<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to _______________
Commission file number 333-04841
---------
SIMMONS COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1007444
- -------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Concourse Parkway, Suite 600, Atlanta, Georgia 30328
- ---------------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 512-7700
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [x] Yes [ ] No
The number of shares of the registrant's common stock outstanding as of
May 13, 1997 was 31,964,452.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Simmons Company and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands)
(Unaudited)
Successor Predecessor
---------------------- ------------
Period from Period from
March 22, December 31,
Quarter 1996 1995
ended through through
March 29, March 30, March 21,
1997 1996 1996
--------- --------- -----------
<S> <C> <C> <C>
Net sales $ 133,416 $ 12,886 $ 106,431
Costs and expenses:
Cost of products sold 80,775 9,042 66,630
Selling, general and administrative 47,555 4,626 35,846
ESOP expense 1,251 109 1,203
Amortization of intangible assets 1,958 118 1,324
--------- --------- ---------
131,539 13,895 105,003
--------- --------- ---------
Income from operations 1,877 (1,009) 1,428
Interest expense, net 4,803 461 1,489
Other deductions, net 379 4,309 96
--------- --------- ---------
Loss before income taxes (3,305) (5,779) (157)
Provision for income taxes (benefit) (1,603) (2,311) 282
--------- --------- ---------
Net loss $ (1,702) $ (3.468) $ (439)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 3
Simmons Company and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
Unaudited
March 29, December 28,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,386 $ 4,573
Accounts receivable, less allowance for
doubtful accounts of $6,357 and $5,644 66,154 66,634
Inventories 19,570 18,833
Other current assets 18,912 17,748
-------- -------
Total current assets 114,022 107,788
Property, plant and equipment, net 39,405 38,079
Patents, net of accumulated amortization of
$2,773 and $2,071 14,259 14,961
Goodwill, net of accumulated amortization of
$4,833 and $3,577 188,474 187,070
Other assets 20,770 19,951
-------- -------
$376,930 $367,849
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 4
Simmons Company and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
Unaudited
March 29, December 28,
1997 1996
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,342 $ 24,800
Accrued advertising and incentives 23,208 17,124
Accrued interest expense 5,596 2,734
Other accrued expenses 19,571 16,143
Current maturities of long-term obligations 2,701 2,701
--------- ---------
Total current liabilities 74,418 63,502
Noncurrent liabilities:
Long-term obligations 190,093 194,114
Other noncurrent liabilities 21,592 18,942
--------- ---------
Total liabilities 286,103 276,558
--------- ---------
Series A Preferred Stock--ESOP, net of related
unearned compensation of $22,101 and $23,352 6,251 5,000
Common stockholders' equity:
Common stock, $.01 par value; 50,000 shares
authorized, 31,964 shares issued 320 320
Additional paid-in capital 84,680 84,680
Retained earnings (accumulated deficit) (390) 1,312
Foreign currency translation adjustment (34) (21)
--------- ---------
Total common stockholders' equity 84,576 86,291
--------- ---------
$ 376,930 $ 367,849
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 5
Simmons Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Successor Predecessor
------------------------ -----------
Period from Period from
March 22, December 31,
Quarter 1996 1995
ended through through
March 29, March 30, March 21,
1997 1996 1996
-------- -------- -------
<S> <C> <C> <C>
Net cash provided by (used in) operating activities $ 11,336 $ (10,187) $ 2,339
-------- --------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment (2,489) -- (1,567)
Payment to the seller for the acquisition -- (151,625) --
Payments to option holders -- (6,950) --
Payments of acquisition costs -- (16,040) --
-------- --------- -------
Net cash (used in) investing activities (2,489) (174,615) (1,567)
-------- --------- -------
Cash flows from financing activities;
Proceeds from Predecessor revolving line of
credit and long-term borrowings -- -- 3,334
Predecessor principal payments on revolving
line of credit, long-term debt and capital
lease obligations -- -- (3,490)
Payments of Predecessor debt -- (55,495) --
Proceeds of Successor debt 5,000 160,000 --
Payments of Successor debt (9,021) -- --
Payments of financing costs -- (5,742) --
Proceeds from issuance of Successor common
stock -- 85,000 --
Treasury stock purchases -- -- (660)
-------- --------- -------
Net cash provided by (used in) financing
activities (4,021) 183,763 (816)
-------- --------- -------
Net effect of exchange rate changes on cash (13) -- 9
-------- --------- -------
Change in cash and cash equivalents 4,813 (1,039) (35)
Cash and cash equivalents, beginning of period 4,573 9.150 9,185
-------- --------- -------
Cash and cash equivalents, end of period $ 9,386 $ 8,111 $ 9,150
======== ========= =======
Supplemental cash flow information:
Depreciation $ 1,163 $ 96 $ 874
======== ========= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 6
Simmons Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
For purposes of this report the "Company" refers to Simmons Company and
Subsidiaries, collectively.
The Condensed Consolidated Financial Statements of the Company have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission (the "SEC"). The accompanying unaudited condensed
consolidated financial statements contain all adjustments which, in the opinion
of management, are necessary to present fairly the financial position of the
Company at March 29, 1997, and its results of operations and cash flows for the
periods presented herein. All adjustments in the periods presented herein are
normal and recurring in nature unless otherwise disclosed. These condensed
consolidated financial statements should be read in conjunction with the
year-end consolidated financial statements and accompanying notes included in
the Company's annual report on Form 10-K, dated December 28, 1996. Operating
results for the period ended March 29, 1997, are not necessarily indicative of
future results that may be expected for the year ending December 27, 1997.
2. The Acquisition
On March 22, 1996, Simmons Holdings, Inc. ("Holdings"), through its
subsidiary formed for this purpose, Simmons Acquisition Corp. ("SAC"), acquired
100% of the outstanding common stock of the Company. Holdings was formed to
consummate the Acquisition on behalf of affiliates of INVESTCORP S.A.
("Investcorp"), management and certain other investors. Immediately following
the completion of the Acquisition, SAC merged into the Company, as a result of
which 100% of the common stock of the Company became owned by Holdings. For
purposes of identification and description, Simmons Company is referred to as
the "Predecessor" for the period prior to the Acquisition, the "Successor" for
the period subsequent to the Acquisition, and the "Company" for both periods.
The purchase price for the Acquisition was approximately $269.6 million
(including approximately $94.6 million in refinancing or assumption of existing
indebtedness, purchase of certain stock options, and the payments of fees and
expenses) which was allocated to the assets and liabilities of the Company based
upon their estimated fair market value at the date of the Acquisition, under
the purchase method of accounting.
The financing for the Acquisition (including the refinancing of
outstanding debt) was provided for by (i) borrowings under a new $115.0 million
Senior Credit Facility, which refinanced the Company's existing senior and
subordinated loans, (ii) the $100.0 million proceeds under a new Subordinated
Loan Facility, and (iii) $85.0 million of capital provided by affiliates of
Investcorp, management and certain other investors from Holdings.
In connection with the Acquisition, the Simmons Employee Stock Ownership
Plan ("ESOP") sold 6,001,257 shares of the Company's common stock (representing
all of the allocated shares) for cash, and converted all of the remaining
5,670,406 shares of common stock of the Company (unallocated shares) into
5,670,406 shares of Series A Preferred Stock. The Series A Preferred Stock is
convertible into common stock of the Company on a one-to-one basis and is
entitled to an
6
<PAGE> 7
Simmons Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)
aggregate liquidation preference of approximately $28.4 million ($5.00 per
share). The ESOP also has the right, upon the occurrence of certain events, to
require the Company to purchase the stock owned by the ESOP for $5.00 per share.
On April 18, 1996, the Company issued $100.0 million in 10.75% Senior
Subordinated Notes, pursuant to an offering (the "Offering "). The proceeds of
the offering were used to retire loans under the Subordinated Loan Facility
mentioned above.
3. Inventories
Inventories consisted of the following at March 29, 1997 and December
28, 1996 (in thousands):
March 29, December 28,
1997 1996
--------- ------------
Raw materials $13,578 $12,044
Work in progress 1,674 1,888
Finished goods 4,318 4,901
------- -------
$19,570 $18,833
======= =======
4. Long-Term Obligations
Long-term obligations consisted of the following at March 29, 1997 and
December 28, 1996 (in thousands):
<TABLE>
<CAPTION>
March 29, December 28,
1997 1996
--------- --------
<S> <C> <C>
Senior loans:
Tranche A term loan $ 35,516 $ 35,516
Tranche B term loan 34,784 34,784
Revolving loan 7,000 16,000
10.75% Series A Senior Subordinated
Notes due 2006 100,000 100,000
Industrial Revenue Bonds, 7.00%, due 2017 9,700 9,700
Industrial Revenue Bonds, 3.55%, due 2016 5,000 --
Other, including capital lease obligations 794 815
--------- --------
192,794 196,815
Less current portion (2,701) (2,701)
--------- --------
$ 190,093 $194,114
========= ========
</TABLE>
During the quarter ended March 29, 1997 the construction cost of the
Company's new Kansas City, Kansas facility was financed through the issuance by
the City of Shawnee, Kansas of variable rate industrial revenue bonds maturing
on December 1, 2016, the proceeds of which were loaned by the city to the
Company, which agreed, pursuant to a loan agreement, to pay to the city amounts
sufficient to pay debt service on the bonds. At March 29, 1997, the effective
interest rate on the obligation was 3.55% with a principal amount of $5.0
million.
7
<PAGE> 8
Simmons Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)
The interest rates per annum in effect at March 29, 1997 for the
revolving credit, Tranche A term, and Tranche B term loans were 8.43%, 8.00%,
and 8.75%, respectively.
At March 29, 1997, the amount under the revolving credit portion of the
Senior Credit Facility that was available to be drawn was approximately $26.3
million, after giving effect to $7.0 million of borrowings and $6.7 million that
was reserved for the Company's reimbursement obligations with respect to
outstanding letters of credit. The remaining availability under the revolving
credit facility may be utilized to meet the Company's current working capital
requirements, including issuance of stand-by and trade letters of credit. The
Company also may utilize the remaining availability under the revolving credit
facility to fund acquisitions and capital expenditures.
The Senior Credit Facility contains certain covenants and restrictions
on actions by the Company and its subsidiaries. In addition, the Senior Credit
Facility requires that the Company comply with specified financial ratios and
tests, including minimum cash flow, a maximum ratio of indebtedness to cash flow
and a minimum interest coverage ratio. As of March 29, 1997, the Company was in
compliance with respect to all covenants under the Senior Credit Facility.
Future maturities of long-term obligations as of March 29, 1997 are as follows
(in thousands):
1997 $ 2,701
1998 7,310
1999 9,319
2000 11,329
2001 21,739
Thereafter 140,396
--------
$192,794
========
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
INTRODUCTION
The Company employed the purchase method of accounting for the
Acquisition completed in March 1996. As a result of the required purchase
accounting adjustments, the post-Acquisition financial statements for the
period ended March 29, 1997 and the period from March 22, 1996 to March 30, 1996
(the "Successor Financials") are not comparable to the financial statements for
the periods prior to the Acquisition (the "Predecessor Financials").
RESULTS OF OPERATIONS
For purposes of the discussion below, the results of operations for the
three month period ended March 30, 1996 represent the mathematical addition of
the historical amounts for the Predecessor period (December 31, 1995 through
March 21, 1996) and the Successor period (March 22, 1996 through March 30, 1996)
and are not indicative of the results that would actually have been obtained if
the Acquisition had occurred on December 30, 1995.
QUARTER ENDED MARCH 29, 1997 AS COMPARED TO QUARTER ENDED MARCH 30, 1996
Net Sales. Net sales for the quarter ended March 29, 1997 increased
11.8%, or $14.1 million, from $119.3 million in 1996 to $133.4 million in
1997.' This increase was due primarily to an 8.8% or $10.4 million increase in
bedding unit sales volume and a 3.2% or $4.1 million increase in bedding average
unit selling price. The growth in bedding unit sales volume resulted primarily
from strong Beautyrest(R) sales. The increase in Beautyrest(R) sales is the
result of new product introductions and the effect of first quarter promotions.
The strong improvement in bedding average unit selling price is predominantly
attributable to a higher mix of Beautyrest(R) sales.
During the first quarter, the Company elected to discontinue its supply
relationship with one of its customers, Mattress Discounters, when the terms of
the relationship did not meet management's account profitability expectations.
It is anticipated that the Company will stop supplying products to Mattress
Discounters sometime during the second half of 1997. Because of the breadth of
penetration and continued consumer acceptance of the Company's Beautyrest(R) and
BackCare(R) product lines, management believes, although there can be no
assurances, that the decision to discontinue its supply relationship with
Mattress Discounters will not have any long-term or material adverse effect on
the Company's financial position or results of operations.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold for
the quarter ended March 29, 1997 decreased 2.9 percentage points from 63.4% in
1996 to 60.5% in 1997. The improvement is attributable to: (i) relatively stable
raw material prices; (ii) a higher product mix concentration of Beautyrest(R)
products; (iii) the cost of goods sold in 1996 reflecting the sale of finished
goods inventory which had been written up, as required by generally accepted
accounting principles, to fair market value as of the date of the Acquisition;
and (iv) economies of scale due to the increase in unit volume. The improvements
were offset, in part, by increased costs for the Company's reengineering project
and plant moving expenditures.
Selling, General and Administrative Expenses. As a percentage of net
sales, selling, general and administrative expenses for the quarter ended March
29, 1997 increased 1.7 percentage points from 33,9% in 1996 to 35.6% in 1997.
The increase is attributable to an increase in marketing expenditures and higher
distribution costs due to higher volume and increased fuel costs.
9
<PAGE> 10
Simmons Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations - Continued
Amortization of Intangible Assets. Amortization of intangible assets for
the quarter ended March 29, 1997 increased $0.5 million due in part to the
effect of an increase in goodwill resulting from purchase accounting adjustments
made in connection with the Acquisition in March 1996.
Interest Expense, Net. Interest expense, net increased $2.9 million to
$4.8 million due primarily to interest expense on increased total indebtedness,
which resulted from the issuance of senior subordinated notes and a new senior
credit facility as financing for the Acquisition. ("See Notes to Condensed
Consolidated Financial Statements")
Other (Income) Deductions, Net. Other (income) deductions, net for the
quarter ended March 29, 1997 declined $4.0 million. Non-recurring expenses of
$4.3 million were incurred in the quarter ended March 30, 1996 in connection
with the Acquisition. Approximately $3.8 million was attributable to special
compensation agreements entered into by the Company with certain members of
management of the Company.
Provision (Benefit) for Income Taxes. The Company's effective tax rates
for the quarters ended March 29, 1997 and March 30, 1996 differ from the federal
statutory rate primarily because of non tax-deductible amortization of goodwill.
Net (Loss) Income. For the reasons set forth above, the quarter ended
March 29, 1997 resulted in a net loss of $1.7 million as compared to $3.9
million at March 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of cash to fund its liquidity needs is net
cash provided by operating activities. Net cash provided by operating activities
was $11.3 million for the quarter ended March 29, 1997 compared to a $7.8
million use of cash in 1996, due primarily to lower net loss in the first
quarter as described above and the timing of payments of accounts payable and
accrued liabilities. The Company's principal use of funds consists of payments
of principal, interest, and capital expenditures. Capital expenditures totaled
$2.6 million for the quarter ended March 29, 1997. These capital expenditures
consisted primarily of normal recurring capital expenditures in the amount of
$0.7 million, capital expenditures relating to the construction of a new
manufacturing facility in the amount of $1.3 million and capitalized
expenditures related to the Company's systems upgrade project in the amount of
$0.6 million. The Company estimates that total normal recurring capital
expenditures will be approximately $8.5 million in 1997. In addition, total
expenditures for completing the systems upgrade project are expected to be
approximately $2.5 million in 1997. Management believes that annual capital
expenditure limitations in its Senior Credit Facility will not significantly
inhibit the Company from meeting its ongoing capital needs.
The Company may seek to make selective acquisitions in the bedding
industry. Although the Company has discussions from time to time with potential
candidates, the Company currently has no commitments with respect to any such
acquisitions.
During the quarter ended March 29, 1997, the construction cost of the
Company's new Kansas City, Kansas facility was financed through the issuance by
the City of Shawnee, Kansas of variable rate industrial revenue bonds maturing
on December 1, 2016, the proceeds of which were loaned by the city to the
Company, which agreed, pursuant to a loan agreement, to pay to the city amounts
sufficient
10
<PAGE> 11
Simmons Company and Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations - Continued
to pay debt service on the bonds. At March 29, 1997, the effective interest rate
on the obligation was 3.55% with a principal amount of $5.0 million.
At March 29, 1997, the amount under the revolving credit portion of the
Senior Credit Facility that was available to be drawn was approximately $26.3
million, after giving effect to $7.0 million of borrowings and $6.7 million that
was reserved for the Company's reimbursement obligations with respect to
outstanding letters of credit. The remaining availability under the revolving
credit facility may be utilized to meet the Company's current working capital
requirements, including issuance of stand-by and trade letters of credit. The
Company also may utilize the remaining availability under the revolving credit
facility to fund acquisitions and capital expenditures. At March 29, 1997, the
Company's weighted average borrowing cost was 9.5%.
Management believes that the Company will have the necessary liquidity
for the foreseeable future from cash flow from operations, and amounts
available under its revolving credit facility in the Senior Credit Facility to
fund: (i) its obligations under the Senior Credit Facility and the New Notes;
(ii) expected capital expenditures; (iii) selective acquisitions in the bedding
industry; and (iv) other needs required to manage and operate its business.
Forward looking statements in this Form 10-Q are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
There are certain important factors that could cause results to differ from
those anticipated by some of the statements made above. Investors are cautioned
that all forward looking statements involve risk and uncertainty. In addition to
the factors discussed above, among the other factors that could cause actual
results to differ are the following: consumer spending and debt levels;
continuity of relationships with and purchases by major customers; product mix;
competitive pressure on sales and pricing, and increase in material or
production cost which cannot be recouped in product pricing.
11
<PAGE> 12
PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.66 Loan Agreement, dated as of December 1, 1996, between the
City of Shawnee, Kansas and the Company, relating to
$5,000,000 Private Activity Revenue Bonds of the City of
Shawnee, Kansas (Simmons Company Project) Series 1996.
27.0 Financial Data Schedule
(b) Reports on Form 8-K:
None.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Simmons Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SIMMONS COMPANY
By: /s/ Zenon S. Nie
----------------------------------------
Zenon S. Nie
Chairman of the Board of Directors,
Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ Jonathan C. Daiker
----------------------------------------
Jonathan C. Daiker
Executive Vice President-Finance and
Administration, Chief Financial Officer
and Director
(Principal Accounting Officer)
Date: May 13, 1997
13
<PAGE> 1
EXHIBIT 10.66
- --------------------------------------------------------------------------------
CITY OF SHAWNEE, KANSAS
AND
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
AS TRUSTEE
--------------------
INDENTURE OF TRUST
--------------------
DATED AS OF DECEMBER 1, 1996
RELATING TO
$5,000,000
PRIVATE ACTIVITY REVENUE BONDS
SERIES 1996
(SIMMONS COMPANY PROJECT)
OF THE CITY OF SHAWNEE, KANSAS
- --------------------------------------------------------------------------------
This instrument was prepared by:
McDowell, Rice, Smith & Gaar
a Professional Corporation
7101 College Boulevard, Suite 200
Overland Park, Kansas 66210
Telephone: (913) 338-5400
<PAGE> 2
TABLE OF CONTENTS
(This Table of Contents is not a part of the Indenture of Trust and is only for
convenience of reference.)
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 101. Definitions ................................................................................4
Section 102. Rules of Interpretation ....................................................................4
ARTICLE II
THE BONDS
Section 2.01. Authorized Amount of Bonds..................................................................5
Section 2.02. Issuance of Bonds...........................................................................5
Section 2.03. Execution; Limited Obligations..............................................................9
Section 2.04. Officers, Directors, etc. Exempt from Individual Liability.................................10
Section 2.05. Authentication.............................................................................10
Section 2.06. Form of Bonds..............................................................................11
Section 2.07. Delivery of Bonds..........................................................................11
Section 2.08. Mutilated, Lost, Stolen or Destroyed Bonds.................................................11
Section 2.09. Transfer of Bonds; Persons Treated as Owners...............................................12
Section 2.10. Destruction of Bonds.......................................................................13
Section 2.11. Temporary Bonds............................................................................13
Section 2.12. Book-Entry System..........................................................................13
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 3.01. Extraordinary and Mandatory Redemption.....................................................15
Section 3.02. Optional Redemption by the Company.........................................................17
Section 3.03. Sinking Fund Redemption....................................................................17
Section 3.04. Notice of Redemption.......................................................................18
Section 3.05. Redemption Payments........................................................................19
Section 3.06. Cancellation...............................................................................19
Section 3.07. Partial Redemption of Bonds................................................................19
Section 3.08. Sinking Fund...............................................................................20
</TABLE>
<PAGE> 3
<TABLE>
ARTICLE IV
CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION
<S> <C> <C>
Section 4.01. Conversion of Interest Rate on Conversion Date.............................................22
Section 4.02. Mandatory Tender of Bonds Upon Termination of Letter of Credit.............................23
Section 4.03. Condition to Conversion; Additional Notices................................................24
Section 4.04. Demand Purchase Option.....................................................................24
Section 4.05. Funds for Purchase of Bonds................................................................25
Section 4.06. Delivery of Purchased Bonds................................................................25
Section 4.07. Delivery of Proceeds of Sale of Purchased Bonds............................................26
Section 4.08. Duties of Trustee and Tender Agent with Respect to Purchase of Bonds.......................26
Section 4.09. Remarketing of Bonds.......................................................................27
ARTICLE V
GENERAL COVENANTS
Section 5.01. Payment of Principal, Premium, if any, and Interest....................................... 27
Section 5.02. Performance of Covenants...................................................................28
Section 5.03. Instruments of Further Assurance...........................................................28
Section 5.04. Recording and Filing.......................................................................28
Section 5.05. Inspection of Books........................................................................28
Section 5.06. List of Owners of Bonds....................................................................29
Section 5.07. Rights Under Agreement.....................................................................29
Section 5.08. Issuer's Election to Issue Bonds Pursuant to Section 144(a)(4).............................29
Section 5.09. Payments of Taxes, Charges, Etc............................................................29
Section 5.10. Obligations to Maintain, Repair and Insure.................................................29
Section 5.11. Agreement References; Lien of Indenture; Subordinate to
Agreement; Enforcement, Obligations and Rights.............................................29
Section 5.12. Covenant Not to Sell or Dispose of Interest in Trust
Estate and Not to Encumber Except in Accordance with
Agreement and Indenture....................................................................30
ARTICLE VI
REVENUES AND FUNDS
Section 6.01. Creation of the Bond Fund..................................................................30
Section 6.02. Payments into the Bond Fund................................................................31
Section 6.03. Use of Moneys in the Bond Fund.............................................................31
Section 6.04. Payment of Bonds with Proceeds of Refunding Bonds..........................................32
Section 6.05. Construction Fund..........................................................................32
Section 6.06. Payments into the Construction Fund; Disbursements........................................ 32
Section 6.07. Use of Money in the Construction Fund Upon Default.........................................32
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 6.08. Completion of the Project..................................................................32
Section 6.09. Nonpresentment of Bonds....................................................................33
Section 6.10. Moneys to be Held in Trust.................................................................33
Section 6.11. Repayment to the Bank and the Company from the Bond Fund
or the Construction Fund...................................................................33
Section 6.12. Letter of Credit ..........................................................................33
Section 6.13. Creation of Rebate Fund; Duties of Trustee;
Amounts Held in Rebate Fund................................................................34
Section 6.14. Creation of Cost of Issuance Fund;
Amounts Held in Cost of Issuance Fund......................................................35
ARTICLE VII
INVESTMENT OF MONEYS
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Indenture.....................................................................38
Section 8.02. Defeasance of Bonds........................................................................39
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.01. Defaults...................................................................................40
Section 9.02. Acceleration...............................................................................41
Section 9.03. Other Remedies; Rights of Owners of Bonds..................................................41
Section 9.04. Right of Owners of Bonds to Direct Proceedings.............................................42
Section 9.05. Appointment of Receivers...................................................................42
Section 9.06. Waiver.....................................................................................42
Section 9.07. Application of Moneys......................................................................43
Section 9.08. Remedies Vested in Trustee.................................................................45
Section 9.09. Rights and Remedies of Owners of Bonds.....................................................45
Section 9.10. Termination of Proceedings.................................................................46
Section 9.11. Waivers of Defaults........................................................................46
Section 9.12. Notice of Defaults under Section 9.01(g);
Opportunity to Cure Such Defaults..........................................................46
Section 9.13. Subrogation Rights of Bank.................................................................47
Section 9.14. Sale of Issuer's Interest in the Project in Event of Default...............................47
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE X
TRUSTEE AND TENDER AGENT
<S> <C> <C>
Section 10.01. Acceptance of Trusts.......................................................................48
Section 10.02. Fees, Charges and Expenses of the Trustee..................................................51
Section 10.03. Notice to Owners of Bonds If Default Occurs................................................51
Section 10.04. Intervention by the Trustee................................................................51
Section 10.05. Successor Trustee..........................................................................51
Section 10.06. Resignation by the Trustee.................................................................52
Section 10.07. Removal of the Trustee.....................................................................52
Section 10.08. Appointment of Successor Trustee by Owners of Bonds........................................52
Section 10.09. Acceptance by Successor Trustee............................................................53
Section 10.10. Appointment of Co-Trustee..................................................................53
Section 10.11. Successor Tender Agent; Appointment of Co-Tender Agent.....................................54
Section 10.12. Successor Remarketing Agent................................................................55
Section 10.13. Notice to Rating Agencies..................................................................57
Section 10.14. Notice to Bondowners.......................................................................57
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.01. Supplemental Indentures Not Requiring Consent of Owners of Bonds...........................57
Section 11.02. Supplemental Indentures Requiring Consent of Owners of Bonds...............................59
ARTICLE XII
AMENDMENT OF AGREEMENT
Section 12.01. Amendments to Agreement Not Requiring Consent of
Owners of Bonds............................................................................60
Section 12.02. Amendments to Agreement Requiring Consent of
Owners of Bonds............................................................................61
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Consents of Owners of Bonds................................................................61
Section 13.02. Limitation of Rights.......................................................................62
Section 13.03. Severability...............................................................................62
Section 13.04. Notices....................................................................................62
Section 13.05. Payments Due on Saturdays, Sundays and Holidays............................................64
Section 13.06. Counterparts...............................................................................64
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 13.07. Applicable Provisions of Law...............................................................64
Section 13.08. Rules of Interpretation....................................................................65
Section 13.09. Captions...................................................................................65
Section 13.10. No Personal Liability......................................................................65
Section 13.11. Certain References Ineffective After Letter
of Credit Termination Date.........................................................65
EXHIBIT A - PROJECT SITE
EXHIBIT B - PROJECT BUILDING
EXHIBIT C - PROJECT EQUIPMENT
EXHIBIT D - DEFINITIONS
EXHIBIT E - FORM OF NOTICE FROM TRUSTEE TO OWNER
REGARDING CHANGE IN DURATION OF INTEREST
PERIOD
EXHIBIT F - ADJUSTABLE RATE FORM OF BOND
EXHIBIT G - FIXED RATE FORM OF BOND
EXHIBIT H - NOTICE OF CONVERSION
EXHIBIT I - NOTICE OF MANDATORY TENDER DATE
</TABLE>
<PAGE> 7
INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of December 1, 1996, by and between
the CITY OF SHAWNEE, KANSAS, a municipal corporation duly organized and existing
under the laws of the State of Kansas (the "Issuer") and State Street Bank and
Trust Company of Missouri, N.A., a national banking association duly organized
and existing under the laws of the United States of America (the "Trustee");
W I T N E S S E T H:
WHEREAS, the Issuer is authorized and empowered pursuant to the
provisions of K.S.A. 12-1740 to 12-1749d, inclusive, as amended (the "Act"), to
acquire, purchase and construct certain facilities (as defined in the Act) for
the stated statutory purposes, with any person, firm or corporation for said
projects, and to issue revenue bonds for the purpose of paying the cost of such
facilities; and
WHEREAS, Simmons Company, a Delaware corporation, duly authorized and
qualified to do business in the State of Kansas (the "Company"), has requested
the Issuer to finance the acquisition, construction, furnishing and equipping of
a facility, consisting of an approximately 140,000 square foot manufacturing
facility, including real estate (the "Project Site" as more fully described on
EXHIBIT A attached hereto), buildings and fixtures (collectively, the "Project
Building" as more fully described on EXHIBIT B attached hereto), and equipment
(the "Project Equipment" as more fully described on EXHIBIT C attached hereto)
to be located at 7910 Hedge Lane Terrace, K-7 Industrial Park, within the
corporate limits of the Issuer, in an amount not to exceed $5,000,000;
WHEREAS, the Project Site, the Project Building and the Project
Equipment are herein collectively referred to as the "Project;" and
WHEREAS, the City Council of the Issuer has heretofore adopted
Resolution No. 1023 on January 22, 1996, expressing the Issuer's intention to
authorize private activity revenue bonds in a principal amount not to exceed
$5,500,000 for the purpose of financing the Project;
WHEREAS, pursuant to the Act, the City Council of the Issuer passed
Ordinance No. 2292 on December 12, 1996 (the "Ordinance"), authorizing the
issuance of $5,000,000 Private Activity Revenue Bonds, Series 1996 (Simmons
Company Project), of the Issuer, authorizing the Issuer to enter into a Lease
Agreement dated as of December 1, 1996 (the "Agreement"), with the Company and
to provide the terms and conditions under which the Issuer will lease the
Project to the Company; and
<PAGE> 8
WHEREAS, pursuant to the Ordinance, the Issuer is authorized (a) to
execute and deliver this Indenture for the purpose of issuing and securing the
Bonds, and (b) to enter into the Agreement, under which the Issuer will cause
the proceeds of the Bonds to be used to finance the cost of the Project and
paying a portion of the Costs of Issuance of the Bonds and will lease the
Project to the Company, in consideration of rentals which will be sufficient to
pay the principal of, premium, if any, and interest on the Bonds as the same
become due; and
WHEREAS, all things necessary to make the Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, the valid and binding
limited obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid assignment and pledge of the payments under
the Agreement (except for amounts payable under SECTIONS 4.2(b), 7.2 AND 8.4 of
the Agreement) for the payment of the principal or Purchase Price of, premium,
if any, and interest on the Bonds, and to constitute the Indenture a valid
assignment of certain of the rights of the Issuer under the Agreement have been
done and performed, and the creation, execution and delivery of this Indenture
and the issuance of the Bonds subject to the terms thereof, have in all respects
been duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
That the Issuer, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Bonds by the Owners thereof, and of the sum of one dollar, lawful money of
the United States of America, to it duly paid by the Trustee at or before the
execution and delivery 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 the Bonds
according to their tenor and effect and to secure the performance and observance
by the Issuer of all the covenants expressed herein and in the Bonds, does
hereby assign and grant a security interest in the following to the Trustee, and
its successors in trust and assigns forever, for the securing of the performance
of the obligations of the Issuer hereinafter set forth:
All right, title and interest of the Issuer in and to the real estate
described in EXHIBIT A attached hereto and all buildings, additions,
improvements, machinery and equipment now or hereafter located thereon and
constituting a part of the Project and with the tenements, hereditament,
appurtenances, rights, privileges and immunities thereunto belonging or
appertaining.
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<PAGE> 9
GRANTING CLAUSE SECOND
All right, title and interest of the Issuer in and to the Agreement,
including, but not limited to, the present and continuing right to make claim
for, collect, receive and receipt for any of the sums, amounts, income,
revenues, issues and profits and any other sums of money payable or receivable
under the Agreement (except for amounts payable to the Issuer under SECTIONS
4.2(b), 7.2 AND 8.4 of the Agreement), to bring actions and proceedings
thereunder or for the enforcement thereof, and to do any and all things which
the Issuer is or may become entitled to do under the Agreement.
GRANTING CLAUSE THIRD
All right, title and interest of the Issuer in and to all moneys and
securities from time to time held by the Trustee under the terms of this
Indenture, other than moneys and securities from time to time held by the
Trustee in the Remarketing Account of the Bond Fund or in the Rebate Fund.
GRANTING CLAUSE FOURTH
Any and all other property rights and interests of every kind and
nature from time to time hereafter by delivery or by writing of any kind
granted, bargained, sold, alienated, demised, released, conveyed, assigned,
transferred, mortgaged, pledged, hypothecated or otherwise subjected hereto, as
and for additional security herewith, by the Company or any other person on its
behalf or with its written consent or by the Issuer or any other person on its
behalf or with its written consent, and the Trustee 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 and singular the Trust Estate, whether now
owned or hereafter acquired, unto the Trustee and its respective successors in
said trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit, security and protection of all present and
future Owners of the Bonds, from time to time, 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 of the other Bonds 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;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns shall
well and truly pay, or cause to be paid, the principal of, premium, if any, and
interest on the Bonds due or to become due thereon, at the times and in the
manner set forth in the Bonds according to the true intent and meaning thereof,
and shall cause the payments to be made on the Bonds as required hereunder, or
shall provide, as permitted hereby, for
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<PAGE> 10
the payment thereof by depositing with the Trustee the entire amount due or to
become due thereon, and shall well and truly cause to be kept, performed and
observed all of its covenants and conditions pursuant to the terms of this
Indenture, and shall pay or cause to be paid to the Trustee all sums of money
due or to become due to it in accordance with the terms and provisions hereof,
then upon the final payment thereof this Indenture and the rights hereby granted
shall cease, determine and be void, except to the extent specifically provided
in ARTICLE VIII hereof; otherwise this Indenture shall remain in full force and
effect.
THIS INDENTURE FURTHER WITNESSETH, and it is declared, that all Bonds
issued and secured hereunder are to be issued, authenticated and delivered and
all said property, rights and interests, including, without limitation, the
amounts payable under the Agreement and any other amounts hereby assigned and
pledged are to be dealt with and disposed of under, upon and subject to the
terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes as herein expressed, and the Issuer has agreed and covenanted, and does
hereby agree and covenant with the Trustee and with the respective Owners of the
Bonds as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. In addition to the words and terms defined
elsewhere in this Indenture, the words and terms as used in this Indenture shall
have the meanings set forth in EXHIBIT D attached hereto.
SECTION 102. RULES OF INTERPRETATION.
(a) Unless the context shall otherwise indicate, the words
importing the singular number shall include the plural and
vice versa, and words importing persons shall include firms,
associations, partnerships, limited liability companies and
corporations, including public bodies, as well as natural
persons.
(b) Wherever in this Indenture it is provided that either party
shall or will make any payment or perform or refrain from
performing any act or obligation, each such provision shall,
even though not so expressed, be construed as an express
covenant to make such payment or to perform, or not to
perform, as the case may be, such act or obligation.
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<PAGE> 11
(c) All references in this instrument to designated "Articles,"
"Sections" and other subdivisions are, unless otherwise
specified, to the designated Articles, Sections and
subdivisions of this instrument as originally executed. The
words "herein," "hereof," "hereunder" and other words of
similar import refer to this Indenture as a whole and not to
any particular Article, Section or subdivision.
(d) The Table of Contents and the Article and Section headings of
this Indenture shall not be treated as a part of this
Indenture or as affecting the true meaning of the provisions
hereof.
ARTICLE II
THE BONDS
SECTION 2.01. AUTHORIZED AMOUNT OF BONDS. The total principal amount of
Bonds that may be issued hereunder is hereby expressly limited to $5,000,000.
SECTION 2.02. ISSUANCE OF BONDS.
(a) The Bonds shall be designated "Private Activity Revenue Bonds,
Series 1996 (Simmons Company Project)," in the principal
amount of $5,000,000. 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. 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 Issuer shall otherwise direct, the Bonds
shall be lettered "R" and shall be numbered consecutively from
1 upward.
(b) The Bonds shall be dated the date of initial authentication
and delivery, and shall bear interest from such date, and
thereafter from the Interest Payment Date next preceding the
date of authentication thereof to which interest has been paid
or duly provided for, unless the date of authentication
thereof is an Interest Payment Date to which interest has been
paid or duly provided for, in which case from the date of
authentication thereof, or unless no interest has been paid or
duly provided for on the Bonds, then from the date of the
Bonds, at the rates per annum and on the dates set forth in
this Indenture. Notwithstanding the foregoing, if any Bond is
dated after any Record Date and before the following Interest
Payment Date, such Bond shall bear interest from such
following Interest Payment Date; provided, however, that if
the Issuer
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<PAGE> 12
shall default in the payment of interest due on such Interest
Payment Date, then such 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 the date of the Bonds.
The Bonds shall bear interest at the Adjustable Rate, as the
same shall be determined from time to time, pursuant to the
provisions of SECTION 2.02(c) hereof, calculated on the basis
of (i) actual days elapsed in a 365- or 366-day year, as the
case may be, so long as the Interest Period is one week or one
month in duration, and (ii) a 360-day year comprised of twelve
(12) 30-day months, so long as the Interest Period is three
months or six months in duration, until the earlier of the
Conversion Date or maturity. From and after the Conversion
Date, the Bonds shall bear interest at the Fixed Rate,
determined in accordance with SECTION 2.02(d) hereof, on the
basis of a 360-day year comprised of twelve (12) 30-day
months.
Anything herein contained to the contrary notwithstanding, at no time
shall the interest rate borne by the Bonds exceed the Maximum Interest Rate.
The Bonds shall mature on December 1, 2016, and are subject to
mandatory sinking fund redemption prior to maturity in accordance with the
provisions of SECTION 3.08 hereof.
(c) Prior to the Conversion Date, the Bonds shall bear interest at
the Adjustable Rate, as hereinafter described. The Adjustable
Rate for each Interest Period will be determined by the
Remarketing Agent on the first day of each such Interest
Period, as follows: the interest rate for each Interest Period
shall be established at a rate equal to the interest rate per
annum that, in the sole judgment of the Remarketing Agent,
taking into account prevailing financial market conditions,
would be the minimum interest rate required to sell the Bonds
at a price of Par on the date of such determination. Upon
determining the Adjustable Rate for each Interest Period, the
Remarketing Agent shall notify the Trustee and, if the
Book-Entry System is then in effect, the Securities
Depository, of such rate by telephone or such other manner as
may be appropriate by not later than 2:00 P.M. New York City
time on the date of such determination, which notice shall be
promptly confirmed in writing. Notwithstanding the foregoing,
no adjustment shall be made to the Adjustable Rate for an
Interest Period commencing after the second (2nd) Business Day
prior to any Interest Payment Date or a date fixed for
redemption, and the Bonds shall bear interest during such
Interest Period at the rate in effect during the immediately
preceding Interest Period.
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<PAGE> 13
The Company is authorized to adjust the duration of the Interest Period
prior to the Conversion Date and, in that connection, shall instruct the
Remarketing Agent, not later than the tenth (10th) day prior to the Rate
Determination Date, to compute the Adjustable Rate on the basis of an Interest
Period of one week, one month, three months or six months. In the event the
Company elects to adjust the duration of the Interest Period, the Company shall
provide telephonic notice to the Trustee, and, if the Book-Entry System is then
in effect, the Securities Depository, promptly confirmed in writing, on the date
such instruction is provided to the Remarketing Agent, of such an election with
respect to the Interest Period and of the Rate Determination Date on which such
new Interest Period shall commence, and shall furnish with such written
confirmation an opinion of Bond Counsel to the effect that such change in
duration will not adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds pursuant to the Code by reason of
such change in duration.
Following receipt of instructions from the Company regarding the
computation of the Adjustable Rate based upon a change in the duration of the
Interest Period, the Trustee shall mail notice to the Owners of such Bonds in
the form attached hereto as EXHIBIT E, not more than two (2) Business Days
following the date on which such instructions are received, stating (a) that the
duration of the Interest Period will be adjusted as of the first (1st) day of
the next succeeding Interest Period; (b) that the date of commencement of such
Interest Period is a Tender Date, and that the Owners of such Bonds must tender
their Bonds to the Tender Agent for purchase on such Tender Date, and (c) that
any Bonds not so tendered shall be deemed to have been tendered on such Tender
Date, and the Owners of such Bonds shall not be entitled to receive any interest
that accrues on the Bonds subsequent to the Tender Date.
The delivery by the Company to the Trustee of a letter from Bond
Counsel confirming the opinion accompanying the Company notification described
above on such Tender Date is a condition precedent to the change in duration of
the Interest Period. In the event that the Company fails to deliver to the
Trustee the letter of Bond Counsel referred to in the preceding sentence, such
change in the duration of the Interest Period shall not take effect; provided,
however, that the Owners of the Bonds shall nonetheless be required to tender
their Bonds for purchase on the Tender Date and the Bonds, as remarketed to the
new Owners, shall continue to bear interest calculated by the method applicable
prior to the proposed change. Any Bonds not so tendered shall be deemed to have
been tendered on such Tender Date, and the Owners of such Bonds shall not be
entitled to receive any interest that accrues on the Bonds subsequent to the
Tender Date.
As described above, Owners of Bonds shall be required to tender their
Bonds on the Rate Determination Date to the Tender Agent for purchase at the
Purchase Price, and any such Bonds not so tendered on the Rate Determination
Date ("Untendered 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 Untendered Bonds, shall be deemed to have been purchased pursuant to this
SECTION 2.02(c). IN THE EVENT OF A
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<PAGE> 14
FAILURE BY AN OWNER OF BONDS TO TENDER SUCH OWNER'S BONDS ON OR PRIOR TO THE
RATE DETERMINATION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT
(INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE RATE DETERMINATION DATE)
OTHER THAN THE PURCHASE PRICE FOR SUCH UNTENDERED BONDS, AND ANY UNTENDERED
BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THIS INDENTURE, EXCEPT FOR
THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR.
On the Rate Determination Date, the Remarketing Agent shall establish
the Adjustable Rate for the Bonds for the Interest Period commencing on the Rate
Determination Date, and shall notify the Trustee and the Company and, if the
Book-Entry System is then in effect, the Securities Depository, thereof by
telephone or such other manner as may be appropriate by not later than 2:00
P.M., New York City time on the date of such determination, which notice shall
be promptly confirmed in writing. The Adjustable Rate on the Bonds for such
Interest Period shall be established at a rate equal to the interest rate per
annum that, in the sole judgment of the Remarketing Agent, taking into account
prevailing financial market conditions, would be the minimum interest rate
required to sell the Bonds at a price of Par on the Rate Determination Date. The
Adjustable Rate determined by the Remarketing Agent for the Bonds will take
effect on the first day of the Interest Period for which such rate was
determined. The determination of the Adjustable Rate (absent manifest error)
shall be conclusive and binding upon the Issuer, the Company, the Trustee, the
Bank, the Tender Agent and the Owners of the Bonds. If for any reason the
Remarketing Agent shall fail to establish the Adjustable Rate for any Interest
Period, the Bonds shall bear interest during such Interest Period at the
Adjustable Rate in effect during the immediately preceding Interest Period.
(d) On and after the Conversion Date, the interest rate shall be
the Fixed Rate, determined as follows: commencing on the
Conversion Date and thereafter through and including the
maturity or prior redemption of the Bonds, the Fixed Rate
shall be the interest rate per annum which, in the sole
judgment of the Remarketing Agent, taking into account
prevailing financial market conditions, would be the minimum
interest rate required to sell such Bonds on the Conversion
Date at a price equal to Par. The Fixed Rate shall be
determined by the Remarketing Agent on or before the
Conversion Date, and the Remarketing Agent shall notify the
Trustee and the Company thereof by telephone or such other
manner as may be appropriate by not later than 2:00 P.M., New
York City time on such date, which notice shall be promptly
confirmed in writing. If the Book-Entry System is in effect,
such notice shall be provided to the Securities Depository in
accordance with the requirements of the Securities Depository
for the delivery of notices. The determination of the Fixed
-8-
<PAGE> 15
Rate by the Remarketing Agent in accordance with the
provisions of this Section (absent manifest error) shall be
conclusive and binding upon the Issuer, the Company, the
Trustee, the Bank, the Tender Agent and the Owners of all the
Bonds.
(e) Subject to the provisions of SECTION 2.11 hereof relating to
Bonds held in the Book-Entry System, the principal of and
premium, if any, on the Bonds shall be payable in lawful money
of the United States of America at the Payment Office of the
Trustee, or of its successor in trust. The Purchase Price of
the Bonds shall be payable in lawful money of the United
States of America by the Trustee to the Owner of Bonds
entitled to receive such Purchase Price at such Owner's
address shown on the registration books maintained by the
Trustee, unless otherwise instructed by such Owner in writing
at least twenty-four (24) hours prior to the time such
Purchase Price is due. Payment of interest on the Bonds shall
be made to the Owner thereof on the applicable Record Date by
check mailed by the Trustee to such Owner at such Owner's
address as it appears on the registration books maintained by
the Trustee or at such other address as is furnished to the
Trustee in writing by such Owner, or in such other manner as
may be mutually acceptable to the Trustee and the Owner of any
Bond. Interest, premium, if any, and principal due to any
person holding Bonds in an aggregate principal amount of
$1,000,000 or more will be paid, upon the written request of
any such holder, by wire transfer of immediately available
funds to an account designated by such holder in the
continental United States. Said written request shall be made
to the Trustee at least fifteen (15) days prior to an Interest
Payment Date and shall include the appropriate ABA number.
SECTION 2.03. EXECUTION; LIMITED OBLIGATIONS. The Bonds shall be
executed on behalf of the Issuer with the manual or facsimile signature of the
Mayor of the Issuer 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 Clerk. All authorized facsimile signatures shall have the same
force and effect as if manually signed. The Bonds shall not be general
obligations of the Issuer but limited and special obligations payable solely
from the rental amounts payable under the Agreement and other amounts
specifically pledged therefor under this Indenture, and shall be a valid claim
of the respective Owners thereof only against the designated accounts of the
Bond Fund and other moneys held by the Trustee and the rental amounts payable
under the Agreement or otherwise pledged therefor, which amounts are hereby
pledged, assigned and otherwise secured for the equal and ratable payment of the
Bonds and shall 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. No Owner of any Bonds has
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<PAGE> 16
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 debt limitation or restriction.
SECTION 204. OFFICERS, DIRECTORS, ETC. EXEMPT FROM INDIVIDUAL
LIABILITY. No recourse under or upon any covenant or agreement of this
Indenture, or of the Bonds, or for any claim based thereon or otherwise in
respect thereof, shall be had against any past, present or future elected or
appointed official, officer or agent of the Issuer or the Trustee, or of any
successor, either directly or through the Issuer or the Trustee, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the Bonds issued hereunder are limited and special obligations,
and that no personal liability whatever shall attach to, or is or shall be
incurred by, any elected or appointed official, officer or agent of the Issuer
or the Trustee or any successor of either, or any of them, because of the
issuance of the Bonds, or under or by reason of the covenants or agreements
contained in this Indenture or in the Bonds or implied therefrom.
SECTION 2.05. AUTHENTICATION.
(a) State Street Bank and Trust Company of Missouri, N.A., has
been designated to serve as Tender Agent pursuant to the terms
and conditions set forth in the Tender Agent Agreement. The
Issuer hereby appoints the Tender Agent as an authenticating
agent for the Bonds.
(b) No Bond shall be valid or obligatory for any purpose or
entitled to any security or benefit under this Indenture
unless and until a certificate of authentication on such Bond
substantially in the form set forth in EXHIBITS F AND G
attached hereto shall have been duly executed by the Trustee
or by the Tender Agent, and such executed certificate of
authentication upon any such 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 the Tender
Agent if signed by an authorized signatory of the Trustee or
the 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 2.02(c), 4.01 OR 4.02 hereof but is not
physically so tendered, the Issuer shall execute and the
Trustee or the Tender Agent shall authenticate a new Bond of
like denomination as that deemed tendered.
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<PAGE> 17
SECTION 2.06. FORM 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 F attached hereto, with appropriate
variations, omissions and insertions as permitted or 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 G attached hereto, with appropriate variations, omissions and
insertions as permitted or required by this Indenture.
SECTION 2.07. DELIVERY OF BONDS. Upon the execution and delivery of
this Indenture, the Issuer shall execute and deliver to the Trustee and the
Trustee shall authenticate the Bonds and deliver them as directed by the Issuer
as hereinafter in this Section provided.
Prior to the delivery by the Trustee of the Bonds there shall be filed
with the Trustee the Letter of Credit, an executed copy of this Indenture, the
Agreement, an opinion of Bond Counsel to the effect that the Bonds constitute
valid and binding special, limited obligations of the Issuer and that the
interest on the Bonds is exempt from federal income taxation and Kansas income
taxation and a request and authorization to the Trustee on behalf of the Issuer
and signed by an authorized officer of the Issuer to authenticate and deliver
the Bonds to the purchasers thereof and for the purchase price therein
identified. Upon payment of the proceeds to the Trustee, the Trustee shall
deposit the proceeds pursuant to ARTICLE VI hereof.
SECTION 2.08. MUTILATED, LOST, STOLEN OR DESTROYED BONDS. Except when
the Bonds are held in the Book-Entry System, in the event any Bond is mutilated,
lost, stolen, or destroyed, the Issuer shall execute and the Trustee shall
authenticate a new Bond of like date and denomination as that mutilated, lost,
stolen or destroyed, provided that, in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Issuer or the Trustee, and in
the case of any lost, stolen, or destroyed Bond, there first shall be furnished
to the Issuer and the Trustee evidence of such loss, theft or destruction
satisfactory to the Issuer and the Trustee, together with an indemnity
satisfactory to them which indemnity shall, in any event, name the Tender Agent
as a beneficiary. In the event any such Bond shall have matured, the Trustee,
instead of issuing a duplicate Bond, may pay the same without surrender thereof,
making such requirements as it deems fit for its protection, in addition to the
lost instrument bond required by State law. The Issuer and the Trustee may
charge the Owner of such Bond with their reasonable fees and expenses for such
service. In executing a new Bond, the Issuer may rely conclusively upon a
representation by the Trustee that the Trustee is satisfied with the adequacy of
the evidence presented concerning the mutilation, loss, theft or destruction of
any Bond.
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<PAGE> 18
SECTION 2.09. TRANSFER OF BONDS; PERSONS TREATED AS OWNERS. The Trustee
shall keep books for the transfer of the Bonds as provided in this Indenture,
and the Trustee is hereby constituted and appointed the Bond Registrar of the
Issuer. The Tender Agent is hereby constituted and appointed the Co-Bond
Registrar of the Issuer. Upon surrender for transfer of any Bond at the Payment
Office of the Trustee, or at the Payment Office of the Tender Agent, duly
endorsed for transfer or accompanied by an assignment duly executed by the Owner
or such Owner's agent duly authorized in writing, the Issuer shall execute and
the Trustee or the Tender Agent, as the case may be, shall authenticate and
deliver in the name of the transferee or transferees a new Bond or Bonds in
authorized denominations for a like aggregate principal amount. Subject to the
provisions of SECTION 2.11 hereof relating to the transfer of ownership of Bonds
held in the Book-Entry System, any Bond, upon surrender thereof at the Payment
Office of the Trustee or at the Payment Office of the Tender Agent, duly
endorsed for transfer or accompanied by an assignment duly executed by the Owner
or such Owner's agent duly authorized in writing, may, at the option of the
Owner thereof, be exchanged for an equal aggregate principal amount of Bonds of
any denominations authorized by this Indenture in an aggregate principal amount
equal to the principal amount of such Bond. In each case, the Trustee or the
Tender Agent, as the case may be, may require the payment by the Owner of the
Bond requesting exchange or transfer of any tax or other governmental charge
required to be paid with respect to such exchange or transfer.
The Trustee and the Tender Agent shall not be required to exchange or
register a transfer of (a) any Bonds during the fifteen (15) day period next
preceding the selection of Bonds to be redeemed and thereafter until the date of
the mailing of a notice of redemption 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 not
so to be redeemed; PROVIDED that the foregoing shall not apply to the
registration or transfer of any Bond which has been tendered to the Tender Agent
pursuant to SECTION 4.04 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 4.06 hereof shall be deemed and treated as the same
Bond. If any Bond shall be transferred and delivered pursuant to SECTION 4.06(a)
hereof after such Bond has been (i) called for redemption, (ii) accelerated
pursuant to SECTION 9.02, or (iii) tendered pursuant to SECTIONS 2.02(c), 4.01
OR 4.02, the Tender Agent shall deliver to such transferee a copy of the
applicable redemption notice, acceleration notice, or tender notice indicating
that the Bond delivered to such transferee has previously been called for
redemption, acceleration or tender, and such Bonds shall not be delivered by the
Trustee or the Tender Agent to the transferee until the transferee shall
acknowledge receipt of such notice in writing.
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<PAGE> 19
The Trustee, the Tender Agent and the Issuer may treat the person in
whose name a Bond is registered as the absolute Owner thereof for all purposes,
and neither the Issuer, the Tender Agent nor the Trustee shall be bound by any
notice or knowledge to the contrary, but such registration may be changed as
hereinabove provided. All payments made to the Owner shall be valid and
effectual to satisfy and discharge the liability upon such Bond to the extent of
the sum or sums so paid.
SECTION 2.10. DESTRUCTION OF BONDS. Subject to the provisions of
SECTION 2.11 hereof relating to Bonds held in the Book-Entry System, whenever
any Outstanding Bond shall be delivered to the Trustee for cancellation pursuant
to this Indenture, or for replacement pursuant to SECTION 2.07 hereof, such Bond
shall be promptly cancelled and periodically cremated or otherwise destroyed by
the Trustee, and, upon the request of the Company and the Issuer, counterparts
of a certificate of destruction evidencing such cremation or other destruction
shall be furnished by the Trustee to the Issuer and the Company.
SECTION 2.11. TEMPORARY BONDS. Until Bonds in definitive form are ready
for delivery, the Issuer may execute, and upon the request of the Issuer, the
Trustee shall authenticate and deliver, subject to the provisions, limitations
and conditions set forth above, one or more Bonds in temporary form, whether
printed, typewritten, lithographed or otherwise produced, substantially in the
form of the definitive Bonds, with appropriate omissions, variations and
insertions, and in authorized denominations. Until exchanged for Bonds in
definitive form, such Bonds in temporary form shall be entitled to the liens and
benefits of this Indenture.
Upon presentation and surrender of any Bond or Bonds in temporary form,
the Issuer shall, at the request of the Trustee, execute and deliver to the
Trustee, and the Trustee shall authenticate and deliver, in exchange therefor, a
Bond or Bonds in definitive form. Such exchange shall be made by the Trustee
without making any charge therefor to the Owner of such Bond in temporary form.
Notwithstanding the foregoing, Bonds in definitive form may be issued hereunder
in typewritten form.
SECTION 2.12. BOOK-ENTRY SYSTEM. Upon the initial issuance and delivery
of the Bonds, the Bonds shall be issued in the name of the Securities Depository
or its nominee, as registered owner of the Bonds, and held in the custody of the
Securities Depository or its designee. A single certificate (or such number of
certificates required by the procedures of the Securities Depository) will be
issued and delivered to the Securities Depository (or its designee) for the
Bonds, and the Beneficial Owners will not receive physical delivery of Bond
certificates except as provided herein. For so long as the Securities Depository
shall continue to serve as securities depository for the Bonds as provided
herein, all transfers of beneficial ownership interests will be made by
book-entry only, and no investor or other party purchasing, selling or otherwise
transferring beneficial ownership of Bonds is to receive, hold or deliver any
Bond certificate. The Issuer, the Company, the Registrar, the Tender Agent and
the Trustee
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<PAGE> 20
will recognize the Securities Depository or its nominee as the Owner for all
purposes, including notices, except that, for purposes of a mandatory redemption
upon a Determination of Taxability as provided in SECTION 3.01 hereof or voting,
a Beneficial Owner may establish beneficial ownership of any of the Bonds to the
Trustee or to the Company in form satisfactory to the Trustee or to the Company,
as the case may be.
The Issuer, the Company, the Trustee, the Registrar, the Tender Agent
and the Remarketing Agent may rely conclusively upon (a) a certificate of the
Securities Depository as to the identity of the Participants in the Book-Entry
System with respect to the Bonds and (b) a certificate of any such Participant
as to the identity of, and the respective principal amount of Bonds beneficially
owned by, the Beneficial Owners.
Whenever, during the term of the Bonds, the beneficial ownership
thereof is determined by a book-entry at the Securities Depository, the
requirements in this Indenture of holding, delivering or transferring Bonds
shall be deemed modified to require the appropriate person to meet the
requirements of the Securities Depository as to registering or transferring the
book-entry to produce the same effect. Any provision hereof permitting or
requiring delivery of Bonds shall, while the Bonds are in the Book-Entry System,
be satisfied by the notation on the books of the Securities Depository in
accordance with applicable state law.
Except as otherwise specifically provided in this Indenture and the
Bonds with respect to the rights of Participants and Beneficial Owners, when a
Book-Entry System is in effect, the Issuer, the Trustee, the Registrar, the
Tender Agent, the Remarketing Agent and the Company may treat the Securities
Depository (or its nominee) as the sole and exclusive owner of the Bonds
registered in its name for the purposes of payment of the principal of, premium,
if any, and interest on the Bonds or portion thereof to be redeemed or
purchased, and of giving any notice permitted or required to be given to
Bondholders under this Indenture and none of the Issuer, the Trustee, the
Registrar, the Tender Agent, the Remarketing Agent nor the Company shall be
affected by any notice to the contrary. Neither the Issuer, the Company, the
Trustee, the Registrar, the Tender Agent, nor the Remarketing Agent will have
any responsibility or obligations to the Securities Depository, any Participant,
any Beneficial Owner or any other person which is not shown on the Bond
Register, with respect to (a) the accuracy of any records maintained by the
Securities Depository or any Participant; (b) the payment by the Securities
Depository or by any Participant of any amount due to any Beneficial Owner in
respect of the principal amount or redemption or Purchase Price of, or interest
on, any Bonds; (c) the delivery of any notice by the Securities Depository or
any Participant; (d) the selection of the Beneficial Owners to receive payment
in the event of any partial redemption of the Bonds; or (e) any other action
taken by the Securities Depository or any Participant. The Trustee shall pay all
principal of, premium, if any, and interest on the Bonds registered in the name
of Cede & Co. only to or "upon the order of" the
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<PAGE> 21
Securities Depository (as that term is used in the Uniform Commercial Code as
adopted in the State of Kansas), and all such payments shall be valid and
effective to fully satisfy and discharge the Issuer's obligations with respect
to the principal of, premium, if any, and interest on such Bonds to the extent
of the sum or sums so paid.
The Book-Entry System may be discontinued by the Trustee and the
Issuer, at the direction and expense of the Company, and the Issuer and the
Trustee will cause the delivery of Bond certificates to such Beneficial Owners
of the Bonds and registered in the names of such Beneficial Owners as shall be
specified to the Registrar by the Securities Depository in writing, under the
following circumstances:
(a) The Securities Depository determines to discontinue providing
its service with respect to the Bonds and no successor
Securities Depository is appointed as described above. Such a
determination may be made at any time by giving thirty (30)
days' notice to the Issuer, the Company, the Registrar, the
Tender Agent and the Trustee and discharging its
responsibilities with respect thereto under applicable law.
(b) The Company determines not to continue the Book-Entry System
through a Securities Depository.
When the Book-Entry System is not in effect, all references herein to
the Securities Depository shall be of no further force or effect.
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
SECTION 3.01. EXTRAORDINARY AND MANDATORY REDEMPTION.
(a) Following the Conversion Date, the Bonds are subject to
extraordinary optional redemption in whole by the Issuer at a
redemption price equal to 100% of the Outstanding principal
amount thereof plus accrued interest to the redemption date,
if either of the following events shall have occurred:
(i) The Project shall have been damaged or destroyed to
such extent that it 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 to such
extent that the Company is thereby prevented, in the
Company's judgment, from carrying on its normal
operations at the Project for a period of six (6)
months or more; or
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<PAGE> 22
(ii) Title to, or the temporary use for a period of six
(6) months or more of, all or substantially all of
the Project, or such part thereof as shall materially
interfere, in the Company's judgment, with the
operation of the Project for the purpose for which
the Project is designed, shall have been 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
(including such a taking or takings as results in the
Company being thereby prevented from carrying on its
normal operations at the Project for a period of six
(6) months or more).
(iii) if as a result of changes in the Constitution of the
State, or of legislative or administrative action by
the State or any political subdivision thereof, or by
the United States, or by reason of any action
instituted in any court, the Agreement shall become
void or unenforceable, or impossible of performance
without unreasonable delay, or in any other way, by
reason of such change of circumstances, unreasonable
burdens or excessive liabilities are imposed on the
Company or the Issuer.
(b) The Bonds are required to be redeemed in whole on the earliest
practicable Interest Payment Date, at a redemption price of
100% of the Outstanding principal amount thereof plus accrued
interest to the redemption date, upon the occurrence of a
Determination of Taxability. A "Determination of Taxability"
shall be deemed to have occurred 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 purposes under the Code (other than
an Owner who is a substantial user or related person within
the meaning of Section 144(a) 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
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<PAGE> 23
promptly give notice thereof to the Company, the Issuer, 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.
SECTION 3.02. OPTIONAL REDEMPTION BY THE COMPANY. On or prior to the
Conversion Date, the Bonds are subject to redemption by the Issuer, at the
option of the Company, on or after July 1, 1997, in whole or in part on any
Interest Payment Date, less than all of such Bonds to be selected by lot or in
such other manner as the Trustee shall determine (except as otherwise provided
in SECTION 3.07 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
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, while a
Book-Entry System is not in effect less than all of such Bonds to be selected by
lot or in such other manner as the Trustee shall determine (except as otherwise
provided in SECTION 3.07 hereof), 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 30 102%
First Anniversary of the First Optional
Redemption Date through the following
November 30 101%
Second Anniversary of the First Optional
Redemption Date and thereafter 100%
</TABLE>
SECTION 3.03. SINKING FUND REDEMPTION. The Bonds are also subject to
redemption by the Issuer, pursuant to the terms of the mandatory sinking fund
provided in SECTION 3.08 of this Indenture, on December 1, 1999, and on each
December 1 thereafter to and including December 1, 2016 (the final amount to be
paid rather than redeemed), in part, less than all of such Bonds to be selected
by lot or in such other manner as the Trustee may determine (except as otherwise
provided in SECTION 3.07 hereof), at a redemption price equal to the principal
amount thereof plus accrued interest to the redemption date.
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<PAGE> 24
SECTION 3.04. NOTICE OF REDEMPTION.
(a) 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 first class mail
at least fifteen (15) days but not more than sixty (60) days
(following the Conversion Date, at least thirty (30) days but
not more than sixty (60) days) prior to the date fixed for
redemption to the Owner of each Bond (or, if the Book-Entry
System is in effect, to the Securities Depository, in
accordance with its rules and procedures) 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.
Failure to mail any such notice, or the mailing of defective
notice, to any Owner, shall not affect the proceeding for
redemption as to any Owner to whom proper notice is mailed.
The Trustee shall deliver a copy of any such redemption notice
to the Tender Agent. Notwithstanding the foregoing provisions
of this SECTION 3.04, 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 3.04 with respect to any
such transferee.
(b) In addition to the foregoing notice, further notice shall be
given by the Trustee as set out below, but no defect in said
further notice nor any failure to give all or any portion of
such further notice shall in any manner defeat the
effectiveness of a call for redemption if notice thereof is
given as prescribed in (a) above. Each further notice of
redemption given hereunder shall contain the information
required in (a) above for an official notice of redemption
plus (i) the CUSIP numbers of all Bonds being redeemed
provided, however, such notice may contain a disclaimer as to
the accuracy of such CUSIP numbers; (ii) the date of issue of
the Bonds as originally issued; (iii) after the Conversion
Date, the rate of interest borne by each Bond being redeemed;
(iv) the maturity date of each Bond being redeemed; and (v)
any other descriptive information needed to identify
accurately the Bonds being redeemed. Each further notice of
redemption shall be sent at least thirty (30) days before the
redemption date (fifteen (15) days as to redemption of Bonds
prior to the Conversion Date) by registered or certified mail
or overnight delivery service (such overnight delivery service
at the expense of the addressee), or by facsimile to all of
the following registered securities depositories then in the
business of holding substantial amounts of bonds of the type
comprising the Bonds (such depositories now being Depository
Trust Company of New York,
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<PAGE> 25
New York; and Philadelphia Depository Trust Company of
Philadelphia, Pennsylvania) and by facsimile to one or more
national information services that disseminate notices of
redemption of bonds such as the Bonds (such as The Bond Buyer,
Bloomberg Municipal Repositories, Financial Information Inc.'s
Financial Daily Called Bond Service; Interactive Data
Corporation's Bond Service; Kenny Information Service's Called
Bond Service; and Standard & Poor's Called Bond Record). Upon
the payment of the redemption price of Bonds being redeemed,
each check issued for such purpose shall bear the CUSIP number
identifying, by issue and maturity, the Bonds being redeemed
with the proceeds of such check or other transfer. The Trustee
shall use its best efforts to include the CUSIP number when
payments of principal of premium, if any, and interest on the
Bonds are made by wire transfer of funds.
SECTION 3.05. REDEMPTION PAYMENTS. Pursuant to SECTION 6.12 hereof, on
or prior to the Letter of Credit Termination Date, the Trustee is authorized and
directed to draw upon the Letter of Credit in order to provide for the payment
of the redemption price of the Bonds called for redemption, and is hereby
authorized and directed to apply such funds to the payment of the principal of
the Bonds or portions thereof called, together with accrued interest thereon to
the redemption date. Following the Letter of Credit Termination Date, if on or
prior to any date fixed for redemption, sufficient moneys shall be on deposit
with the Trustee to pay the redemption price of the Bonds called for redemption,
the Trustee is hereby authorized and directed to apply such funds to the payment
of the principal of the Bonds or portions thereof called, together with accrued
interest thereon to the redemption date, and any required premium. Upon the
giving of notice and the deposit of 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 3.06. CANCELLATION. All Bonds which have been redeemed shall
not be reissued but shall be cancelled and periodically cremated or otherwise
destroyed by the Trustee in accordance with SECTION 2.09 hereof.
SECTION 3.07. PARTIAL REDEMPTION OF BONDS.
(a) Upon surrender of any Bond for redemption in part only, the
Issuer 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.
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<PAGE> 26
(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
or, if the Book-Entry System is in effect, the Securities
Depository, may select for redemption Bonds in an aggregate
principal amount equal to such excess by lot or in such other
manner as the Trustee may determine. If the Book-Entry System
is in effect, upon a redemption of less than the entire amount
of the Bonds outstanding, the Trustee shall (i) either
exchange the Bond or Bonds held by the Securities Depository
for a new Bond or Bonds in the appropriate principal amount,
if such Bond is presented to the Trustee by the Securities
Depository, or (ii) obtain from the Securities Depository a
written confirmation of the reduction in the principal amount
of the Bonds held by such Securities Depository.
(d) No Bond may be redeemed in part if the principal amount
thereof to remain Outstanding following such redemption is not
itself an Authorized Denomination.
SECTION 3.08. SINKING FUND. As and for a sinking fund for the
redemption of the Bonds, the Issuer shall cause to be deposited in the Bond Fund
on or before December 1, 1999, and on or before each December 1 thereafter to
and including December 1, 2016, proceeds from a drawing under the Letter of
Credit or, following the Letter of Credit Termination Date, other moneys which
are sufficient to redeem the following principal amounts (after credit as
provided below) of the Bonds (the final amount to be paid rather than redeemed):
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<PAGE> 27
<TABLE>
<CAPTION>
DATE PRINCIPAL
---- ---------
<S> <C>
December 1, 1997
December 1, 1998
December 1, 1999 $ 200,000.00
December 1, 2000 200,000.00
December 1, 2001 200,000.00
December 1, 2002 200,000.00
December 1, 2003 200,000.00
December 1, 2004 200,000.00
December 1, 2005 200,000.00
December 1, 2006 200,000.00
December 1, 2007 300,000.00
December 1, 2008 300,000.00
December 1, 2009 300,000.00
December 1, 2010 300,000.00
December 1, 2011 300,000.00
December 1, 2012 300,000.00
December 1, 2013 400,000.00
December 1, 2014 400,000.00
December 1, 2015 400,000.00
December 1, 2016 400,000.00
---------------- ----------
$ 5,000,000.00
</TABLE>
On or before the fifteenth (15th) day (or, subsequent to the Conversion
Date, the thirtieth (30th) day) prior to each such sinking fund payment date,
the Trustee shall proceed to call the principal amount of the Bonds indicated
above for redemption on the next December 1, and give notice of such call. At
its option, to be exercised with written notice to the Trustee on or before the
forty-fifth (45th) day next preceding any such sinking fund redemption date, the
Issuer, with the consent of the Company, may (a) deliver to the Trustee for
cancellation the Bonds subject to redemption pursuant to the terms of the
mandatory sinking fund provided in this SECTION 3.08 in an aggregate principal
amount desired, or (b) receive credit in respect of its sinking fund redemption
obligation for any Bonds subject to redemption pursuant to the terms of the
mandatory sinking fund provided in this Section, which prior to said date have
been redeemed (otherwise than through the operation of the sinking fund) and
cancelled by the Trustee 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 at the principal amount thereof on the
obligation of the Issuer on such sinking fund redemption date and the principal
amount of Bonds to be redeemed by operation of such sinking fund on such date
shall be accordingly reduced, and any excess over the principal amount of
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<PAGE> 28
Bonds to be redeemed by operation of the sinking fund on any sinking fund
payment date shall be credited against future sinking fund payments in
chronological order and the principal amount of Bonds required to be redeemed by
operation of the sinking fund on subsequent sinking fund payment dates shall be
correspondingly reduced.
ARTICLE IV
CONVERSION OF INTEREST RATE; MANDATORY TENDER;
DEMAND PURCHASE OPTION
SECTION 4.01. CONVERSION OF INTEREST RATE. The interest rate on the
Bonds shall be converted from the Adjustable 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 Conversion Date.
To exercise the Conversion Option, the Company shall deliver or mail by first
class mail a notice to the Trustee at its Principal Office with respect to the
determination of the Company to convert the interest rate on the Bonds from the
Adjustable Rate to the Fixed Rate, which notice shall be delivered to the
Trustee at least thirty (30) but not more than forty-five (45) days prior to the
Conversion Date. The Trustee shall then deliver or mail by first class mail a
notice in substantially the form attached hereto as EXHIBIT H at least twenty
(20) days but not more than thirty (30) days prior to the Conversion Date to the
Owner of each Bond at the address shown on the registration books of the Issuer.
If the Bonds are held in the Book-Entry System, such notice shall be provided by
the Securities Depository in accordance with the requirements of the Securities
Depository for the delivery of notices. Any notice given by the Trustee as
provided in this Section shall be conclusively presumed to have been duly given,
whether or not the Owner receives the notice. Failure to mail any such notice,
or the mailing of defective notice, to any Owner, shall not affect the
proceeding for redemption as to any Owner to whom proper notice is mailed. Said
notice shall state (a) the Conversion Date, and (b) that all Owners of Bonds
must tender their Bonds to the Tender Agent for purchase on the Conversion Date,
and that any Bonds not so tendered shall be deemed to have been tendered for
purchase on the Conversion Date.
As described above, Owners of Bonds shall be required to tender their
Bonds on the Conversion Date to the Tender Agent for purchase at the Purchase
Price, and any such Bonds not so tendered on the Conversion Date ("Untendered
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
Untendered Bonds, shall be deemed to have been purchased pursuant to this
SECTION 4.01. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO TENDER SUCH
OWNER'S BONDS ON OR PRIOR TO THE CONVERSION DATE, SAID OWNER SHALL NOT BE
ENTITLED TO ANY
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PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE CONVERSION DATE)
OTHER THAN THE PURCHASE PRICE FOR SUCH UNTENDERED BONDS, AND ANY UNTENDERED
BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THIS INDENTURE, EXCEPT FOR
THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR.
SECTION 4.02. MANDATORY TENDER OF BONDS UPON TERMINATION OF LETTER OF
CREDIT. If a Substitute Letter of Credit has not been delivered to the Trustee
at least sixty (60) days prior to the expiration of the Letter of Credit, in
accordance with SECTION 4.4 of the Agreement, the Bonds shall be subject to
mandatory tender by the Owners thereof for purchase on the Mandatory Tender
Date. The Trustee shall deliver or mail by first class mail a notice in
substantially the form attached hereto as EXHIBIT I, stating that the Letter of
Credit will expire fifteen (15) days after the Mandatory Tender Date, and that,
if the Book-Entry System is not in effect, all Owners of Bonds must tender their
Bonds to the Tender Agent for purchase on the Mandatory Tender Date, and that
any Bonds not so tendered shall be deemed to have been tendered for purchase on
the Mandatory Tender Date. Such notice shall be delivered at least twenty (20)
days but not more than thirty (30) days prior to the Mandatory Tender Date to
the Owner of each Bond at the address shown on the registration books of the
Issuer. 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.
Failure to mail any such notice, or the mailing of defective notice, to any
Owner, shall not affect the proceeding for redemption as to any Owner to whom
proper notice is mailed.
As described above, Owners of Bonds shall be required to tender their
Bonds on the Mandatory Tender Date to the Tender Agent for purchase at the
Purchase Price, and any such Bonds not so tendered on the Mandatory Tender Date
("Untendered Bonds"), for which there have been irrevocably deposited in trust
with the Trustee an amount of moneys sufficient to pay the Purchase Price of the
Untendered Bonds, shall be deemed to have been purchased pursuant to this
SECTION 4.02. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS TO TENDER SAID
OWNER'S BONDS ON OR PRIOR TO THE MANDATORY TENDER DATE, SAID OWNER SHALL NOT BE
ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE
MANDATORY TENDER DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNTENDERED BONDS,
AND ANY UNTENDERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THIS
INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR.
The Bonds shall not be remarketed unless and until a Substitute Letter
of Credit is provided to the Trustee pursuant to the terms of the Agreement.
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SECTION 4.03. CONDITION TO CONVERSION; ADDITIONAL NOTICES.
(a) As a condition to the giving of notice as provided in SECTION
4.01 above, the Company shall provide the Trustee with an
opinion of Bond Counsel to the effect that the proposed
conversion of the interest rate on the Bonds will not
adversely affect the exclusion of the interest on the Bonds
from gross income for federal income tax purposes.
(b) The delivery by the Company to the Trustee of a letter from
Bond Counsel confirming the opinion required prior to the
notification described above on such Conversion Date is a
condition precedent to any such Conversion. In the event that
the Company fails to deliver to the Trustee the letter of Bond
Counsel referred to in the preceding sentence, such Conversion
shall not take effect, and the Bonds shall continue to bear
interest calculated by the method applicable prior to the
proposed Conversion Date.
(c) The Trustee shall provide the Tender Agent with a copy of any
notice delivered to the Owners of the Bonds pursuant to
SECTION 4.01 OR 4.02 hereof.
SECTION 4.04. DEMAND PURCHASE OPTION. Any Bond bearing interest at the
Adjustable Rate shall be purchased at the Purchase Price from the Owner thereof
upon:
(a) delivery to the Tender Agent at its Principal Office and to
the Remarketing Agent at its Principal Office of a written
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 purchased, which date shall
be a Tender Date not prior to the seventh (7th) day next
succeeding the date of delivery of such notice; and
(b) delivery to the Tender Agent at its Payment Office 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 due bill, payable to bearer, for interest due on
such Interest Payment Date.
If the Book-Entry System is in effect, the notice described in SECTION
4.04(i), above, may be delivered by the Participant on behalf of the Beneficial
Owner of the Bond.
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SECTION 4.05. FUNDS FOR PURCHASE OF BONDS. On the date Bonds are to be
purchased pursuant to SECTION 2.02(c), 4.01, 4.02 OR 4.04 hereof, such Bonds
shall be purchased at the Purchase Price only from the funds listed below.
Subject to the provisions of SECTION 6.12(b), funds for the payment of the
Purchase Price shall be derived from the following sources in the order of
priority indicated:
(a) the proceeds of the sale of such Bonds which have been
remarketed by the Remarketing Agent, and which proceeds are on
deposit with the Trustee prior to 12:00 Noon, New York City
time, on the Business Day preceding the date such Bonds are to
be purchased by any entity other than the Company or the
Issuer, or any affiliate of the foregoing;
(b) moneys drawn by the Trustee under the Letter of Credit; and
(c) any other moneys furnished to the Trustee and available for
such purpose.
SECTION 4.06. DELIVERY OF PURCHASED BONDS.
(a) Bonds purchased with moneys described in SECTION 4.05(a)
hereof shall be delivered by the Tender Agent, at its Delivery
Office, to or upon the order of the purchasers thereof.
(b) Bonds purchased with moneys described in SECTION 4.05(b)
hereof shall be held by the Tender Agent in trust for the
benefit of the Bank pursuant to the Pledge Agreement or, upon
receipt of written instructions from the Bank, such Bonds
shall be delivered by the Tender Agent to the Bank. If the
Bonds are held in the Book-Entry System, such Bonds shall be
recorded in the books of the Securities Depository for the
account of the Tender Agent, as custodian for the Bank, as
pledgee. The Bank's security interest in such Bonds shall be
released only after the Tender Agent has been notified in
writing by the Bank that the Letter of Credit has been fully
reinstated.
(c) Bonds purchased with moneys described in SECTION 4.05(c)
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.
(d) The Tender Agent shall deliver to the person to whom the
Tender Agent is to deliver such Bonds the due bills, if any,
delivered to the Tender Agent with such Bonds in accordance
with SECTION 4.04 hereof.
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Bonds delivered as provided in this Section shall be registered in the
manner directed by the recipient thereof.
SECTION 4.07. 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 2.02(c), 4.01, 4.02 OR 4.04 hereof,
to the extent not required to pay the Purchase Price thereof
in accordance with SECTION 4.05 hereof, shall be paid to or
upon the order of the Bank, to the extent required to satisfy
the obligations of the Company under the Credit Agreement, and
the balance, if any, shall be paid to or upon the order of the
Company; provided, however, in the case of Pledged Bonds that
are subsequently remarketed prior to an Interest Payment Date,
the accrued interest paid by such new purchaser shall be
deposited into the Remarketing Account of the Bond Fund and
used to pay interest on the next Interest Payment Date.
(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 extent the Bank shall hold
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 4.06(b) hereof and
the proceeds of sale of such Bonds shall be delivered to the
Bank; provided that any (i) premium or (ii) accrued interest
in excess of amounts then due to the Bank pursuant to
Paragraph 2A 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 4.08. 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 2.02(c), 4.01, 4.02 OR 4.04 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 been delivered to or for the
account of or to the order of such Owners of Bonds;
(b) The Trustee shall hold all moneys delivered to it 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;
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(c) The Tender Agent shall deliver to the Trustee, the Company,
the Bank and the Remarketing Agent a copy of each notice
delivered to it in accordance with SECTION 4.04 hereof and,
immediately upon the delivery to it of Bonds in accordance
with said SECTION 4.04, give telephonic or telegraphic notice
to the Company, the Trustee and the Bank specifying the
principal amount of the Bonds so delivered; and
(d) The Trustee shall draw moneys under the Letter of Credit in
accordance with the terms thereof to the extent required by
SECTIONS 4.05 AND 6.12 hereof to provide for timely payment of
the Purchase Price of Bonds.
SECTION 4.09. REMARKETING OF BONDS. Pursuant to the Remarketing
Agreement, the Remarketing Agent will use its best efforts to remarket the Bonds
at a price of par plus accrued interest, if any, and shall give notice by
telephone or telex, promptly confirmed in writing, at or prior to 12:00 noon,
New York City time, on the Business Day preceding the date any Bonds are to be
purchased, to the Company, the Trustee and the Tender Agent, specifying the
principal amount of such Bonds, if any, remarketed and the registration
information of the purchasers, and shall deliver the proceeds of such sale to
the Trustee.
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. The
Issuer covenants that it will promptly pay or cause to be paid the principal of,
premium, if any, and interest on every Bond issued under this Indenture at the
place, on the dates, and in the manner provided herein and in said Bonds
according to the true intent and meaning thereof, but solely from the amounts
pledged therefor which are from time to time held by the Trustee in the various
accounts of the Bond Fund. The principal of, premium, if any, and interest on
the Bonds are payable from the rental amounts to be paid under the Agreement and
otherwise as provided herein and in the Agreement, 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
Issuer, the State, nor any political subdivision of the State shall in any event
be liable for the payment of the principal of, 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 the moneys pledged herein are
sufficient therefor.
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No Owner of any Bonds 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 debt limitation or restriction.
SECTION 5.02. PERFORMANCE OF COVENANTS. The Issuer covenants that it
will faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions contained in this Indenture and in the Agreement, in
any and every Bond executed, 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
and without limitation the Act, to issue the Bonds authorized hereby and to
execute this Indenture, to assign the Agreement, and to pledge the rental
amounts to be paid under the Agreement and other amounts hereby pledged in the
manner and to the extent herein set forth, that all action on its part for the
issuance of the Bonds and the execution and delivery of this Indenture has been
duly and effectively taken, and that the Bonds in the hands of the Owners
thereof are and will be valid and enforceable obligations of the Issuer
according to the terms thereof and hereof.
SECTION 5.03. INSTRUMENTS OF FURTHER ASSURANCE. The Issuer 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 the better
assuring, transferring, conveying, pledging, assigning and confirming unto the
Trustee all and singular the amounts pledged hereby to the payment of the
principal of, premium, if any, and interest on the Bonds. The Issuer, except as
herein and in the Agreement provided, will not sell, convey, mortgage, encumber
or otherwise dispose of any part of the amounts, revenues and receipts payable
under the Agreement or its rights under the Agreement.
SECTION 5.04. RECORDING AND FILING. The Company has agreed pursuant to
the Agreement that it will cause all financing statements related to this
Indenture and all supplements hereto to be recorded and filed in such manner and
in such places as may from time to time 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, and to take or cause to be taken any and all other action
necessary to perfect the security interest created by this Indenture.
SECTION 5.05. INSPECTION OF BOOKS. All books and records, if any, in
the Issuer's possession relating to the Project and the amounts derived from the
Project shall at all reasonable times be open to inspection by such accountants
or other agents as the Trustee may from time to time designate.
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SECTION 5.06. LIST OF OWNERS OF BONDS. The Trustee will keep on file a
list of names and addresses of the Owners of all Bonds as from time to time
registered on the registration books maintained by the Trustee as Bond
Registrar, together with the principal amount and numbers of such Bonds owned by
each such Owner. At reasonable times and under reasonable regulations
established by the Trustee, said list may be inspected and copied for any
purpose by the Company or by the Owners (or a designated representative thereof)
of fifteen percent (15%) or more in aggregate principal amount of Outstanding
Bonds, such possession or ownership and the authority of such designated
representative to be evidenced to the satisfaction of the Trustee. The Trustee
shall furnish to the Issuer a list of Owners of Bonds then Outstanding within
ten (10) days of a written request for said list from the Issuer.
SECTION 5.07. RIGHTS UNDER AGREEMENT. The Agreement, a duly executed
counterpart of which has been filed with the Trustee, sets forth the covenants
and obligations of the Issuer and the Company, and reference is hereby made to
the Agreement for a detailed statement of said covenants and obligations of the
Company thereunder, and the Issuer agrees that the Trustee in its 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 for and on behalf of the Owners
of Bonds, whether or not the Issuer is in default hereunder.
SECTION 5.08. ISSUER'S ELECTION TO ISSUE BONDS PURSUANT TO SECTION
144(a)(4). The Issuer hereby elects to have the $10,000,000 limitation set forth
in Section 144(a)(4) of the Code apply to the Bonds and agrees to take all
actions necessary to assure compliance with the provisions of said Section.
SECTION 5.09. PAYMENTS OF TAXES, CHARGES, ETC. The Issuer represents
that pursuant to the provisions in the Agreement, the Company has agreed at its
own expense to pay, as the same respectively come due, all taxes, assessments
and other governmental charges at any time lawfully levied or assessed upon or
against the Project or any part thereof.
SECTION 5.10. OBLIGATIONS TO MAINTAIN, REPAIR AND INSURE. The Issuer
represents that pursuant to the provisions in the Agreement, the Company has
agreed to cause the Project to be maintained, preserved and kept in good
condition, repair and working order and to keep the Project insured to the
extent provided therein.
SECTION 5.11. AGREEMENT REFERENCES; LIEN OF INDENTURE SUBORDINATE TO
AGREEMENT; ENFORCEMENT, OBLIGATIONS AND RIGHTS. It is understood and agreed that
the Project has been leased to the Company under the Agreement. The Agreement,
or memorandum thereof, is recorded in the Office of the Register of Deeds,
Johnson County, Kansas, and an executed copy is on file in the office of the
Trustee. Reference is hereby made to the Agreement for a detailed statement of
the terms and conditions thereof and for a statement of the rights and
obligations of the parties thereunder. The
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Issuer agrees, upon the request of the Trustee, to enforce all covenants and
obligations of the Company (at the expense of the Company) under the Agreement
to the extent necessary to preserve the Project in good order and repair, and to
protect the rights of the Trustee and the Bondowners hereunder with respect to
the pledge and assignment of the rents, revenues and receipts coming due under
the Agreement. The Issuer agrees that the Trustee, in its own name or in the
name of the Issuer, may and is hereby granted the right to enforce all rights of
the Issuer and all obligations of the Company under and pursuant to the
Agreement, whether or not the Issuer is in default in its covenant to enforce
such rights and obligations.
SECTION 5.12. COVENANT NOT TO SELL OR DISPOSE OF INTEREST IN TRUST
ESTATE AND NOT TO ENCUMBER EXCEPT IN ACCORDANCE WITH AGREEMENT AND INDENTURE.
The Issuer covenants that so long as any Bonds authorized by and issued under
this Indenture are Outstanding, it will not sell or otherwise dispose of its
interest in the Project, except in accordance with the provisions of the
Agreement, and that it will not encumber the same, or any part thereof, or its
interest therein, or create or permit to be created any charge or lien on the
payments to be derived pursuant to the Agreement except as provided in this
Indenture.
ARTICLE VI
REVENUES AND FUNDS
SECTION 6.01. CREATION OF THE BOND FUND. There is hereby created and
established with the Trustee a trust fund to be designated "Private Activity
Revenue Bonds, Series 1996 (Simmons Company Project), of the City of Shawnee,
Kansas - Bond Fund," which shall be used to pay when due the principal and
Purchase Price of, premium, if any, and interest on the Bonds. Within the Bond
Fund there is hereby created and established certain trust accounts, to be
designated the "General Account," the "Letter of Credit Account," and the
"Remarketing Account." Moneys drawn under the Letter of Credit shall be
deposited in the Letter of Credit Account and shall be held separate and apart
from moneys derived from any other source. Moneys received from the Remarketing
Agent shall be deposited in the Remarketing Account and shall be held separate
and apart from moneys derived from any other source. Unless otherwise specified,
all moneys received by the Trustee for deposit into the Bond Fund shall be
credited to the General Account. Any reference herein to the "Bond Fund" without
further qualification or explanation shall, unless the context indicates
otherwise, constitute a reference to the General Account.
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SECTION 6.02. PAYMENTS INTO THE BOND FUND. There shall be deposited
into 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
6.07 OR 6.08 hereof, for deposit in the General Account;
(b) all payments specified in SECTION 4.2 of the Agreement, for
deposit in the General Account;
(c) any moneys drawn under the Letter of Credit, for deposit in
the Letter of Credit Account, and such moneys shall not be
commingled with any other moneys on deposit with the Trustee;
(d) amounts held by the Trustee pursuant to SECTION 4.08(b)
hereof, for deposit in the Remarketing Account; and
(e) all other moneys received by the Trustee under and pursuant to
any of the provisions of the Agreement which are required to
be or which are accompanied by directions that such moneys are
to be paid into the Bond Fund, for deposit in the General
Account.
SECTION 6.03. USE OF MONEYS IN THE BOND FUND. Except as provided in
this SECTION 6.03 and in SECTIONS 4.05, 4.08 AND 6.11 hereof, moneys in the
various accounts of the Bond Fund shall be used solely for the payment of the
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 6.12
hereof, funds for such payments of the principal of and premium, if any, and
interest on the Bonds shall be derived from the following sources in the order
of priority indicated:
(a) moneys drawn by the Trustee under the Letter of Credit; and
(b) any other moneys furnished to the Trustee and available for
such purpose.
Notwithstanding the foregoing, amounts deposited into the General
Account of the Bond Fund in accordance with SECTION 6.02(a) OR (b) hereof shall
be paid by the Trustee to the Bank in order to reimburse the Bank to the extent
of a corresponding drawing upon the Letter of Credit to pay the redemption price
of any Bond called for redemption pursuant to SECTION 3.01 hereof.
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SECTION 6.04. PAYMENT OF BONDS WITH PROCEEDS OF REFUNDING BONDS. The
principal of and interest on the Bonds may be paid from the proceeds of the sale
of refunding obligations if, in the opinion of counsel experienced in bankruptcy
matters, which opinion shall be satisfactory to the rating agency (if any) then
providing the rating borne by the Bonds, the application of such refunding
proceeds will not constitute a voidable preference in the event of the
occurrence of an Act of Bankruptcy.
SECTION 6.05. CONSTRUCTION FUND. There is hereby created and
established with the Trustee a trust fund to be designated "Private Activity
Revenue Bonds, Series 1996 (Simmons Company Project), of the City of Shawnee,
Kansas - Construction Fund," which shall be expended in accordance with the
provisions of the Agreement.
SECTION 6.06. PAYMENTS INTO THE CONSTRUCTION FUND; DISBURSEMENTS. The
net proceeds of the issuance and delivery of the Bonds shall be deposited in the
Construction Fund and shall not be commingled with any other funds. The Trustee
is hereby authorized and directed to make each disbursement from the
Construction Fund required by the provisions of the Agreement. The Trustee shall
keep and maintain adequate records pertaining to the Construction Fund and all
disbursements therefrom, including records of all Requisitions made pursuant to
the Agreement, and after the Project has been completed and a completion
certificate has been filed as provided in SECTION 6.08 hereof, the Trustee
shall, upon request of the Company, file an accounting thereof with the Issuer
and the Company.
SECTION 6.07. USE OF MONEY IN THE CONSTRUCTION FUND UPON DEFAULT. If
the principal of the Bonds shall have become due and payable pursuant to ARTICLE
IX hereof, any balance remaining in the Construction Fund shall without further
authorization be transferred into the General Account of the Bond Fund.
SECTION 6.08. COMPLETION OF THE PROJECT. The completion of the Project
and payment or provision for payment of all Costs of the Project shall be
evidenced by the filing with the Trustee of the certificate required by SECTION
3.5 of the Agreement. As soon as practicable and in any event not more than
sixty (60) days from the date of the certificate referred to in the preceding
sentence, any balance remaining in the Construction Fund (except amounts the
Company shall have directed the Trustee to retain for any Cost of the Project
not then due and payable) shall without further authorization be transferred
into the General Account of the Bond Fund and thereafter applied in the manner
provided in SECTION 3.5 of the Agreement; provided, that prior to the Letter of
Credit Termination Date, in the event that a portion of the Bonds is to be
redeemed with any balance remaining in the Construction Fund and transferred to
the General Account of the Bond Fund, the Trustee is authorized and directed to
draw upon the Letter of Credit to the extent of the redemption price of the
Bonds so called for redemption, and promptly thereafter to transfer any amounts
on deposit in the General Account of the Bond Fund to the Bank, to the extent
necessary to reimburse the Bank for such drawing upon the Letter of Credit.
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SECTION 6.09. 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 moneys
sufficient to pay any such Bond shall have been deposited with the Trustee for
the benefit of the Owner thereof, all liability of the Issuer 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, uninvested or invested in Government Obligations maturing overnight,
but in any event without liability for interest thereon, for the benefit of the
Owner of such Bond which shall thereafter be restricted exclusively to such
funds for any claim of whatever nature on its part under this Indenture with
respect to such Bond.
Subject to the provisions of SECTION 6.11, any moneys so deposited with
and held by the Trustee not so applied to the payment of Bonds within two (2)
years after the date on which the same shall have become due shall be repaid by
the Trustee to the Company upon written direction of a Company Representative,
and thereafter Owners of Bonds shall be entitled to look only to the Company for
payment, and then to the extent of the amount so repaid, 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 such money.
SECTION 6.10. MONEYS TO BE HELD IN TRUST. All moneys required to be
deposited with or paid to the Trustee for the account of any fund or account
referred to in any provision of this Indenture or the Agreement shall be held by
the Trustee in trust, and shall, while held by the Trustee, constitute part of
the Trust Estate and be subject to the lien and security interest created
hereby.
SECTION 6.11. REPAYMENT TO THE BANK AND THE COMPANY FROM THE BOND FUND
OR THE CONSTRUCTION FUND. Any amounts remaining in any account of the Bond Fund,
the Construction Fund, or any other fund or account created hereunder (other
than the Rebate Fund) 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 6.12. 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 to pay when due (whether by reason of maturity,
the occurrence of an Interest Payment Date, redemption,
acceleration or otherwise) the principal of and interest on
the Bonds; and to the extent moneys described in SECTION
4.05(a) hereof are not available therefor, to pay when due the
Purchase Price of Bonds. Without limiting the generality of
the foregoing,
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at such time as the duration of the Interest Period is either
three months or six months in duration, the Trustee is hereby
instructed to draw upon the Letter of Credit on the first day
of each month during such Interest Period, commencing with the
first day of the second month of such Interest Period (or on
the Business Day preceding the first day of each such month,
in the event such day is not a Business Day), an amount equal
to the interest on the Bonds that has accrued or will accrue
during the month for which the drawing is being submitted,
less, with respect to the final drawing of the Interest
Period, investment earnings (if any) on any previous amounts
drawn under the Letter of Credit, which investments earnings
are on deposit in the Letter of Credit Account of the Bond
Fund.
(b) Notwithstanding any provision to the contrary which may be
contained in this Indenture, including, without limitation,
SECTION 6.12(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 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.
(c) If for any reason the Trustee is unable to determine the rate
of interest that will accrue on the Bonds, the Trustee shall
assume a rate equal to the Maximum Rate for the drawing being
submitted and will credit the difference in the Maximum Rate
and the actual rate determined and shall apply such difference
to the next payment of interest when due.
SECTION 6.13 CREATION OF REBATE FUND; DUTIES OF TRUSTEE; AMOUNTS HELD
IN REBATE FUND.
(a) There is hereby created and established with the Trustee a
trust fund to be held in trust to be designated "Private
Activity Revenue Bonds, Series 1996 (Simmons Company Project,
of the City of Shawnee, Kansas Rebate Fund."
(b) In the manner and at the times required by the Code and
consistent with the Tax Agreement or an opinion of Bond
Counsel, the Trustee shall at the direction and expense of the
Company, employ a Consultant to determine or cause to be
determined, the Excess Investment Earnings on each fund or
account held by the Trustee pursuant to this Indenture and
shall deposit, from moneys held on deposit in such fund or
account or from any lawfully
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available source, into the Rebate Fund an amount equal to such
Excess Investment Earnings, plus such additional moneys, if
any, which are necessary or required to be set aside for
rebate to the United States under the Code, as determined by
the Consultant.
(c) All income or interest on the investment of moneys on deposit
in the Rebate Fund shall remain in the Rebate Fund unless and
until required to be rebated to the United States. Any funds
remaining in the Rebate Fund after redemption and payment of
all of the Bonds and payment in full of all amounts required
to be rebated to the United States of America shall be
withdrawn and paid to the Company.
(d) The provisions in paragraphs (b) and (c) above shall not be
applied if an exemption from rebate is provided by the Code as
evidenced by an opinion of Bond Counsel.
(e) Within sixty (60) days after December 1 of the years 2001,
2006, 2011 and within sixty (60) days after the retirement of
all of the Outstanding Bonds, the Trustee shall pay to the
United States from the Rebate Fund then from the Bond Fund,
and if insufficient therefor, from amounts paid by the Company
pursuant to SECTION 4.2 of the Agreement, the rebatable
arbitrage calculated in accordance with the Code, as
determined by the Consultant.
SECTION 6.14. CREATION OF COSTS OF ISSUANCE FUND; AMOUNTS HELD IN COSTS
OF ISSUANCE FUND.
(a) There is hereby created and established with the Trustee a
trust fund to be held in trust to be designated "Private
Activity Revenue Bonds, Series 1996 (Simmons Company Project),
of the City of Shawnee, Kansas - Costs of Issuance Fund."
(b) Moneys in the Costs of Issuance Fund shall be disbursed from
time to time by the Trustee for the payment of the Costs of
Issuance upon the direction of the Company as evidenced by a
requisition certificate in the form of EXHIBIT E to the
Agreement executed by the Company and approved by the Issuer,
or as approved by the Company on the Bond Closing Date.
Expenditures from the Costs of Issuance Fund shall be made
first from Bond proceeds and second from moneys provided by
the Company. Moneys in the Costs of Issuance Fund shall be
expended no later than 180 days after the Bond Closing Date.
Any moneys remaining therein on such date or on such earlier
date as the Issuer and Company shall certify
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that all Costs of Issuance have been paid shall be transferred
to the Company to the extent such moneys constitute moneys
provided by the Company, or to the Construction Fund to the
extent such moneys constitute Bond proceeds, and the Costs of
Issuance Fund shall be closed.
ARTICLE VII
INVESTMENT OF MONEYS
Any moneys held as a part of the Construction Fund, the Cost of
Issuance Fund or any fund other than the Bond Fund or the Rebate Fund shall be
invested or reinvested by the Trustee, to the extent permitted by law, at the
written request of and as directed by a Company Representative, in any of the
following qualified investments:
(a) Bonds or obligations of counties, municipal corporations,
school districts, political subdivisions, authorities, or
bodies of the State;
(b) Bonds or other obligations of the United States or of
subsidiary corporations of the United States Government which
are fully guaranteed by such government;
(c) Obligations of agencies of the United States Government issued
by the Federal Land Bank, the Federal Home Loan Bank, the
Federal Intermediate Credit Bank, and the Central Bank for
Cooperatives;
(d) Bonds or other obligations issued by any Public Housing Agency
or Municipal Corporation in the United States, which such
bonds or obligations are fully secured as to the payment of
both principal and interest by a pledge of annual
contributions under an annual contributions contract or
contracts with the United States Government, or project notes
issued by any public housing agency, urban renewal agency, or
municipal corporation in the United States which are fully
secured as to payment of both principal and interest by a
requisition, loan, or payment agreement with the United States
Government;
(e) Certificates of deposit of national or state banks located
within the State which have deposits insured by the Federal
Deposit Insurance Corporation. 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, or with any
national or state bank or federal savings and loan association
or state building and loan or savings and loan association
located within the State, of one or more the following
securities in an aggregate principal amount equal at least to
the
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amount of such excess; direct and general obligations of this
state or of any county or municipal corporation in this state,
obligations of the United States or subsidiary corporations
included in paragraph (b) hereof, obligations of the agencies
of the United States Government included in paragraph (c)
hereof, or bonds, obligations, or project notes of public
housing agencies, urban renewal agencies, or municipalities
included in paragraph (d) hereof;
(f) 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 public funds; and
(g) Securities of or other interests in any no-load, open-end
management type investment company or investment trust
registered under the Investment Company Act of 1940, as from
time to time amended, or any common trust fund maintained by
any bank or trust company which holds such proceeds as trustee
or by an affiliate thereof so long as:
(i) the portfolio of such investment company or
investment trust or common trust fund is limited to
the obligations referenced in paragraph (b) hereof
and repurchase agreements fully collateralized by any
such obligations;
(ii) such investment company or investment trust or common
trust fund takes delivery of such collateral either
directly or through an authorized custodian;
(iii) such investment company or investment trust or common
trust fund is managed so as to maintain its shares at
a constant net asset value; and
(iv) securities of or other interests in such investment
company or investment trust or common trust fund are
purchased and redeemed only through the use of
national or state banks having corporate trust powers
and located within this State.
Any moneys held as a part of any account of the Bond Fund or the Rebate
Fund shall be invested or reinvested by the Trustee, at the direction of the
Company, to the extent permitted by law, in Government Obligations with such
maturities as shall be required in order to assure full and timely payment of
amounts required to be paid from the Bond Fund or the Rebate Fund, which
maturities shall (in the case of the Bond
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Fund), in any event, extend no more than thirty (30) days from the date of
acquisition thereof; provided, that any moneys held pursuant to the provisions
of SECTION 6.09 either shall be held uninvested or shall be invested in
Government Obligations maturing on the next Business Day.
The Trustee may make any and all such investments through its own bond
or investment department or the bond or investment department of any bank or
trust company under common control with the Trustee. All such investments shall
at all times be a part of the fund or account from which 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. All investments hereunder shall be registered in the name of the
Trustee, as Trustee under the Indenture. All investments hereunder shall be held
by or under the control of the Trustee. The Trustee shall sell and reduce to
cash a sufficient amount of investments of funds in any account of the Bond Fund
whenever the cash balance in such account of the Bond Fund is insufficient,
together with any other funds available therefor, to pay the principal or
Purchase Price of, premium, if any, and interest on the Bonds when due.
The Issuer covenants and agrees that it will use the proceeds of the
Bonds as soon as practicable and with all reasonable dispatch for the purpose
for which the Bonds are issued, and the Issuer covenants and agrees that no part
of the proceeds of the Bonds shall be invested in any securities or obligations
except for the temporary period pending such use, nor used at any time, directly
or indirectly, in a manner which will cause the Bonds to be classified as
"arbitrage bonds" within the meaning of Section 148 of the Code.
ARTICLE VIII
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF INDENTURE. When the principal of, premium,
if any, and interest due on all the Bonds shall have been paid in accordance
with their terms or provision has been made for such payment, as provided in
SECTION 8.02 hereof, and provision shall also be made for paying all other sums
payable hereunder, including the fees and expenses of the Trustee, 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 Issuer such instruments in writing as
shall be requisite to release the lien hereof and reconvey, release, assign and
deliver unto the Issuer 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 (i) amounts
in any
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account of the Bond Fund or Construction Fund required to be paid to the Bank or
the Company under the terms of this Indenture, (ii) amounts held by the Trustee
for the payment of the principal or Purchase Price of, premium, if any, or
interest on particular Bonds, and (iii) amounts held in the Rebate Fund required
to be paid to the United States.
SECTION 8.02. DEFEASANCE OF BONDS. The following provisions of this
SECTION 8.02 shall apply only from and after the Conversion 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 provided for by irrevocably
depositing with the Trustee or a bank located in the State of Kansas and having
full trust powers, in trust and irrevocably set aside exclusively for such
payment, (i) moneys sufficient to make such payment or (ii) Government
Obligations maturing as to principal and interest in such amounts and at such
times as will insure, without further investment or reinvestment thereof, in the
opinion of an independent certified public accounting firm of national
reputation (a copy of which opinion shall be furnished to the rating agency then
providing the rating borne by the Bonds), the availability of sufficient moneys
to make such payment, (b) all necessary and proper fees, compensation and
expenses of the Trustee and the Issuer pertaining to the Bonds with respect to
which such deposit is made, including any payments required to be made to the
Rebate Fund, shall have been paid or the payment thereof provided for to the
satisfaction of the Trustee, and (c) the Issuer, at the expense of the Company,
shall have given to the Trustee in form satisfactory to the Trustee an opinion
of counsel experienced in bankruptcy matters, which opinion shall be
satisfactory to the rating agency (if any) then providing the rating borne by
the Bonds, to the effect that the application of such moneys will not constitute
a voidable preference in the event of the occurrence of an Act of Bankruptcy. At
such time as a Bond shall be deemed to be paid hereunder, as aforesaid, such
Bond shall 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 III 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 8.02 and stating the maturity or redemption date
upon which
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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 and (c) an opinion of
Bond Counsel shall be delivered to the Trustee and the Issuer that the
defeasance of the Bonds will not adversely affect the tax-exempt status of the
Bonds.
All moneys so deposited with the Trustee as provided in this SECTION
8.02 may also be invested and reinvested, at the direction of the Company, in
noncallable 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 8.02 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 General
Account of the Bond Fund as and when realized and collected for use and
application as are other moneys deposited in the General Account of the Bond
Fund.
The Issuer and the Trustee hereby covenant that no deposit will
knowingly be made or accepted and no use knowingly made of any such deposit
which would cause the Bonds to be treated as arbitrage bonds within the meaning
of Section 148 of the Code.
Notwithstanding any provision of any other article of this Indenture
which may be contrary to the provisions of this SECTION 8.02, all moneys or
Government Obligations set aside and held in trust pursuant to the provisions of
this SECTION 8.02 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.
ARTICLE IX
DEFAULTS AND REMEDIES
SECTION 9.01. DEFAULTS. If any of the following events occur, it is
hereby declared to constitute a "Default":
(a) Default in the due and punctual payment of interest on any
Bond;
(b) Default in the due and punctual payment of the principal of or
premium, if any, on any Bond, whether at the stated maturity
thereof, or upon proceedings for redemption thereof, or upon
the maturity thereof by declaration;
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(c) Default in the due and punctual payment of the Purchase Price
of any Bond at the time required by SECTION 2.02(C), 4.01,
4.02 OR 4.04 hereof;
(d) At any time prior to the Letter of Credit Termination Date,
receipt by the Trustee, within ten (10) Business Days
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 written notice from the Bank that the Letter
of Credit will not be reinstated (in respect of interest) to
an amount equal to at least fifty (50) days' interest on all
Outstanding Bonds;
(e) At any time prior to the Letter of Credit Termination Date,
receipt by the Trustee of written notice from the Bank that an
Event of Default has occurred under the Credit Agreement and
instructing the Trustee to accelerate the Bonds;
(f) The occurrence of a Default under the Agreement;
(g) Default in the performance or observance of any other of the
covenants, agreements or conditions on the part of the Issuer
in this Indenture or in the Bonds contained and failure to
remedy the same after notice thereof pursuant to SECTION 9.12
hereof.
SECTION 9.02. ACCELERATION. Upon the occurrence of (i) any Default
under subsection (a), (b), (c), (f) or (g) of SECTION 9.01, the Trustee may, and
at the written request of the Owners of not less than twenty-five percent (25%)
in aggregate principal amount of Outstanding Bonds shall, or (ii) any Default
under subsection (d) or (e) of SECTION 9.01, the Trustee shall, by notice in
writing delivered to the Issuer and the Company (and, if the Book-Entry System
is in effect, the Securities Depository), declare the principal of all Bonds and
the interest accrued thereon to the date of such acceleration immediately due
and payable. Upon any declaration of acceleration hereunder, the Trustee shall
immediately declare the payments required to be made by the Company under
SECTION 4.2 of the Agreement 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 6.12(A) hereof.
Interest shall cease to accrue on the Bonds on the date of declaration of
acceleration under this SECTION 9.02.
SECTION 9.03. OTHER REMEDIES; RIGHTS OF OWNERS OF BONDS. Subject to the
provisions of SECTION 9.02 hereof, upon the occurrence of a Default, the Trustee
may pursue any available remedy at law or in equity to enforce the payment of
the principal of, premium, if any, and interest on the Outstanding Bonds.
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Subject to the provisions of SECTION 9.02 hereof, if a Default shall
have occurred and be continuing and if requested so to do by the Owners of
twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and
provided the Trustee is indemnified as provided in SECTION 10.01(l) hereof, the
Trustee shall be obligated to exercise such one or more of the rights and powers
conferred by this Section and by SECTION 9.02 hereof, as the Trustee, being
advised by counsel, shall deem most expedient in the interests of the Owners of
Bonds.
Subject to the provisions of SECTION 9.02 hereof, no remedy by the
terms of this Indenture conferred upon or reserved to the Trustee (or to the
Owners of 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 Bonds hereunder or now or
hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any
Default shall impair any such right or power or shall be construed to be a
waiver of any such Default or acquiescence therein; such right or power may be
exercised from time to time as often as may be deemed expedient.
No waiver of any Default hereunder, whether by the Trustee or by the
Owners of Bonds, shall extend to or shall affect any subsequent Default or shall
impair any rights or remedies consequent thereon.
SECTION 9.04. RIGHT OF OWNERS OF BONDS TO DIRECT PROCEEDINGS. Subject
to the provisions of SECTION 9.02 hereof, anything in this Indenture to the
contrary notwithstanding, the Owners of a majority in aggregate principal amount
of the Outstanding Bonds shall have the right, at any time, by an instrument or
instruments in writing executed and delivered to the Trustee, 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 for the
appointment of a receiver or any other proceedings hereunder provided that such
direction shall not be otherwise than in accordance with the provisions of law
and of this Indenture.
SECTION 9.05. APPOINTMENT OF RECEIVERS. Upon the occurrence of a
Default, and upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee and of the Owners of Bonds
under this Indenture, the Trustee shall be entitled, as a matter of right, to
the appointment of a receiver or receivers of the Trust Estate and of the
revenues, earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment shall confer.
SECTION 9.06. WAIVER. To the extent permitted by law, the Issuer will
not at any time insist upon, plead claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption law now or hereafter in
force solely for the purpose of preventing or hindering the enforcement of this
Indenture, and the Issuer, for itself and
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all who may claim through or under it, so far as it or they now or hereafter may
lawfully do so, hereby waives the benefit of all such laws. The Issuer, for
itself and all who may claim under it waives, to the extent that it lawfully may
do so, all right to have the property in the Trust Estate marshalled upon any
enforcement hereof.
SECTION 9.07. APPLICATION OF MONEYS. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
(other than moneys drawn under the Letter of Credit, which shall be deposited
directly into the Letter of Credit Account of the Bond Fund) 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 owing to or
incurred or made by the Trustee, be deposited in the General Account of the Bond
Fund and the moneys in each account of the Bond Fund shall be applied as
follows:
(a) Unless the principal of all the Bonds shall have become or
shall 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 (with
interest on overdue installments of such interest, to the
extent permitted by law, at the rate of interest borne by the
Bonds) 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 and premium, if any, on any of the Bonds
which shall 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), (with interest
on overdue installments of principal and premium, if any, to
the extent permitted by law, at the rate of interest borne by
the Bonds) and, if the amount available shall not be
sufficient to pay in full all 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 - To the payment to the persons entitled thereto as the
same shall become due of the principal of and premium, if any,
and interest on the Bonds which may thereafter become due and,
if the amount available shall not be sufficient to pay in full
Bonds due on any particular date, together
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with interest and premium, if any, then due and owing thereon,
payment shall be made ratably according to the amount of
interest, principal and premium, if any, 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, with interest on
overdue installments of interest or principal, to the extent
permitted by law, at the rate of interest borne by the Bonds.
(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 this Article,
then, subject to the provisions of SECTION 9.07(b) hereof, 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 SECTION 9.07(a)
hereof.
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) upon 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; provided, that upon an acceleration of Bonds
pursuant to SECTION 9.02, interest shall cease to accrue on the Bonds on and
after the date of such acceleration. 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 shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
Whenever the principal of, premium, if any, and interest on all Bonds
have been paid under the provisions of this Section and all expenses and charges
of the Trustee have been paid, any balance remaining in any account of the Bond
Fund shall be paid to the Company or the Bank as provided in SECTION 6.11
hereof.
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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 and accrued interest on the Bonds.
SECTION 9.08. 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 Owners of the Bonds, and any recovery of judgment shall be for
the equal and ratable benefit of the Owners of the Outstanding Bonds.
SECTION 9.09. RIGHTS AND REMEDIES OF OWNERS OF BONDS. No Owner of any
Bond shall have any right to institute any suit, action or proceeding at law or
in equity 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 (subject to the provisions of SECTION 9.02 hereof) (i) a Default has
occurred of which the Trustee has been notified as provided in SECTION 10.01(h)
hereof, or of which by said subsection it is deemed to have notice, (ii) the
Owners of twenty-five percent (25%) in aggregate principal amount of Outstanding
Bonds shall have made written request to the Trustee and shall have offered it
reasonable opportunity either to proceed to exercise the powers hereinbefore
granted or to institute such action, suit or proceeding and shall have offered
to the Trustee indemnity as provided in SECTION 10.01(l), and (iii) the Trustee
shall thereafter fail or refuse to exercise the powers hereinbefore granted, or
to institute such action, suit or proceeding. 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 no one or more Owners of the
Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by their action or to enforce any right
hereunder except in the manner herein provided, and that all proceedings at law
or equity shall be instituted, had and maintained in the manner herein provided
and for the equal and ratable benefit of the Owners of all Outstanding Bonds.
However, nothing contained in this Indenture shall affect or impair the right of
any Owner of Bonds to enforce the payment of the principal or Purchase Price of,
premium, if any, 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 Owners thereof
at the time and place, from the source and in the manner in the Bonds expressed.
No Owner of any Bond shall have any right to institute any suit, action or
proceeding at equity or at law to enforce a drawing under the Letter of Credit.
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SECTION 9.10. 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, the Trustee and the Owners of Bonds shall be
restored to their former positions and rights hereunder, respectively, with
regard to the property subject to this Indenture, and all rights, remedies and
powers of the Trustee shall continue as if no such proceedings had been taken.
SECTION 9.11. 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 (a) 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 (b) more
than two-thirds (2/3) in aggregate principal amount of Outstanding Bonds in the
case of any other Default; PROVIDED, HOWEVER, that there shall not be waived any
Default hereunder unless and until the Trustee shall have received written
notice from the Bank that the Letter of Credit has been reinstated in full; and
PROVIDED FURTHER that any Default under subsection (e) of SECTION 9.01 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 Default specified in subsection (a) or (b) of
SECTION 9.01 hereof unless prior to such waiver or rescission, the Company shall
have caused to be paid to the Trustee (i) 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 rate then borne by the
Bonds on overdue installments, to the extent permitted by law, and (ii) all
expenses of the Trustee in connection with such Default. In case of any waiver
or rescission described above, or in case any proceeding taken by the Trustee on
account of any such Default shall have been discontinued or concluded or
determined adversely, then and in every such case the Issuer, the Trustee and
the Owners of Bonds 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 the foregoing, no waiver, rescission or annulment of a
Default hereunder shall be made without the Bank's consent if the Bank shall
theretofore have honored in full a drawing under the Letter of Credit in respect
of such Default.
SECTION 9.12. NOTICE OF DEFAULTS UNDER SECTION 9.01(g); OPPORTUNITY TO
CURE SUCH DEFAULTS. Anything herein to the contrary notwithstanding, no Default
under SECTION 9.01(g) hereof shall be deemed a Default until notice of such
Default shall be given to the Issuer and the Company by the Trustee or by the
Owners of not less than twenty-five percent (25%) in aggregate principal amount
of all Outstanding Bonds, and the Issuer and the Company shall have had thirty
(30) days after receipt of such notice to correct said Default or to cause said
Default to be corrected and shall not have
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corrected said Default or caused said Default to be corrected within the
applicable period; provided, however, if said Default be such that it cannot be
corrected within the applicable period, it shall not constitute a Default if
corrective action is instituted by the Issuer or the Company within the
applicable period and diligently pursued until the Default is corrected.
With regard to any Default concerning which notice is given to the
Issuer and the Company under the provisions of this Section, the Issuer hereby
grants the Company full authority for the account of the Issuer to perform any
covenant or obligation alleged in said notice to constitute a Default, in the
name and stead of the Issuer with full power to do any and all things and acts
to the same extent that the Issuer could do and perform any such things and acts
and with power of substitution.
SECTION 9.13. SUBROGATION RIGHTS OF BANK. The Bank shall be subrogated
to the rights possessed under this Indenture by the Owners of the Bonds, to the
extent the Letter of Credit is drawn upon and the amount of such drawing is not
subsequently reimbursed to the Bank. For purposes of the subrogation rights of
the Bank hereunder, (a) any reference herein to the Owners of the Bonds shall
mean the Bank, (b) any principal of or interest on the Bonds paid with moneys
collected pursuant to the Letter of Credit shall be deemed to be unpaid
hereunder, and (c) the Bank may exercise any rights it would have hereunder as
the Owner of the Bonds. The subrogation rights granted to the Bank in this
Indenture are not intended to be exclusive of any other remedy or remedies
available to the Bank and such subrogation rights shall be cumulative and shall
be in addition to every other remedy given hereunder, under the Credit Agreement
or under any other instrument or agreement with respect to the reimbursement of
moneys paid by the Bank under the Letter of Credit or with respect to the
security for the obligations of the Company under the Credit Agreement, and
every other remedy now or hereafter existing at law or in equity or by statute.
SECTION 9.14. SALE OF ISSUER'S INTEREST IN THE PROJECT IN EVENT OF
DEFAULT. If an Event of Default shall have occurred, and subject to the rights
of the Company under the Agreement, the Issuer shall, upon the request and at
the written direction of the Trustee (given at the written direction of the
Owners of twenty-five percent (25%) of the Bonds Outstanding), sell its interest
in the Project or any part or parts thereof (which sale may be to the Bondowners
for cash or in consideration for the forgiveness of all or any portion of the
amounts owed in respect of the Bonds or otherwise under this Indenture or both),
and shall cooperate with the Trustee in the offering for sale and sale of its
interest in the Project, including the employing of such brokers or agents, the
making of such repairs and improvements to the Project, and the taking of such
other actions as shall, in the judgment of the Trustee, be necessary or
appropriate in connection therewith. The net proceeds of such sale, after
deducting all of the Issuer's and Trustee's reasonable fees, charges, costs,
advances and expenses in or in connection therewith, including without
limitation, all repossession costs, brokerage commissions, legal
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expenses and expenses of preparation for sale, shall be deposited in the Bond
Fund and applied as provided in SECTION 9.07 hereof. The Issuer shall not be
required to incur any costs in connection with such offer for sale or sale,
other than those to be paid out of the proceeds of sale or out of funds advanced
by the Bondowners for such purposes.
ARTICLE X
TRUSTEE AND TENDER AGENT
SECTION 10.01. ACCEPTANCE OF TRUSTS. 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 express terms and conditions:
(a) The Trustee, prior to the occurrence of a Default and after
the curing of all Defaults which may have occurred, undertakes
to perform such duties and only such duties as are
specifically set forth in this Indenture and the Agreement. In
case a Default has occurred (which has not been cured or
waived), 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 the exercise of such rights and powers as
an ordinary, prudent person would exercise or use in the
conduct of such person's 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 not be answerable for the
conduct of the same if appointed with due care, and shall be
entitled to advice of counsel concerning its 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 any attorney
(who may be the attorney or attorneys for the Issuer or the
Company) selected 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 inaction taken or not
taken, as the case may be, in good faith in reliance upon such
opinion or advice.
(c) The Trustee shall not be responsible for any recital herein or
in the Bonds (except with respect to the certificate of
authentication endorsed on the Bonds), or for insuring the
Project, or for collecting any insurance moneys, 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 Project or any lien waivers with respect to
the Project, and the Trustee shall not be bound to
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ascertain or inquire as to the performance or observance of
any covenants, conditions or agreements on the part of the
Company under the Agreement except as hereinafter set forth;
but the Trustee may require of the Issuer and the Company full
information and advice as to the performance of the aforesaid
covenants, conditions and agreements.
(d) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder. The Trustee may become
the Owner of Bonds secured hereby with the same rights which
it would have if not the Trustee hereunder.
(e) 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 Owner of any Bond shall be
conclusive and binding upon all future owners of the same Bond
and upon Bonds issued in exchange therefor or in place
thereof.
(f) 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 by an Issuer Representative or a Company
Representative 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 SECTION 10.01(h)
hereof, or of which by said subsection the Trustee 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 by it to be
necessary or advisable, but shall in no case be bound to
secure the same. The Trustee may accept a certificate of such
officials of the Issuer who executed the Bonds (or their
successors in office) 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.
(g) The permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence
or willful default.
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(h) The Trustee shall not be required to take notice or be deemed
to have notice of any Default hereunder except for Defaults
specified in subsections (a), (b), (c), (d) or (e) of SECTION
9.01 hereof, unless the Trustee shall be specifically notified
in writing of such Default by the Issuer, the Bank or by the
Owners of at least twenty-five percent (25%) in aggregate
principal amount of Outstanding Bonds, and all notices or
other instruments required by this Indenture 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 except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants
and representatives, shall have the right fully to inspect all
books and records of the Issuer pertaining to the Project and
the Bonds, and to make such copies and memoranda from and with
regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or surety
in respect of the execution of this Indenture or otherwise in
respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture with
respect to 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, the Trustee shall have
the right, but shall not be required, to demand 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,
deemed desirable by the Trustee 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.
(l) Before taking any action under this Indenture or under the
Agreement (other than (i) paying the principal or Purchase
Price of, redemption premium (if any) and interest on the
Bonds as the same shall become due and payable, (ii) drawing
upon the Letter of Credit, and (iii) declaring an acceleration
under SECTION 9.02 as a result of a Default under SECTION
9.01(d) OR (e)), the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of any
expenses to which it may be put and to protect it against all
liability, except liability which is adjudicated to have
resulted from its negligence or willful default in connection
with any such action.
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(m) All moneys received by the Trustee 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 otherwise
required herein or required by law.
SECTION 10.02. FEES, CHARGES AND EXPENSES OF THE TRUSTEE. The Trustee
shall be entitled to payment of reasonable fees for its services rendered
hereunder and reimbursement of all advances, counsel fees and other expenses
reasonably made or incurred by the Trustee in connection with such services.
Upon the occurrence of a Default, but only upon the occurrence of a Default, the
Trustee shall have a first lien with right of payment prior to payment on
account of principal of, premium, if any, and interest on any Bond upon the
Trust Estate (exclusive of the proceeds of any drawing under the Letter of
Credit, proceeds of the remarketing of the Bonds and funds held by the Trustee
for matured and unpresented Bonds) for the foregoing fees, charges and expenses
of the Trustee. When the Trustee incurs expenses or renders services after the
occurrence of an Act of Bankruptcy with respect to the Company, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency, arrangement,
moratorium, reorganization or other debtor relief law. The Issuer shall have no
liability to pay any fees, charges or other expenses of the Trustee hereinabove
mentioned except from the amounts pledged under this Indenture.
SECTION 10.03. NOTICE TO OWNERS OF BONDS IF DEFAULT OCCURS. If a
Default occurs of which the Trustee has been notified as provided in SECTION
10.01(h) hereof, or of which by said subsection it is deemed to have notice,
then the Trustee shall promptly give notice thereof to the Bank and to the Owner
of each Bond.
SECTION 10.04. 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%) of the aggregate principal
amount of Outstanding Bonds.
SECTION 10.05. 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, sale, merger, consolidation or transfer to
which it is a party, shall be and become successor Trustee hereunder and 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.
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SECTION 10.06. RESIGNATION BY THE TRUSTEE. The Trustee and any
successor Trustee may at any time resign from the trusts hereby created by
giving thirty (30) days' notice to the Issuer, the Bank, the Tender Agent, the
Remarketing Agent, the Company, and the Owner of each Bond. Such resignation
shall not take effect until the appointment of a successor Trustee or temporary
Trustee.
SECTION 10.07. REMOVAL OF THE TRUSTEE. The Trustee may be removed at
any time by an instrument in writing signed by the Issuer delivered to the
Trustee or by an instrument or concurrent instruments in writing delivered to
the Trustee and to the Issuer and signed by the Owners of a majority in
aggregate principal amount of Outstanding Bonds. Such removal shall not take
effect until the appointment of a successor Trustee or temporary Trustee.
SECTION 10.08. APPOINTMENT OF SUCCESSOR TRUSTEE BY OWNERS OF BONDS. In
case the Trustee hereunder shall resign or be removed, or be dissolved, or shall
be in the course of dissolution or liquidation, 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 court, a successor may be
appointed by the Owners of a majority in aggregate principal amount of
Outstanding Bonds by an instrument or concurrent instruments in writing signed
by such Owners, or by their attorneys-in-fact duly authorized, a copy of which
shall be delivered personally or sent by registered mail to the Issuer, the
Company, the Tender Agent and the Bank. In case of any such vacancy, the Issuer,
by an instrument executed by its official who executed the Bonds or said
official's successor in office, may appoint a temporary successor Trustee to
fill such vacancy until a successor Trustee shall be appointed by the Owners of
Bonds in the manner above provided; and such temporary successor Trustee so
appointed by the Issuer shall immediately and without further act be superseded
by the Trustee appointed by the Owners of Bonds. If no successor Trustee has
accepted appointment in the manner provided in SECTION 10.09 hereof within sixty
(60) days after the Trustee has given notice of resignation to the Issuer and
the Owner of each Bond, the Trustee may petition any court of competent
jurisdiction for the appointment of a temporary successor Trustee; provided that
any Trustee so appointed shall immediately and without further act be superseded
by a Trustee appointed by the Issuer or the Owners of Bonds as provided above.
Every successor Trustee appointed pursuant to the provisions of this Section
shall be, if there be such an institution willing, qualified and able to accept
the trust upon customary terms, a bank or trust company within or without the
State, in good standing and having or be wholly owned by an entity having
reported capital and surplus of not less than $50,000,000 and rated Baa3/Prime-3
or better by Moody's (or a substantially equivalent rating by such other rating
agency then providing the rating borne by the Bonds).
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SECTION 10.09. ACCEPTANCE BY 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,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor; but its
predecessor shall, nevertheless, on the written request of the Issuer, or of its
successor, execute and deliver an instrument transferring to such successor 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 for more fully and
certainly vesting in such successor the estate, 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 10.10. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture 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 under this Indenture
or the Agreement, and in particular in case of the enforcement thereof on
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 or therein 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 or the
Agreement to be exercised by or vested in or conveyed to the Trustee with
respect thereto shall 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 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 or Co-Trustee so appointed by the Trustee for more
fully and certainly vesting in and confirming to it such properties, rights,
powers, trusts, duties and obligations, any and all such deeds, conveyances and
instruments in writing shall, on request, be executed, acknowledged and
delivered by the Issuer. In case any separate or Co-Trustee, or a successor,
shall die, become incapable of acting, resign or be removed, all the estates,
properties, rights, powers, trusts, duties and obligations of such separate or
Co-Trustee, so far as permitted by law, shall vest in and be exercised by the
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Trustee until the appointment of a successor to such separate or Co-Trustee. Any
Co-Trustee appointed by the Trustee pursuant to this Section may be removed by
the Trustee, in which case all powers, rights and remedies vested in the
Co-Trustee shall again vest in the Trustee as if no such appointment of a
Co-Trustee had been made.
SECTION 10.11. SUCCESSOR TENDER AGENT; APPOINTMENT OF CO-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, 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 Issuer, 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 Issuer or 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 Issuer 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 and rated
Baa3/Prime-3 or better by Moody's (or a substantially
equivalent rating by such other rating agency then providing
the rating borne by the Bonds). Any such successor shall be
acceptable to the Issuer and 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
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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 Issuer, 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 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.
(e) In the event the Tender Agent shall determine at any time that
the duties and obligations of the Tender Agent described
herein and in the Tender Agent Agreement require the
appointment of a Co-Tender Agent, the Tender Agent may appoint
an additional institution as a separate or Co-Tender Agent, in
which event each and every remedy, power, right, claim,
demand, cause of action, immunity and interest expressed or
intended by this Indenture and by the Tender Agent Agreement
to be exercised by or conveyed to the Tender Agent with
respect thereto shall be exercisable by and vest in such
separate or Co-Tender Agent, but only to the extent necessary
to enable such separate or Co-Tender Agent to exercise such
powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate or
Co-Tender Agent shall run to and be enforceable by either of
them. Such Co-Tender Agent shall be acceptable so long as it
satisfies the requirements set forth above with respect to the
appointment of a successor Tender Agent.
SECTION 10.12. SUCCESSOR REMARKETING AGENT.
(a) Any corporation or association into which the Remarketing
Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its business
and assets 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,
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shall be and become the successor Remarketing 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 Remarketing Agent may at any time resign by giving thirty
(30) days' notice to the Issuer, the Trustee, the Bank, the
Company and the Tender Agent. Such resignation shall not take
effect until the appointment of a successor Remarketing Agent.
(c) The Remarketing 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
Remarketing Agent take effect until a successor Remarketing
Agent shall have been appointed.
(d) In case the Remarketing 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
Remarketing 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 Issuer and the
Bank. Every successor Remarketing 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 Remarketing Agent upon customary terms, a bank or trust
company or any entity rated Baa3/Prime-3 or better, within or
without the State, in good standing and having reported
capital and surplus of not less than $10,000,000 and rated
Baa3/Prime-3 or better by Moody's (or a substantially
equivalent rating by such other rating agency then providing
the rating borne by the Bonds). Any such successor shall be
acceptable to the Issuer and 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 Remarketing 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 Remarketing Agent, but such predecessor
shall nevertheless, on the written request of the Company, the
Trustee or the Issuer, 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 Remarketing
Agent has accepted appointment in the manner provided
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above within 90 days after the Remarketing Agent has given
notice of its resignation as provided above, the Remarketing
Agent may petition any court of competent jurisdiction for the
appointment of a temporary successor Remarketing Agent;
provided that any Remarketing Agent so appointed shall
immediately and without further act be superseded by a
Remarketing Agent appointed by the Company as provided above.
SECTION 10.13. NOTICE TO RATING AGENCIES. The Trustee shall provide
Moody's or S&P, as appropriate, so long as either of such rating agencies shall
provide the rating borne by the Bonds, with prompt written notice following the
effective date of such event of (a) any successor Trustee, any successor Tender
Agent, and any successor Remarketing Agent, (b) any Substitute Bank, (c) any
material amendments to this Indenture or the Agreement, (d) the expiration or
termination of any Letter of Credit, (e) the conversion of the interest rate
borne by the Bonds from the Adjustable Rate to the Fixed Rate, (f) a change in
the duration of the Interest Period (and the duration of the new Interest
Period), (g) the occurrence of a Mandatory Tender Date, or (h) the redemption in
whole of the Bonds or the payment in full of the Bonds at maturity.
SECTION 10.14 NOTICE TO BONDOWNERS. Pursuant to SECTION 4.4 of the
Agreement, the Company may provide for the delivery to the Trustee of a
Substitute Letter of Credit, in accordance with the terms set forth in the
Agreement. The Company has agreed that it will promptly notify the Trustee of
its intention to deliver a Substitute Letter of Credit. Upon receipt of such
notice, the Trustee will promptly mail a notice of the anticipated delivery of a
Substitute Letter of Credit by first-class mail to the Issuer, the Remarketing
Agent and each Bondowner at the Owner's registered address, which notice must be
mailed not later than the date of the notice of mandatory tender as described in
this Indenture.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF OWNERS
OF BONDS. The Issuer and the Trustee may, with the consent of the Bank and upon
receipt of an opinion of Bond Counsel to the effect that the proposed
supplemental indenture will not adversely affect the excludability of interest
on the Bonds from gross income for federal income tax purposes and is authorized
by this Indenture, and without consent of, or notice to, any of the Owners of
Bonds, enter into an indenture or indentures supplemental to this Indenture for
any one or more of the following purposes:
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(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
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;
(c) To subject to this Indenture additional revenues, properties
or collateral;
(d) To modify, amend or supplement this Indenture or any indenture
supplemental hereof 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;
(e) To evidence the appointment of a separate or Co-Trustee or the
succession of a new Trustee hereunder;
(f) To correct any description of, or to reflect changes in, any
of the properties comprising the Trust Estate;
(g) To make any revisions of this Indenture that shall be required
by Moody's or S&P in order to obtain or maintain an investment
grade rating on the Bonds;
(h) To provide for an uncertificated system of registering the
Bonds or to provide for changes to or from the Book-Entry
System; or
(i) To effect any other change herein which, in the judgment of
the Issuer, is not materially prejudicial to the Trustee or
the Owners of Bonds; or
(j) To conform this Indenture to the Code or other future
applicable federal law concerning tax-exempt obligations.
In the event S&P and/or Moody's has issued a rating of any of the
Bonds, S&P and/or Moody's, as the case may be, shall receive prior written
notice from the Trustee of the proposed amendment but such notice shall not be a
condition of the effectiveness of such amendment.
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SECTION 11.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF OWNERS OF
BONDS. Exclusive of supplemental indentures permitted by SECTION 11.01 hereof
and subject to the terms and provisions contained in this Section, and not
otherwise, the Bank and the Owners of not less than two-thirds (2/3) in
aggregate principal amount of the Outstanding Bonds shall have the 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 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 or in SECTION 11.01 hereof contained shall permit,
or be construed as permitting, without the consent of the Bank and the Owners of
all Bonds Outstanding, (a) an extension of the maturity of the principal of, or
the interest on, any bond issued hereunder, or (b) a reduction in the principal
amount or Purchase Price of, or redemption premium on, any Bond or the rate of
interest thereon, or (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 indentures or any modifications
or waivers of the provisions of this Indenture or the Agreement, or (e) the
creation of any lien ranking prior to or on a parity with the lien of this
Indenture on the Trust Estate or any part thereof, except as hereinbefore
expressly permitted, or (f) the deprivation of the Owner of any Outstanding Bond
of the lien hereby created on the Trust Estate.
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, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
notice of the proposed execution of such supplemental indenture to be given to
the Bank and to the Owners of the Bonds as provided in SECTION 3.04 of this
Indenture; provided, that prior to the delivery of such notice, the Trustee may
require that an opinion of Bond Counsel be furnished to the effect that the
supplemental indenture complies with the provisions of this Indenture and will
not adversely affect the excludability of interest on the Bonds from gross
income for federal income tax purposes. 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 Office of the Trustee for inspection by all
Owners of Bonds. If, within sixty (60) days or such longer period as shall be
prescribed by the Issuer following such notice, the Bank and the Owners of not
less than two-thirds (2/3) in aggregate principal amount of the Bonds
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 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
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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 and be deemed to be
modified and amended in accordance therewith.
Anything herein to the contrary notwithstanding, a supplemental
indenture under this Article 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 of any such supplemental
indenture together with a copy of the proposed supplemental indenture to be
mailed to the Company at least fifteen (15) Business Days prior to the proposed
date of execution and delivery of any such supplemental indenture.
In the event S&P and/or Moody's has issued a rating of any of the
Bonds, S&P and/or Moody's, as the case may be, shall receive prior written
notice from the Trustee of the proposed amendment but such notice shall not be a
condition of the effectiveness of such amendment.
ARTICLE XII
AMENDMENT OF AGREEMENT
SECTION 12.01. AMENDMENTS TO AGREEMENT NOT REQUIRING CONSENT OF OWNERS
OF BONDS. The Issuer and the Trustee may, with the consent of the Bank and upon
receipt of an opinion of Bond Counsel to the effect that the proposed amendment
will not adversely affect the excludability of interest on the Bonds from gross
income for federal income tax purposes and is authorized by this Indenture, and
without the consent of or notice to the Owners of Bonds, consent to any
amendment, change or modification of the Agreement as may be required (a) by the
provisions of the Agreement, (b) for the purpose of curing any ambiguity or
formal defect or omission in the Agreement, (c) so as to more precisely identify
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 Agreement, (d) to enter into an indenture or
indentures supplemental hereto as provided in SECTION 11.01 hereof, (e) to make
any revisions that shall be required by Moody's and/or S&P in order to obtain or
maintain an investment grade rating on the Bonds, (f) in connection with any
other change therein which, in the judgment of the Trustee, is not materially
prejudicial the Trustee or the Owners of Bonds, or (g) to conform the Agreement
to the Code or other future applicable federal law concerning tax-exempt
obligations.
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SECTION 12.02. AMENDMENTS TO AGREEMENT REQUIRING CONSENT OF OWNERS OF
BONDS. Except for the amendments, changes or modifications as provided in
SECTION 12.01 hereof, neither the Issuer nor the Trustee shall consent to any
other amendment, change or modification of the Agreement without mailing of
notice and 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 Agreement that would
permit the termination or cancellation of the Agreement or a reduction in or
postponement of the payments under the Agreement or any change in the provisions
relating to payment thereunder. 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, the Trustee shall, upon being satisfactorily
indemnified by the Company with respect to expenses, cause notice of such
proposed amendment, change or modification to be given in the same manner as
provided by SECTION 11.02 hereof with respect to supplemental indentures;
provided, that prior to the delivery of such notice or request, the Trustee and
the Issuer may require that an opinion of Bond Counsel be furnished to the
effect that such amendment, change or modification complies with the provisions
of this Indenture and will not adversely affect the excludability of interest on
the Bonds from gross income for federal income tax purposes. 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 all Owners of Bonds.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. CONSENTS OF OWNERS OF BONDS. Any consent, request,
direction, approval, objection or other instrument required by this Indenture to
be signed and executed by the Owners of Bonds may be in any number of concurrent
documents and may be executed by such Owners of Bonds 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 written appointment
of any such agent or 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 by it under
such request or other instrument. 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 or by an officer authorized by law to take
acknowledgments of deeds certifying that the person signing such instrument or
writing acknowledged to him the execution thereof. The fact of ownership of
Bonds and the amount or amounts, numbers and other identification of such Bonds,
and the date of owning the same shall be proved by the registration books of the
Issuer maintained by the Trustee pursuant to SECTION 2.08 hereof.
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SECTION 13.02. LIMITATION OF RIGHTS. With the exception of any 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 or company other than the parties hereto, the Tender Agent, the Bank
and the Owners of the Bonds, any legal or equitable right, remedy or claim under
or with 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 Tender Agent, the Bank and the Owners of the
Bonds as herein provided.
SECTION 13.03. SEVERABILITY. If any provision of this Indenture shall
be held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to any
extent whatever.
SECTION 13.04. NOTICES. Any notice, request, complaint, demand,
communication or other paper shall be sufficiently given and shall be deemed
given when delivered or mailed by registered or certified mail, postage prepaid
or sent by telegram, addressed as follows:
If to the Issuer:
City of Shawnee, Kansas
Shawnee City Hall
11110 Johnson Drive
Shawnee, Kansas 66203
Attention: Finance Director
If to the Trustee:
State Street Bank and Trust
Company of Missouri, N.A.
One Mercantile Center
17th Floor
7th & Washington
P.O. Box 321 (Zip 63166-0321)
St. Louis, Missouri 63101
Attention: Corporate Trust Department
Payment Office (to surrender Bonds for payment or for exchange and
registration):
State Street Bank and Trust Company
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102
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or
State Street Bank and Trust Company
Two International Place, 4th Floor
Corporate Trust Window
Boston, Massachusetts 02110
If to the Company:
Simmons Company
One Concourse Parkway,
Suite 600
Atlanta, Georgia 30328-5346
Attention: Vice President-Finance, Treasurer
If to the Bank:
SunTrust Bank, Atlanta
25 Park Place, 10th Floor
Atlanta, Georgia 30303
Attention: Letter of Credit Department
If to the issuer of a Substitute Letter of Credit:
Its address designated in
writing to the Trustee
If to the Remarketing Agent:
Its Principal Office
If to the Tender Agent:
State Street Bank and Trust
Company of Missouri, N.A.
One Mercantile Center
17th Floor
7th & Washington
P.O. Box 321 (Zip 63166-0321)
St. Louis, Missouri 63101
Attention: Corporate Trust Department
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Payment Office (to surrender Bonds for payment or for exchange and
registration):
State Street Bank and Trust Company
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102
If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Corporate Department, Structured Finance Group
If to S&P:
Standard & Poor's Corporation
25 Broadway
New York, New York 10004
Attention: Corporate Finance Department
A duplicate copy of each notice required to be given hereunder by any person
listed above shall also be given to the others. The Issuer, the Company, the
Trustee, the Remarketing Agent, the Tender Agent and the Bank, and the issuer of
any Substitute Letter of Credit, may designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent. Except for those writings requiring original signatures, any
written notice, instruction or confirmation required hereunder may be provided
by telex, telegraph or facsimile transmission.
SECTION 13.05. 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 13.06. COUNTERPARTS. This Indenture may be simultaneously
executed in several counterparts, each of which shall be an original and all of
such shall constitute but one and the same instrument.
SECTION 13.07. APPLICABLE PROVISIONS OF LAW. This Indenture shall be
governed by and construed in accordance with the laws of the State.
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SECTION 13.08. RULES OF INTERPRETATION. Unless expressly indicated
otherwise, references to Sections or Articles are to be construed as references
to Sections or Articles of this instrument as originally executed. Use of the
words "herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter"
and other equivalent words refer to this Indenture and not solely to the
particular portion in which such word is used.
SECTION 13.09. CAPTIONS. The captions and 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 13.10. NO PERSONAL LIABILITY. Notwithstanding anything to the
contrary contained herein or in any of the Bonds or the Agreement, or in any
other instrument or document executed by or on 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 obligations, nor shall any recourse be
had for the payment of 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.
SECTION 13.11. 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
Agreement, this Indenture and the Bonds shall be ineffective.
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This Trust Indenture has been executed as of the date first written
hereinabove.
CITY OF SHAWNEE, KANSAS
By:
----------------------------------
Mayor
(SEAL)
ATTEST:
City Clerk
<PAGE> 73
This Trust Indenture has been executed as of the date first written
hereinabove.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.
By:
----------------------------------
Assistant Vice President
(SEAL)
ATTEST:
Assistant Secretary
<PAGE> 74
EXHIBIT A
---------
PROJECT SITE
Lot 1, K-7 Industrial Park, a subdivision of land in the City of Shawnee,
Johnson County, Kansas according to the plat thereof recorded in Plat Book 95,
Page 10.
<PAGE> 75
EXHIBIT B
---------
PROJECT BUILDING
All buildings, structures, improvements and fixtures located on or to
be acquired, constructed, furnished and otherwise improved on the Project Site
and paid for in whole or in part from proceeds of the Bonds.
<PAGE> 76
EXHIBIT C
---------
PROJECT EQUIPMENT
All equipment located on or to be purchased and used to equip the
Project Building located on the Project Site and paid for in whole or in part
from proceeds of the Bonds, including, without limitation, the following:
See Attached Schedule I
<PAGE> 77
SCHEDULE I
Porter 401/300 Box Spring Sewing Machine
Box Spring Frame Making Tables(2)
Gribetz 2300 Quilt Machine
Porter 1000 Overcasting Machine(2)
Pocketed Coiler Machines(2)
Cutting Table w/Feed Rail
Cloth Spreader
High Speed Double Overcaster
10 Ft. Overhead Conveyor Pocketed Coil(6)
Bechick Handle Machine Model 7000
Spuhl Anderson Bagging Machine Model MW22
Queen Size Closing Tables w/King Pull Outs(2)
300 W Sewing Machine
Air Assist Sewing Table
Conveyor
conveyor - Electrical
Material Slitter
New Hog Ring Tables (HMB Area)(3)
Auto-Label Machine
New Style Box Spring Top Off Tables
Trough Conveyors(2)
<PAGE> 78
EXHIBIT D
DEFINITIONS
"Act" means K.S.A. 12-1740 to 12-1749d, inclusive, all as amended.
"Act of Bankruptcy" means the filing of a petition in bankruptcy (or
any other commencement of a bankruptcy or similar proceeding) by or against
the Company or the Issuer or any affiliate of the foregoing under any
applicable bankruptcy, insolvency, reorganization or similar law, now or
hereafter in effect.
"Adjustable Rate" means the interest rate borne by the Bonds from the
date of issuance and delivery thereof to (but not including) the Conversion
Date, as said rate is determined in accordance with SECTION 2.02(c) of the
Indenture.
"Agreement" means the Lease Agreement dated as of December 1, 1996, by
and between the Issuer and the Company, and any amendments and supplements
thereto.
"Authorized Denominations" means (a) in the case of Bonds with an
Adjustable Rate $100,000 and any integral multiple of $5,000 in excess thereof
and (b) in the case of Bonds with a Fixed Rate $5,000 and any integral multiple
thereof.
"Bank" means (a) SunTrust Bank, Atlanta, a state banking corporation
organized and existing under the laws of the State of Georgia, and (b) any
Substitute Bank.
"Beneficial Owner" means any person who (a) has the power directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of,
any Bond (including persons holding Bonds through nominees, depositories or
other intermediaries), or (b) is treated as owner of any Bond for federal
income tax purposes.
"Bond Closing Date" means December 23, 1996.
"Bond Counsel" means McDowell, Rice, Smith & Gaar, a Professional
Corporation, or other attorney or firm of attorneys designated by the Issuer
having a national reputation for skill in connection with the authorization and
issuance of municipal obligations in Kansas and under Sections 103 and 141-150
of the Code.
"Bond Fund" means the fund created in Section 6.01 of the Indenture, in
which there is established a General Account, a Letter of Credit Account and a
Remarketing Account.
"Bondowner" or "Owner" of the Bonds means the Registered Owner of any
Bond issued under the Indenture.
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"Bond Register" means the books of the Issuer kept by the Registrar to
evidence the registration and transfer of the Bonds.
"Bonds" means $5,000,000 Private Activity Revenue Bonds, Series 1996
(Simmons Company Project), of the City of Shawnee, Kansas, issued pursuant to
SECTION 2.02 of the Indenture.
"Book-Entry System" means the system maintained by the Securities
Depository described in SECTION 2.12 of the Indenture.
"Business Day" means a day on which the Trustee, the Bank and banks
located in St. Louis, Missouri, or Boston, Massachusetts, are required or
permitted by law to be open for the purpose of conducting a banking business.
"Casualty\Condemnation Fund" means the fund created in SECTION 6.14 of
the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, including, when appropriate, the statutory predecessor of the Code, and
all applicable regulations thereunder whether proposed, temporary or final,
including regulations issued and proposed pursuant to the statutory predecessor
of the Code, and, in addition, all official rulings and judicial determinations
applicable to the Bonds under the Code and under the statutory predecessor of
the Code and any successor provisions to the relevant provisions of the Code or
regulations.
"Company" means (a) Simmons Company, a Delaware corporation, authorized
and qualified to do business in the State of Kansas and (b) any surviving,
resulting, or transferee entity as provided in the Agreement.
"Company Representative" means the person or persons at the time
designated to act on behalf of the Company by written certificate furnished to
the Issuer and the Trustee containing the specimen signatures of such person or
persons and signed on behalf of the Company by its President or any Vice
President. Such certificate may designate an alternate or alternates.
"Completion Date" means the date of completion of the Project, as that
date shall be certified as provided in SECTION 3.5 of the Agreement.
"Construction Fund" means the fund created in SECTION 6.05 of the
Indenture.
"Consultant" means a firm of recognized expertise in the area of
arbitrage rebate calculations and requirements engaged by the Company and
acceptable to the Issuer and the Trustee.
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<PAGE> 80
"Conversion Date" means the date on which the interest rate on the Bonds
is converted from the Adjustable Rate to the Fixed Rate, which date shall be an
Interest Payment Date that is at least six (6) months after the Dated Date of
the Bonds.
"Conversion Option" means the option granted to the Company in SECTION
4.01 of the Indenture to convert the interest rate on the Bonds from the
Adjustable Rate to the Fixed Rate as of the Conversion Date.
"Cost" with respect to the Project shall be deemed to include all items
permitted to be financed under the provisions of the Code and the Act.
"Cost of Issuance Fund" means the fund created in SECTION 6.15 of the
Indenture.
"Credit Agreement" means (a) the Letter of Credit Agreement dated as of
December 1, 1996, by and between the Company and SunTrust Bank, Atlanta, and any
amendments and supplements thereto and (b) the letter of credit agreement or
reimbursement agreement between the Company and any Substitute Bank, and any
amendments and supplements thereto.
"Dated Date" means December 23, 1996.
"Default" means any Default under the Indenture as specified in and
defined by SECTION 9.01 of the Agreement.
"Determination of Taxability" means 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 purposes under the Code (other than an
Owner who is a substantial user or related person within the meaning of Section
144(a) 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.
"Demand Purchase Option" means the option granted to Owners of Bonds,
while the Bonds bear interest at the Adjustable Rate, to require that Bonds be
purchased prior to the Conversion Date pursuant to SECTION 4.04 of the
Indenture.
"Environment" means all air, surface, water, ground water, or land,
including land surface or sub-surface, and all other natural resources.
D-3
<PAGE> 81
"Environmental Law" means any applicable federal, state or local
statutory or common law, statute, ordinance, code, rule, regulation or other
legally binding requirement, whether now in existence or established or enacted
in the future, relating to natural resources, pollution, protection of the
environment or public and employee health and safety, including without
limitation, any common law of nuisance or trespass, and any law, rule or
regulation relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants or chemicals, or industrial, toxic or hazardous
substances or waste into the environment (including without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants
or chemical or industrial, toxic or hazardous substances or wastes including,
without limitation, all Hazardous Waste Laws.
"Environmental Report Audit" means the Phase I Environment Assessment
dated March 29, 1996, as updated December 19, 1996.
"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, 2016, multiplied by 1/2 and rounded up to the nearest whole
number.
"Fixed Rate" means 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(d) of the Indenture.
"Full Insurable Value" means the actual replacement cost of the Project
less physical depreciation and exclusive of land, excavations, footings,
foundations and parking lots.
"Government Obligations" means any of the following which are
noncallable: direct general obligations of, or obligations the payment of
the principal of and interest on which are unconditionally guaranteed as to
full and timely payment by, the United States of America.
"Gross Proceeds" means the aggregate of:
(a) the net amount (after payment of all expenses of issuing the
Bonds) of Bond proceeds received by the Issuer as a result of
the sale of the Bonds;
(b) all amounts received by the Issuer as a result of the investment
of the Bond proceeds;
D-4
<PAGE> 82
(c) any amounts held in any fund to the extent that the Issuer
reasonable expects to use the fund to pay principal of or
interest on the Bonds; and
(d) any securities or obligations pledged by the Issuer or by the
Company as security for the payment of principal of or interest
on the Bonds.
"Guarantor" means the Company, its successors or assigns.
"Guaranty Agreement" means the Guaranty Agreement dated as of December
1, 1996, from the Company in favor of the Trustee.
"Hazardous Materials" means any substance, material or waste presently
or hereafter identified to be toxic, hazardous or dangerous (or words of
similar import) by any governmental or quasi-governmental authority having
jurisdiction over the Project according to any Hazardous Waste Law or other
Environmental Law, including, without limitation, any material, substance or
waste which is defined as a "hazardous waste," "hazardous material,"
"restricted hazardous waste, "contaminant," "toxic waste" or "toxic substance"
under any provision of Environmental Law, which includes, but is not limited
to, any asbestos, PCBs, radioactive substance, methane, volatile hydrocarbons,
acids, pesticides, paints, petroleum based products, urea formaldehyde lead,
cyanide, DDT, printing inks, industrial solvents or any other material or
substance which has in the past or could presently or at any time in the future
cause or constitute a health, safety or other environmental hazard to any
person or property, including, without limitation, the Project.
"Hazardous Substances" means any substance or material (a) identified
in Section 101(14) of CERCLA, 42 USC Section 9601(14) and as set forth in Title
40, Code of Federal Regulations, Part 302, as the same may be amended from time
to time, (b) determined to be toxic, a pollutant or contaminant, under federal,
state or local statute, law, ordinance, rule or regulation or judicial or
administrative order or decision, as the same may be amended from time to time,
including but not limited to petroleum and petroleum products as defined in the
State of Kansas Statutes, as the same may be amended from time to time, (c)
asbestos, (d) radon, (e) polychlorinated biphenyls and (f) such other
materials, substances or waste which are otherwise dangerous, hazardous,
harmful or deleterious to human health or the environment, including without
limitation, any Hazardous Materials or other materials which may otherwise
impair the value of the Project.
"Hazardous Waste Law" means any and all federal, state and local
statutes, rules and regulations relating to the discharge, spillage, storage,
uncontrolled loss, seepage, filtration, disposal, removal or use of Hazardous
Materials, including, but not limited to, the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. 6901 ET SEQ., the Comprehensive Environment
Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
9601-9657, as amended by the Superfund Amendments and Reauthorization Act of
1986, the Hazardous Substances Transportation Act, 49 U.S.C. 6901 ET SEQ., the
Federal Water Pollution Control Act, 33 U.S.C., 1251 ET SEQ., the Clean Air
Act, 42
D-5
<PAGE> 83
U.S.C. 7401 ET SEQ., the Toxic Substances Control Act, 15 U.S.C. 2601-2629,
the Safe Drinking Water Act, 42 U.S.C. 3OOf-300j, the Oil Pollution Act of 1990,
33 U.S.C. 2701 ET SEQ. and the Occupational Safety and Health Act, 29 U.S.C. 651
ET SEQ., as such laws have been amended and the regulations promulgated pursuant
thereto and all analogous state or local laws and all similar present and future
federal, state and local environmental statutes and ordinances, and all
regulations, orders, and decrees now or hereafter promulgated thereunder, as the
same may be amended at any time hereafter.
"Indenture" means the Indenture of Trust dated as of December 1, 1996,
by and between the Issuer and the Trustee pursuant to which the Bonds are
authorized to be issued, and any amendments and supplements thereto.
"Independent Counsel" means an attorney duly admitted to practice law
before the highest court of any state and who is not a full-time employee,
director, officer, or partner of the Issuer or the Company.
"Interest Payment Date" means (a) so long as the Bonds bear interest at
the Adjustable Rate, the Interest Payment Date for each Interest Period shall
be the first day of the next succeeding Interest Period; provided, that so long
as the Interest Period is one week in duration, the term Interest Payment Date
shall mean the first day of each calendar month, and (b) so long as the Bonds
bear interest at the Fixed Rate, June 1 and December 1 in each year, commencing
on the June 1 or December 1 next succeeding the Conversion Date.
"Interest Period" means the period from the date of issuance and
delivery of the Bonds to and including the next succeeding Tuesday (unless the
Bonds are issued and delivered on a Tuesday, in which case the first Interest
Period shall include only such Tuesday), and each period of one (1) week's
duration thereafter, commencing on Wednesday of each week and continuing
through Tuesday of the following week. At the option of the Company, the
duration of the Interest Period may be adjusted in accordance with the
provisions of SECTION 2.02(c) of the Indenture, in which event the term
"Interest Period" shall mean (a) for any period of time of one (1) week's
duration, the period commencing Wednesday of each week and continuing through
Tuesday of the following week, (b) for any period of time of one (1) month's
duration, the period commencing on the first (1st) day of each calendar month
and terminating on the last day of such month, (c) for any period of time of
three (3) month's duration, the period commencing on the first (1st) day of the
first (lst) calendar month and terminating on the last day of the third (3rd)
calendar month, and (iv) for any period of time of six (6) month's duration,
the period commencing on the first (lst) day of the first (lst) calendar month
and terminating on the last day of the sixth (6th) calendar month. Under no
circumstances shall the Interest Period exceed six (6) months in duration. The
duration of the Interest Period may be adjusted effective only on the day
following the last day of the preceding Interest Period; provided, however,
that an Interest Period of one week's duration may be adjusted to any other
authorized duration only on the first (lst) day of each calendar month. In the
event the duration of the Interest Period is to be adjusted from one (1) week
to another authorized duration pursuant to the provisions of
D-6
<PAGE> 84
SECTION 2.02(c) of the Indenture, and the expiration of the last Interest Period
prior to the first (lst) calendar day of the month does not occur on the last
day of a calendar month, then in such event the duration of such Interest Period
shall be increased or decreased at the discretion of the Remarketing Agent, by
not more than six (6) days, in order to cause the expiration of such Interest
Period to occur on the last day of the calendar month.
"Issuance Costs" or "Costs of Issuance" means an costs that are treated
as costs of issuing or carrying the Bonds under existing Treasury Department
regulations and rulings, including, but not limited to, (a) underwriter's
spread (whether realized directly or derived through purchase of the Bonds at a
discount below the price at which they are expected to be sold to the public);
(b) counsel fees (including bond counsel, underwriter's counsel, Issuer's
counsel, Company counsel, as well as any other specified counsel fees incurred
in connection with the issuance of the Bonds; (c) financial adviser fees
incurred in connection with the issuance of the Bonds; (d) rating agency fees;
(e) Trustee fees incurred in connection with the issuance of the Bonds; (f)
paying agent and certifying and authenticating agent fees related to issuance
of the Bonds; (g) accountant fees related to the issuance of the Bonds; (h)
printing costs of the Bonds and of the preliminary and final offering
materials; (i) publication costs associated with the financing proceedings; and
(j) costs of engineering and feasibility studies necessary to the issuance of
the Bonds; provided, that bond insurance premiums and certain credit
enhancement fees, to the extent treated as interest expense under applicable
regulations, shall not be treated as "Issuance Costs."
"Issuer" means the City of Shawnee, Kansas, a municipal corporation
duly organized and existing under the laws of the State, and its successors and
assigns.
"Issuer Representative" means the person or persons at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Company and the Trustee containing the specimen signatures of such person
or persons and signed on behalf of the Issuer by its duly authorized agent.
Such certificate may designate an alternate or alternates.
"Letter of Credit" means (a) that certain letter of credit dated the
date of issuance of the Bonds issued by the Bank and (b) any Substitute Letter
of Credit.
"Letter of Credit Termination Date" means the later of (a) that date
upon which the Letter of Credit shall expire or terminate pursuant to its
terms, or (b) 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.
"Mandatory Tender Date" means the Interest Payment Date immediately
preceding the Letter of Credit Termination Date.
D-7
<PAGE> 85
"Maximum Interest Rate" means, so long as the Bonds bear interest at
the Adjustable Rate, an interest rate per annum equal to the lesser of (a) the
maximum rate permitted by law and (b) thirteen percent (13%), and otherwise
shall mean the maximum rate permitted by law.
"Moody's" means 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 Remarketing Agent and the
Bank, by written notice to the Trustee.
"Net Proceeds" means, when used with respect to any insurance or
condemnation award with respect to the Project, the gross proceeds from the
insurance or condemnation award with respect to which that term is used
remaining after payment of all expenses (including attorneys' fees and any
ordinary or extraordinary expenses of the Issuer and the Trustee) incurred in
the collection of such gross proceeds.
"Net proceeds of the sale of the Bonds" means the proceeds of the Bonds
reduced by amounts in a reasonably required reserve or replacement fund.
"Nonpurpose Investment" means any investment property (as defined in
Section 148(b) of the Code) which is acquired with the gross proceeds of the
Bonds and which is not acquired to carry out the governmental purpose of the
Bonds.
"Ordinance" means Ordinance No. 2292 passed by the City on December 12,
1996, authorizing the issuance of the Series 1996 Bonds.
"Outstanding" or "Bonds Outstanding" means all Bonds which have been
authenticated and delivered by the Trustee or the Tender Agent under the
Indenture, except:
(a) Bonds canceled after purchase in the open market or
because of payment at or redemption prior to maturity;
(b) Bonds paid or deemed to be paid pursuant to Article
VIII of the Indenture;
(c) Bonds in lieu of which others have been authenticated
under SECTION 2.08 or SECTION 2.09 of the Indenture; and
(d) Bonds in lieu of which others have been issued pursuant
to SECTION 2.05(c) of the Indenture.
D-8
<PAGE> 86
"Owner" means the person or persons in whose name or names a Bond shall
be registered on the books of the Issuer kept for that purpose in accordance
with provisions of this Indenture.
"Par" means 100% of the principal amount of any Bond, or of the
aggregate principal amount of the Bonds Outstanding, as the context may
require, exclusive of accrued interest.
"Participant" means one of the entities which is a member of the
Securities Depository and deposits securities, directly or indirectly, in the
Book-Entry System.
"Payment Office of the Tender Agent" means Two International Place, 4th
Floor, Corporate Trust Window, Boston, Massachusetts, 02110 or such other
office designated as such by any successor Tender Agent.
"Payment Office of the Trustee" means Two International Place, 4th
Floor, Corporate Trust Window, Boston, Massachusetts, 02110 or such other
office designated as such by any successor Trustee.
"Permitted Encumbrances" means, as of any particular time (a) liens for
ad valorem taxes and special assessments not then delinquent, (b) the
Indenture, (c) the Agreement, (d) utility, access and other easements and
rights-of-way, mineral rights, restrictions, exceptions and encumbrances that
will not materially interfere with or impair the operations being conducted on
the Project Site or easements granted to the Issuer, and (e) such minor
defects, irregularities, encumbrances, easements, mechanics' liens,
rights-of-way and clouds on title as normally exist with respect to properties
similar in character to the Project and as do not in the aggregate materially
impair the property affected thereby for the purpose for which it was acquired
or is held by the Issuer.
"Plans and Specifications" means the plans and specifications for the
Project submitted to the Bank.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
December 1, 1996, made by the Company to the Bank, and any amendments or
supplements thereto.
"Pledged Bonds" means any Bonds which shall, at the time of
determination thereof, be pledged to the Bank pursuant to the Pledge Agreement.
Principal Office of the Tender Agent" means P.O. Box 321, St. Louis,
Missouri, 63166-0321, Attention Corporate Trust Department or such other office
designated as such by any successor Tender Agent.
D-9
<PAGE> 87
"Principal Office of the Trustee" means P.O. Box 321, St. Louis,
Missouri, 63166-0321, Attention Corporate Trust Department or such other office
designated as such by any successor Trustee.
"Project" means, collectively, the Project Site, the Project Building
and the Project Equipment, as they may at any time exist.
"Project Building" means those certain buildings or improvements to
buildings and all other facilities and improvements forming a part of the
Project to be constructed on the Project Site and not constituting part of the
Project Equipment, as they may at any time exist, and which is described
generally in EXHIBIT B of the Agreement.
"Project Equipment" means the property which is described generally in
EXHIBIT C hereto, and any items of machinery, equipment, or other tangible
property acquired in substitution for, or as a renewal or replacement of or a
modification or improvement to, such property.
"Project Site" means the real estate described in EXHIBIT A of the
Agreement on which the Project Building will be situated, and any other
interests in real property, leasehold interests, easements, licenses, and
rights in real property hereafter acquired by the Company with proceeds of the
Bonds for use in connection with the Project, less such real property as may be
released pursuant to SECTION 5.8 of the Agreement or taken by the exercise of
the power of eminent domain or sold in lieu thereof as provided in SECTIONS
5.1(a) and (b) of the Agreement.
"Purchase Price" means an amount equal to 100% of the principal amount
of any Bond tendered or deemed tendered pursuant to SECTION 2.02(c), 4.01, 4.02
or 4.04 of the Indenture, plus, in the case of purchase pursuant to SECTION
4.04 of the Indenture, accrued and unpaid interest thereon to the date of
purchase.
"Qualified Project Costs" means costs and expenses of the Project which
constitute land costs or costs for property of a character subject to the
allowance for depreciation excluding specifically working capital and inventory
costs, provided, however, that (a) costs or expenses paid more than sixty (60)
days prior to the adoption by the Issuer of its resolution on January 22, 1996,
declaring its intent to reimburse Project expenditures with Bond proceeds,
shall not be deemed to be Qualified Project Costs; (b) Issuance Costs shall not
be deemed to be Qualified Project Costs; (c) interest during the Construction
Period shall be allocated between Qualified Project Costs and other costs and
expenses to be paid from the proceeds of the Bonds; (d) interest following the
Construction Period shall not constitute a Qualified Project Cost; (e) letter
of credit fees and municipal bond insurance premiums which represent a transfer
of credit risk shall be allocated between Qualified Project Costs and other
costs and expenses to be paid from the proceeds of the Bonds; and (f) letter of
credit fees and municipal bond insurance premiums which do not represent a
transfer of credit risk shall not constitute Qualified Project Costs.
D-10
<PAGE> 88
"Rate Determination Date" means the first day of each Interest Period
that has a duration different from the preceding Interest Period, on which date
the Remarketing Agent shall establish the Adjustable Rate for such Interest
Period (or if such date is not a Business Day, then the Business Day
immediately preceding such date).
"Rebate Fund" means the trust fund so designated and created pursuant
to SECTION 6.13 of the Indenture.
"Record Date" means (a) so long as the Bonds bear interest at the
Adjustable Rate, that day which is the second (2nd) Business Day next preceding
any Interest Payment Date, and (b) so long as the Bonds bear interest at the
Fixed Rate, the fifteenth (15th) day of the month next preceding any Interest
Payment Date.
"Registered Owner" means the owner of any Bond issued under the
Indenture as shown on the bond registration books required to be kept by the
Trustee pursuant to the Indenture.
"Registrar" means the Trustee. The Registrar shall perform the duties
of Registrar and paying agent.
"Remarketing Agent" means the Remarketing Agent acting as such under
the Remarketing Agent. So long as the Bonds are held in the Book-Entry System,
the Remarketing Agent must be a Participant in the Book-Entry System with
respect to the Bonds. "Principal Office" of the Remarketing Agent means the
principal office of the Remarketing Agent designated in the Remarketing
Agreement.
"Remarketing Agreement" means the Remarketing Agreement dated as of
December 1, 1996, by and between the Company and SunTrust Bank, Atlanta or any
successor Remarketing Agent, and any amendments or supplements thereto.
"Requisition" means a written request for a disbursement from the
Construction Fund, signed by a Company Representative, substantially in the
form attached as Exhibit E to the Lease and satisfactorily completed as
contemplated by said form.
"SEC Rule 15c2-12" means Rule 15c2-12(b)(5) adopted by the Security and
Exchange Commission under the Securities Exchange Act of 1934, as the same may
be amended from time to time.
"Securities Depository" means the Depository Trust Company, New York,
New York, or its nominee, and its successors and assigns.
"Security Interest" or "Security Interests" shall refer to the security
interests created herein and shall have the meaning set forth in the U.C.C.
D-11
<PAGE> 89
"State" means the State of Kansas.
"S&P" means Standard & Poor's Ratings Services, 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 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 Remarketing Agent and the Bank, by written notice to
the Trustee.
"Substitute Bank" means a commercial bank or savings and loan
association which has issued a Substitute Letter of Credit.
"Substitute Letter of Credit" means a letter of credit delivered to the
Trustee, with the written consent of the Bank, in accordance with SECTION 4.4
of the Agreement, issued by the Bank or a Substitute Bank, replacing any
existing Letter of Credit.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement and
Arbitrage Certificate dated as of December 1, 1996, by and among the Issuer,
the Company and the Trustee.
"Tender Agent" means State Street Bank and Trust Company of Missouri,
N.A., a national banking association duly organized and existing under the laws
of the United States of America 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 under the Indenture.
"Tender Date" means (a) during any Interest Period of other than one
week's duration, any Interest Payment Date, (b) during any Interest Period of
one week's duration, the seventh (7th) day (unless such day is not a Business
Day, in which case the next Business Day) following receipt by the Tender Agent
of notice from the Owner that such Owner has elected to tender bonds (as more
fully described in SECTION 4.04 of the Indenture), (c) the Mandatory Tender
Date, and (d) the Conversion Date.
"Term of Agreement" means the duration of the leasehold interest
created in the Agreement effective upon its delivery and commencing as of the
date thereof and terminating on December 31, 2016, subject to sooner
termination pursuant to the terms of the Agreement.
"Trustee" means State Street Bank and Trust Company of Missouri, N.A. a
national banking association duly organized and existing under the laws of the
United States of America 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 Trustee at the time serving as successor Trustee under
the Indenture.
D-12
<PAGE> 90
"Trust Estate" means the property conveyed to the Trustee pursuant to
the Granting Clauses of the Indenture.
"U.C.C." means the Uniform Commercial Code of the State as now or
hereafter amended.
"Yield" shall mean yield as defined in Section 148(h) of the Code and
any regulations promulgated thereunder.
D-13
<PAGE> 91
EXHIBIT E
FORM OF NOTICE FROM TRUSTEE TO OWNER
REGARDING CHANGE IN DURATION OF INTEREST PERIOD
Re: $5,000,000 Private Activity Revenue Bonds, Series 1996
(Simmons Company Project), of the City of Shawnee, Kansas
The undersigned officer of ______________________, as Trustee with
respect to the captioned Bonds, pursuant to the provisions of SECTION 2.02(C) of
that certain Indenture of Trust (the "Indenture"), dated as of December 1, 1996,
by and between the City of Shawnee, Kansas and the Trustee, does hereby notify
you as follows (capitalized terms used herein shall have the meanings provided
in the Indenture):
(a) The duration of the Interest Period with respect to the Bonds
will be adjusted on ____________ 1, _____ (the "Rate
Determination Date").
(b) All Owners of Bonds are required to tender their Bonds on the
Tender Date to the Tender Agent, at the address set forth
below, for purchase on the Tender Date. In the event any Owner
of Bonds shall fail to tender its Bonds for purchase on the
Tender Date, such Bonds shall be deemed to have been tendered
on such Tender Date, and the Owner of such Bonds shall not be
entitled to receive any interest that accrues on the Bonds
subsequent to the Tender Date.
(c) The address of the Tender Agent is as follows:
- ----------------------
Attention:
----------------------------
- ----------------------
- ----------------------
- ----------------------
- ----------------------
This _____ day of ____________________, _____.
, as Trustee
------------------
By:
--------------------------------
Title:
-----------------------------
<PAGE> 92
EXHIBIT F
ADJUSTABLE RATE FORM OF BOND
<PAGE> 93
EXHIBIT G
FIXED RATE FORM OF BOND
<PAGE> 94
EXHIBIT H
NOTICE OF CONVERSION
--------------------
Re: $5,000,000 Private Activity Revenue Bonds, Series 1996 (Simmons
Company Project), of the City of Shawnee, Kansas
The undersigned officer of ______________________, as Trustee with
respect to the captioned Bonds, pursuant to the provisions of SECTION 4.01 of
that certain Indenture of Trust (the "Indenture"), dated as of December 1, 1996,
by and between the City of Shawnee, Kansas and the Trustee, hereby notifies you
that the interest rate borne by the captioned Bonds shall be converted from the
Adjustable Rate to the Fixed Rate, as follows (capitalized terms used herein
shall have the meanings provided in the Indenture):
1. The Conversion Date is ____________________;
2. All Owners of Bonds are required to tender their Bonds on the
Conversion Date to the Tender Agent, at the address set forth
below, for purchase on the Conversion Date. In the event any
Owner of Bonds shall fail to tender its Bonds for purchase on
the Conversion Date, such Bonds shall be deemed to have been
tendered for purchase on the Conversion Date and the Owner of
such Bonds shall not be entitled to any payment (including any
interest to accrue subsequent to the conversion date) other
than the purchase price for such untendered Bonds.
3. The address of the Tender Agent is as follows:
-------------------------
Attention:
-----------------------
-------------------------
-------------------------
-------------------------
This day of , .
----- -------------------- -----
, as Trustee
--------------------
By:
-----------------------------------
Title:
--------------------------------
<PAGE> 95
EXHIBIT I
NOTICE OF MANDATORY TENDER DATE
-------------------------------
Re: $5,000,000 Private Activity Revenue Bonds, Series 1996
(Simmons Company Project), of the City of Shawnee, Kansas
The undersigned officer of ______________________, as Trustee
with respect to the captioned Bonds, pursuant to the provisions of SECTION 4.02
of that certain Indenture of Trust (the "Indenture"), dated as of December 1,
1996, by and between the City of Shawnee, Kansas, and the Trustee, hereby
notifies you that the Letter of Credit securing the Bonds will expire on
___________ (the "Letter of Credit Termination Date"), and that the Bonds are
required to be tendered for purchase on the Interest Payment Date next preceding
the Letter of Credit Termination Date (the "Mandatory Tender Date").
Accordingly, the undersigned hereby notifies you as follows:
1. The Mandatory Tender Date is ____________________, and the
Letter of Credit will expire fifteen (15) days after the
Mandatory Tender Date.
2. All Owners of Bonds are required to tender their Bonds on the
Mandatory Tender Date to the Tender Agent, at the address set
forth below, for purchase on the Mandatory Tender Date. In the
event any Owner of Bonds shall fail to tender its Bonds for
purchase on the Mandatory Tender Date, such Bonds shall be
deemed to have been tendered for purchase on the Mandatory
Tender Date and the Owner of such Bonds shall not be entitled
to any payment (including any interest to accrue subsequent to
the Mandatory Tender Date) other than the purchase price for
such untendered Bonds.
3. The address of the Tender Agent is as follows:
-------------------------
Attention:
-----------------------
-------------------------
-------------------------
-------------------------
This day of , .
----- -------------------- -----
, as Trustee
--------------------
By:
-----------------------------------
Title:
--------------------------------
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1996
<CASH> 9,386
<SECURITIES> 0
<RECEIVABLES> 78,765
<ALLOWANCES> 12,611
<INVENTORY> 19,570
<CURRENT-ASSETS> 114,022
<PP&E> 42,328
<DEPRECIATION> 2,923
<TOTAL-ASSETS> 376,930
<CURRENT-LIABILITIES> 74,418
<BONDS> 190,093
<COMMON> 320
6,251
0
<OTHER-SE> 84,256
<TOTAL-LIABILITY-AND-EQUITY> 376,930
<SALES> 133,416
<TOTAL-REVENUES> 133,416
<CGS> 80,775
<TOTAL-COSTS> 80,775
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 750
<INTEREST-EXPENSE> 4,803
<INCOME-PRETAX> (3,305)
<INCOME-TAX> (1,603)
<INCOME-CONTINUING> (1,702)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,702)
<EPS-PRIMARY> 0
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</TABLE>
