, in any
instance, conform to the terms and conditions of this Letter of Credit, we shall
give you prompt notice that the demand for payment was not effected in
accordance with the terms and conditions of this Letter of Credit, stating the
reasons therefor and that we will upon your Instructions hold any documents at
your disposal or return the same to you. Upon being notified that the demand for
payment was not effected in conformity with this Letter of Credit, you may
attempt to correct any such non-conforming demand for payment to the extent that
you are entitled to do so.
Demands for payment hereunder honored by us shall not, in the
aggregate, exceed the Stated Amount, as the Stated Amount may have been
reinstated by us as provided in the next paragraph. Subject to the preceding
sentence, each "A Drawing" and each "B Drawing" honored by us hereunder shall
pro tanto reduce the Principal Component and each "C Drawing" honored by us
hereunder shall pro tanto reduce the Interest Component, and any such reduction
shall result in a corresponding reduction in the Stated Amount, it being
understood that after the effectiveness of any such reduction you shall no
longer have any right to make the drawing hereunder in respect of the amount of
such principal and/or interest on the Bonds or the payment of Purchase Price
corresponding thereto causing or corresponding to such reduction.
Upon release by us of any Pledged Bonds, the Principal Component shall be
reinstated automatically by an amount equal to the principal amount of such
Pledged Bonds. In addition, (i) if you shall not have received, within ten
business days after any payment in respect of a "C Drawing", notice from us that
an Event of Default under the Letter of Credit Agreement dated as of December 1,
1984 between the Company and us has occurred and is continuing, the Interest
Component shall be reinstated automatically, as of the close of business on such
tenth business day (unless the Interest Component previously has been reinstated
with respect to such "C Drawing"), by the amount of such "C Drawing" and (ii)
upon the release by us of any Pledged Bonds, the Interest Component shall be
reinstated automatically by the amount of the "C Drawing" made to pay the
portion of the Purchase Price corresponding to interest on such Pledged Bonds
(unless the Interest Component previously has been reinstated with respect to
such "C Drawing"); provided,
<PAGE> 4
[BANKERS TRUST COMPANY LETTERHEAD]
page 4
however, that in no event shall the Interest Component be reinstated to an
amount in excess of 120 days' interest (computed at the rate of 15% per annum
and on the basis of a 360-day year, actual days elapsed, notwithstanding the
actual rate borne from time to time by the Bonds) on the sum of the then
applicable Principal Component plus the aggregate principal amount of any
Pledged Bonds at the time of any such reinstatement.
Only you or your successor as Trustee may make a drawing under this Letter
of Credit. Upon the payment to you, to your designee or to your account of the
amount demanded hereunder, we shall be fully discharged on our obligation under
this Letter of Credit with respect to such 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 to you or any other person who may have
made to you or makes to you a demand for payment of principal of Purchase Price
of interest on, any Bond. 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 applies only to the payment of principal or the
portion of Purchase Price of the Bonds corresponding to principal, and up to 120
days' interest (computed as aforesaid) accruing on the Bonds on or prior to the
expiration of this Letter of Credit and does not apply to any interest that may
accrue thereon or any principal or premium which may be payable with respect
thereto after such date.
Upon the earliest of (i) the making by you of the final drawing available
to be made hereunder; (ii) our receipt of a certificate signed by an Authorized
Officer stating that: "(a) the conditions precedent to the acceptance of a
Substitute Letter of Credit (as defined in the Indenture) have been satisfied,
(b) the Trustee has accepted the Substitute Letter of Credit and (c) on the
effective date of the Substitute Letter of Credit, and after receipt by Bankers
Trust Company of this certificate, Bankers Trust Company Irrevocable Letter of
Credit No. V 65986-S shall terminate"; (iii) our receipt of a certificate signed
by an Authorized officer stating that no Bonds remain Outstanding (as defined in
the Indenture); (iv) fifteen days after the Optional Conversion Date (as defined
in the Indenture); and (v) the stated
<PAGE> 5
[BANKERS TRUST COMPANY LETTERHEAD]
page 5
expiration date hereof, this Letter of Credit shall automatically terminate and
be delivered to us for cancellation.
Communications with respect to this Letter of Credit shall be in writing
and shall be addressed to us at One Bankers Trust Plaza, New York, New York
10015, Attention: Letter of Credit Division, specifically referring thereon to
this Letter of Credit by number, with a copy to Bankers Trust Company, 280 Park
Avenue, Floor 15E, New York, New York 10015, Attention: European Department,
Europe/U.K. Group.
This Letter of Credit may not be transferred or assigned, either in whole
or in part except to a successor trustee properly appointed and qualified
pursuant to Article XI of the Indenture. We agree to issue a substitute letter
of credit to any such successor trustee and to successively replace any such
substitute letter of credit upon the return to us for cancellation of the
original of the letter of credit to be the number of the letter of credit to be
replaced, accompanied by a request relating to such letter of credit, which (i)
shall be in the form of Exhibit I attached hereto with the blanks appropriately
completed, (ii) shall be signed by an Authorized Officer, (iii) shall specify
where indicated therein the same letter of credit number as replaced, and (iv)
shall the name and address of the successor trustee. Each substitute letter of
credit will be in substantially the form of this Letter of Credit except for the
date and letter of credit number.
As used herein (a) "Authorized Officer" shall mean any of your Vice
Presidents, Assistant Vice Presidents, Trust Officers or Assistant Trust
Officers; (b) "Purchase Price" shall mean the principal amount of any Bonds to
be purchased in accordance-with Section 3.01 or 3.02 of the Indenture and shall
mean the principal amount off together with accrued interest on, any Bonds to be
purchased in accordance with Section 3.06 of the Indenture; and (c) "business
day" shall mean any day on which we are open for the purpose of conducting a
commercial banking business,
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the certificates)
referred to herein; and any such reference
<PAGE> 6
[BANKERS TRUST COMPANY LETTERHEAD]
page 6
shall not be deemed to incorporate herein by reference any document, instrument
or agreement except for such certificate(s).
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits, 1983 Revision, ICC Publication No. 400 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be a contract made under the
laws of the State of New York and shall, as to matters not governed by the
Uniform Customs, be governed by and construed in accordance with the laws of
said State.
Very truly yours,
BANKERS TRUST COMPANY
By /s/ [SIG]
---------------------------
Title
<PAGE> 7
EXHIBIT A
---------
CERTIFICATE FOR "A DRAWING"
[Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
The undersigned, a duly Authorized Officer of The Farmers and Merchants
National Bank of Bridgeton (the "Trustee"), hereby certifies to Bankers Trust
Company (the "Bank") that:
(1) The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
(2) The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $__________ with respect to the payment
of the portion of the Purchase Price of the Bonds corresponding to the
principal amount thereof, which Bonds are to be purchased pursuant to
Section [3.01] [3.02] [3.06] of the Indenture.
(3) The amount demanded hereby does not exceed the amount available
on the date hereof to be drawn under the above-referenced Letter of Credit
in respect of the portion of the Purchase Price of Bonds corresponding to
the principal amount thereof.
(4) The amount demanded hereby does not include any amount in
respect of the purchase of any Pledged 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 principal amount owing on account of the purchase of 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 other funds held by the undersigned.
<PAGE> 8
Exhibit A
page 2
As used herein, the terms "Authorized Officer", "Indenture", "Bonds" ,
"Pledged Bonds" and "Purchase Price" shall have the respective meanings assigned
to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _______ day of _________, 19__.
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON,
as Trustee
By______________________________
Title:
<PAGE> 9
EXHIBIT B
CERTIFICATE FOR "B DRAWING"
[Date].
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
The undersigned, a duly Authorized Officer of The Farmers and Merchants
National Bank of Bridgeton (the "Trustee"), hereby certifies to Bankers Trust
Company (the "Bank") that:
(1) The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
(2) The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $_______ with respect to the payment of
principal of the Bonds, which amount has, or will, within five business
days, become due and payable pursuant to the Indenture, upon maturity or
as a result of acceleration or redemption of the Bonds.
(3) The amount demanded hereby does not include any amount in
respect of the principal amount of any Pledged Bonds.
(4) The amount demanded hereby, together with the aggregate of all
prior payments made pursuant to "B Drawings" under the above-referenced
Letter of Credit, does not exceed 2,500,000.
(5) The amount demanded hereby does not exceed the amount available
on the date hereof to be drawn under the above-referenced Letter of Credit
in respect of the principal of the Bonds.
(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 principal
<PAGE> 10
Exhibit B
page 2
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 other
funds held by the undersigned.
As used herein, the terms "Authorized Officer", "Indenture", "Bonds",
"business day", "B Drawing" and "Pledged Bonds", shall have the respective
meanings assigned to such terms in the above-referenced Letter of Credits
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of _______,19___.
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON,
as Trustee
By______________________
Title:
<PAGE> 11
EXHIBIT C
---------
CERTIFICATE FOR "C DRAWING"
(Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
The undersigned, a duly Authorized Officer of The Farmers and Merchants
National Bank of Bridgeton (the "Trustee"), hereby certifies to Bankers Trust
Company (the "Bank") that:
(1) The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
(2) The Trustee is making a drawing under the above-referenced
Letter of Credit in the amount of $__________ with respect to payment of
[the portion of the Purchase Price of $___________ in principal amount of
the Bonds corresponding to the accrued interest thereon, which Bonds are
to be purchased pursuant to Section 3.06 of the Indenture] [accrued
interest on the Bonds, which amount has, or will, within five business
days, become due and payable pursuant to the Indenture].
(3) The amount demanded hereby does not exceed the amount available
on the date hereof to be drawn under the above-referenced Letter of Credit
in respect of interest on the Bonds.
(4) The amount demanded hereby does not include any amount in
respect of the interest on any Pledged 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 (interest owing on account of the Bonds pursuant to the Indenture]
[portion of the Purchase Price of Bonds pursuant to Section 3.06 of the
Indenture corresponding to accrued interest thereon], (b) no portion of
said amount shall be applied by the undersigned for any other pur-
<PAGE> 12
Exhibit C
page 2
pose and (c) no portion of said amount shall be commingled with other
funds held by the undersigned.
As used herein, the terms "Authorized Officer", "Indenture", "Bonds",
"business day", "Pledged Bonds" and "Purchase Price" shall have the respective
meanings assigned to such terms in the above-referenced Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ________ day of _____, 19__.
________________________
as Trustee
By______________________
Title:
<PAGE> 13
EXHIBIT D
INSTRUCTION TO ISSUE SUBSTITUTE LETTER OF CREDIT
------------------------------------------------
[Date]
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10015
Attention: Letter of Credit Division
Re: Irrevocable Letter of Credit No. V 65986-S
Gentlemen:
Reference is made to (i) the above-referenced letter of credit (the "Old
Letter of Credit") and (ii) the Indenture of Trust, dated as of December 1, 1988
(the "Indenture"), between the City of Salem Municipal Port Authority and us.
[Name and address of successor trustee] (the "Successor Trustee") has been
appointed successor trustee under the Indenture. You are hereby requested to
issue, in accordance with the terms of the Old Letter of Credit, a new letter of
credit to the Successor Trustee having the same terms and providing for the same
Stated Amount as the Old Letter of Credit.
We submit herewith for cancellation the original of the Old Letter of
Credit.
The individual signing below on our behalf hereby represents that he or
she is duly authorized to so sign on our behalf.
Very truly yours,
THE FARMERS AND MERCHANTS
NATIONAL BANK OF BRIDGETON
By______________________________
Title:____________________
<PAGE> 1
EXHIBIT 10.60
LEASE AGREEMENT
BASIC LEASE INFORMATION
LEASE DATE: February 8, 1993
LANDLORD: AETNA REAL ESTATE ASSOCIATES, L.P.
A DELAWARE LIMITED PARTNERSHIP
LANDLORD'S ADDRESS: Aetna Investment Group
1740 Technology Drive, Suite 600
San Jose, CA 95110
TENANT: STERIGENICS INTERNATIONAL
A CALIFORNIA CORPORATION
TENANT'S ADDRESS: 4020 Clipper Court
Fremont, California 94538
PREMISES: Premises located at 344 Bonnie Circle, Corona,
California 91720, which, upon completion will
contain approximately Ninety-Eight
Thousand (98,000) rentable square feet
MONTHS OF TERM: One hundred twenty (120) months
(exclusive of Option Terms)
*/**MONTHLY BASE RENT: Months Sq. Ft. Monthly Rate Monthly Rent
------ ------- ------------ ------------
1-4 98,000 x 0.032 = $3,136.00
5-7 98,000 x 0.064 = 6,272.00
8-9 98,000 x 0.096 = 9,408.00
10 98,000 x 0.128 = 12,544.00
11-24 98,000 x 0.32 = 31,360.00
25-48 98,000 x 0.33 = 32,340.00
49-72 98,000 x .364 = 35,672.00
73-96 98,000 x .401 = 39,298.00
97-120 98,000 x .442 = 43,316.00
*PREPAID RENT: Thirty-One Thousand Three Hundred Sixty Dollars
($31,360)
MONTH TO WHICH PREPAID
RENT APPLIED: Eleventh (11th) month of the Term
SECURITY DEPOSIT: None
PERMITTED USE: General Office, Warehouse and Cell Area for a
Gamma Sterilization Facility
BROKER(S): Grubb & Ellis
Bishop Hawk
TENANT IMPROVEMENTS ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000)
LANDLORD'S ARCHITECT: William Simpson and Associates
EXHIBITS: EXHIBIT A - Legal Description of Land
EXHIBIT B - Legal Description of Entire Westgate
Distribution Center Project
EXHIBIT C - Floor Plan
EXHIBIT D - Design Specifications
EXHIBIT E - Changes to Be Incorporated Into Final Plans and
Specifications For Landlord's Improvements
EXHIBIT F - Form of Commencement Date Memorandum
EXHIBIT G - Form of Guaranty
EXHIBIT H - Construction Insurance Requirements
ADDENDUM OR ADDENDA: None
* To be adjusted based upon actual rentable square footage - determined after
completion of construction.
** See Paragraph 47 for Monthly Base Rent During Options Terms.
<PAGE> 2
TABLE OF CONTENTS
PARAGRAPH Page
1. DEMISE.............................................. 4
2. PREMISES............................................ 4
3. TERM................................................ 4
4. RENT................................................ 4
5. LATE CHARGE......................................... 6
6. There is no Paragraph 6 in this Lease............... 6
7. LANDLORD IMPROVEMENTS............................... 6
8. TENANT IMPROVEMENTS................................. 8
9. USE OF PREMISES..................................... 10
10. SURRENDER........................................... 10
11. ALTERATIONS AND ADDITIONS........................... 10
12. MAINTENANCE OF PREMISES............................. 11
13. LANDLORD'S INSURANCE................................ 11
14. TENANT'S INSURANCE.................................. 12
15. INDEMNIFICATION..................................... 13
16. SUBROGATION......................................... 13
17. ABANDONMENT......................................... 13
18. FREE FROM LIENS..................................... 13
19. ADVERTISEMENTS AND SIGNS............................ 13
20. UTILITIES........................................... 13
21. ENTRY BY LANDLORD................................... 13
22. DESTRUCTION AND DAMAGE.............................. 14
23. CONDEMNATION........................................ 15
24. ASSIGNMENT AND SUBLETTING........................... 16
25. TENANT'S DEFAULT.................................... 17
26. LANDLORD'S REMEDIES................................. 17
27. ATTORNEYS' FEES..................................... 19
28. TAXES............................................... 19
29. EFFECT OF CONVEYANCE................................ 19
30. TENANT'S ESTOPPEL CERTIFICATE....................... 19
31. SUBORDINATION....................................... 19
32. ENVIRONMENTAL COVENANTS............................. 20
33. NOTICES............................................. 21
34. WAIVER.............................................. 21
2
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
35. HOLDING OVER........................................ 21
36. SUCCESSORS AND ASSIGNS.............................. 21
37. TIME................................................ 21
38. BROKERS............................................. 21
39. LIMITATION OF LIABILITY............................. 21
40. FINANCIAL STATEMENTS................................ 22
41. RULES AND REGULATIONS............................... 22
42. MORTGAGEE PROTECTION................................ 22
43. ENTIRE AGREEMENT.................................... 22
44. INTEREST............................................ 22
45. CONSTRUCTION........................................ 22
46. REPRESENTATIONS AND WARRANTIES OF TENANT............ 22
47. EXTENSION OPTIONS................................... 23
48. PURCHASE OPTION..................................... 23
EXHIBIT A - Legal Description of Land
EXHIBIT B - Legal Description of Entire Westgate Distribution
Center Project
EXHIBIT C - Floor Plan
EXHIBIT D - Design Specifications
EXHIBIT E - Changes to Be Incorporated Into Final Plans and
Specifications For Landlord's Improvements
EXHIBIT F - Form of Commencement Date Memorandum
EXHIBIT G - Form of Guaranty
EXHIBIT H - Construction Insurance Requirements
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LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between Landlord
and Tenant on the Lease Date. The defined terms used in this Lease which are
defined in the Basic Lease Information set forth on page 1 of this Lease
Agreement ("Basic Lease Information") shall have the meaning and definition
given them in the Basic Lease Information. The Basic Lease Information, the
exhibits(s), and addendum or addenda described in the Basic Lease Information,
and this Lease Agreement are and shall be construed as a single instrument and
are referred to herein as the "Lease."
1. DEMISE: In consideration for the rents and all other charges and
payments payable by Tenant, and for the agreements, terms and conditions to be
performed by Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND
TENANT DOES HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below
(the "Premises"), upon the agreements, terms and conditions of this Lease for
the Term hereinafter stated.
2. PREMISES: The Premises demised by this Lease is the building
specified in the Basic Lease Information, which building is to be constructed on
the parcel of real property described on Exhibit A attached hereto and
incorporated herein by this reference (the "Land") and which, upon completion
will contain approximately the square footage specified in the Basic Lease
Information. The Land, together with the Premises and any other improvements now
or hereafter located thereon is referred to hereinafter as the "Property." The
Property is part of a larger business park (the "Project") a legal description
of which is attached hereto as Exhibit B. Tenant shall have the right to use the
parking and other areas included in the Property. No easement for light or air
is incorporated in the Premises.
The Premises demised by this Lease shall also include the "Tenant
Improvements" (as defined in Paragraph 8).
3. TERM: The term of this Lease (the "Term") shall be for the period of
months specified in the Basic Lease Information, commencing on the Commencement
Date" which shall be the date of "Substantial Completion" (as defined in
Paragraph 7) of the "Landlord Improvements" (as defined in Paragraph 7).
Promptly after the Commencement Date Landlord and Tenant shall execute a
Commencement Date Memorandum in the form attached hereto as Exhibit F. The Term
may be extended as provided in Paragraph 47.
4. RENT:
(a) BASE RENT. Tenant shall pay to Landlord, in advance on the
first day of each month, without further notice or demand and without offset or
reduction, the monthly installments of rent specified in the Basic Lease
Information (the "Base Rent"). Within thirty (30) days after Substantial
Completion of the Landlords Improvements, Landlord's Architect shall make an
exact determination of the number of gross square feet or floor Andrea contained
in the Premises measured from and to the exterior of exterior walls of the
Premises, whereupon the Base Rent (and all other amounts provided in this Lease
which are expressly based on the amount of gross floor area and/or adjustment
upon determination of the final amount hereof) shall be adjusted accordingly,
retroactive to the Commencement Date. Any adjustment in any prior payment which
is necessary because of such determination shall be reflected in an additional
payment and/or refund within thirty (30) days after the determination is made.
Upon execution of this Lease, Tenant shall pay to Landlord the Prepaid
Rent specified in the Basic Lease Information to be applied toward Base Rent for
the month of the Term specified in the Basic Lease Information.
(b) ADDITIONAL RENT. In addition to the Base Rent, Tenant
shall pay to Landlord, in accordance with this Paragraph 4, all the following
items related to the Premises, the Property, and/or the Outside Areas (as
defined in Paragraph 4(b)(3) (the "Additional Rent"):
(1) TAXES AND ASSESSMENTS. All real estate taxes and
assessments assessed or levied with respect to the Property. Real estate taxes
and assessments assessed or levied with respect to the Property shall include
any form of assessment, license, fee, tax, levy, penalty (if a result of
Tenant's delinquency), or tax (other than net income, estate, succession,
inheritance, transfer of franchises taxes), imposed by any authority having the
direct or indirect power to tax, or by any city, county, state or federal
government or any improvement or other district or division thereof, whether
such tax is (i) determined by the area of the Premises or the Property, or any
part thereof, or the Rent and other sums payable hereunder by Tenant, including,
but not limited to, any gross income or excise tax levied by any of the
foregoing authorities with respect to receipt of Rent or other sums due under
this Lease; (ii) upon any legal or equitable interest of Landlord in the
Premises or the Property, or any part thereof; (iii) upon this transaction or
any document to which Tenant is a party creating or transferring any interest in
the Premises or the Property; (iv) levied or assessed in lieu of, in
substitution for, or in addition to, existing or additional taxes against the
Premises or the Property,
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whether or not now customary or within the contemplation of the parties; or (v)
surcharged against the parking area. Tenant and Landlord acknowledge that
Proposition 13 was adopted by the voters of the State of California in the June,
1978 election and that assessments, taxes, fees, levies and charges may be
imposed by governmental agencies for such purposes as fire protection, street,
sidewalk, road, utility construction and maintenance, refuse removal and for
other governmental services which may formerly have been provided without charge
to property owners or occupants. It is the intention of the parties that all new
and increased assessments, taxes, fees, levies and charges due to Proposition 13
or any other cause are to be included within the definition of real estate taxes
for purposes of this Lease.
(2) INSURANCE. All insurance premiums, including
premiums for "all risk," fire and extended coverage (including earthquake
endorsements) insurance relating to the Property or the Premises, public
liability insurance, other insurance as Landlord Reasonably deems necessary, and
any deductibles paid under policies of any such insurance.
(3) OUTSIDE AREA EXPENSES. All costs to maintain,
repair, replace, supervise, insure (including provisions of public liability
insurance) and administer the areas of the Property outside of the Premises
("outside Areas"), including parking areas, landscaping (including maintenance
contracts), sprinkler systems, sidewalks, driveways, curbs, lighting systems,
and utilities for Outside Areas.
(4) PARKING CHARGES. Any parking charges or other
costs levied, assessed or imposed by, or at the direction of, resulting from
statutes or regulations, or interpretations thereof, promulgated by any
governmental authority in connection with the use or occupancy of the Premises,
the Outside Areas and/or the Property.
(5) MAINTENANCE AND REPAIR OF PREMISES. All costs to
maintain, repair, replace the roof coverings, the floor slab, and non
load-bearing exterior walls (including the painting thereof) of the Premises,
the heating, ventilation, and air condition ("VAC") systems serving the Premises
(including the cost of maintenance contracts), and all costs to maintain, repair
and replace all utility and plumbing systems, fixtures and equipment serving the
Premises but which are located in the Outside Areas.
(6) MANAGEMENT AND ADMINISTRATION ALLOWANCE. An
allowance equal to 10% of the amounts payable by Tenant pursuant to
subparagraphs 4(b)(3), (4) and (5), to cover Landlord's management, overhead and
administrative expenses associated with the management and administration of the
Premises and the Property.
(c) PRORATION OF CERTAIN ADDITIONAL RENT. It is agreed and
acknowledged that Landlord may operate and maintain the Outside Areas, including
parking areas, together with the comparable areas elsewhere in the Project, as a
single unit without segregating the costs incurred in connection with individual
portions of the Project. For as along as it does not segregate those of such
costs as relate to the Outside Areas, Landlord may compute the Additional Rent
due under subparagraphs 4(b)(3) and (4), and all or portions of the Additional
Rent due under subparagraphs 4(b)(2), (5) and (6), as a pro rata portion of the
total of the costs and charges therein described for the entire Project. Such
percentage shall be determined on the basis of the number of gross square feet
of floor area contained in the Premises determined in accordance with paragraph
4(a) relative to the total number of gross square feet of floor area contained
in all the buildings located in the Project. It is acknowledged and agreed that
the three buildings located in the Project as of the date of this Lease contain
a total of 322,594 square feet of gross floor area. In the event the Premises
contain 98,000 square feet of gross floor area, the percentage initially shall
be 23.3%, based on a total of 420,594 square feet of gross floor area in all the
buildings at the project. Such percentage is subject to adjustment in the event
the number of gross square feet or floor area contained in the Premises
determined in accordance with Paragraph 4(a) is higher or lower than 98.000.
Such percentage shall be subject to further adjustment in the event of new
construction, demolition, sale of a portion of the Project or other factor
affecting the gross floor area of the Premises or of other buildings located at
the Project.
(d) EXPENDITURES OF A CAPITAL NATURE. Notwithstanding anything
to the contrary contained in Paragraph 4(b), with respect to any expenditure by
Landlord which is capital in nature and not a normal operating, maintenance or
repair expense, there shall be charged to Tenant as Additional Rent for each
month only that portion of such expenditure equal to the amount of such capital
expenditure divided by the product of twelve (12) multiplied by the number of
years of useful life of the improvement. The determination of whether an
expenditure is capital, and if it is capital, the useful life of the
improvement, shall be as reasonably determined by Landlord in accordance with
generally accepted accounting principles. It is understood and agreed that the
cost of any necessary replacement of HVAC shall not constitute a capital
expenditure for purposes of this Paragraph 4 and the cost thereof shall be
included on Additional Rent in the year incurred.
(e) PAYMENT OF ADDITIONAL RENT.
(1) Upon commencement of this Lease, Landlord shall
submit to Tenant an estimate of monthly Additional Rent for the period between
the Commencement Date and the
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following December 31 and Tenant shall pay such estimated Additional Rent on a
monthly basis concurrently with the payment of the Base Rent. Tenant shall
continue to make said monthly payments until notified by Landlord of a change
therein. By March 1 of each calendar year, Landlord shall endeavor to provide to
Tenant a statement showing in reasonable detail the actual Additional Rent
chargeable to Tenant for the prior calendar year, prorated from the Commencement
Date during the first year. If the total of the monthly payments of Additional
Rent that Tenant has made for the prior calendar year (or portion thereof during
which this Lease was in effect) and for prior months of the current year is less
than the actual Additional Rent chargeable to Tenant for such prior calendar
year and the payments which should have been made on account of Additional Rent
for prior months of the current year (based on actual Additional Rent for the
prior year), then Tenant shall pay the difference in a lump sum within ten (10)
days after receipt of such statement from Landlord. Any overpayment by Tenant of
Additional Rent for the prior calendar year shall be credited towards the
Additional Rent next due.
(2) The actual Additional Rent for the prior calendar
year shall be used for purposes of calculating Tenant's monthly payment of
estimated Additional Rent for the current year (and for the succeeding year
until Additional Rent for the current year is determined), except that in any
year in which resurfacing of the parking area, material roof repairs or other
major work, whether or not involving a capital expenditure, are planned,
Landlord may include the estimated cost of such work, or in the case of a
capital expenditure, that portion of the estimated cost of such work which may
be charged to Tenant each month pursuant to Paragraph 4(d), in the estimated
monthly Additional Rent. Landlord shall make the final determination of
Additional Rent for the year in which this Lease terminates as soon as possible
after termination of such year. Tenant shall remain liable for payment of any
amount due to Landlord in excess of the estimated Additional Rent previously
paid by Tenant, and, conversely, Landlord shall promptly return to Tenant any
overpayment, even though the Term has expired and Tenant has vacated the
Premises. Failure of Landlord to submit statements as called for herein shall
not be deemed a waiver of Tenant's obligation to pay Additional Rent as herein
provided.
(f) GENERAL PAYMENT TERMS. The Base Rent, Additional Rent and
all other sums payable by Tenant to Landlord hereunder are referred to as the
"Rent". All Rent shall be paid without deduction, offset or abatement in lawful
money of the United States of America. Checks are to be made payable to Aetna
Investment Group and shall be mailed to: Aetna Investment Group, 1740 Technology
Drive, Suite 600, San Jose, California 95110, or to such other person or place
as Landlord may, from time to time, designate to Tenant in writing. Rent for any
partial month during the Term shall be prorated for the portion of such month
falling within the Term.
5. LATE CHARGE. Notwithstanding any other provision of this Lease,
Tenant hereby acknowledges that late payment to Landlord of Rent, or other
amounts due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
If any Rent or other sums due from Tenant are not received by Landlord or by
Landlord's designated agent within ten (10) days after their due date, then
Tenant shall pay to Landlord a late charge equal to five percent (5%) of such
overdue amount, plus any attorneys' fees incurred by Landlord by reason of
Tenant's failure to pay Rent and/or other charges when due hereunder. Landlord
and Tenant hereby agree that such late charges represent a fair and reasonable
estimate of the cost that Landlord will incur by reason of Tenant's late
payment. Landlord's acceptance of such late charges shall not constitute a
waiver of Tenant's default with respect to such overdue amount or estop Landlord
from exercising any of the other rights and remedies granted under this Lease.
Initials:
Landlord /s/ Tenant /s/
6. There is no Paragraph 6 in this Lease.
7. LANDLORD IMPROVEMENTS:
(a) CONSTRUCTION BY LANDLORD. Landlord, at Landlord's sole
cost and expense, subject to the limitations set forth in subparagraph (d)
below, shall construct, or cause to be constructed, the shell building (the
"Shell Building") and the other improvements described in the Final Drawings and
Specifications (as hereinafter defined), as revised to satisfy an requirement
and any governmental authorities (the "Final Approved Drawings and
Specifications"). The improvements required to be constructed by Landlord
pursuant to this Paragraph 7 are referred to herein as the "Landlord
Improvements."
(b) MODIFICATION OF DRAWINGS AND SPECIFICATIONS. As soon as
practical, and in any event not later than forty-five (45) days after execution
of this Lease, Landlord shall provide to Tenant modified Construction drawings
and specifications (the "Revised Initial Drawings and Specifications") which
shall consist of a modification of those Construction Drawings and
Specifications, dated 5/29/90, prepared by Landlord's Architect for Building D,
342 Bonnie Circle, which were delivered to Tenant by Landlord prior to execution
of this Lease (the "Initial Drawings and Specifications"), modified to
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incorporate the provisions of the Floor Plan dated January 8, 1993, prepared by
DES Architects ("Tenants's Architect") and the Design Specifications dated
January 26, 1993 prepared by Tenant's Architect, copies of which are attached
hereto as Exhibits C and D, respectively, and, also, to incorporate those
certain changes and clarifications to the Design Specifications summarized in
Exhibit E hereto. Tenant shall have fifteen (15) days from receipt to review the
Revised Initial Drawings and Specifications and submit in writing to Landlord
any and all requested changes or further modifications (the "Changes"). Landlord
shall incorporate in the final construction drawings and specifications (the
"Final Drawings and Specifications") any Changes ("Required Changes") requested
by Tenant which are required to make the Final Drawings and Specifications i)
conform with the requirements of applicable laws, regulations and ordinances and
ii) consistent with the requirements of the Floor Plan and Design Specifications
prepared by Tenant's Architect which are referred to above and the changes set
forth on Exhibit E attached hereto (collectively, "Tenant's Specifications").
Landlord shall accommodate Changes other than the Required Changes ("Optional
Changes") by incorporating into and making the Optional Changes a part of the
Final Drawings and Specifications provided i) collectively, the Optional Changes
do not, in Landlord's sole determination, affect the cost (including, without
limitation, cost of design, engineering, permitting and construction) of the
Landlord Improvements, ii) the Optional Changes do not materially impact the
general character or appearance of the Shell Building, and iii) the Optional
Changes, in Landlord's sold determination, will not delay the design, permitting
or construction of the Landlord Improvements.
Tenant shall bear the cost of making any Required Changes (1) which are
required to make the Final Drawings and Specifications conform with legal
requirements (and which would not be required if the Landlord Improvements were
constructed in accordance with the Initial Drawings and Specifications) and (2)
which are not required by Tenant's Specifications. Landlord shall bear the cost
of making any Required Changes which are required to make the Final Drawings and
Specifications conform with legal requirements and which would be required if
the Landlord Improvements were constructed in accordance with the Initial
Drawings and Specifications, as well as all Required Changes required by
Tenant's Specifications. Tenant shall pay to Landlord, promptly following demand
by Landlord, the amount of any costs required to be paid by Tenant pursuant to
the first sentence of this paragraph.
In the event Landlord determines that the Optional changes will
increase the cost of the Landlord Improvements (including, without limitation,
design, engineering, permitting or construction costs) or delay the construction
of the Landlords Improvements (for any reason, including delays in design,
engineering, permitting or construction) and therefore the Commencement Date,
Landlord shall notify Tenant, in writing, of the additional costs (the
"Additional Costs") and/or delay (the "Delay") which Landlord, in its reasonable
judgment, estimates will result from making the Optional Changes.
Notwithstanding that Optional Changes will result in Additional Costs and/or
Delay, Landlord shall cause the Optional Changes, or some of the Optional
Changes, to be incorporated in the Final Drawings and Specifications, provided
that within ten (10) days after delivery to Tenant of Landlord's written
estimate(s), Tenant delivers to Landlord written notice specifying which
Optional Changes should be incorporated (such Changes are referred to herein as
the "Approved Changes"), and, in the event the estimated Additional Costs of the
Approved Changes exceed $150,000, a cash payment equal to the amount by which
the estimated Additional Costs of the Approved Changes exceeds $150,000, which
payment shall be on account of the actual Additional Costs to be paid by Tenant,
and subject to the following: (i) Tenant shall be responsible for paying all of
the Additional Costs of the Approved Changes, which Additional Costs Tenant
acknowledges may exceed Landlord's estimate thereof, and (ii) the Commencement
Date shall be accelerated by the actual number of days of Delay which results
from the Approved Changes, which Delay Tenant acknowledges may be greater than
Landlord's estimate of the Delay. In the event Approved Changes are made in
accordance with the foregoing, upon "Substantial Completion" (as hereinafter
defined) of the Landlord Improvements and receipt of Landlord's statement of the
amount of the actual Additional Costs, Tenant shall immediately pay to Landlord
the total amount of the Additional Costs shown on such statement, less the
amount previously paid to Landlord in accordance with the paragraph on account
of the Additional Costs. In the event the amount paid to Landlord on account of
the Additional Costs exceeds the actual amount of the Additional Costs, Landlord
shall refund the excess amount to Tenant promptly after Substantial Completion
of the Landlord Improvement. Landlord, in its sole discretion, may elect to
offset and reduce the "Tenant Improvements Allowance" (as defined in Paragraph
8) to pay for all or part of the Additional Costs, in lieu of requiring Tenant
to pay such amounts to Landlord.
Landlord and Tenant understand that "time is of the essence" in making
any Changes. It is understood and agreed that in the event Tenant does not
respond within the specified time periods for Tenant's response under this
Paragraph 7, Landlord may proceed with permitting and construction of the
Landlord Improvements in accordance with the Revised Initial Drawings and
Specifications. In such event, the term "Final Drawings and Specifications" as
used in subparagraphs (a), (c) and (d) of the Paragraph 7 shall mean the Revised
Initial Drawings and Specifications.
(c) BIDDING. Landlord intends to seek bids for the construction of the
Landlord Improvements from several general contractors whom Landlord believes
are qualified general contractors. At the request of Tenant, Landlord agrees to
request a bid from L.E. Wentz Company for the construction of the Landlord
Improvements, provided, however, that Landlord shall have no
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obligation to accept any bid from L.E. Wentz Company, it being understood and
agreed that Landlord's selection of the general contractor for the Landlord
Improvements shall be in Landlord's sole discretion.
(d) SUBSEQUENT CHANGES REQUESTED BY TENANT. In the event
Tenant shall desire any changes or additions to the Final Drawings and
Specifications (such changes are referred to herein as "Subsequent Changes"),
Tenant shall submit to Landlord a written request describing such Subsequent
Changes. Landlord shall not unreasonably withhold or delay its approval of any
such requested Subsequent Changes. If Landlord approves some or all of the
Subsequent Changes, Landlord shall deliver a written estimate to Tenant of the
additional cost and/or delay that such Subsequent Changes are anticipated to
cause. In the event Tenant notifies Landlord in writing, within three (3)
business days after receipt of such estimate, that Tenant approves such
Subsequent Changes, and pays to Landlord in cash the amount of the estimated
additional cost of such Subsequent Changes, Landlord will accommodate such
Subsequent Changes by causing them to be incorporated into and made a part of
the Final Drawings and Specification. Tenant acknowledges that the estimates
provided by Landlord will be merely estimates and that the actual additional
costs and delay associated with the Subsequent Changes may be greater than such
estimates. It is understood and agreed that Tenant be fully responsible for
reimbursing Landlord for all of the actual additional costs associated with such
approved Subsequent Changes (including, without limitation, design, engineering,
permitting and construction costs) immediately after receipt for a statement
therefor. It is further understood and agreed that the Commencement Date shall
be accelerated by the number of days of actual delay caused by the Subsequent
Changes (including, without limitation, delay resulting from making
modifications to the Final Drawings and Specifications, obtaining additional
approvals and permits and in construction).
(e) COOPERATION. Landlord and Tenant agree to cooperate, and
to use best efforts to cause Landlord's Architect and Tenant's Architect,
respectively, to cooperate, in good faith in incorporating any Approved Changes
into the Revised Initial Drawings and Specifications. Landlord and Tenant
further agree to cooperate with each other in obtaining permits and approvals
for the Landlord Improvements and Tenant Improvements and coordinating the
construction of the Landlord Improvements and the Tenant Improvements.
(f) SUBSTANTIAL COMPLETION OF LANDLORD IMPROVEMENTS. Landlord
shall deliver to Tenant, and Tenant shall accept from Landlord, possession of
the Premises upon "Substantial Completion" (as hereinafter defined) of the
Landlord Improvements. The "Substantial Completion" of the Landlord Improvements
shall be deemed to occur on the earlier of (i) the date the Landlord
Improvements are approved by the appropriate governmental authority as being
completed in accordance with its building code and the building permit issued
for such improvements, which approval may be evidenced by the issuance of a
final building inspection approval and (ii) the date Landlord's Architect has
certified in writing to Tenant that the Landlord Improvements, or the Landlord
Improvements which are capable of being completed before completion of the
Tenant Improvements, have been substantially completed in accordance with the
Final Approved Drawings and Specifications, subject to completion of minor items
approved by Tenant (which approval shall not be unreasonably withheld) and
specified in a punchlist included with such certification (which certification
shall be deemed conclusive evidence of Substantial Completion of the Landlord
Improvements provided it is given in good faith and in the reasonable exercise
of Landlord's Architect's professional judgment). Landlord shall correct or
complete the items shown on the punchlist within thirty (30) days after Tenant
accepts possession of the Premises, provided that if any item reasonably
requires more than thirty (30) days for correction, then Landlord shall have
such time as is reasonably required to correct such item(s), provided Landlord
diligently prosecutes such items to completion.
(g) Notwithstanding any provision to the contrary set forth in
this Paragraph 7, Tenant shall not be responsible for any additional costs or
delays to the extent caused by the negligence or willful misconduct of Landlord
or Landlord's agents or contractors.
(h) Landlord, at its sole cost and expense, shall promptly
repair and correct any defects in the Landlord Improvements, provided Tenant
delivers written notice of the defects within one year after the date of
Substantial Completion of the Landlord Improvements.
8. TENANT IMPROVEMENTS:
(a) DESCRIPTION OF TENANT IMPROVEMENTS. Tenant shall be
responsible for constructing, and paying for, any improvements to the Shell
Building not included in the Landlord Improvements. Tenant contemplates
constructing certain improvements in the Building (such improvements are
referred to herein as the "Tenant Improvements"). It is contemplated that the
Tenant Improvements will include construction of an enclosed area within the
Building consisting of concrete walls (herein referred to as the "Cell Area"),
together with fire sprinklers and plumbing and electrical distribution within
the Cell Area, roof plug, below-grade pool(s) and unistrut and mechanical
conveyor systems located within the Cell Area (the walls surrounding the Cell
Area, the pools located within the Cell Area, the plumbing and electrical
distribution within the Cell Area and all such other improvements may be
referred to herein as the "Cell Improvements"). The Tenant
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Improvements shall also include installation and construction of any other
personal property, trade fixtures or improvements desired by Tenant.
(b) TENANT IMPROVEMENT DRAWINGS AND SPECIFICATIONS. The Tenant
Improvements shall be constructed in accordance with drawings and specifications
prepared, or caused to be prepared, by Tenant, and approved by Landlord, such
approval not to be unreasonably withheld. Prior to commencement of construction
of the Tenant Improvements, Tenant shall submit such drawings and specifications
to Landlord. Landlord shall notify Tenant in writing of Landlord's approval or
disapproval of the drawings and specifications submitted to Landlord within
thirty (30) days after Landlord's receipt thereof. Landlord's failure to so
notify Tenant within such thirty (30) day period shall be deemed to be its
approval. In the event Landlord reasonably disapproves the drawings and
specifications, Tenant shall cause the drawings and specifications to be
modified so that they will be acceptable to Landlord, in Landlord's reasonable
judgment. The drawings and specifications approved, or deemed approved, by
Landlord shall be referred to herein as the "Tenant Improvement Drawings and
Specifications."
(c) CONSTRUCTION OF TENANT IMPROVEMENTS. Tenant shall
construct, or cause the Tenant Improvements to be constructed in accordance with
the Tenant Improvement Drawings and Specifications, at Tenant's sole cost and
expense, except for the contribution by Landlord of all or a portion of the
"Tenant Improvements Allowance" (as defined in subparagraph 8(d) hereof) which
is available in accordance with subparagraph 8(d) hereof, in a good and
workmanlike manner, lien-free and in compliance with all applicable federal,
state and local requirements, including, in particular, all requirements which
will be applicable to the Cell Area when used for its intended purpose. Without
limiting the generality of the preceding sentence, Tenant shall obtain all
governmental permits and approvals required to be obtained in connection with
the construction of the Tenant Improvements.
Landlord agrees to reasonably cooperate with Tenant's
contractor for the construction of the Tenant Improvements. Landlord agrees to
give Tenant and Tenant's contractors, subcontractors, architects, engineers,
agents, representatives and employees access to the Land for excavation and
grading work in connection with the construction of the pool(s) to be located in
the Cell Area when grading and excavation work is being done in connection with
the Landlord Improvements and for pouring concrete for the pool(s) when concrete
for the foundation of the Shell Building is being poured. Landlord further
agrees to give Tenant and Tenant's contractors, subcontractors, architects,
engineers, agents, representatives and employees access to the Shell Building as
soon as reasonably possible after commencement of construction of the Shell
Building, for construction of the remaining Tenant Improvements. However,
notwithstanding anything to the contrary contained in this Lease, in the event
the construction of Tenant Improvements prior to completion of the Landlord
Improvements increases the cost of constructing the Landlord Improvements,
Tenant shall pay to Landlord, on demand, the amount of such additional costs,
and in the event the construction of Tenant Improvements prior to completion of
the Landlord Improvements causes any delays in the completion of the Landlord
Improvements, the Commencement Date shall be accelerated by the number of days
of any such delays.
Landlord, Landlord's Architect and any engineers or other consultants
engaged by Landlord shall have the right from time to time, upon reasonable
notice to Tenant and Tenant's contractor (provided that Tenant has previously
notified Landlord in writing of the name, telephone number and address of
Tenant's contractor) during the construction of the Cell Area, to inspect the
Cell Area and the Cell Improvements for purposes of confirming that the Cell
Improvements are being constructed in accordance with, and comply with, all of
the requirements of this Lease. Landlord and its agents described above shall
not exercise such inspection rights in a manner which unnecessarily interferes
with Tenant's construction of the Cell Improvements. Landlord may notify Tenant
in writing of any aspect of the Cell Improvements which: (1) is not in
conformance with applicable laws, regulations, permits or ordinances or the
Tenant Improvement Drawings and Specifications, or (2) should, in Landlord's
reasonable determination, be modified to assure the structural integrity of
operational safety of the Cell Improvements. Promptly after Tenant's receipt of
any such notice, Tenant shall, at Tenant's cost and expense, cause necessary
changes to be made to the Cell Improvements in order to incorporate any
modifications of the type referred to in clause (2) of the prior sentence and to
cause any aspect thereof which is not in conformance with the Tenant Improvement
Drawings and Specifications and applicable laws, regulations, permits and
ordinances, as indicated in such notice, to be brought into conformance
therewith. Landlord's inspection and approval rights under this paragraph are
not intended to, and shall not, create any obligation on the part of Landlord to
assure the construction of the Cell Improvements in accordance with the
requirements of this Lease.
(d) TENANT IMPROVEMENTS ALLOWANCE. Tenant shall be solely
responsible for paying for all costs of the Tenant Improvements, provided that
Landlord shall provide an allowance of $100,000 (the "Tenant Improvements
Allowance") for the construction of the Tenant Improvements
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Landlord and Tenant acknowledge that the Tenant Improvements Allowance is not
intended to cover all of the costs of constructing the Tenant Improvements, but
is merely a contribution by Landlord to defray a portion of such costs. The
Tenant Improvements Allowance shall be paid to Tenant within thirty (30) days
after submission to Landlord of written evidence satisfactory to Landlord that
Tenant has paid $100,000 or more to the contract engaged to construct the Tenant
Improvements for the construction of the Tenant Improvements. The Tenant
Improvement Allowance is subject to being reduced or eliminated as provided in
Paragraph 7 hereof.
9. USE OF PREMISES:
(a) PERMITTED USES. The Premises shall be used for the
Permitted Uses specified in the Basic Lease Information and no other. The
Premises shall not be used to create any nuisance or trespass, for any illegal
purpose, for any purpose not permitted by applicable laws and regulations, or
for any purpose that would vitiate the insurance or increase the premiums for
insurance on the Premises. Tenant agrees not to overload the floor(s) of the
Premises.
(b) COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Tenant shall, at
Tenant's expense, faithfully observe and comply with all Municipal, State and
Federal statutes, rules, regulations, ordinances, requirements, and orders, now
in force or which may hereafter be in force pertaining to the Premises or
Tenant's use thereof, including without limitation, any statutes, rules,
regulations, ordinances, requirements, or orders requiring installation of fire
sprinkler systems, seismic reinforcement and related alterations, and removal of
asbestos, whether substantial in cost or otherwise, and all recorded covenants,
conditions and restrictions affecting the Property ("Private Restriction") now
in force or which may hereafter be in force; provided, however, that Tenant
shall not be required to make structural changes to the Premises not related to
Tenant's specific use of the Premises unless the requirement for such changes is
imposed as a result of any improvements or additions made or proposed to be made
at Tenant's request. The judgment of any court of competent jurisdiction, or the
admission of Tenant in any action or proceeding against Tenant, whether Landlord
be a party thereto or not, that Tenant has violated any such rule, regulation,
ordinance, statute or Private Restrictions, shall be conclusive of that fact as
between Landlord and Tenant.
10. SURRENDER: Tenant agrees that on the last day of the Term, or on
the sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord (a) in good condition and repair (damage by Acts of God, fire,
condemnation and normal wear and tear excepted), but with all interior walls
painted or cleaned so they appear painted, any carpets cleaned, and with all
floors cleaned and waxed, together with all alterations, additions and
improvements which may have been made in or on the Premises; except that Tenant
shall remove trade fixtures put in at the expense of Tenant, and any
improvements as to which Landlord has, prior to the date of surrender, consented
to or requested removal, and Tenant shall remove the Cell Improvements as
provided in the following sentence; and (b) otherwise in accordance with
Paragraph 32(f). Tenant shall, at Tenant's sole cost and expense, on or before
the last day of the Term, or on the sooner termination of this Lease (i) remove
the above-grade concrete enclosures of the Cell Area, provided, that to the
extent the southerly wall of the Cell Area is contiguous with the exterior wall
of the Building, such portion of such wall need not be removed, and dispose of
all removed materials off of the Property, and (ii) empty and then fill in the
below-ground pools located in the Cell Area and make the area which was the Cell
Area a continuous slab consistent with the remainder of the Building.
Concurrently with the delivery of this Lease, Charles W. King, Jr., a principal
shareholder of Tenant, will furnish Landlord with a Guaranty in substantially
the form of the Guaranty attached hereto as Exhibit F whereby he will guarantee
the payment and performance of the Cell Removal Obligations, on the terms and
conditions, and subject to the limitations, set forth therein. Tenant shall
repair all damage caused by Tenant's removal of improvements under this
Paragraph 10 and otherwise restore the Premises in accordance with the foregoing
at Tenant's sole cost and expense. On or before the expiration or sooner
termination of this Lease, Tenant shall remove all of Tenant's personal property
from the Premises. All property of Tenant not so removed, unless such
non-removal is consented to by Landlord, shall be deemed abandoned by Tenant,
provided that in such event Tenant shall remain liable to Landlord for all costs
surrendered at the end of the Term or sooner termination of this Lease, and in
accordance with the provisions of this Paragraph 10 and of Paragraph 32(f),
Tenant hereby indemnifies Landlord against loss or liability resulting from
delay by Tenant in so surrendering the Premises including, without limitation,
any claims made by any succeeding tenant founded on such delay. Tenant's
obligations under this Paragraph 10 shall survive a termination of this Lease.
11. ALTERATIONS AND ADDITIONS
(a) Tenant shall not make, or permit to be made, any
alteration or addition to the Premises, or any part thereof, other than the
installation of the Tenant Improvements, without the prior written consent of
Landlord, such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, Landlord's consent shall not be required for
non-structural interior alterations with a cost of $5,000 or less.
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(b) Any alteration or addition to the Premises shall be at
Tenant's sole cost and expense, in compliance with all applicable laws and
requirements, and in accordance with plans and specifications approved in
writing by Landlord.
(c) In the event Landlord consents to a proposed alteration or
addition, such consent shall include Landlord's advice whether or not such
proposed alteration or addition shall be required to be removed at the
expiration or termination of this Lease. If Landlord fails so to advise Tenant
regarding whether or not a proposed alteration or addition may be removed at the
expiration or termination of this Lease, then Tenant shall be required to
surrender the alteration or addition to Landlord with the Premises, without
compensation to Tenant, at the expiration or termination of this Lease. All
additions, alterations or improvements, including, but not limited to, heating,
lighting, electrical, air conditioning, fixed partitioning, drapery, wall
covering and paneling, built-in cabinet work and carpeting installations made by
Tenant, together with all property that has become an integral part of the
Premises, shall at once be and become the property of Landlord, and shall not be
deemed trade fixtures.
(d) Tenant agrees not to proceed to make such alterations or
additions, notwithstanding consent from Landlord to do so, until five (5) days
after Tenant's receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work.
12. MAINTENANCE OF PREMISES:
(a) MAINTENANCE BY TENANT. Throughout the Term, Tenant shall,
at its sole expense, (1) keep and maintain in good order and condition, repair,
and replace the Premises, and every part thereof, including glass, windows,
window frames, skylights, interior and exterior doors and door frames, all non
load bearing interior walls and the interior of the Premises (excepting only
those portions of the Premises to be maintained by Landlord, as provided in
Paragraph 12(c) below), (2) keep and maintain in good order and condition,
repair, and replace all utility and plumbing systems, fixtures and equipment,
including without limitation, electricity, gas, water, and sewer, located in or
on the Premises, and furnish all expendables, including light bulbs, paper goods
and soaps, used in the Premises, (3) repair all damage to the Premises or the
Outside Areas caused by the negligence or willful misconduct of Tenant or its
agents, employees, contractors or invitees. Tenant shall not do anything to
cause any damage, deterioration or unsightliness to the Premises and the Outside
Areas.
(b) LANDLORD'S RIGHT TO MAINTAIN AND REPAIR AT TENANT'S
EXPENSE. Notwithstanding the foregoing, Landlord shall have the right, but not
the obligation, at Tenant's expense, to enter the Premises and perform Tenant's
maintenance, repair and replacement work, provided that, except in the case of
an emergency, Landlord shall be required to give Tenant written notice at least
thirty (30) days prior to entering the Premises to perform such work. In the
case of an emergency, Landlord shall not be required to give Tenant notice prior
to entering the Premises to perform such work. Within ten (10) days after
invoice therefor from Landlord, Tenant shall pay all reasonable costs and
expenses incurred by Landlord in connection with such maintenance, repair and
replacement work.
(c) MAINTENANCE BY LANDLORD. Subject to the provisions of
Paragraphs 12(a), 22 and 23, and further subject to Tenant's obligation under
Paragraph 4 to reimburse Landlord, in the form of Additional Rent, for the cost
and expense of maintaining and repairing certain of the following items,
Landlord agrees to repair and maintain the following items: the structural
portions of the roof and the roof coverings (provided that Tenant installs no
additional air conditioning or other equipment on the roof that damages
structural portions of the roof or the roof coverings), the foundation, the
floor slab, the load bearing walls, and the exterior walls (excluding any glass
therein but including the painting thereof) of the Premises; the HVAC systems
serving the Premises; the utility and plumbing systems fixtures, and equipment
located outside the Premises; and the parking areas, landscaping, sprinkler
systems, sidewalks, driveways, curbs, and lighting systems in the Outside Areas.
Landlord shall not be required to repair or maintain conditions created due to
any act, negligence or omission of Tenant or its agents, contractors, employees
or invitees. Landlord's obligation hereunder to repair and maintain is subject
to the condition precedent that Landlord shall have received written notice of
the need for such repairs and maintenance. Tenant shall promptly report in
writing to Landlord any defective condition known to it which Landlord is
required to repair, and Tenant shall indemnify and hold harmless Landlord from
and against any and all liability incurred by Landlord as a result of an
unreasonable delay by Tenant in reporting any such defective condition to
Landlord.
(d) TENANT'S WAIVER OF RIGHTS. Tenant hereby expressly waives
all rights to make repairs at the expense of Landlord or to terminate this
Lease, as provided for in California Civil Code Sections 1941 and 1942, and
1932(1), respectively, and any similar or successor statute or law in effect or
any amendment thereof during the Term.
13. LANDLORD'S INSURANCE: Landlord shall purchase and keep in force
fire, extended coverage and "all risk" insurance covering the Premises and
public liability insurance covering the
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Outside Areas. Tenant shall, at its sole cost and expense, comply with any and
all reasonable requirements pertaining to the Premises of any insurer necessary
for the maintenance of fire insurance covering the Premises and appurtenances,
and public liability insurance covering the Outside Areas. Landlord, at Tenant's
cost, may maintain "Loss of Rents" insurance, insuring that the Rent will be
paid in a timely manner to Landlord for a period of at least twelve (12) months
if the Premises are destroyed or rendered unusable or inaccessible by any cause
insured against under this Lease.
At all times during the construction of the Landlord Improvements,
Landlord shall maintain and keep in force, or cause there to be maintained and
kept in force, insurance which satisfies the requirements set forth on Exhibit H
attached hereto and incorporated herein by this reference. Copies of all
policies of insurance required by Exhibit H or certificates thereof evidencing
coverage shall be delivered to Tenant prior to commencement of construction of
the Landlord Improvements. All such insurance policies shall name Tenant, its
affiliates or designees, and its officers, directors and employees as additional
insureds as their interests may appear. All such insurance policies shall (i) be
issued by a company or companies licensed to do business in the State of
California, (ii) provide that no cancellation, non-renewal or material
modification shall be effective without sixty (60) days prior written notice
provided to Tenant, (iii) be primary and not contributing with any insurance
carried by Tenant, or affiliates (iv) provide no deductible greater than $25,000
per loss and (v) contain a waiver of subrogation clause in favor of Tenant; its
affiliates or designees and their officers, directors and employees.
14. TENANT'S INSURANCE:
(a) PUBLIC LIABILITY INSURANCE. Tenant shall, at Tenant's
expense, secure and keep in force a "broad form" public liability insurance and
property damage policy covering the Premises, insuring Tenant, and naming
Landlord and its lenders as additional insureds, against any liability arising
out of the ownership, use, occupancy or maintenance of the Premises. The minimum
limit of coverage of such policy shall be in the amount of not less than Three
Million Dollars ($3,000,000.00) for injury or death of one person in any one
accident or occurrence and in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of more than one person in any one accident
or occurrence, shall include an extended liability endorsement providing
contractual liability coverage (which shall include coverage for Tenant's
indemnification obligations in this Lease), and shall contain a severability of
interest clause or a cross liability endorsement. Such insurance shall further
insure Landlord and Tenant against liability for property damage of at least One
Million Dollars ($1,000,000.00). The limit of any insurance shall not limit the
liability of Tenant hereunder. No policy shall be cancellable or subject to
reduction of coverage, and loss payable clauses shall be subject to Landlord's
approval. Such policies of insurance shall be issued as primary policies and not
contributing with or in excess of coverage that Landlord may carry, by an
insurance company authorized to do business in the State of California for the
issuance of such type of insurance coverage and rated A:XIII or better in Best's
Key Rating Guide. A copy of said policy or a certificate evidencing to
Landlord's reasonable satisfaction that such insurance is in effect shall be
delivered to Landlord upon commencement of the Term, and thereafter whenever
Landlord shall reasonably request.
(b) PERSONAL PROPERTY INSURANCE. Tenant shall maintain in full
force and effect on all of its fixtures and equipment on the Premises, a policy
or policies of fire and extended coverage insurance with standard coverage
endorsement to the extent of the full replacement cost thereof. During the term
of this Lease the proceeds from any such policy or policies of insurance shall
be used for the repair or replacement of the fixtures and equipment so insured.
Landlord shall have no interest in the insurance upon Tenant's equipment and
fixtures and will sign all documents reasonably necessary in connection with the
settlement of any claim or loss by Tenant. Landlord will not carry insurance on
Tenant's possessions. A certificate evidencing to Landlord's reasonable
satisfaction that such insurance is in effect shall be delivered to Landlord
upon commencement of the Term, and thereafter whenever Landlord shall reasonably
request.
(c) INSURANCE DURING CONSTRUCTION. At all times during the
construction of the Tenant Improvements, Tenant shall maintain and keep in
force, or cause there to be maintained and kept in force, insurance which
satisfies the requirements set forth on Exhibit H attached hereto and
incorporated herein by reference. Copies of all policies of insurance required
by Exhibit II or certificates thereof evidencing coverage shall be delivered to
Landlord prior to commencement or construction of the Tenant Improvements. All
such insurance policies shall name Aetna Life & Casualty Company, Landlord,
their affiliates or designees and their officers, directors, partners and
employees as additional insureds as their interests may appear. All such
insurance policies shall (i) be issued by a company or companies licensed to do
business in the State of California, (ii) provide that no cancellation,
non-renewal or material modification shall be effective without sixty (60) days
prior written notice provided to Landlord, (iii) be primary and not contributing
with any insurance carried by Aetna Life & Casualty Company, Landlord, their
affiliates or designees, (iv) provide no deductible greater than $25,000 per
loss and (v) contain a waiver of subrogation clause in favor of Aetna Life &
Casualty Company, Landlord, their affiliates or designees and their officers,
directors, partners and employees.
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15. INDEMNIFICATION:
(a) OF LANDLORD. Tenant shall indemnify and hold harmless
Landlord and agents, employees, partners, shareholders, directors, invitees, and
independent contractors (collectively "Agents") of Landlord against and from any
and all claims, liabilities, judgments, costs, demands, causes of action and
expenses (including, without limitation, reasonable attorneys' fees) arising
from (1) Tenant's use of the Premises or from any activity done, permitted or
suffered by Tenant in or about the Premises or the Property, and (2) any act,
neglect, fault, willful misconduct or omission of Tenant, or Tenant's Agents or
from any breach or default in the terms of this Lease by Tenant, and (3) any
action or proceeding brought on account of any matter in items (1) or (2). If
any action or proceeding is brought against Landlord by reason of any such
claim, upon notice from Landlord, Tenant shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord. As a material part of
the consideration to Landlord, Tenant hereby assumes all risk of damage to
property or injury to persons in or about the Premises from any cause whatsoever
(except that which is caused by the negligence or willful misconduct by Landlord
or its Agents or by the failure of Landlord to observe any of the terms and
conditions of this Lease, if such failure has persisted for an unreasonable
period of time after written notice of such failure), and Tenant hereby waives
all claims in respect thereof against Landlord. The obligations of Tenant under
this Paragraph 15 shall survive any termination of this Lease.
(b) NO IMPAIRMENT OF INSURANCE. The foregoing indemnity shall
not relieve any insurance carrier of its obligations under any policies required
to be carried by either party pursuant to this Lease, to the extent that such
policies cover the peril or occurrence that results in the claim that is subject
to the foregoing indemnity.
16. SUBROGATION: Landlord and Tenant hereby mutually waive any claim
against the other during the Term for any injury to person or loss or damage to
any of their property located on or about the Premises or the Property that is
caused by or results from perils covered by insurance carried by the respective
parties, to the extent of the proceeds of such insurance actually received with
respect to such injury, loss or damage, whether or not due to the negligence of
the other party or its agents. Because the foregoing waivers will preclude the
assignment of any claim by way of subrogation to an insurance company or any
other person, each party now agrees to immediately give to its insurer written
notice of the terms of these mutual waivers and shall have their insurance
policies endorsed to prevent the invalidation of the insurance coverage because
of these waivers. Nothing in this Paragraph shall relieve a party of liability
to the other for failure to carry insurance required by this Lease.
17. ABANDONMENT: Tenant shall not abandon the Premises at any time
during the Term. In the event of abandonment, the rights and remedies of Tenant
and Landlord shall be determined in accordance with the applicable California
statutes in effect at the time of abandonment.
18. FREE FROM LIENS: Tenant shall keep the Premises and the Property,
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant.
19. ADVERTISEMENTS AND SIGNS: Tenant shall not place or permit to be
placed in, upon, or about the Premises or the Property any signs, advertisements
or notices without obtaining Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed, or without complying with
applicable law, and will not conduct, or permit to be conducted, any sale by
auction on the Premises or otherwise on the Property. Tenant shall remove any
sign, advertisement or notice placed on the Premises by Tenant upon the
expiration of the Term or sooner termination of this Lease, and Tenant shall
repair any damage or injury to the Premises or the Property caused thereby, all
at Tenant's expense. If any signs are not removed, or necessary repairs not
made, Landlord shall have the right to remove the signs and repair any damage or
injury to the Premises at Tenant's sole cost and expense.
20. UTILITIES: Tenant shall pay for all water, gas, heat, light, power,
telephone service and all other materials and services supplied to the Premises.
If Tenant fails to pay for any of the foregoing when due, Landlord may pay the
same and add such amount to the Rent.
21. ENTRY BY LANDLORD: Tenant shall permit Landlord and its Agents to
enter into and upon the Premises at all reasonable times, upon reasonable notice
(except in the case of an emergency, for which no notice shall be required), and
subject to Tenant's reasonable security arrangements, for the purpose of (i)
inspecting the Premises, (ii) showing the Premises to prospective purchasers,
lenders or tenants and (iii) maintaining and repairing the Premises as required
or permitted of Landlord under the terms hereof, and otherwise improving and
altering the Premises, but only to the extent such alterations and improvements
are required to comply with applicable laws with which Landlord is required to
comply under the terms hereof or are consented to by Tenant, which consent shall
not be unreasonably withheld. Any such entry into and upon the Premises shall be
without any rebate of Rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned (except for
actual damages resulting from the negligence or willful misconduct of Landlord
or its agents); and Tenant shall permit Landlord to post
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notices of non-responsibility and ordinary "for sale" or "for lease" signs,
provided that Landlord may post such "for lease" signs and exhibit the Premises
to prospective tenants only during the six (6) months prior to termination of
this Lease. No such entry shall be construed to be a forcible or unlawful entry
into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises.
22. DESTRUCTION AND DAMAGE
(a) If the Premises are damaged by fire or other perils
covered by extended coverage insurance or any other insurance covering the
Premises which may be maintained by Landlord, or by perils for which insurance
is required to be carried hereunder by Landlord, the following provisions shall
apply:
(1) In the event of total destruction of the Premises
(which shall mean destruction or damage in excess of seventy-five percent (75%)
of the full insurable value of the Landlord Improvements) either Landlord or
Tenant may elect to terminate this Lease by giving written notice to the other
party of its election to terminate within sixty (60) days after the occurrence
of such destruction. If either party gives notice of election to terminate in
accordance with the preceding sentence, this Lease shall be deemed to have
terminated as of the date of such total destruction. In the event the Lease is
not terminated in accordance with the foregoing, Landlord shall commence
promptly to repair and restore the Premises and prosecute the same diligently to
completion, and this Lease shall remain in full force and effect.
(2) In the event of a partial destruction of the
Premises (which shall mean destruction or damage to an extent not exceeding
seventy-five percent (75%) of the full insurable value of the Landlord
Improvements) for which Landlord will receive insurance proceeds sufficient to
cover the cost to repair and restore such partial destruction and, if the damage
thereto is such that the Premises may be substantially repaired or restored to
its condition existing immediately prior to such damage or destruction under
applicable laws, ordinances and regulations and under any Private Restrictions,
Landlord shall commence and proceed diligently with the work of repair and
restoration, in which event the Lease shall continue in full force and effect.
If such repair and restoration is not permitted under applicable laws,
ordinances or regulations or under any Private Restrictions, then this Lease
shall terminate as of the date of such partial destruction. If the insurance
proceeds Landlord will receive for such repair and restoration are not
sufficient (by any amount and for any reason, including provision for a
deductible in the applicable policy) to cover the cost of such repair and
restoration, Landlord may elect either to so repair and restore, in which event
the Lease shall continue in full force and effect, or not to repair or restore,
in which event the Lease shall terminate. In either case, Landlord shall give
written notice to Tenant of its intention within sixty (60) days after the
destruction occurs. If Landlord's election is not to repair and restore the
Premises, Landlord shall include in its notice Landlord's reasonable estimate of
the amount (the "Deficiency Amount") by which the cost of repair and restoration
will exceed the insurance proceeds which Landlord will receive for such repair
and restoration. In such event, Tenant may prevent a termination of this Lease
by delivering to Landlord, within ten (10) days after the date of Landlord's
notice, a written agreement by Tenant to pay the Deficiency Amount, together
with cash in the amount of the estimated Deficiency Amount to be used for such
restoration and repair, and Landlord shall proceed to repair and restore the
Premises in accordance with the foregoing. In the event the actual Deficiency
Amount is less than Landlord's estimate, Landlord shall pay to Tenant the
difference promptly after completion of the repair and restoration work. In the
event the actual Deficiency Amount exceeds Landlord's estimate, Tenant shall pay
to Landlord, on demand, cash in the amount of the excess. If Landlord elects not
to restore the Premises, this Lease shall be deemed to have terminated as of the
date of such partial destruction, unless Tenant prevents the termination in
accordance with the foregoing.
(3) Notwithstanding anything to the contrary
contained in subparagraph 22(a)(2), in the event of damage to the Premises
occurring during the last twelve (12) months of the Term, Landlord may elect to
terminate this Lease by written notice of such election given to Tenant within
thirty (30) days after the damage occurs. Unless such notice is given at a time
during the last 150 days of the current Term when Tenant has not exercised its
option under Paragraph 47 to extend the Term for the next Option Term, such
notice shall include Landlord's estimate of the Deficiency Amount, if any. If
such notice is required, in accordance with the preceding sentence, to include
Landlord's estimate of the Deficiency Amount, Tenant may prevent such
termination by delivering to Landlord, not later than 15 days following receipt
of Landlord's notice, a written agreement pursuant to which Tenant agrees to pay
the Deficiency Amount, together with cash in the amount of the estimated
Deficiency Amount, provided, however, that if Tenant's option as to the next
Option Term has not yet been exercised, such agreement must be accompanied by
notice of exercise of such option. In the event Tenant so prevents a termination
of this Lease, then Landlord shall proceed to repair and restore the Premises in
accordance with the provisions of subparagraph 22(a)(2). Notwithstanding the
foregoing, Tenant shall have no right to prevent a termination of this Lease in
the event the repair and restoration of the Premises is not permitted under
applicable laws, ordinances, regulations or under any Private Restrictions.
(b) If the Premises are damaged by any peril not covered by
extended coverage insurance or other insurance covering the Property which may
be maintained by Landlord, Landlord
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may elect either to commence promptly to repair and restore the Premises and
prosecute the same diligently to completion, in which event this Lease shall
remain in full force and effect; or not to repair or restore the Premises, in
which event this Lease shall terminate. Landlord shall give Tenant written
notice of its election within sixty (60) days after the occurrence of such
damage. If Landlord's election is not to repair and restore the Premises,
Landlord shall include in its notice Landlord's reasonable estimate of the
amount (the "Repair Amount") it will cost to repair and restore the Premises. In
such event, Tenant may prevent a termination of this Lease by delivering to
Landlord, within ten (10) days after the date of Landlord's notice, a written
agreement by Tenant to pay the Repair Amount, together with cash in the amount
of the estimate Repair Amount to be used for such restoration and repair, and
Landlord shall proceed to repair and restore the Premises. In the event the
actual Repair Amount is less than Landlord's estimate, Landlord shall pay to
Tenant the difference promptly after completion of the repair and restoration
work. In the event the actual Repair Amount exceeds Landlord's estimate, Tenant
shall pay to Landlord, on demand, cash in the amount of the excess. If Landlord
elects not to restore the Premises, unless Tenant prevents a termination of this
Lease as provided in the preceding sentence, this Lease shall be deemed to have
terminated as of the date on which Tenant surrenders possession of the Premises
to Landlord, except that if the damage to the Premises materially impairs
Tenant's ability to continue its business operations in the Premises, then this
Lease shall be deemed to have terminated as of the date such damage occurred.
(c) In the event of repair and restoration as herein provided,
the monthly installments of Base Rent shall be abated proportionately in the
ratio which Tenant's use of the Premises is impaired from the date of damage or
destruction until the date Landlord completes the repair and restoration of the
Landlord Improvements, provided that to the extent Tenant or any of Tenant's
employees, contractors, agents or representatives causes any delay in the repair
and restoration of the Landlord Improvements, there shall be no rental abatement
during the number of days of such delay. Tenant shall not be entitled to any
compensation or damages for loss of use of the whole or any part of the Premises
and/or any inconvenience or annoyance occasioned by such damage, repair or
restoration.
(d) Notwithstanding anything to the contrary in this Paragraph
22, in addition to the conditions to Landlord's obligation to repair and restore
the Premises set forth above in this Paragraph 22, a condition to such
obligation shall be Tenant's clean-up, in accordance with the terms and
conditions set forth in Paragraph 32, of any contamination of the Property,
including the soil, surface and groundwater, resulting from Hazardous Materials
stored or used by Tenant at the Premises, which exists immediately following the
damage or destruction of the Premises.
(e) If Landlord is obligated to or elects to repair or restore
as herein provided, Landlord shall repair or restore only those portions of the
Premises which were originally Landlord Improvements, substantially to their
condition existing immediately prior to the occurrence of the damage or
destruction; Landlord shall have no obligation to repair and restore Tenant's
fixtures, improvements, the Tenant Improvements or any other alterations and
additions in and to the Premises which were not provided at Landlord's expense.
(f) Tenant hereby waives the provisions of California Civil
Code Section 1932(2) and Section 1933(4) which permit termination of a lease
upon destruction of the leased premises, and the provisions of any similar law
now or hereinafter in effect, and the provisions of this Paragraph 22 shall
govern exclusively in case of such destruction.
23. CONDEMNATION:
(a) If twenty-five percent (25%) or more of the Premises or
the parking area for the Premises or the Cell Area is taken for any public or
quasi-public purpose by any lawful governmental power or authority, by exercise
of the right of appropriation, inverse condemnation, condemnation or eminent
domain, or sold to prevent such taking (each such event being referred to as a
"Condemnation"), or if there is a Condemnation of the Cell Area, regardless of
what percentage of the Premises the Cell Area constitutes, Landlord or Tenant
may, at its option, terminate this Lease as of the date possession of the
Premises is obtained by the condemning party. If either party elects to
terminate this Lease as provided herein, such election shall be made by written
notice to the other party given within thirty (30) days after the nature and
extent of such Condemnation have been finally determined. Tenant shall not
because of such taking assert any claim against Landlord. If neither Landlord
nor Tenant elects to terminate this Lease as permitted above, or if there is a
Condemnation which does not entitle either party to terminate this Lease
pursuant to the foregoing, then Landlord shall promptly proceed to restore the
Premises, to the extent of any Condemnation award received by Landlord, to
substantially their same condition as existed prior to such Condemnation,
allowing for the reasonable effects of such Condemnation, and a proportionate
abatement shall be made to the Base Rent corresponding to the time during which,
and to the portion of the floor area of the Premises (adjusted for any increase
thereto resulting from any reconstruction) of which, Tenant is deprived on
account of such Condemnation and restoration. The provisions of California Code
of Civil Procedure Section 1265.130, which allows either party to petition the
Superior Court to terminate the Lease in the event of a partial taking of the
Premises, and any other applicable law now or hereafter enacted, are hereby
waived by Landlord and Tenant.
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(b) Landlord shall be entitled to receive the proceeds of all
Condemnation awards, whether such award shall be made as compensation for
reduction in the value of the leasehold, the taking of the fee, severance
damages or otherwise; provided, however, that Tenant shall be entitled to that
amount of any award specifically designated for loss of or damage to Tenant's
trade fixtures or removable personal property, the then value of the remaining
use of the Tenant Improvements for the remaining term in excess of $100,000, and
Tenant's moving expenses.
24. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not voluntarily or by operation of law, (1)
mortgage, pledge, hypothecate or encumber this Lease or any interest herein, (2)
assign or transfer this Lease or any interest herein, sublet the Premises or any
part thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees, agents and invitees of Tenant excepted) to occupy or use
the Premises, or any portion thereof, without first obtaining the written
consent of Landlord, which consent shall not be withheld or delayed
unreasonably. When Tenant requests Landlord's consent to such assignment or
subletting, it shall notify Landlord in writing of the name and address of the
proposed assignee or subtenant and the nature and character of the business of
the proposed assignee or subtenant and shall provide current financial
statements for the proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles. Tenant shall also provide Landlord
with a copy of the proposed sublet or assignment agreement, including all
material terms and conditions thereof. Landlord shall have the option, to be
exercised within thirty (30) days of receipt of the foregoing, to (1) cancel
this Lease as of the commencement date stated in the proposed sublease or
assignment, (2) acquire from Tenant the interest, or any portion thereof, in
this Lease and/or the Premises that Tenant proposed to assign or sublease, on
the same terms and conditions as stated in the proposed sublet or assignment
agreement, (3) consent to the proposed assignment or sublease, or (4) refuse its
consent to the proposed assignment or sublease, providing that such consent
shall not be unreasonably withheld. Notwithstanding the foregoing, in the event
Tenant requests Landlord's consent to a sublease of a portion of the Premises
and Landlord intends to elect to cancel this Lease as of the commencement date
of the proposed sublease pursuant to the foregoing, Landlord shall so notify
Tenant in writing within ten (10) days after receipt of the foregoing, and
Tenant shall have the right to withdraw its request for Landlord's consent to
such proposed sublease by delivering written notice of such withdrawal to
Landlord within three (3) days after receipt of Landlord's notice, in which case
this Lease shall not be canceled, but shall continue in force and effect.
(b) Without otherwise limiting the criteria upon which
Landlord may withhold its consent, Landlord may take into account the reputation
and credit worthiness of the proposed assignee or subtenant, the character of
the business proposed to be conducted in the Premises or portion thereof sought
to be subleased, and the potential impact of the proposed assignment or sublease
on the economic value of the Premises. In any event, Landlord may withhold its
consent to any assignment or sublease, if (1) the actual use proposed to be
conducted in the Premises or portion thereof conflicts with the provisions of
Paragraph 9(a) or (b) above, or (2) the proposed assignment or sublease requires
alterations, improvements or additions to the Premises or portions thereof,
which are not acceptable to Landlord, in the reasonable exercise of its
judgment, or which would be required to be constructed and/or paid for, all or
in part, by Landlord.
(c) If Landlord approves an assignment or subletting as herein
provided, Tenant shall pay to Landlord, as Additional Rent, one-half (1/2) of
the difference, if any, between (1) the Base Rent plus Additional Rent allocable
to that part of the Premises affected by such assignment or sublease pursuant to
the provisions of this Lease, and (2) the rent and any additional rent payable
by the assignee or sublessee to Tenant, after deducting the costs incurred by
Tenant in connection with any such assignment or sublease. The assignment or
sublease agreement, as the case may be, after approval by Landlord, shall not be
amended without Landlord's prior written consent, and shall contain a provision
directing the assignee or subtenant to pay the rent and other sums due
thereunder directly to Landlord upon receiving written notice from Landlord that
Tenant is in default under this Lease with respect to the payment of Rent.
Landlord's collection of such rent and other sums shall not constitute an
acceptance by Landlord of attornment by such assignee or subtenant. A consent to
the assignment, subletting, occupation or use shall not be deemed to be a
consent to any other subsequent assignment, subletting, occupation or use, and
consent to any assignment or subletting shall in no way relieve Tenant of any
liability under this Lease. Any assignment or subletting without Landlord's
consent shall be void, and shall, at the option of Landlord, constitute a
Default under (word not clear) Lease.
(d) Tenant shall pay Landlord's reasonable fees, not to exceed
One Thousand Dollars ($1,000.00) per transaction, incurred in connection with
Landlord's review and processing of documents regarding any proposed assignment
or sublease.
(e) Tenant acknowledges and agrees that the restrictions,
conditions and limitations imposed by this Paragraph 24 on Tenant's ability to
assign or transfer this Lease or any interest herein, to sublet the Premises or
any part thereof, to transfer or assign any right or privilege appurtenant to
the Premises, or to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that this Lease was entered into, and shall be
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deemed to be reasonable at the time that Tenant seeks to assign or transfer this
Lease or any interest herein, to sublet the Premises or any part thereof, to
transfer or assign any right or privilege appurtenant to the Premises, or to
allow any other person to occupy or use the Premises or any portion thereof.
(f) Notwithstanding anything to the contrary set forth herein,
Tenant may assign this Lease or any interest herein, and sublet the Premises or
any part thereof, without Landlord's consent, to any person or entity which
controls, is controlled by, or is under common control with, Tenant.
(g) An assignment of this Lease to which Landlord consents, or
which is permitted hereunder, shall be effective only if and when the assignee
shall have executed and delivered to Landlord an instrument, satisfactory to
Landlord, pursuant to which the assignee specifically assumes all of Tenant's
obligations hereunder. In no event will Tenant, or other party responsible for
any of Tenant's obligations hereunder, be relieved of liability for performance
of such obligations by virtue of any assignment or subletting, even if Landlord
consents thereto or such assignment or subletting is specifically permitted by
the terms hereof.
25. TENANT'S DEFAULT: The occurrence of any one of the following events
shall constitute an event of default on the part of Tenant ("Default"):
(a) The abandonment of the Premises by Tenant;
(b) Failure to pay any installment of Rent or any other monies
due and payable hereunder, said failure continuing for a period of three (3)
days after the same is due;
(c) A general assignment by Tenant for the benefit of
creditors;
(d) The filing of a voluntary petition in bankruptcy by
Tenant, the filing of a voluntary petition for an arrangement, the filing of a
petition, voluntary or involuntary, for reorganization, or the filing of an
involuntary petition by Tenant's creditors, said involuntary petition remaining
undischarged for a period of sixty (60) days;
(e) Receivership, attachment, or other judicial seizure of
substantially all of Tenant's assets on the Premises, such attachment or other
seizure remaining undismissed or undischarged for a period of sixty (60) days
after the levy thereof;
(f) Failure of Tenant to execute and deliver to Landlord any
estoppel certificate, subordination agreement, or lease amendment within the
time periods and in the manner required by Paragraph 30 or 31 or 42;
(g) An assignment or sublease, or attempted assignment or
sublease, of this Lease or the Premises by Tenant contrary to the provisions of
Paragraph 24, unless such assignment or sublease is expressly conditioned upon
Tenant having received Landlord's consent thereto;
(h) Failure in the performance of any of Tenant's covenants,
agreements o obligations hereunder (except those failures specified as events of
Default in other subparagraphs of this Paragraph 25, which shall be governed by
such other subparagraphs), which failure continues for thirty (30) days after
written notice thereof from Landlord to Tenant provided that, if Tenant has
exercised reasonable diligence to cure such failure and such failure cannot be
cured within such thirty (30) day period despite reasonable diligence, Tenant
shall not be in default under this subparagraph unless Tenant fails thereafter
diligently and continuously to prosecute the cure to completion; and
(i) Chronic delinquency by Tenant in the payment of Rent, or
any other periodic payments required to be paid by Tenant under this Lease.
"Chronic delinquency" shall mean failure by Tenant to pay Rent, or any other
payments required to be paid by Tenant under this Lease within three (3) days
after written notice thereof for any three (3) months (consecutive or
nonconsecutive) during any twelve (12) month period.
Tenant agrees that any notice given by Landlord pursuant to
Paragraph 25(b), (i) or (word unreadable) above shall satisfy the requirements
for notice under California Code of Civil Procedure Section 1161 and Landlord
shall not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.
26. LANDLORD'S REMEDIES:
(a) TERMINATION. In the event of any Default by Tenant, then
in addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease then Landlord may recover from Tenant:
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(1) the worth at the time of award of any unpaid Rent
and any other sums due and payable which have been earned at the time of such
termination; plus
(2) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable which would have been
earned after termination until the time of award exceeds the amount of such
rental loss Tenant proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable for the balance of the
term of this Lease after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering or
rehabilitating the Premises or any portion thereof, including such acts for
reletting to a new tenant or tenants; (iii) for leasing commissions; or (iv) for
any other costs necessary or appropriate to relet the Premises; plus
(5) such reasonable attorneys' fees incurred by
Landlord as a result of a Default, and costs in the event suit is filed by
Landlord to enforce such remedy; and plus
(6) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award, plus one percent (1%).
(b) CONTINUATION OF LEASE. In the event of any Default by
Tenant, then in addition to any other remedies available to Landlord at law or
in equity and under this Lease, Landlord shall have the remedy described in
California Civil Code Section 1951.4 (Landlord may continue this Lease in effect
after Tenant's Default and abandonment and recover Rent as it becomes due,
provided Tenant has the right to sublet or assign, subject only to reasonable
limitations).
(c) RE-ENTRY. In the event of any Default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, in compliance
with applicable law, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant.
(d) RELETTING. In the event of the abandonment of the Premises
by Tenant or in the event that Landlord shall elect to re-enter as provided in
Paragraph 26(c) or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in Paragraph 26(a), Landlord may from
time to time, without terminating this Lease, relet the Premises or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Landlord in its sole discretion may deem advisable with
the right to make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from such
reletting shall be applied in the following order: (1) to reasonable attorneys'
fees incurred by Landlord as a result of a Default and costs in the event suit
is filed by Landlord to enforce such remedies; (2) to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; (3) to the
payment of any costs of such reletting; (4) to the payment of the costs of any
alterations and repairs to the Premises; (5) to the payment of Rent due and
unpaid hereunder; and (6) the residue, if any, shall be held by Landlord and
applied in payment of future Rent and other sums payable by Tenant hereunder as
the same may become due and payable hereunder. Should that portion of such
rentals received from such reletting during any month, which is applied to the
payment of Rent hereunder, be less than the Rent payable during the month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
(e) TERMINATION. No re-entry or taking of possession of the
Premises by Landlord pursuant to this Paragraph 26 shall be construed as an
election to terminate this Lease unless a written notice of such intention is
given to Tenant or unless the termination thereof is decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any Default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such Default.
(i) CUMULATIVE REMEDIES. The remedies herein provided are not
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.
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(g) NO SURRENDER. No act or conduct of Landlord, whether
consisting of the acceptance of the keys to the Premises, or otherwise, shall be
deemed to be or constitute an acceptance of the surrender of the Premises by
Tenant prior to the expiration of the Term, and such acceptance by Landlord of
surrender by Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord. The surrender of
this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless
Landlord elects in writing that such merger take place, but shall operate as an
assignment to Landlord of any and all existing subleases, or Landlord may, at
its option, elect in writing to treat such surrender as a merger terminating
Tenant's estate under this Lease, and thereupon Landlord may terminate any or
all such subleases by notifying the sublessee of its election so to do within
five (5) days after such surrender.
27. ATTORNEYS' FEES: In the event any legal action or proceeding,
including arbitration and declaratory relief, is commenced for the purpose of
enforcing any rights or remedies pursuant to this Lease, the prevailing party
shall be entitled to recover from the non-prevailing party reasonable attorneys'
fees, as well as costs of suit, in said action or proceeding, whether or not
such action is prosecuted to judgment.
28. TAXES: Tenant shall be liable for and shall pay, prior to
delinquency, all taxes levied against personal property and trade or business
fixtures of Tenant. If any alteration, addition or improvement installed by
Tenant pursuant to Paragraph 8 or 11, or any personal property, trade fixture or
other property of Tenant, is assessed and taxed with the Property, Tenant shall
pay such taxes to Landlord within ten (10) days after delivery to Tenant of a
statement therefor.
29. EFFECT OF CONVEYANCE: The term "Landlord" as used in this Lease,
means only the owner for the time being of the Property containing the Premises,
so that, in the event of any sale of the Property or the Premises, Landlord
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder accruing from and after the transfer, and it
shall be deemed and construed, without further agreement between the parties and
the purchaser at any such sale, that the purchaser of the Property or the
Premises has assumed and agreed to carry out any and all covenants and
obligations of Landlord hereunder.
30. TENANT'S ESTOPPEL CERTIFICATE: From time to time, upon written
request of Landlord, Tenant shall execute, acknowledge and deliver to Landlord
or its designee, a written certificate stating (a) the date this Lease was
executed, the Commencement Date of the Term and the date the Term expires; (b)
the date Tenant entered into occupancy of the Premises; (c) the amount of Rent
and the date to which such Rent has been paid; (d) that this Lease is in full
force and effect and has not been assigned, modified, supplemented or amended in
any way (or, if assigned, modified, supplemented or amended, specifying the date
and terms of any agreement so affecting this Lease); (e) that this Lease
represents the entire agreement between the parties with respect to Tenant's
right to use and occupy the Premises (or specifying such other agreements, if
any); (f) that all obligations under this Lease to be performed by Landlord as
of the date of such certificate have been satisfied (or specifying those as to
which Tenant claims that Landlord has yet to perform); (g) that all required
contributions by Landlord to Tenant on account of Tenant's improvements have
been received (or stating exceptions thereto); (h) that on such date there exist
no defenses or offsets that Tenant has against the enforcement of this Lease by
Landlord (or stating exceptions thereto); (i) that no Rent or other sum payable
by Tenant hereunder has been paid more than one (1) month in advance (or stating
exceptions thereto); (j) that security has been deposited with Landlord, stating
the amount thereof; and (k) any other matters evidencing the status of this
Lease that may be required either by a lender making a loan to Landlord to be
secured by a deed of trust covering the Premises or by a purchaser of the
Premises. Any such certificate delivered pursuant to this Paragraph 30 may be
relied upon by a prospective purchaser of Landlord's interest or a mortgagee of
Landlord's interest or assignee of any mortgage upon Landlord's interest in the
Premises. If Tenant shall fail to provide such certificate within ten (10) days
of receipt by Tenant of a written request by Landlord as herein provided, such
failure shall, at Landlord's election, constitute a Default under this Lease,
and Tenant shall be deemed to have given such certificate as above provided
without modification and shall be deemed to have admitted the accuracy of any
information supplied by Landlord to a prospective purchaser or mortgagee.
31. SUBORDINATION: Landlord shall have the right to cause this Lease to
be and remain subject and subordinate to any and all mortgages, deeds of trust
and ground leases, if any ("Encumbrances") that are now or may hereafter be
executed covering the Premises, or any renewals, modifications, consolidations,
replacements or extensions thereof, for the full amount of all advances made or
to be made thereunder and without regard to the time or character of such
advances, together with interest thereon and subject to all the terms and
provisions thereof; provided only, that in the event of termination of any such
ground lease or upon the foreclosure of any such mortgage or deed of trust, so
long as Tenant is not in default, the holder thereof ("Holder") shall agree to
recognize Tenant's rights under this Lease as long as Tenant shall pay the Rent
and observe and perform all the provisions of this Lease to be observed and
performed by Tenant. Within ten (10) days after Landlord's written request,
Tenant shall execute, acknowledge and deliver any and all reasonable documents
requested by Landlord or the Holder to effectuate such subordination. If Tenant
fails to do so, such [word unreadable] shall constitute a Default by Tenant
under this Lease. Notwithstanding anything to the
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contrary set forth in this Paragraph 31, Tenant hereby attorns and agrees to
attorn to any person or entity purchasing or otherwise acquiring the Premises at
any sale or other proceeding or pursuant to the exercise of any other rights,
powers or remedies under such Encumbrance.
32. ENVIRONMENTAL COVENANTS:
(a) As used herein, the term "Hazardous Material" shall mean
any substance or material which has been, or in the future is, determined by any
state, federal or local governmental authority to be capable of posing a risk of
injury to health, safety or property, including all of those materials and
substances designated as hazardous or toxic by the city in which the Premises
are located, the U.S. Environmental Protection Agency, the Consumer Product
Safety Commission, the Food and Drug Administration, the California Water
Resources Control Board, the Regional Water Quality Control Board, San Francisco
Bay Region, the California Air Resources Board, CAL/OSHA Standards Board,
Division of Occupational Safety and Health, the California Department of Food
and Agriculture, the California Department of Health Services, and any federal
agencies that have overlapping jurisdiction with such California agencies, or
any other governmental agency now or hereafter authorized to regulate materials
and substances in the environment. Without limiting the generality of the
foregoing, the term "Hazardous Material" shall include all of those materials
and substances defined as "hazardous materials" or "hazardous waste" in Sections
66680 through 66685 of Title 22 of the California Administrative Code, Division
4, Chapter 30, as the same shall be amended from time to time, petroleum,
petroleum-related substances, asbestos, cobalt 60, cobalt 59 and any other
materials requiring remediation or special handling now or in the future under
federal, state or local statutes, ordinances, regulations or policies.
(b) Tenant represents, warrants and covenants (i) that it will
use and store in, on or about the Premises, only those Hazardous Materials that
are necessary for Tenant to conduct its business activities on the Premises,
(ii) that, with respect to any such Hazardous Materials, Tenant shall comply
with all applicable federal, state and local laws, rules, regulations, policies
and authorities relating to the storage, use, disposal or cleanup of Hazardous
Materials, including, but not limited to, the obtaining of proper permits, and
(iii) that it will not dispose of any Hazardous Materials in, on or about the
Property under any circumstances.
(c) Tenant shall immediately notify Landlord of any inquiry,
test, investigation or enforcement proceeding by or against Tenant, Landlord or
the Property concerning a Hazardous Material.
(d) If Tenant's storage, use or disposal of any Hazardous
Material in, on or adjacent to the Property results in any contamination of the
Property, the soil or surface or groundwater (1) requiring remediation under
federal, state or local statutes, ordinances, regulations, or policies, or (2)
at levels which are unacceptable to Landlord, in Landlord's reasonable judgment,
Tenant agrees to clean up said contamination. Tenant further agrees to
indemnify, defend and hold Landlord harmless from and against any claims,
liabilities, suits, causes of action, costs, expenses or fees, including
attorneys' fees and costs, arising out of or incurred in connection with any
Hazardous Materials currently or hereafter used, stored or disposed of by Tenant
or its agents, employees, contractors or invitees in, on or adjacent to the
Property and/or any remediation, cleanup work, inquiry or enforcement proceeding
related thereto.
(e) Notwithstanding any other right of entry granted to
Landlord under this Lease, Landlord shall have the right to enter the Premises
and/or to have consultants enter the Premises throughout the term of this Lease
for the purpose of (1) determining whether the Premises are in conformity with
federal, state and local statutes, regulations, ordinances, and policies
including those pertaining to the environmental condition of the Premises, (2)
conducting an environmental audit or investigation of the Premises for purposes
of sale, transfer, conveyance or financing and following damage or destruction
of the Premises from a fire or other casualty, (3) determining whether Tenant
has complied with this Paragraph 32, and (4) determining the corrective
measures, if any, required of Tenant to ensure the safe use, storage and
disposal of Hazardous Materials, or to remove Hazardous Materials (except to the
extent used, stored or disposed of by Tenant or its agents, employees,
contractors or invitees in compliance with applicable law); provided, however,
that Landlord shall have the right to enter the Premises for the purposes set
forth in clauses (1), (3) and (4) only if, prior to such entry, Landlord has a
reasonable belief that Tenant may have released Hazardous Materials on or about
the Property or otherwise violated the provisions of this Paragraph 32. Tenant
agrees to provide access and reasonable assistance for such inspections. Such
inspections may include, but are not limited to, entering the Premises, the
Property or adjacent property with drill rigs or other machinery for the purpose
of obtaining laboratory samples. Subject to the limitations expressly set forth
above on Landlord's right to make such inspections, Landlord shall not be
limited in the number of such inspections during the term of this Lease. To the
extent such inspections disclose the presence of Hazardous Materials used,
stored or disposed of by Tenant or its agents, employees, contractors or
invitees, Tenant shall reimburse Landlord for the cost of such inspections
within ten (10) days of receipt of a written statement thereof. If such
consultants determine that the Premises or the Property are contaminated with
Hazardous Materials used, stored or disposed of by Tenant or its agents,
employees contractors or invitees, Tenant shall, in a timely manner, at its
expense, remove such Hazardous Materials or otherwise comply with the
recommendations of such consultants to the
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reasonable satisfaction of Landlord and any applicable governmental agencies.
The right granted to Landlord herein to inspect the Premises shall not create a
duty on Landlord's part to inspect the Premises, or liability of Landlord for
Tenant's use, storage or disposal of Hazardous Materials, it being understood
that Tenant shall be solely responsible for all liability in connection
therewith.
(f) Tenant shall surrender the Premises to Landlord upon the
expiration or earlier termination of this Lease free of debris, waste and
Hazardous Materials used, stored or disposed of by Tenant or its agents,
employees, contractors or invitees, and in a condition which complies with all
governmental statutes, ordinances, regulations and policies, reasonable
requirements as may be imposed by Landlord.
(g) Tenant's obligations under this Paragraph 32 shall survive
termination of this Lease.
(h) Tenant hereby acknowledges that Landlord has made no
representations or warranties, orally or in writing, express or implied, to
Tenant, concerning the absence of presence of Hazardous Materials at the
Property or otherwise relating to the environmental condition of the Property.
33. NOTICES: All notices and demands which may or are to be required or
permitted to be given to either party by the other hereunder shall be in writing
and shall be sent by United States mail, postage prepaid, certified, or by
personal delivery or overnight courier, addressed to the addressee at the
address for such addressee as specified in the Basic Lease Information, or to
such other place as such party may from time to time designate in a notice to
the other party given as provided herein, or by telex or telecopy at the number
therefor designated by the addressee in a written notice given as provided
herein. Notice shall be deemed given upon the earlier of actual receipt or the
third day following deposit in the United States mail in the manner described
above.
34. WAIVER: The waiver of any breach of any term, covenant or condition
of this Lease shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of Rent by Landlord shall
not be deemed to be a waiver of any preceding breach by Tenant, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of Rent.
No delay or omission in the exercise of any right or remedy of Landlord on any
Default by Tenant shall impair such a right or remedy or be construed as a
waiver. Any waiver by Landlord of any Default must be in writing and shall not
be a wavier of any other Default concerning the same or any other provisions of
this Lease.
35. HOLDING OVER: Any holding over after the expiration of the Term,
without the express written consent of Landlord, shall constitute a Default and,
without limiting Landlord's remedies provided in this Lease, such holding over
shall be construed to be a tenancy at sufferance * a rental rate of one hundred
twenty-five percent (125%) of the Base Rent last due in this Lease, plus
Additional Rent, and shall otherwise be on the terms and conditions herein
specified, so far as applicable.
36. SUCCESSORS AND ASSIGNS: The terms, covenants and conditions of this
Lease shall, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of all of the parties
hereto. If Tenant shall consist of more than one entity or person, the
obligations of Tenant under this Lease shall be joint and several.
37. TIME: Time is of the essence of this Lease and each and every term,
condition and provision herein.
38. BROKERS: Landlord and Tenant each represents and warrants to the
other that neither it nor its officers or agents nor anyone acting on its behalf
has dealt with any real estate broker except the Broker(s) specified in the
Basic Lease Information in the negotiating or making of [work unreadable] Lease,
and each party agrees to indemnify and hold harmless the other from any claim or
claims [word unreadable] costs and expenses, including attorneys' fees, incurred
by the indemnified party in conjunction with any such claim or claims of any
other broker or brokers to a commission in connection with this Lease as a
result of the actions of the indemnifying party.
39. LIMITATION OF LIABILITY: Tenant agrees that, in the event of any
default * breach by Landlord with respect to any of the terms of the Lease to be
observed and performed by Landlord (a) Tenant shall look solely to the estate
and property of Landlord or any a successor in interest in the Property and the
Premises, for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord;
(b) no other property or assets of Landlord, its partners, shareholder,
officers, directors or any successor in interest shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies; (c) no personal liability shall at any time be asserted or enforceable
against Landlord's partners or successors in interest (except to the extent
permitted in (a) above), or against Landlord's shareholders, officers or
directors, or their respective partners, shareholders, officers, directors or
21
<PAGE> 22
successors in interest; and (d) no judgment will be taken against any partner,
shareholder, officer or director of Landlord. The provisions of this Paragraph
shall apply only to the Landlord and the parties herein described, and shall not
be for the benefit of any insurer nor any other third party.
40. FINANCIAL STATEMENTS: Within thirty (30) days after Landlord's
request, Tenant shall deliver to Landlord the then current financial statements
of Tenant (including interim periods following the end of the last fiscal year
for which annual statements are available), prepared or compiled by a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with generally accepted
accounting principles consistently applied.
41. RULES AND REGULATIONS: Tenant agrees to comply with such reasonable
rules and regulations as Landlord may adopt from time to time for the orderly
and proper operation of the Premises and parking and other common areas. Such
rules may include but shall not be limited to the following: (a) restriction of
employee parking to a limited, designated area or areas; and (b) regulation of
the removal, storage and disposal of Tenant's refuse and other rubbish at the
sole cost and expense of Tenant. The rules and regulations shall be binding upon
Tenant upon delivery of a copy of them to Tenant. Landlord shall not be
responsible to Tenant for the failure of any other person to observe and abide
by any of said rules and regulations.
42. MORTGAGEE PROTECTION:
(a) MODIFICATIONS FOR LENDER. If, in connection with obtaining
financing for the Premises or any portion thereof, Landlord's lender shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant shall not unreasonably withhold, delay or defer its consent to such
modifications, provided such modifications do not materially adversely affect
Tenant's rights or require any payment of additional sums by Tenant not required
by this Lease or otherwise increase Tenant's obligations under this Lease.
(b) RIGHTS TO CURE. Tenant agrees to give to any trust deed or
mortgage holder ("Holder"), by registered mail, at the same time as it is given
to Landlord, a copy of any notice of default given to Landlord, provided that
prior to such notice Tenant has been notified, in writing, (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Holder shall have an
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
Paragraph 42(b)), whichever shall last occur, within which to cure such default,
or if such default cannot be cured within that time, then an additional
forty-five (45) days if within such initial twenty (20) day period, any Holder
has commenced and is diligently pursuing the remedies necessary to cure such
default, in which event this Lease shall not be terminated.
43. ENTIRE AGREEMENT: This Lease, including the Exhibits and any
Addenda attached hereto, which are hereby incorporated herein by this reference,
contains the entire agreement of the parties hereto, and no representations,
inducements, promises or agreements, oral or otherwise, between the parties, not
embodied herein or therein, shall be of any force and effect.
44. INTEREST: Any installment of Rent and any other sum due from Tenant
under this Lease which is not received by Landlord within ten (10) days from
when the same is due shall bear interest from such tenth (10th) day until paid
at an annual rate equal to the maximum rate of interest permitted by law.
Payment of such interest shall not excuse or cure any Default by Tenant. In
addition, Tenant shall pay all costs and attorneys' fees incurred by Landlord in
collection of such amounts.
45. CONSTRUCTION: This Lease shall be construed and interpreted in
accordance with the laws of the State of California. The parties acknowledge and
agree that no rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall be employed in the interpretation of
this Lease, including the Exhibits and any Addenda attached hereto. All captions
in this Lease are for reference only and shall not be used in the interpretation
of this Lease. Whenever required by the context of this Lease, the singular
shall include the plural, the masculine shall include the feminine, and vice
versa. If any provision of this Lease shall be determined to be illegal or
unenforceable, such determination shall not affect any other provision of this
Lease and all such other provisions shall remain in full force and effect.
46. REPRESENTATIONS AND WARRANTIES OF TENANT: Tenant hereby makes the
following representations and warranties, each of which is material and being
relied upon by Landlord, is true in all respects as of the date of this Lease,
and shall survive the expiration or termination of the Lease.
(a) If Tenant is an entity, Tenant is duly organized, validly
existing and in good standing under the laws of the state of its organization
and the person(s) executing this Lease on behalf of Tenant have the full right
and authority to execute this Lease on behalf of Tenant and to bind Tenant
without the consent or approval of any other person or entity. Tenant has full
power, capacity
22
<PAGE> 23
authority and legal right to execute and deliver this Lease and to perform all
of its obligations hereunder. This Lease is a legal, valid and binding
obligation of Tenant, enforceable in accordance with its terms.
(b) Tenant has not (1) made a general assignment for the
benefit of creditors, (2) filed any voluntary petition in bankruptcy or suffered
the filing of an involuntary petition by any creditors, (3) suffered the
appointment of a receiver to take possession of all or substantially all of its
assets, (4) suffered the attachment or other judicial seizure of all or
substantially all of its assets, (5) admitted in writing its inability to pay
its debts as they come due, or (6) made an offer of settlement, extension or
composition to its creditors generally.
47. EXTENSION OPTIONS: So long as no Default exists, Tenant shall have
options to renew and extend the Term for four (4) successive five (5) year
periods ("Option Terms") upon the same terms and conditions as are provided
herein for the initial Term (the "Initial Term"), subject, however to the
redetermination of Monthly Base Rent hereinafter provided. The option for each
such Option Term shall be exercised by the giving of notice of exercise during,
and at least 150 days prior to the expiration of, the prior Option Term or
Initial Term (as the case may be).
The monthly Base Rent shall be redetermined effective as of the
beginning of each Option Period at a level equal to 95% of the then current
market rate for the rental in the general area in which the Premises are located
for comparable warehouse/distribution facilities leased under comparably
structured leases (but excluding any rental value attributable to the Tenant
Improvements paid for by Tenant and not reimbursed by Landlord). After an
exercise by Tenant of an option to renew this Lease for a new Option Term,
Landlord and Tenant shall use their best efforts to agree, at least 120 days
prior to the commencement of such Option Term on the new Base Rent. In the
absence of such an agreement by such date, then within twenty (20) days after
such date, Landlord and Tenant shall each appoint an appraiser, the two of which
will appoint a third appraiser within thirty (30) days after the date of their
appointment. Each appraiser shall have a minimum of five years' professional
experience in appraising comparable property in the area in which the Property
is located. Independently, each of the three appraisers will render an opinion
as to the market rental and the two appraisers opinions which are closets in
value will be averaged to determine the market rental rate on which the new
monthly Base Rent of 95% of market rent will be based. Such opinions shall be
rendered within sixty (60) days after the date the third of such three
appraisers is appointed. In no event shall the monthly Base Rent so established
be less, however, than the monthly Base Rent in effect at the conclusion of the
prior Option Term or Initial Term (as the case may be). Landlord and Tenant will
each pay for the cost of their respective appraiser and one-half the cost of the
third appraiser. Notwithstanding the foregoing, in the event either party fails
to timely appoint an appraiser in accordance with the foregoing, the other party
shall notify such party in writing of such party's failure and that, if such
party fails to make an appointment within five (5) days after such notice, the
determination of the appraiser timely appointed shall control. If the party
which receives such notice fails to make an appointment within such five (5) day
period, the determination of the appraiser timely appointed shall control.
The initial monthly Base Rent for each Option Term, as so determined,
will be increased effective on the twenty-fifth (25th) and forty-ninth (49th)
months of such Option Term by ninety-five percent (95%) of the change in the
Consumer Price Index (Los Angeles, Long Beach, Santa Ana - 1985 = 100) between
the first (1st) and twenty-fourth (24th) and twenty-fifth (25th) and
forty-eighth (48th) months, respectively, of each Option Term, provided that in
no event shall any such increase in the monthly Base Rent be less than six
percent (6%), or more than twelve percent (12%).
48. PURCHASE OPTION: Tenant shall have an option to purchase the
Property (the "Purchase Option") by giving notice of exercise at any time after
the execution of this Lease and on or before the second anniversary of the
Commencement Date. Within two business days after giving notice of exercise of
the Purchase Option, an escrow shall be opened by Landlord and Tenant (who shall
execute such instructions as are reasonably required to facilitate the sale of
the Property pursuant to an exercise of the Purchase Option, in accordance with
the terms hereof and as are reasonably required by the escrow holder in
accordance with its customary practice) at Chicago Title Insurance Company, or
another title company mutually acceptable to Landlord and Tenant, and
$150,000.00 (the "Option Deposit") shall be deposited in escrow by Tenant.
Tenant shall have a period of 30 days following the opening of
escrow (the "Contingency Period") in which to conduct such investigation and
review of the Property, and all matters relating thereto, including title,
environmental factors, soil conditions and building condition, as it deems
necessary or appropriate. Upon request, after the opening of escrow, Landlord
shall promptly deliver to Tenant such soil and engineering reports,
environmental studies, boundary and topographic studies, plans, building
materials and/or other relevant materials as are in Landlord's possession and
included within the scope of Tenant's request. Tenant shall order from Chicago
Title Insurance Company, or another Title company mutually acceptable to
Landlord and Tenant, a preliminary title report sufficient to enable it to
review title to its satisfaction.
At any time on or before the expiration of the Contingency
Period, Tenant may by notice to Landlord and the escrow holder disapprove the
Property for any reason, whereupon the escrow shall
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be canceled (and Tenant shall bear all costs thereof), the Option Deposit will
be returned, Tenant will have no further option or right to purchase the
Property and the Lease will continue in full force and effect.
In the absence of such a termination within the Contingency
Period, the Option Deposit shall be non refundable, and Tenant shall be
obligated to purchase the Property, subject only to the conditions hereinafter
contained.
The purchase price shall be the sum of (1) the amount of any
"Additional Concrete Costs" (as hereinafter defined) plus (2) $40.50 multiplied
by the number of square feet of rentable area contained in the Premises, if the
purchase is exercised prior to the Commencement Date, and $43.00, multiplied by
the number of square feet of rentable area contained in the Premises if the
purchase is exercised after the Commencement Date. If the closing occurs prior
to a determination of the exact gross floor area, the amount due and payable on
account of the purchase price at the closing shall be based on 98,000 rentable
square feet and shall be adjusted post closing, by refund or additional payment,
as the case may be. The "Additional Concrete Costs" means the increase in costs
paid by Landlord as a result of using #4 reinforcement bars, instead of wire
mesh, in the concrete floor slab and concrete apron area located adjacent to the
truck loading area constructed by Landlord as part of the Landlord Improvements.
The entire Purchase Price, subject to the foregoing, shall be paid in cash
through escrow at the closing. The Option Deposit shall be applied to the
Purchase Price and the balance of the Purchase Price shall be deposited in
escrow by wire transfer or other means sufficient to assure the availability of
good funds on the closing.
The closing shall occur 45 days after the opening of escrow,
or on such earlier date as shall be mutually agreed upon by the parties.
After the expiration of the Contingency Period without
disapproval by Tenant of the Property or any aspects thereof, the only
conditions to Tenant's obligation to purchase the Property shall be:
(a) there being no material damage to or destruction of the
Premises subsequent to the end of the Contingency Period and prior to the
closing;
(b) execution by Landlord and delivery through escrow at the
closing of a grant deed in recordable form, with an exception for matters
approved in writing by Tenant, conveying the Property to Tenant; and
(c) issuance to Tenant by Chicago Title Insurance Company, or
another title company mutually acceptable to the parties, of an owner's policy
of title insurance insuring Tenant's title to the Property in the amount of the
Purchase Price, subject to exceptions only for non-delinquent taxes and
assessments, and matters approved in writing by Tenant.
The issuance of the aforesaid title insurance policy shall be
a condition to Tenant's obligation only if ordered by Tenant in time to enable
the title company to complete the review necessary to issue the policy at the
closing.
The title policy shall be a CLTA or ALTA policy, as determined
by Tenant, and shall contain such endorsements as Tenant shall reasonably
require. Landlord shall pay the basic cost of a CLTA Policy and Tenant shall pay
the cost of any endorsements and all additional costs required to obtain an ALTA
policy, if Tenant elects to obtain an ALTA, instead of a CLTA, policy.
Rent, taxes and expenses shall be prorated as of the closing.
Landlord shall pay any applicable transfer taxes. Landlord and Tenant shall each
pay one-half of the escrow holder's fees and charges.
Tenant agrees that upon closing, it will have accepted the
Property on an "As Is", "Where is", "With All Faults Basis", except as to that
portion of the Landlord Improvements which may not have been completed if the
closing is prior to the Commencement Date.
In the event that the closing occurs prior to the Commencement Date,
Landlord shall complete the Landlord Improvements on the same basis as would
have been applicable if the Purchase Option had not been exercised.
IF, AFTER A TERMINATION OF THE CONTINGENCY PERIOD WITHOUT
DISAPPROVAL BY TENANT, THE PURCHASE FAILS TO CLOSE AS THE RESULT OF A BREACH BY
TENANT, THEN THE OPTION DEPOSIT, AND ALL INTEREST EARNED THEREON, SHALL BE
RELEASED TO LANDLORD BY ESCROW HOLDER AS LIQUIDATED DAMAGES. RETENTION OF THE
OPTION DEPOSIT BY LANDLORD AS LIQUIDATED DAMAGES SHALL NOT CONSTITUTE A
FORFEITURE OR PENALTY. RETENTION OF THE OPTION DEPOSIT BY LANDLORD SHALL
CONSTITUTE LANDLORD'S SOLE AND
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EXCLUSIVE REMEDY FOR SUCH BREACH. THE PARTIES ACKNOWLEDGE THAT THE ACTUAL DAMAGE
WHICH WOULD RESULT TO LANDLORD AS A RESULT OF SUCH BREACH WOULD BE EXTREMELY
DIFFICULT TO ESTABLISH. THE PARTIES AGREE THAT THE OPTION DEPOSIT CONSTITUTES A
FAIR AND REASONABLE AMOUNT TO BE RETAINED BY LANDLORD AS AGREED AND LIQUIDATED
DAMAGES. THE FOREGOING PROVISION SHALL BE OF NO EFFECT WITH RESPECT TO, AND
SHALL NOT AFFECT THE AMOUNT OF ANY LIABILITY OF TENANT ARISING UNDER ANY
PROVISION OF THIS LEASE OTHER THAN A BREACH BY TENANT UNDER THIS PARAGRAPH 48
AND IN PARTICULAR SHALL NOT AFFECT TENANT'S CONTINUING OBLIGATIONS, INCLUDING
THE OBLIGATION TO PAY RENT, UNDER THIS LEASE.
Landlord and Tenant have executed and delivered this Lease as of the
Lease Date specified in the Basic Lease Information.
TENANT:
STERIGENICS INTERNATIONAL
a California corporation
By: /s/ James F. Clouser
----------------------------------
Name: James F. Clouser
----------------------------------
Title: President & CEO
----------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
LANDLORD:
AETNA REAL ESTATE ASSOCIATES, L.P.
a Delaware limited partnership
By: Aetna/AREA Corporation
a Connecticut corporation
General Partner
By: /s/ Thomas Berreira
----------------------------------
Name: Thomas Berreira
---------------------------
Title: Senior Vice President
---------------------------
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EXHIBIT A
That certain real property located in the City of Corona, County of Riverside,
State of California, described as follows:
Lot 5 of Tract No. 19150-1 in the City of Corona, County of Riverside, State of
California, as per map recorded on February 21, 1991, in Book 166, Pages 22
through 26 inclusive of Maps, in the Office of the County Recorder of said
County.
<PAGE> 27
EXHIBIT B
That certain real property located in the City of Corona, County of Riverside,
State of California, described as follows:
Lots 1, 2 and 3 of Parcel Map No. 24357 in the City of Corona, County of
Riverside, State of California, as per map recorded on February 21, 1991, in
Book 174, Pages 72 through 76 of Maps, in the Office of the County Recorder of
said County.
Lot 5 of Tract No. 19150-1 in the City of Corona, County of Riverside, State of
California, as per map recorded on February 21, 1991, in Book 166, Pages 22
through 26 inclusive of Maps, in the Office of the County Recorder of said
County.
<PAGE> 28
[PROPOSED FLOOR PLAN]
<PAGE> 29
EXHIBIT D
DESIGN SPECIFICATIONS
January 26, 1993
New SteriGenics International Facility
Corona, California
Building Size 98,000 sf (Approximately)
Building Dimensions: 200' x 490'
Clear Height: 24' min. (except 29' min. over call area).
Bay Spacing 40' x 50' minimum
General
Design and - In accordance with all applicable codes and
Accessibility ordinances. Accessibility shall meet Title
24 (California) and ADA Standards
(Federal) without regard to tenant's
specific use.
Site Work
Trucking and - Shall be concrete or asphalt. Design to a
Access Roads truck index of 6.0 or higher, which shall
accommodate heavy truck loads and have a
minimum life expectancy of 15 years.
Concrete Apron - 60' wide x 6" minimum thickness with
minimum #4 reinforcement bars at 18"
minimum on center each way over sub base
section per soils engineer recommendation.
Grade at dock high truck doors not to
exceed 3%.
Signing - One monument or building sign to be reasonably
approved by tenant.
Drainage - Design to provide gravity flow drainage off of
site.
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Shell:
Architecture - Exterior design and colors to be consistent with
other buildings in the park and approved by
tenant.
Floor Slab - Five (5) in. minimum 4,000 lb. psi concrete. Slab
shall be level adjacent to the cell area and
sloped at a maximum of 1% east and west of the
cell area and designed to minimize cracking.
Including #4 reinforcement bars at 18" on center
in each direction. Design concrete mix to meet a
shrinking characteristic of .032% +/- 15%.
Maximum unjointed slab area shall be 400 sq. ft.
Exterior Walls - Tilt-up construction with accent bands. Design
concrete mix to meet a shrinking characteristic
of .032% +/- 15% to minimize cracks due to
shrinkage.
Exterior Wall - One high grade primer coat and one high grade
Finish "Tex Coat". "One coat to cover" systems will not
be allowed.
Roof - Panalized roof system, plywood stiffeners,
Structure purlins and glu-laminated beams with steel
columns. Truss system may be substituted.
Roofing - 4 ply, built-up, asphaltic membrane. Minimum
Material shall be class A rating and class 1 wind uplift
rating I-90. A 20 year bondable system and a
three year written warrantee shall be required.
Dock High - Twenty-seven steel sectional high-lift doors,
8.5' wide x 9.5' high. Include 4" wide x 60' long
yellow paint strips at edge of each truck door, 8
1/2' between center lines. Paint numbers (minimum
9" high) 1 through 28 above each truck door
(including drive-in doors).
Drive-in - Two steel sectional roll-up doors 10' wide x 14'
Doors high.
Driver's - Paint "Driver's Entrance" (minimum 9" high)
Entrance above entrance door(1).
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Fire - Coverage will be .60 GPM over 3300 sq. ft. Mount
Sprinkler heads and pipes to maintain maximum clear height
Fire sprinkler water supply shall be delivered to
call area.
Skylight/Smoke - Class IV commodity, per article 81 of the UFC,
Vents, Combination designed Vents, for high piled, combustible
Units stock (20+)
Downspouts - All downspouts may be at exterior of building.
Downspouts at trucking area shall be protected
with pipe bollards.
Roof Hatch & - To be provided for HVAC maintenance.
Access Ladder
Curbs - All on-site curbs shall be poured in place
concrete. Bottom of curb shall be a minimum 12"
below top of asphalt pavement.
Electrical - Landlord to specify electrical service
Service required to building. 1200 amp/ 480/277 volt
3 phase electrical service subpanel required
at cell area.
Gas Service - Sized to accommodate office HVAC and
future radiant heaters at conveyor loading area.
Plumbing - Water and sewer lines shall be provided at cell
area.
Parapet - Sufficient to screen roof and HVAC from street
view.
Landscaping - Consistent with requirements of the Industrial
Park.
Improvements - Office (See Office Plan):
Ceiling - Nine (9) ft. high
Height
Office - Fluorescent lighting providing 75FC at desk
Lighting top level. Conference rooms and lobby area
shall include parabolic lenses.
Wall Finish - Primer and finish paint coat over textured
finish. 50% of office area wall surface
shall include wall covering. Allowance to be
$2.50/sq. ft. of wall area. Tenant to
approve material selection and colors.
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<PAGE> 32
Interior - 3' x 7', solid core wood doors with sidelights
Office Doors at offices. Frames to be aluminum with black
amodized finish.
Ceiling Tiles - 2' x 4' acoustical, lay-in tiles with recessed
grid (equivalent to Armstrong's Second Look II).
Grid color to match ceiling tile.
Carpet/Top Set - 32 oz. cut pile. Tenant to approve color and
Base final selection.
Vinyl Tile - At lunch rooms (office and warehouse) and
(Sheet) shipping and receiving office. Provide a 6"
cover base.
HVAC - Capacity, zoning and thermostat location to
(Office Area) be reasonably approved by tenant.
Window - Horizontal aluminum, mini-blind type at all
Covering exterior window areas and all interior
sidelights. Tenant to approve.
Lunch Area - To include cabinets (with plastic laminate
(Office) finish, concealed hinges and pulls), sink,
microwave oven, refrigerator (self-
defrosting/18 cu. ft. min.), and dishwasher.
Men's Office/ - To include a minimum of two (2) water closets, 1
Restrooms urinal and 1 sink.
Women's - To include a minimum of 2 water closets, 1 sink.
Restroom
Toilet Room - Toilet paper dispenser, toilet seat cover
Accessories dispenser, paper towel dispenser/waster
receptacle. Feminine napkin dispenser and
disposal in woman's water closets.
Ceramic Tile - All Floor areas and 4' high at all sink,
at Restrooms urinal and water closet areas (i.e. wet walls
only). Grout to be sealed. Standard tile
type and color to be approved by tenant.
Floor Drains - At least one drain shall be provided in each
restroom. Entire floor shall slope to drain.
Water - One to be provided in warehouse lunchroom and
Fountain one to be provided at office restroom core.
(Recessed)
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<PAGE> 33
Door Closures - At all doors from main offices and lunch room
and Vision leading into warehouse. Doors from main
Panels office area to warehouse shall have locks.
Electrical, - Standard 110 Volt distribution throughout
Phone and office. Phone and computer pull rings to be
Computer Lines layout. Phone and computer system to be
provided by tenant.
Mezzanine - Designed to accommodate a live load of at least
125 #/sf. and include 1.5" of flooring topping,
Gyp-crete, or equivalent to reduce sound
transmission to first floor.
Improvements - Warehouse:
Warehouse - Control room and maintenance manager's
Office Area offices shall include 9' high ceiling, HVAC,
Improvement electrical outlets, telephone and sheet vinyl
tile flooring with 6" cove base. Maintenance
shops, and sample inbound and outbound rooms
shall include 110 Volt electrical outlets,
concrete floor and no ceiling. Strip fluorescent
lighting shall be dropped to top of sheet-rocked
wall. Lighting shall be 70 FC at desk top height.
Perimeter wall height from control room to sample
room shall be a minimum of 10'.
Warehouse - Men's restroom to include 1 urinal, 1 toilet,
Restrooms and 1 sink. Women's restroom to include 1
toilet and 1 sink.
Warehouse - Floor to be cleaned before sealing with acid
Floor wash or "shot blast" to insure slab is
completely clean prior to sealer application.
Sealer to be "Shur-Seal", or equivalent.
Interior Walls/ - Interior concrete walls, office and cell
Pipe Columns/ walls exposed to warehouse to be painted
Guard Rails with two colors. Four (4) ft. high darker
band (Cobalt blue) at all warehouse interior
walls. Remaining interior walls to be painted
off-white. Columns shall be painted off-white
with an eight (8) ft. band painted
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yellow at base. Guard rails at perimeter of
office shall be painted yellow. Use both a primer
and finish coat throughout. Tenant to approve
colors selected by landlord's architect.
Concrete - Provide protection at outside edge of drive-
Filled 6" in truck doors and next to inside guide
Bollards rails of dock-high doors. Bollards shall be
placed in closure pour strip and painted yellow.
Slop Sink - To be provided in the maintenance room next
and Floor to cell.
Drain
Recessed - 25,000 lbs. capacity, Model #H608K (6 Total)
Levelers Kelley hydraulic type dock levelers, or
equivalent.
Edge of Dock - 20,000 lbs. capacity, Model EXT-72 (14 Total)
Levelers Kelley Manual type dock levelers, or
equivalent.
Warehouse Public - Controlled from reception area in office.
Address System System shall access all areas of warehouse.
Lighting - Metal Halide, 20 FC at floor level, each row
separately switched.
Electrical - One duplex 110V outlet at every other dock
Power at high door.
Dock Doors
Exterior - Photo electrically controlled. Architect to
Lights at specify.
Dock Area
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<PAGE> 35
EXHIBIT E
1. Storage mezzanine plywood deck to be open to warehouse below with the
railing per code.
2. Modular office furniture (as indicated on the Floor Plan attached as
Exhibit C) is excluded from Landlord Improvements.
3. All costs of constructing Cell Improvements are excluded (except for
roof modifications to accommodate 29' clear height in Cell Area) from
the Landlord Improvements.
4. All permits and fees are included as part of Landlord's cost in
designing and constructing the Building. Tenant shall assume full
responsibility for any and all permits and fees associated with
Tenant's Improvements including the Cell Area.
<PAGE> 36
EXHIBIT F
COMMENCEMENT DATE MEMORANDUM
LANDLORD: AETNA REAL ESTATE ASSOCIATES, L.P.
TENANT: STERIGENICS INTERNATIONAL
LEASE DATE: February 8, 1993
PREMISES: 342 Bonnie Circle
Corona, California
Tenant hereby accepts the Premises as being in the condition required
under the Lease, with all Landlord Improvements completed (except for minor
punchlist items).
The Commencement Date of the above referenced Lease is hereby
established as __________, 19 ___.
TENANT:
STERIGENICS INTERNATIONAL
a California corporation
By:_________________________
Printed Name:_______________
Title:______________________
Approved and agreed:
AETNA REAL ESTATE ASSOCIATES, L.P.
a Delaware limited partnership
By: Aetna/AREA Corporation
a Connecticut corporation
General Partner
By: ___________________
Name: _________________
Title: ________________
<PAGE> 37
EXHIBIT G
GUARANTY
THIS GUARANTY (the "Agreement") is entered into as of February 8, 1993,
by CHARLES W. KING, JR. ("Guarantor"), for the benefit of AETNA REAL ESTATE
ASSOCIATES, L.P., a Delaware limited partnership ("Aetna"). This Guaranty is
made with reference to the following facts:
A. Concurrently with the delivery of this Guaranty, Aetna and
Sterigenics International, a California corporation ("Tenant"), are delivering
that certain Lease Agreement dated February 8, 1993, between Aetna, as landlord,
and Tenant, as tenant (the "Lease"), covering premises located at 342 Bonnie
Circle, Corona, California, and more particularly described in the Lease (the
"Premises").
B. As provided in the Lease, Tenant contemplates constructing certain
improvements in the building to be constructed by Aetna, including a "Cell Area"
(as defined in the Lease) and other "Cell Improvements" (as defined in the
Lease).
C. Tenant intends to use the Cell Area as a gamma sterilization
facility, which use will involve the use of certain materials which constitute
"Hazardous Materials" (as defined in the Lease).
D. Under the Lease, Tenant has certain obligations at the end of the
term of the Lease or at the sooner termination of the Lease which are defined in
the Lease as the "Cell Removal Obligations."
E. Guarantor is the sole shareholder of Tenant.
F. A condition precedent to Aetna entering into the Lease is that
Guarantor make and deliver this Guaranty to Aetna, and Aetna would not enter
into the Lease in the absence of this Guaranty.
G. Guarantor wishes to induce Aetna to enter into the Lease.
Guarantor, for the benefit of Aetna, agrees as set forth below:
1. DEFINITIONS. Any capitalized term not otherwise defined herein shall
have the meaning assigned to such term in the Lease.
2. GUARANTY. Subject to the limitation on Guarantor's maximum liability
set forth in Section 9 hereof, Guarantor unconditionally guarantees to Aetna the
timely payment and performance by Tenant of the following (the "Guaranteed
Obligations"):
(i) The performance of the Cell Removal Obligations, in accordance
with all the requirements of the Lease; and
(ii) The full payment of any costs or expenses, including
attorneys' fees, incurred by Aetna in connection with
enforcing its rights under this Guaranty.
3. AETNA'S DIRECT RIGHTS. This is a guaranty of payment and performance
and not a guaranty of collection. In the event that Tenant fails timely to pay
or perform any of the Guaranteed Obligations, Aetna may enforce its rights under
this Guaranty without first seeking to obtain payment or performance from:
(i) Tenant;
(ii) Any other guarantor;
(iii) Any collateral Aetna may hold for the Guaranteed Obligations; or
(iv) Exercise of any other remedy or right that Aetna may have.
Guarantor waives any rights it may have under California Civil Code Sections
2845 or 2849 to require Aetna first to take any of the foregoing actions. If
Aetna decides to
<PAGE> 38
proceed first to exercise any other remedy or right, or to proceed against
another person or any collateral, Aetna retains all of its rights under this
Guaranty.
4. OBLIGATIONS OF GUARANTOR UPON DEFAULT BY TENANT. If
performance of the Cell Removal Obligations shall not be completed in accordance
with Section 2(i) of this Guaranty, Guarantor shall pay to Aetna, in cash,
$50,000.00 or the estimated cost of completing the Cell Removal Obligations, as
determined by Aetna in its sole judgment, whichever is less. The payment under
the preceding sentence shall be due and payable promptly after Aetna advises
Guarantor, in writing, of Tenant's breach of the Cell Removal Obligations and
Aetna's estimate of the cost of completing the Cell Removal Obligations.
5. CONTINUING GUARANTY. This is a continuing guaranty of the
Guaranteed Obligations and may not be terminated, except as provided in Section
10 hereof.
6. NO NOTICE REQUIRED. Aetna does not have to notify Guarantor of
any of the following events and Guarantor will not be released or exonerated
from its obligations under this Guaranty if it is not notified of:
(i) Tenant's failure to timely pay or perform any of
the Guaranteed Obligations;
(ii) Any adverse change in Tenant's financial condition or
business;
(iii) Any sale or other disposition of any collateral for the
Guaranteed Obligations, or for any guaranty of the Guaranteed
Obligations;
(iv) Aetna's acceptance of this Guaranty;
(v) Any renewal, extension or other modification of the Lease; or
(vi) All other notices to which it might be entitled.
7. GUARANTOR'S ADDITIONAL WAIVERS. Guarantor waives any right it
may have to any of the following acts:
(i) Demand;
(ii) Presentment;
(iii) Diligence;
(iv) Protest;
(v) Notice of dishonor; and
(vi) Any other notice to which it may be entitled.
8. NO RELEASE OF GUARANTOR. Aetna may do any of the following, by
action or inaction, without releasing or exonerating Guarantor from any of its
obligations under this Guaranty (including any release or exoneration that might
occur under California Civil Code Sections 2819, 2845, 2848, 2849, or 2850):
(i) Renew, extend or otherwise modify or alter the Lease;
(ii) Release Tenant from any of the Guaranteed Obligations;
(iii) Sell, release, subordinate, impair, waive or otherwise fail to
realize upon any collateral for the Guaranteed Obligations, or
any other guaranty of the Guaranteed Obligations;
(iv) At its option and without any obligation to do so, and
following Tenant's failure to timely do so, proceed to perform
any and all of the Cell Removal Obligations and to pay amounts
required to be paid to cause performance of the Cell Removal
Obligations, and Guarantor shall, in accordance with Section
4, pay to Aetna all sums expended by Aetna in such performance
in accordance with 4;
2
<PAGE> 39
(v) From time to time and without first requiring performance on
the part of Tenant and without being required to exhaust any
security held by Aetna, if any, to look to and require
performance by Guarantor of an obligation on the part of
Guarantor to be performed pursuant to the terms hereof, by
action at law or in equity or both, and further to collect in
any such action its costs and expenses, including reasonable
attorneys' fees incurred in enforcing its rights hereunder;
(vi) Foreclose on any collateral for the Guaranteed Obligations or
a guaranty of the Guaranteed Obligation in a manner that
diminishes, impairs or precludes the right of Guarantor to
enjoy any rights of subrogation against Tenant or any other
guarantor, or to obtain reimbursement, performance, or
indemnification for payment or performance under this Guaranty
(including any of the foregoing that results from the direct
or indirect application of California Code of Civil Procedures
sections 580a, 580b, 580c, 580d, and 726, and Commercial Code
sections 1103 and 9501 et seq.);
(vii) Make an election under Bankruptcy Code section 1111(b)2);
(viii) Permit or suffer the creation of secured or unsecured credit
or debt under Bankruptcy Code section 364;
(ix) Permit or suffer the disallowance, voidance or subordination
of any of the Guaranteed Obligations; or
(x) Fail to exercise any right or remedy it may have with respect
to the payment or performance of the Guaranteed Obligations.
9. MAXIMUM LIABILITY. Notwithstanding anything to the contrary
contained herein, Guarantor's maximum liability under Section 2(i) of this
Guaranty shall be $50,000.00. The foregoing limitation on Guarantor's liability
shall in no way limit the obligations of Tenant under the Lease for the Cell
Removal Obligations.
10. TERMINATION. This Guaranty shall terminate on the last day of
the Initial Term of the Lease, provided that the Lease is then in full force and
effect, no Default then exists under the Lease and the Term of the Lease has
been extended by Tenant in accordance with the terms of the Lease. In the
absence of such a termination, this Guaranty shall continue in full force and
effect.
11. MISCELLANEOUS.
11.1 APPLICABLE LAW. The laws of the State of California will
apply to the interpretation and enforcement of this Guaranty.
11.2 INTEGRATION. This Guaranty is the entire agreement of
Aetna and Guarantor with respect to the subject matter of this Guaranty.
11.3 RIGHTS CUMULATIVE. All of Aetna's rights under this
Guaranty are cumulative. The exercise of any one right does not exclude the
exercise of any other right given in this Guaranty or any other right of Aetna
not set forth in this Guaranty.
11.4 SEVERABILITY. If any provision of this Guaranty is
unenforceable, or otherwise invalid, the remaining provisions of this Guaranty
shall be enforced to the fullest possible extent.
11.5 NOTICES. Each party may give any notice to the other
party at the address specified below for such party, until changed in writing by
notice given by such party to the other party:
If to Aetna:
c/o Aetna Investment Group
242 Trumbull Street
Hartford, Connecticut 06156
Attn: Asset Management
3
<PAGE> 40
and
Aetna Investment Group
1740 Technology Drive
Suite 600
San Jose, California 95110
Attn: Asset Management
If to Guarantor:
Charles W. King, Jr.
416 Sand Hill Circle
Menlo Park, California 94025
11.6 HEADINGS; NUMBER; GENDER. Section headings used in this
Guaranty are for convenience only. They are not a part of this Guaranty and
shall not be used in construing it. Wherever appropriate in this Guaranty, the
singular shall be deemed to also refer to the plural, and the plural to the
singular, and pronouns of certain genders shall be deemed to include either or
both of the other genders.
11.7 REVIEW OF DOCUMENTS. Guarantor hereby acknowledges that
he has a copy of and is fully familiar with the Lease.
11.8 ACKNOWLEDGMENT OF WAIVERS. Guarantor acknowledges that
certain provisions of this Guaranty operate as waivers of rights that Guarantor
would otherwise have under applicable law.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty
as of the date first above written.
"Guarantor"
______________________________
CHARLES W. KING, JR.
4
<PAGE> 41
CONSTRUCTION INSURANCE REQUIREMENTS
A. Workers' Compensation in statutory amounts and Employers Liability
Insurance in the minimum amounts of $100,000 each accident for bodily
injury by accident and $100,000 each employee for bodily injury by
disease with a $500,000 policy limit, covering each and every worker
used in connection with the contract work.
B. Comprehensive General Liability Insurance on an occurrence basis
including, but not limited to, protection for Premises/Operations
Liability, Broad Form Contractual Liability, Owner's and Contractor's
Protective, and Products/Completed Operations Liability*, in the
following minimum limits of liability:
Bodily Injury, Property Damage, and $1,000,000/each occurrence
personal Injury Liability $2,000,000/aggregate
*Products/Completed Operations Liability Insurance is to be provided
for period of at least one (1) year after completion of work.
C. Comprehensive Automobile Liability Insurance with the following minimum
limits of liability:
Bodily Injury and Property $1,000,000/each occurrence
Damage Liability $2,000,000/aggregate
This insurance will apply to all owned, non-owned or hired automobiles
to be used by the Contractor in the completion of the work.
D. Umbrella Liability Insurance in a minimum amount of $2 million dollars
($2,000,000), providing excess coverage on a following-form basis over
the Employer's Liability limit in paragraph A and the liability
coverages outlined in paragraphs B & C.
E. All-Risk Builder's Risk Insurance in the broadest coverage form
available, covering material and equipment, including coverage for
transit, off-site storage, extra expense and expediting expense to
ensure the continuation and timely completion of the project.
<PAGE> 42
EXHIBIT F
COMMENCEMENT DATE MEMORANDUM
LANDLORD: AETNA REAL ESTATE ASSOCIATES, L.P.
TENANT: STERIGENICS INTERNATIONAL
LEASE DATE: February 8, 1993
PREMISES: 342 Bonnie Circle
Corona, California
Tenant hereby accepts the Premises as being in the condition required
under the Lease, with all Landlord Improvements completed (except for minor
punchlist items).
The Commencement Date of the above referenced Lease is hereby
established as June 1, 1994.
TENANT:
STERIGENICS INTERNATIONAL
a California corporation
By: /s/ James F. Clouser
-----------------------------------
Printed Name: James F. Clouser
------------------------
Title: President & CEO
--------------------------------
Approved and agreed:
AETNA REAL ESTATE ASSOCIATES, L.P.
a Delaware limited partnership
By: Aetna/AREA Corporation
a Connecticut corporation
General Partner
By: /s/
-------------------------------
Name: Thomas Berreira
-----------------------------
Title: Vice President
----------------------------
<PAGE> 1
EXHIBIT 11.1
STERIGENICS INTERNATIONAL, INC.
STATEMENT REGARDING
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------
1995 1996 1997
----------- ---------- ----------
<S> <C> <C> <C>
HISTORICAL NET INCOME (LOSS) PER SHARE
Primary and Fully Diluted:
Shares used in computing historical net income (loss)
per share:
Weighted average common shares outstanding(1)....... 3,000,120 3,027,865 3,056,042
Net effect of dilutive common share equivalents..... -- 1,944,418 2,076,720
Shares related to SAB Nos. 55, 64, and 83 (2):
Share options (under treasury stock method)...... 31,917 31,917 31,917
----------- ---------- ----------
Total number of shares................................ 3,032,037 5,004,200 5,164,679
----------- ---------- ----------
Net income (loss)..................................... $(4,766,823) $2,152,062 $3,214,763
=========== ========== ==========
Net income (loss) per share........................... $ (1.57) $ 0.43 $ 0.62
=========== ========== ==========
PRO FORMA NET INCOME PER SHARE
Shares used in computing pro forma net income per
share:
Weighted average common shares outstanding(1)....... 3,056,042
Net effective of dilutive common share
equivalents...................................... 2,076,721
Preferred Shares, if converted...................... --
Shares related to SAB Nos. 55, 64, and 83 (2):
Share options (under treasury stock method)...... 31,917
----------
Total number of shares................................ 5,164,679
----------
Net income............................................ $3,214,763
==========
Net income per share.................................. $ 0.62
==========
</TABLE>
- ---------------
(1) Excludes common shares issued in the period subsequent to March 31, 1996.
(2) Reflects common shares and options issued from April 1, 1996 to March 31,
1997.
2
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of the Registrant
SteriGenics East Corporation
SteriGenics International Holding Corporation Inc.
RSI Leasing, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,957
<SECURITIES> 0
<RECEIVABLES> 4,592
<ALLOWANCES> 253
<INVENTORY> 0
<CURRENT-ASSETS> 8,459
<PP&E> 123,269
<DEPRECIATION> 42,939
<TOTAL-ASSETS> 91,667
<CURRENT-LIABILITIES> 11,638
<BONDS> 32,000
1,500
2
<COMMON> 3,056
<OTHER-SE> 30,975
<TOTAL-LIABILITY-AND-EQUITY> 91,667
<SALES> 37,668
<TOTAL-REVENUES> 37,668
<CGS> 20,425
<TOTAL-COSTS> 20,425
<OTHER-EXPENSES> 10,208
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,836
<INCOME-PRETAX> 5,314
<INCOME-TAX> 2,099
<INCOME-CONTINUING> 3,215
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,215
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
</TABLE>
