<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
------------------
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 001-12505
CORE MATERIALS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 31-1481870
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(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
800 Manor Park Drive, P.O. Box 28183
Columbus, Ohio 43228-0183
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (614) 870-5000
--------------
N/A
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Former name, former address and former fiscal year,
if changed since last report.
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.
Yes [ X ] NO [ ]
As of August 7, 1998, the latest practicable date, 9,779,680 shares of
the registrant's common shares were issued and outstanding.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORE MATERIALS CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
---- ----
ASSETS (unaudited)
<S> <C> <C>
Cash $ 1,136,006 $ 100,356
Mortgage-back security investment 2,961,657 3,217,349
Accounts receivable (less allowance for doubtful accounts:
June 30, 1998-$105,000; December 31, 1997-$133,000) 15,362,280 14,306,101
Inventories:
Work in process 1,950,415 1,163,611
Stores 1,428,971 2,143,108
------------ ------------
Total inventories 3,379,386 3,306,719
Deferred tax asset 455,002 455,002
Prepaid expenses and other current assets 515,528 307,059
------------ ------------
Total current assets 23,809,859 21,692,586
Property, plant and equipment 39,998,612 34,971,001
Accumulated depreciation (11,179,719) (10,293,834)
------------ ------------
Property, plant and equipment - net 28,818,893 24,677,167
Deferred tax asset - net 10,136,245 11,170,190
Other 154,540 --
------------ ------------
TOTAL $ 62,919,537 $ 57,539,943
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Notes payable -- Bank $ 3,819,470 $ 3,997,120
Current portion of long-term debt 270,000 --
Accounts payable 7,403,940 8,140,802
Accrued liabilities:
Compensation and related benefits 2,528,677 2,066,488
Interest 48,059 1,149,061
Other accrued liabilities 1,787,313 1,776,856
------------ ------------
Total current liabilities 15,857,459 17,130,327
Long term debt - less current portion 23,051,841 18,821,841
Deferred long-term gain 2,870,151 3,018,331
Postretirement benefits liability 2,723,265 2,474,367
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $0.01 par value,
Authorized shares - 20,000,000;
97,797 96,133
Outstanding shares: June 30, 1998 - 9,779,680
Outstanding shares: December 31, 1997 - 9,613,281
Paid-in capital 16,226,232 16,049,861
Retained earnings (deficit) 2,092,792 (50,917)
------------ ------------
Total stockholders' equity 18,416,821 16,095,077
------------ ------------
TOTAL $ 62,919,537 $ 57,539,943
============ ============
</TABLE>
See notes to financial statements.
2
<PAGE> 3
CORE MATERIALS CORPORATION
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES:
Navistar $ 15,923,784 $ 13,640,884 $ 32,025,368 $ 24,101,040
Yamaha 2,670,900 2,792,501 6,790,953 8,002,345
Other 555,072 225,865 922,241 928,900
------------ ------------ ------------ ------------
Total Sales 19,149,756 16,659,250 39,738,562 33,032,285
------------ ------------ ------------ ------------
Cost of Sales 14,765,815 12,724,752 30,912,364 25,425,654
Postretirement benefits expense 252,455 193,605 486,218 429,128
------------ ------------ ------------ ------------
Total cost of sales 15,018,270 12,918,357 31,398,582 25,854,782
------------ ------------ ------------ ------------
GROSS MARGIN 4,131,486 3,740,893 8,339,980 7,177,503
------------ ------------ ------------ ------------
Selling, general and administrative expense 1,986,248 1,822,765 3,949,594 3,617,212
Postretirement benefits expense 36,029 54,339 70,323 124,661
------------ ------------ ------------ ------------
Total selling, general and 2,022,277 1,877,104 4,019,917 3,741,873
administrative expense
Other expense
-- (23,233) (318) (23,233)
------------ ------------ ------------ ------------
INCOME BEFORE INTEREST AND TAXES 2,109,209 1,840,556 4,319,745 3,412,397
Interest income 56,292 59,150 117,514 118,267
Interest expense (435,447) (601,004) (804,191) (1,207,705)
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,730,054 1,298,702 3,633,068 2,322,959
Income taxes:
Current 217,394 135,684 455,414 237,043
Deferred 491,729 396,783 1,033,945 715,369
------------ ------------ ------------ ------------
Total income taxes 709,123 532,467 1,489,359 952,412
------------ ------------ ------------ ------------
NET INCOME $ 1,020,931 $ 766,235 $ 2,143,709 $ 1,370,547
============ ============ ============ ============
NET INCOME PER COMMON SHARE:
Basic $ 0.11 $ 0.08 $ 0.22 $ 0.14
============ ============ ============ ============
Diluted $ 0.10 $ 0.08 $ 0.21 $ 0.14
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 9,654,230 9,565,116 9,633,581 9,529,900
============ ============ ============ ============
Diluted 10,126,786 9,672,989 10,079,802 9,639,320
============ ============ ============ ============
</TABLE>
See notes to financial statements
3
<PAGE> 4
CORE MATERIALS CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK OUTSTANDING PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 9,613,281 $ 96,133 $16,049,861 $ (50,917) $16,095,077
Net Income 2,143,709 2,143,709
Amortization of deferred
stock compensation 29,215 29,215
Issuance of stock under
stock option plans 167,600 1,676 147,144 148,820
Other (1,201) (12) 12
========= ======== =========== =========== ===========
BALANCE AT JUNE 30, 1998 9,779,680 $ 97,797 $16,226,232 $ 2,092,792 $18,416,821
========= ======== =========== =========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE> 5
CORE MATERIALS CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------------------
1998 1997
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,143,709 $ 1,370,547
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 887,651 1,194,890
Deferred income taxes 1,033,945 715,369
Loss on disposal of assets 318 24,052
Amortization of gain on sale/leaseback transaction (148,180)
Compensation expense on stock awards 29,215 21,153
Change in operating assets and liabilities:
Increase in accounts receivable (1,056,179) (8,360,937)
(Increase)/decrease in inventories (72,667) 701,566
(Increase)/decrease in prepaid and other assets (129,133) 319,544
(Decrease)/increase in accounts payable (736,862) 4,740,193
(Decrease)/increase in accrued and other (628,356) 1,649,368
liabilities
Increase in postretirement benefits liability 248,898 421,705
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,572,359 2,797,450
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,029,695) (2,804,498)
Payments on mortgage-backed security investment 255,692 58,735
Proceeds from sale of property and equipment -- 12,500
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (4,774,003) (2,733,263)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line-of-credit 6,419,470 3,650,000
Payments on line-of-credit (6,597,120) (3,650,000)
Payments on secured note payable (3,000,000) --
Proceeds from industrial revenue bonds 7,500,000 --
Issuance costs for industrial revenue bonds (233,876) --
Proceeds from exercise of stock options 148,820 37,500
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,237,294 37,500
----------- -----------
NET INCREASE IN CASH 1,035,650 101,687
CASH AT BEGINNING OF PERIOD 100,356 590,212
----------- -----------
CASH AT END OF PERIOD $ 1,136,006 $ 691,899
=========== ===========
CASH PAID FOR:
Interest $ 1,889,111 $ 1,205,403
=========== ===========
Income Taxes $ 375,000 $ 45,000
=========== ===========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
CORE MATERIALS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10Q and include all of the information
and disclosures required by generally accepted accounting principles for interim
reporting, which are less than those required for annual reporting. In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments (all of which are normal and recurring in nature) necessary to
present fairly the financial position of Core Materials Corporation ("Core
Materials") at June 30, 1998, and the results of its operations and its cash
flows. The "Notes to Financial Statements" which are contained in the 1997
Annual Report to shareholders should be read in conjunction with these Financial
Statements. Certain reclassifications have been made to prior year's amounts to
conform with the classifications of such amounts for 1998.
Core Materials Corporation ("Core Materials") was formed on October 8,
1996 by RYMAC Mortgage Investment Corporation ("RYMAC"), as a wholly owned
subsidiary, for the purpose of acquiring substantially all of the assets and
assuming certain of the liabilities of Columbus Plastics Operation ("Columbus
Plastics"), an operating unit of Navistar International Transportation Corp.
("Navistar").
On December 31, 1996, RYMAC merged into its wholly owned subsidiary,
Core Materials, by converting each outstanding common share of RYMAC into the
right to receive one common share of Core Materials, with Core Materials as the
surviving corporation and continuing registrant. Simultaneously, on December 31,
1996, Core Materials purchased substantially all of the assets and assumed
certain liabilities of Columbus Plastics.
Core Materials produces compression Sheet Molding Composite ("SMC")
fiberglass reinforced plastic parts. Core Materials has two principal customers,
Navistar and Yamaha Motor Manufacturing Corporation ("Yamaha").
2. RESTRICTED CASH
Included in cash at June 30, 1998, is $401,770 which is restricted
pursuant to the terms of the Industrial Revenue Bond noted below. This
restriction will be removed as Core Materials incurs qualified expenditures
related to the project for which the bond was issued.
3. LONG-TERM DEBT
In May, 1998, Core Materials borrowed $7,500,000 through the issuance
of an Industrial Revenue Bond ("IRB"). The IRB bears interest at a weekly
adjustable rate and matures in April, 2013. Principal is payable beginning in
July, 1998. Total principal maturities by year are: 1998 - $130,000; 1999 -
$285,000; 2000 - $305,000; 2001 - $330,000; 2002 - $355,000; 2003 - $390,000;
and thereafter - $5,705,000.
In conjunction with the IRB, in June 1998, Core Materials entered
into an interest rate swap agreement with a commercial bank. This agreement
effectively converts the variable rate IRB to fixed interest debt. Under this
agreement, Core Materials will pay a fixed rate of 4.89% to the bank and will
receive 76% of the 30 day commercial paper rate. The difference to be paid
or received varies as short-term interest rates change and is accrued and
recognized as an adjustment to interest expense. The swap term matches the
payment schedule on the IRB with final maturity in April 2013. While Core
Materials is exposed to credit loss on its interest rate swap in the event of
non-performance by the counterparty to the swap management believes such
non-performance is unlikely to occur given the financial resources of the
counterparty.
6
<PAGE> 7
As security for the for the IRB, Core Materials obtained a letter of
credit in the amount of $7,726,028, from a commercial bank. The letter of credit
can only be used to pay principal and interest on the IRB. Any borrowings made
under the letter of credit bear interest at the bank's prime rate and is secured
by a lien and security interest in all of Core Materials' business assets. The
letter of credit expires in April, 2003.
4. COMPREHENSIVE INCOME
Core Materials adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income". Comprehensive income is a
measurement of all changes in stockholders' equity that result from transactions
and other economic events other than transactions with stockholders. Core
Materials does not have any items of comprehensive income other than net income;
therefore, total comprehensive income amounted to $1,020,931 and $766,235 for
the three months ended June 30, 1998 and 1997, respectively; total comprehensive
income amounted to $2,143,709 and $1,370,547 for the six months ended June 30,
1998 and 1997, respectively.
5. NEW ACCOUNTING STANDARDS
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." This statement revises
standards for disclosures about pension and other postretirement benefit plans
which will require adoption no later than December 31, 1998. This standard
expands or modifies disclosure and, accordingly, will have no impact on Core
Materials' reported financial position, results of operations and cash flows.
6. EARNINGS PER COMMON SHARE
Core Materials presents earnings per common share in accordance with
SFAS No. 128, "Earnings per Share." Under SFAS No. 128, basic earnings per
common share are computed based on the weighted average number of common shares
outstanding during the period. Diluted earnings per common share are computed
similarly but include the effect of the exercise of stock options under the
treasury stock method. In calculating net income per share for the three and six
months ended June 30, 1998, weighted average shares increased for the
computation of diluted income per share by 472,556 and 446,221 shares,
respectively, due to the effect of stock options; this effect reduced net income
per share by $0.01 and $0.01 for the three and six months ended June 30, 1998,
respectively. In calculating net income per share for the three and six months
ended June 30, 1997, weighted average shares increased for the computation of
diluted income per share by 107,873 and 109,420, respectively, due to the
effect of stock options, which had no appreciable effect on net income per
share.
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Certain statements under this caption, constitute "forward-looking
statements" which involve certain risks and uncertainties. Core Materials'
actual results may differ significantly from those discussed in the
forward-looking statements. Factors that may cause such a difference include,
but are not limited to: business conditions in the plastics, transportation,
recreation and consumer products industries, the general economy, competitive
factors, the dependence on two major customers, new technologies, the year 2000
systems issue, start-up of the Company's South Carolina facility, regulatory
requirements, labor relations, the loss or inability to attract key personnel,
construction delays, the availability of capital and management's decisions to
pursue new products or businesses which involve additional cost risks or capital
expenditures.
OVERVIEW
On December 31, 1996, Core Materials acquired all of the assets and
assumed certain liabilities of Columbus Plastics, a wholly owned operating unit
of Navistar's truck manufacturing division since its formation in late 1980.
Based on the terms of the acquisition, the transaction for financial reporting
and accounting purposes has been accounted for as a reverse acquisition whereby
Columbus Plastics is deemed to have acquired Core Materials. However, Core
Materials is the continuing legal entity.
Core Materials manufactures high quality compression SMC fiberglass
reinforced parts. Core Materials has two major customers, Navistar and Yamaha.
The demand for Core Materials' products is affected by the volume of purchases
from these two customers, whose orders are primarily affected by economic
conditions in the United States and Canada. Core Materials' manufacturing
operations have a significant fixed cost component. Accordingly, during periods
of changing demands, the profitability of Core Materials' operations will change
proportionately more than revenues from operations.
At the time of the acquisition of Columbus Plastics, Navistar and Core
Materials entered into a Comprehensive Supply Agreement with an initial term of
five years. Under the terms of the Comprehensive Supply Agreement, Navistar
agreed to purchase from Core Materials, and Core Materials agreed to sell to
Navistar at negotiated prices, which approximate fair value, all of Navistar's
original equipment and service requirements for fiberglass reinforced parts
using the SMC process for components then being manufactured by Core Materials
and detailed in the Comprehensive Supply Agreement.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THREE MONTHS ENDED JUNE 30,
1997
Net sales for the three months ended June 30, 1998, totaled $19,150,000 up
15% from the $16,659,000 reported for the three months ended June 30, 1997.
Sales to Navistar increased 17% to $15,924,000 from $13,641,000 for the three
months ended June 30, 1997. The increase in sales to Navistar was the result of
an increase in Navistar's sales of medium and heavy trucks. Sales to Yamaha
decreased for the three months ended June 30, 1998 by 4% to $2,671,000 compared
with $2,793,000 for the three months ended June 30, 1997. The minimal decrease
in sales to Yamaha is primarily due to Yamaha's production slowdown as a result
of the maturing of the personal watercraft market.
8
<PAGE> 9
"Other" sales for the three months ended June 30, 1998, increased 146% to
$555,000 from $226,000 for the three months ended June 30, 1997. The increase in
other sales was primarily the result of sales to a new customer, Case
Corporation, a leading manufacturer of agricultural equipment; in May 1998, Core
Materials began manufacturing SMC tractor roof assemblies for Case Corporation's
Racine, Wisconsin facility.
Gross Margin was 21.6% of sales for the three months ended June 30, 1998
compared with 22.5% for the three months ended June 30, 1997. This decline in
margins is primarily the result of changes in product mix and increased usage of
production process supplies. Also impacting gross margin was the effect of
increased lease expenses associated with the December 1997 sale leaseback
transaction. As previously noted, Core Materials sold various items of
production equipment and leased the items back under an operating lease
agreement. The proceeds of this sale were used to pay down long term debt. As a
result of this transaction, Core Materials has recorded higher costs of sales,
due to the classification of the operating leases, offset by lower interest
costs reflected below.
Selling, general and administrative expenses ("SG&A") totaled $2,022,000 for
the three months ended June 30, 1998 increasing from $1,877,000 for the three
months ended June 30, 1997. The increase over the 1997 amounts is primarily due
to the addition of a second plant in Gaffney, South Carolina. This second plant
provides additional capacity to support the production requirements of current
customers and opportunity for growth. The Gaffney plant began molding and
assembly operations in early 1998.
Interest income for the three months ended June 30, 1998 totaled $56,000
decreasing slightly from the $59,000 for the three months ended June 30, 1997.
Interest expense totaled $435,000 for the three months ended June 30, 1998
decreasing from $601,000 for the three months ended June 30, 1997. The decrease
in interest expense from 1997 is primarily the result of a reduction in interest
costs on the Secured Note payable to Navistar due to the $12,000,000 of proceeds
from the sale-leaseback transaction, noted above, being used to pay down this
debt. This decrease was partially offset by increased interest costs on
borrowings used to finance Core Materials' new facility in Gaffney, South
Carolina.
Income taxes for the three months ended June 30, 1998 are estimated to be
approximately 41% of total earnings before taxes. Actual tax payments will be
lower than the recorded expenses as Core Materials has substantial federal tax
loss carryforwards. These loss carryforwards were recorded as a deferred tax
asset, partially offset by a valuation reserve at December 31, 1996 as a part of
the purchase accounting adjustments. As the tax loss carryforwards are utilized
to offset federal income tax payments, Core Materials reduces the deferred tax
asset as opposed to recording a reduction in income tax expense. Actual cash
payments related to the three months ended June 30, 1998 are estimated to be
approximately $217,000 which reflects federal alternative minimum, state and
local taxes.
Net income for the three months ended June 30, 1998 was $1,021,000 or $.11
per basic and $.10 per diluted share, an increase of $255,000 or 33% over the
net income for the three months ended June 30, 1997 of $766,000 or $.08 per
basic and diluted share. The increase in net income was primarily the result of
increased sales as detailed above.
SIX MONTHS ENDED JUNE 30, 1998 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Net sales for the six months ended June 30, 1998, totaled $39,739,000 up 20%
from the $33,032,000 reported for the six months ended June 30, 1997. Sales to
Navistar increased 33% to $32,025,000 from $24,101,000 for the six months ended
June 30, 1997. The increase in sales to Navistar was the result of an increase
in Navistar's sales of medium and heavy trucks. Sales to Yamaha decreased for
the six months ended June 30, 1998 by 15% to $6,791,000 compared with $8,002,000
for the six months ended June 30, 1997. The decrease in sales to Yamaha is
primarily due to Yamaha's production slowdown as a result of the maturing of the
personal watercraft market.
"Other" sales for the six months ended June 30, 1998, decreased 1% to
$922,000 from $929,000 for the six months ended June 30, 1997. The reduction in
sales was primarily the result of reduced sales to General Motors for electric
car components and a reduction in the sales of sheet molding composite to SMC
molding companies; these reductions were almost totally offset by increased
sales to Case Corporation.
9
<PAGE> 10
Gross margin was 21% of sales for the six months ended June 30, 1998
compared with 21.7% for the six months ended June 30, 1997. The decreased gross
margin as a percent of sales, 21.7% to 21%, is primarily due to the reasons
noted above for the three months.
SG&A totaled $4,020,000 for the six months ended June 30, 1998 increasing
from $3,742,000 for the six months ended June 30, 1997. The increase over the
1997 amounts is primarily due to the addition of a second plant in Gaffney,
South Carolina as explained above.
Interest income for the six months ended June 30, 1998 totaled $118,000 as
compared with the $118,000 for the six months ended June 30, 1997. Interest
expense totaled $804,000 for the six months ended June 30, 1998 decreasing from
$1,208,000 for the six months ended June 30, 1997. The decrease in interest
expense from 1997 is the result of the reasons noted above for the three months
and the effect of an increase in interest capitalized related to capital
projects under construction.
Income taxes for the six months ended June 30, 1998 are estimated to be
approximately 41% of total earnings before taxes. Actual cash payments related
to the six months ended June 30, 1998 are estimated to be approximately $455,000
which reflects federal alternative minimum, state and local taxes.
Net income for the six months ended June 30, 1998 was $2,144,000 or $.22 per
basic and $.21 per diluted share, an increase of $773,000 or 56% over the net
income for the six months ended June 30, 1997 of $1,371,000 or $.14 per basic
and diluted share. The increase in net income was primarily the result of
increased sales as detailed above.
LIQUIDITY AND CAPITAL RESOURCES
Net working capital at June 30, 1998 increased $3,390,000 from the working
capital at December 31, 1997. Accounts receivable increased by $1,056,000 and
accounts payable decreased by $737,000 from the December 31, 1997 levels. The
primary cause for the receivables increase is the increase in sales volume for
the six months ended June 30, 1998. Accounts payable decreased as a result of a
reduction in payables related to capital expenditures. The reduction in interest
payable of $1,101,000 is primarily the result of interest paid to Navistar on
June 30, 1998, for interest accrued through the first half of 1998 on the
Secured Note payable. Property additions of $5,030,000 primarily relate to the
acquisition of equipment for the Gaffney, South Carolina facility.
In the fourth quarter of 1997, Core Materials entered into a comprehensive
financing arrangement with a financial institution. Under this arrangement, the
financial institution committed to provide Core Materials the following credit
facilities: 1.) a $7,500,000 variable rate revolving line of credit; 2.) a
$12,000,000 sale-leaseback arrangement on certain machinery and equipment; 3.) a
letter of credit to support the issuance of an Industrial Revenue Bond, and 4.)
$5,500,000 for equipment leases.
In December 1997, Core Materials closed on the line of credit which is being
used for working capital purposes and to temporarily fund capital expenditures
related to the Company's South Carolina expansion. Also in December, the Company
entered into the sale-leaseback agreement, the proceeds of which were used to
pay down the Secured Note payable to Navistar.
In May 1998, Core Materials borrowed $7,500,000 through the issuance of an
Industrial Revenue Bond. The proceeds from this credit facility were used to pay
down Core Materials' line of credit, which was being used to temporarily finance
the new facility in South Carolina and to pay down the secured note payable to
Navistar.
The equipment leases ($5,500,000 referred to above) will also be used to
provide permanent financing for Core Materials' new facility and equipment in
South Carolina. Subsequent to the end of the quarter, in August of 1998, Core
Materials closed on $5,300,000 of the equipment leases.
10
<PAGE> 11
Management believes that internally generated funds from operations, along
with the current and future financings discussed above, will be sufficient to
fund anticipated capital requirements.
YEAR 2000 MATTERS
Core Materials has identified all significant applications that will
require modification to ensure Year 2000 compliance. Internal and external
resources are being used to make the required modifications and test Year 2000
compliance. The Company plans to complete the modifications and testing process
of all significant applications by August 1999, which is prior to any
anticipated impact on its operating systems.
The date on which Core Materials believes it will complete the Year
2000 modifications is based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources, third-party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
In addition, Core Materials will communicate with others with whom it
does significant business to determine its Year 2000 compliance readiness and
the extent to which the Company is vulnerable to any third-party Year 2000
issues. However, there can be no guarantee that the systems of other companies
on which the Company's systems rely will be timely converted, or that a failure
to convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse affect on the Company.
MANAGEMENT'S OUTLOOK
The Company has continued to focus significant efforts on obtaining new
business for both its Ohio and South Carolina operations. In May 1998, Core
Materials announced a business relationship with Case Corporation for the
manufacture of tractor roof assemblies. In July 1998, this relationship was
expanded with the addition of combine roof assemblies which will go into
production late in the third quarter of 1998.
Also in July 1998, Core Materials established a new relationship with
John Deere. Core Materials will produce hood assemblies for a new tractor model
scheduled to enter production in mid 1999.
The addition of Case Corporation and John Deere, along with the
previously announced addition of residential door products for Caradon Doors
and Windows Inc's, Peachtree division, continue to support Core Material's
objective of obtaining new customers and diversifying its product base.
PART I - FINANCIAL INFORMATION
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of the Stockholders of Core Materials
Corporation held on May 28, 1998 the following issues were
voted upon with the indicated results:
<TABLE>
<CAPTION>
A. ELECTION OF DIRECTORS: SHARES VOTED FOR SHARES WITHHELD
<S> <C> <C>
James F. Crowley 8,922,223 74,683
Ralph O. Hellmold 8,928,123 68,783
Thomas M. Hough 8,928,123 68,783
Malcolm M. Prine 8,928,123 68,783
James L. Simonton 8,928,123 68,783
</TABLE>
The above elected directors constitute the full acting
Board of Directors for Core Materials Corporation; all
terms expire at the 1999 annual meeting of stockholders of
the Company.
B. RATIFICATION OF DELOITTE AND TOUCHE, LLP AS AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 1998:
SHARES VOTED FOR SHARES AGAINST SHARES ABSTAINING
8,944,565 31,350 20,991
C. WITH RESPECT TO APPROVAL OF THE COMPANY'S EMPLOYEE STOCK
PURCHASE PLAN:
SHARES VOTED FOR SHARES AGAINST SHARES ABSTAINING
8,638,717 302,613 55,576
ITEM 5. OTHER INFORMATION
As discussed in the Company's Proxy Statement for the 1998
Annual Meeting of Stockholders, any qualified stockholder of
the Company who intends to submit a proposal to the Company at
the 1999 Annual Meeting of Stockholders (the "1999 Annual
Meeting") must submit such proposal to the Company not later
than December 28, 1998 to be considered for inclusion in the
Company's Proxy Statement and form of Proxy (the "Proxy
Materials") relating to that meeting. If a stockholder intends
to present a proposal at the 1999 Annual Meeting of
Stockholders, but has not sought the inclusion of such
proposal in the Company's Proxy Materials, such proposal must
be received by the Company prior to March 13, 1999 or the
Company's management proxies for the 1999 Annual Meeting will
be entitled to use their discretionary voting authority should
such proposal then be raised, without any discussion of the
matter in the Company's Proxy Materials.
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
See Index to Exhibits
REPORTS ON FORM 8-K:
None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORE MATERIALS CORPORATION
Date: August 14,1998 By: /s/ KENNETH M. SCHMELL
-------------- ------------------------------
Kenneth M. Schmell
Executive Vice President and
Chief Operating Officer
Date: August 14, 1998 By: /s/ KEVIN L. BARNETT
--------------- -------------------------------
Kevin L. Barnett
Vice President, Secretary, Treasurer
and Chief Financial Officer
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
<S> <C> <C>
3(a)(1) Certificate of Incorporation of Incorporated by
Core Materials Corporation reference to Exhibit
as filed with the Secretary of State 4(a) to Registration
of Delaware on October 8, 1996 Statement on Form
S-8 (Registration
No. 333-29203)
3(a)(2) Certificate of Amendment of Incorporated by
Certificate of Incorporation reference to Exhibit
of Core Materials Corporation 4(b) to Registration
as filed with the Secretary of State Statement on Form
of Delaware on November 6, 1996 S-8 (Registration
No. 333-29203)
3(a)(3) Certificate of Incorporation of Core Incorporated by
Materials Corporation, reflecting reference to Exhibit
amendments through November 6, 4(c) to Registration
1996 [for purposes of compliance Statement on Form
with Securities and Exchange S-8 (Registration
Commission filing requirements only] No. 333-29203)
3(b) By-Laws of Core Materials Incorporated by
Corporation reference to Exhibit
3-C to Registration
Statement on Form
S-4 (Registration
No. 333-15809)
4(a)(1) Certificate of Incorporation of Incorporated by
Core Materials Corporation reference to Exhibit
as filed with the Secretary of State 4(a) to Registration
of Delaware on October 8, 1996 Statement on Form
S-8 (Registration
No. 333-29203)
4(a)(2) Certificate of Amendment of Incorporated by
Certificate of Incorporation reference to Exhibit
of Core Materials Corporation 4(b) to Registration
as filed with the Secretary of State Statement on Form
of Delaware on November 6, 1996 S-8 (Registration
No. 333-29203)
4(a)(3) Certificate of Incorporation of Core Incorporated by
Materials Corporation, reflecting reference to Exhibit
amendments through November 6, 4(c) to Registration
1996 [for purposes of compliance Statement on Form
with Securities and Exchange S-8 (Registration
Commission filing requirements only] No. 333-29203)
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C> <C>
4(b) By-Laws of Core Materials Incorporated by
Corporation reference to Exhibit
3-C to Registration
Statement on Form
S-4 (Registration
No. 333-15809)
10(a)(1) Loan Agreement Filed herein
10(a)(2) Reimbursement Agreement Filed herein
10(a)(3) Core Materials Corporation Incorporated by
Employee Stock Purchase Plan reference from
Exhibit 4(e)
from Registration
Statement on
Form S-8 (Registration
No. 333-60909)
11 Computation of Net Income per Share Exhibit 11 omitted
because required
information is
included in Notes to
Financial Statement
27 Financial Data Schedule Filed herein
</TABLE>
16
<PAGE> 1
Exhibit 10(a)(1)
================================================================================
LOAN AGREEMENT
BETWEEN
SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
AND
CORE MATERIALS CORPORATION
$7,500,000 SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
MULTI-MODE VARIABLE RATE INDUSTRIAL
DEVELOPMENT REVENUE BONDS, SERIES 1998
(CORE MATERIALS CORPORATION PROJECT)
DATED
AS OF
APRIL 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Recitals..........................................................................................................1
ARTICLE I....................................................................................................... 3
DEFINITIONS............................................................................................ 3
Section 1.1. Use of Defined Terms........................................................ 3
Section 1.2. Definitions................................................................. 3
Section 1.3. Interpretation.............................................................. 9
Section 1.4. Captions and Headings....................................................... 10
ARTICLE II...................................................................................................... 11
REPRESENTATIONS........................................................................................ 11
Section 2.1. Representations of the Issuer............................................... 11
Section 2.2. Representations and Covenants of the Borrower............................... 11
Section 2.3. Actions under Section 144(a)(4) of the Code................................. 15
ARTICLE III..................................................................................................... 17
COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS....................................................... 17
Section 3.1. Acquisition, Construction, Installation, Equipment and
Improvement................................................................. 17
Section 3.2. Plans and Specifications.................................................... 17
Section 3.3. Issuance of the Bonds; Application of Proceeds.............................. 17
Section 3.4. Disbursements from the Project Fund......................................... 18
Section 3.5. Borrower Required to Pay Costs in Event Project Fund
Insufficient................................................................ 19
Section 3.6. Completion Date............................................................. 20
Section 3.7. Investment of Fund Moneys................................................... 20
Section 3.8. Rebate Fund................................................................. 23
ARTICLE IV...................................................................................................... 24
LOAN BY ISSUER; REPAYMENT OF THE LOAN; LOAN PAYMENTS
AND ADDITIONAL PAYMENTS....................................................................... 24
Section 4.1. Loan Repayment; Delivery of Note and Credit Facility........................ 24
Section 4.2. Additional Payments......................................................... 25
Section 4.3. Place of Payments........................................................... 25
Section 4.4. Obligations Unconditional................................................... 26
Section 4.5. Assignment of Agreement and Revenues........................................ 26
Section 4.6. Credit Facility............................................................. 26
ARTICLE V....................................................................................................... 27
ADDITIONAL AGREEMENTS AND COVENANTS.................................................................... 27
Section 5.1. Right of Inspection......................................................... 27
Section 5.2. Lease, Sale or Grant of Use by Borrower..................................... 27
Section 5.3. Indemnification............................................................. 27
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross
Income of Interest on Bonds................................................. 28
Section 5.5. Borrower to Maintain Their Existence........................................ 28
Section 5.6. Undertaking to Provide Continuing Disclosure................................ 28
ARTICLE VI...................................................................................................... 29
REDEMPTION AND PURCHASE OF BONDS....................................................................... 29
Section 6.1. Optional Redemption......................................................... 29
Section 6.2. Extraordinary Optional Redemption........................................... 29
Section 6.3. Mandatory Redemption in Event of Inclusion in Gross
Income of Interest on Bonds................................................. 31
Section 6.4. Mandatory Redemption........................................................ 31
Section 6.5. Actions by Issuer........................................................... 31
ARTICLE VII..................................................................................................... 32
EVENTS OF DEFAULT AND REMEDIES......................................................................... 32
Section 7.1. Events of Default........................................................... 32
Section 7.2. Remedies on Default......................................................... 33
Section 7.3. No Remedy Exclusive......................................................... 34
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses............................... 34
Section 7.5. No Waiver................................................................... 34
Section 7.6. Notice of Default........................................................... 35
ARTICLE VIII.................................................................................................... 36
MISCELLANEOUS.......................................................................................... 36
Section 8.1. Term of Agreement........................................................... 36
Section 8.2. Amounts Remaining in Funds.................................................. 36
Section 8.3. Notices..................................................................... 36
Section 8.4. Extent of Covenants of the Issuer; No Personal Liability.................... 37
Section 8.5. Binding Effect.............................................................. 37
Section 8.6. Amendments and Supplements.................................................. 37
Section 8.7. Execution Counterparts...................................................... 37
Section 8.8. Severability................................................................ 37
Section 8.9. Governing Law............................................................... 37
EXHIBIT A - Form of Note
EXHIBIT B - Project Facilities
EXHIBIT C - Project Site
EXHIBIT D - Form of Disbursement Request
</TABLE>
ii
<PAGE> 4
LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into as of April 1, 1998
between the South Carolina Jobs-Economic Development Authority, a public body
corporate and politic and an agency of the State of South Carolina (the
"Issuer"), and Core Materials Corporation, a Delaware Corporation (the
"Borrower"), under the following circumstances summarized in the following
recitals (the capitalized terms not defined in the recitals being used therein
as defined in Article I hereof):
A. The Issuer is a public body corporate and politic and an agency of
the State of South Carolina (the "State") created under the South Carolina
Jobs-Economic Development Fund Act, as amended, Title 41, Chapter 43, Code of
Laws of South Carolina, 1976 (the "Act"); and
B. The Issuer, acting by and through its Board of Directors, is
authorized and empowered under and pursuant to the provisions of the Act to
issue bonds in order to promote and develop the business and economic welfare of
the State, and encourage and assist in the location of new business enterprises
in the State and the expansion of existing business enterprises within the State
and thus provide maximum opportunities for the creation and retention of jobs
and improvement of the standard of living of the citizens of the State and in
the promotion and the advancement of industrial development in the State; and
C. The Issuer is further authorized by Section 41-43-110 of the Act to
issue revenue bonds, as defined in the Act to include notes, payable solely from
revenues and receipts from any revenue producing project and secured by a pledge
of said revenues and receipts; and
D. The Issuer has been duly organized pursuant to the Act; and
E. In order to further the purposes of the Act, the Issuer proposes to
undertake the financing of the costs of acquiring by construction and purchase a
facility for compression molding of sheet molding composites and related
activities, all constituting a business enterprise as described in the Act (the
"Project") located in Cherokee County, South Carolina, and to obtain the funds
therefor by the issuance of its Bonds (as hereinafter defined) under a Trust
Indenture securing such Bonds, between the Issuer and The Huntington National
Bank, Columbus, Ohio, as trustee, dated as of the date hereof (the "Indenture");
and
F. The Issuer proposes to loan the proceeds from the sale of the Bonds
to the Borrower to acquire, construct and equip the Project upon the terms and
conditions hereinafter set forth; and
G. It has been determined that the financing of the acquisition,
construction and equipping of the Project will require the issuance, sale and
delivery by the Issuer of a series of bonds in the aggregate principal amount of
Seven Million Five Hundred Thousand Dollars ($7,500,000) (the "Bonds"); and
1
<PAGE> 5
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants herein made, and subject to the conditions herein set
forth, the parties hereto agree as follows: provided, that any obligation of the
Issuer created by or arising out of this Agreement is a limited obligation of
the Issuer and shall never constitute a general obligation or indebtedness of
the Issuer or of the State or of any agency or political subdivision of the
State within the meaning of any State constitutional provision or statutory
limitation and does not and shall never constitute or give rise to a pecuniary
liability of the Issuer or of the State or of any agency or political
subdivision of the State or a charge against the general credit or taxing power
of the Issuer, the State or of any political subdivision or agency of the State
of South Carolina but shall be payable solely from the Revenues (as defined in
the Indenture), anything herein contained to the contrary by implication or
otherwise notwithstanding, and; provided further, that the Issuer only shall be
obligated to fund the Loan from proceeds of the Bonds.
2
<PAGE> 6
ARTICLE I
DEFINITIONS
Section 1.1. Use of Defined Terms. In addition to the words
and terms defined elsewhere in this Agreement or by reference to another
document, the words and terms set forth in Section 1.2 hereof shall have the
meanings set forth therein unless the context or use clearly indicates another
meaning or intent. Such definitions shall be equally applicable to both the
singular and plural forms of any of the words and terms defined therein.
Capitalized terms used and not defined in this Agreement shall have the meanings
assigned to them in the Indenture.
Section 1.2. Definitions. As used herein:
"Act" means Title 41, Chapter 43 of the Code of Laws of South
Carolina 1976, as amended.
"Additional Payments" means the amounts required to be paid by
the Borrower pursuant to the provisions of Section 4.2 hereof.
"Agreement" means this Loan Agreement as amended or
supplemented from time to time.
"Alternate Credit Facility" means any direct pay letter of
credit or other credit enhancement or support facility that has terms which are
the same in all material respects (except for the term and maximum interest rate
but including coverage of accrued interest on the Bonds for 110 days if the
Bonds bear interest at the Weekly Rate or for 195 days if the Bonds bear
interest at the Semi-Annual Rate or the Long-Term Rate) as the then current
Credit Facility and (i) shall have a term of not less than one year (except if
the Long-Term Rate shall then be in effect, the term of such Alternate Credit
Facility shall not expire prior to (a) the first par redemption date plus 15
days or (b) the first redemption date plus 15 days if the Alternate Credit
Facility covers the redemption premium), (ii) shall be issued by a bank, a trust
company or other financial institution or credit provider, and (iii) the Trustee
shall have received the opinions required by Section 6.03 of the Indenture.
"Authenticating Agent" means the Authenticating Agent as
defined in the Indenture.
"Bank" means, initially, KeyBank National Association,
Cleveland, Ohio, and its successors and assigns in its capacity as issuer of the
Credit Facility and, in the event an Alternate Credit Facility is outstanding,
the issuer of the Alternate Credit Facility.
"Bond Fund" means the Bond Fund created in the Indenture.
3
<PAGE> 7
"Bond Resolution" means the resolution providing for the
issuance of the Bonds and approving this Agreement, the Indenture and related
matters.
"Bond Pledge Agreement" means the Bond Pledge Agreement, dated
as of even date herewith, between the Borrower, the Trustee and the Bank, as
amended or supplemented from time to time.
"Bonds" means the $7,500,000 South Carolina Jobs-Economic
Development Authority Multi-Mode Variable Rate Industrial Development Revenue
Bonds, Series 1998 (Core Materials Corporation Project).
"Bond Service Charges" means, for any period or payable at any
time, the principal of, premium, if any, and interest due on the Bonds for that
period or payable at that time whether due at maturity or upon acceleration or
redemption.
"Bond Year" means Bond Year, as defined in the Indenture.
"Borrower" means Core Materials Corporation, a Delaware
corporation, and its lawful successors and assigns to the extent permitted by
this Agreement.
"Business Day" means any day of the year other than (i) a
Saturday or Sunday, (ii) any day on which banks located in either Cleveland,
Ohio, or the principal corporate trust office of the Trustee is located are
required or authorized by law to remain closed, or (iii) any day on which the
New York Stock Exchange is closed.
"Code" means the Internal Revenue Code of 1986, as amended,
including, when appropriate, the statutory predecessor of the Code, and all
applicable regulations (whether proposed, temporary or final) under that Code
and the statutory predecessor of the Code, and any official rulings and judicial
determinations under the foregoing applicable to the Bonds.
"Completion Date" means the date of completion of the Project
evidenced in accordance with the requirements of Section 3.6 hereof.
"Construction Period" means the period between the beginning
of the acquisition, construction, installation, equipment or improvement of the
Project or the date on which the Bonds are delivered to the Original Purchaser,
whichever is earlier, and the Completion Date.
"Conversion" means (a) any conversion from time to time in
accordance with the terms of the Indenture of the Bonds from one Interest Rate
Mode to another Interest Rate Mode and (b) the end of any Long-Term Rate Period.
"Conversion Date" means the first date any Conversion becomes
effective.
"Counsel" means Counsel as defined in the Indenture.
4
<PAGE> 8
"Credit Facility" means the Credit Facility as defined in the
Indenture.
"Credit Facility Account" means the Credit Facility Account
created under Section 5.01 of the Indenture.
"Defeasance Account" means the Defeasance Account created
under Section 5.01 of the Indenture.
"Designated Representative" means the person at the time
designated to act on behalf of the Borrower by written certificate furnished to
the Issuer, the Bank, and the Trustee, containing the specimen signature of that
person and signed on behalf of the Borrower by a duly authorized officer. That
certificate may designate an alternate or alternates. In the event that all
persons so designated become unavailable or unable to act and the Borrower fail
to designate a replacement within 10 days after such unavailability or inability
to act, the Trustee may appoint an interim Designated Representative until such
time as the Borrower designate that person.
"Eligible Investments" means Eligible Investments as defined
in the Indenture.
"Engineer" means an individual or firm acceptable to the
Trustee and qualified to practice the profession of engineering or architecture
under the laws of the State.
"Event of Default" means any of the events described as an
Event of Default in Section 7.1 hereof.
"Force Majeure" means any of the causes, circumstances or
events described as constituting Force Majeure in Section 7.1. hereof.
"Holder" or "Holder of a Bond" means the Person in whose name
a Bond is registered on the Register.
"Indenture" means the Trust Indenture, dated as of even date
herewith, between the Issuer and the Trustee, as amended or supplemented from
time to time.
"Issuer" means the South Carolina Jobs-Economic Development
Authority, a public body politic and corporate and an agency of the State, and
its successors and assigns.
"Interest Rate Mode" means the Weekly Rate, the Semi-Annual
Rate or the Long- Term Rate.
"Loan" means the loan by the Issuer to the Borrower of the
proceeds received from the sale of the Bonds.
"Loan Payment Date" means, (a) while the Bonds bear interest
at the Weekly Rate, each Interest Payment Date, (b) while the Bonds bear
interest at the Semi-Annual or Long-
5
<PAGE> 9
Term Rate, the first day of each January, April, July and October, or (c) any
other date on which any principal of or interest or any premium on the Bonds
shall be due and payable, whether at maturity, upon acceleration, call for
redemption or otherwise.
"Loan Payments" means the amounts required to be paid by the
Borrower in repayment of the Loan pursuant to the provisions of the Note and of
Section 4.1 hereof.
"Long-Term Rate" means the Long-Term Rate on the Bonds
established in accordance with Section 2.02(c)(iii) of the Indenture.
"Long-Term Rate Period" means the Long-Term Rate Period as
defined in the Indenture.
"Note" means the non-negotiable promissory note of the
Borrower, dated as of even date with the Bonds, in the form attached hereto as
Exhibit A and in the principal amount of $7,500,000, evidencing the obligation
of the Borrower to make Loan Payments (as defined in the Agreement).
"Notice Address" means:
<TABLE>
<S> <C> <C>
(a) As to the Issuer: South Carolina Jobs-Economic
Development Authority
1201 Main Street, Suite 1750
Columbia, South Carolina 29201
Attention: Elliott Franks, III,
Executive Director
(b) As to the Borrower: Core Materials Corporation
800 Manor Park Drive
Columbus, Ohio 43228-0183
Attention: Kevin L. Barnett
(c) As to the Trustee:
and Tender Agent The Huntington National Bank
The Huntington Center, HC 1112
41 South High Street
Columbus, Ohio 43215
Attention: Corporate Trust Department
</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C> <C>
As to the Bank: KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-1306
Attention: International Department
with a copy to:
KeyBank National Association
88 East Broad Street, 2nd Floor
Columbus, Ohio 43215
Attention: Roger Campbell
(e) As to the Key Capital Markets, Inc.
Remarketing Agent: 127 Public Square
Structured Capital Markets Group
OH-01-27-0419
Cleveland, Ohio 44114
Attention: Trading and Underwriting
</TABLE>
or such additional or different address, notice of which is given under Section
8.3 hereof.
"Original Purchaser" means the Person or Persons who purchase
the Bonds upon their initial issuance and delivery.
"Paying Agent" means the Paying Agent as defined in the
Indenture.
"Person" or words importing persons mean firms, associations,
partnerships (including without limitation, general and limited partnerships),
joint ventures, societies, estates, trusts, corporations, public or governmental
bodies, other legal entities and natural persons.
"Placement Agent" means Key Capital Markets, Inc., Cleveland,
Ohio.
"Plans and Specifications" means the Borrower's plans and
specifications describing the Project Facilities as now prepared and as they may
be changed as hereinafter provided.
"Private Placement Memorandum" means the Private Placement
Memorandum dated as of May 7, 1998 and distributed by the Placement Agent in
connection with the sale of the Bonds.
"Project" means, collectively, the Project Site and the
Project Facilities, together constituting a "project" as defined in the Act.
7
<PAGE> 11
"Project Costs" means the costs of the Project specified in
Section 3.4 hereof.
"Project Facilities" means the Project Facilities described in
Exhibit B hereto, together with any additions, modifications and substitutions
to those facilities.
"Project Fund" means the Project Fund created in the
Indenture.
"Project Purposes" means the acquisition, construction,
furnishing, equipping and improving of real and personal property comprising an
industrial facility, for use by the Borrower or its designee or assignee for
compression molding of sheet molding composites and any other use which may be
permitted by the Act and this Agreement.
"Project Site" means the real estate described in Exhibit C
hereto, and any additions thereto, less any removals therefrom.
"Rebate Fund" means the Rebate Fund created under Section 5.05
of the Indenture.
"Redemption Premium Account" means the Redemption Premium
Account created in the Indenture.
"Register" means the books kept and maintained by the
Registrar for the registration and transfer of Bonds pursuant to Section 2.04 of
the Indenture.
"Registrar" means the Registrar as defined in the Indenture.
"Reimbursement Agreement" means the Reimbursement Agreement,
dated as of April 1, 1998, between the Borrower and the Bank, as amended or
supplemented from time to time.
"Remarketing Agent" means, initially, Key Capital Markets,
Inc., Cleveland, Ohio and any Person meeting the qualifications of, and
designated from time to time to act as Remarketing Agent under, Section 12.01 of
the Indenture.
"Remarketing Agreement" means the Remarketing Agreement, dated
as of April 1, 1998, among the Borrower, the Remarketing Agent and the Issuer in
connection with the remarketing of the Bonds.
"Remarketing Proceeds Account" means the Remarketing Proceeds
Account created in the Indenture.
"Revenues" means (a) the Loan Payments, (b) all amounts
payable to the Trustee with respect to the principal or redemption price of, or
interest on, the Bonds (i) by the Borrower as required hereunder, (ii) upon
deposit in the Bond Fund from the proceeds of the
8
<PAGE> 12
Bonds; and (iii) by the Credit Facility Issuer under a Credit Facility, and (c)
investment income with respect to any moneys held by the Trustee in the Bond
Fund. The term "Revenues" does not include any moneys or investments in the
Rebate Fund.
"Semi-Annual Rate" means the semi-annual interest rate on the
Bonds established in accordance with Section 2.02(c)(ii) of the Indenture.
"State" means the State of South Carolina.
"Tender Agent" means, initially, The Huntington National Bank,
Columbus, Ohio and any successor Tender Agent as determined or designated under
or pursuant to the Indenture.
"Trustee" means The Huntington National Bank, Columbus, Ohio,
until a successor Trustee shall have become such pursuant to the applicable
provisions of the Indenture, and thereafter "Trustee" shall mean the successor
Trustee.
"Unassigned Issuer's Rights" means all of the rights of the
Issuer to receive Additional Payments under Section 4.2 hereof, to be held
harmless and indemnified under Section 5.3 hereof, to be reimbursed for
attorneys' fees and expenses under Section 7.4 hereof, and to give or withhold
consent to amendments, changes, modifications, alterations and termination of
this Agreement under Section 8.6 hereof.
"Weekly Rate" means the weekly rate of interest on the Bonds
established in accordance with Section 2.02(c)(i) of the Indenture.
Section 1.3. Interpretation. Any reference herein to the
Issuer, to the Board of Directors of the Issuer or to any member or officer of
either includes entities or officials succeeding to their respective functions,
duties or responsibilities pursuant to or by operation of law or lawfully
performing their functions.
Any reference to a section or provision of the Constitution of
the State or the Act, or to a section, provision or chapter of the South
Carolina Code of Laws 1976, as amended, or to any statute of the United States
of America, includes that section, provision or chapter or statute as amended,
modified, revised, supplemented or superseded from time to time; provided, that
no amendment, modification, revision, supplement or superseding section,
provision or chapter or statute shall be applicable solely by reason of this
provision, if it constitutes in any way an impairment of the rights or
obligations of the Issuer, the Holders, the Trustee, the Bank or the Borrower
under this Agreement.
Unless the context indicates otherwise, words importing the
singular number include the plural number, and vice versa; the terms "hereof",
"hereby", "herein", "hereto", "hereunder" and similar terms refer to this
Agreement; and the term "hereafter" means after, and the term "heretofore" means
before, the date of delivery of the Bonds. Words of any gender include the
correlative words of the other genders, unless the sense indicates otherwise.
9
<PAGE> 13
Section 1.4. Captions and Headings. The captions and headings
in this Agreement are solely for convenience of reference and in no way define,
limit or describe the scope or intent of any Articles, Sections, subsections,
paragraphs, subparagraphs or clauses hereof.
(End of Article I)
10
<PAGE> 14
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations of the Issuer. The Issuer
represents that: (a) it is duly organized and validly existing under the laws of
the State; (b) it has duly accomplished all conditions necessary to be
accomplished by it prior to the issuance and delivery of the Bonds and the
execution and delivery of this Agreement and the Indenture; (c) it is not in
violation of or in conflict with any provisions of the laws of the State which
would impair its ability to carry out its obligations contained in this
Agreement or the Indenture; (d) it is empowered to enter into the transactions
contemplated by this Agreement and the Indenture; (e) it has duly authorized the
execution, delivery and performance of this Agreement and the Indenture; and (f)
it will do all things in its power in order to maintain its existence or assure
the assumption of its obligations under this Agreement and the Indenture by any
successor public body.
The Issuer makes no representation or warranty concerning the
suitability of the Project for the purpose for which it is being undertaken by
the Borrower. The Issuer has not made any independent investigation as to the
feasibility or creditworthiness of the Borrower. Any bond purchaser, assignee of
the Loan Agreement or any other party with interest in this transaction, shall
make its own independent investigation as to the creditworthiness and
feasibility of the Project, independent of any representation or warranties of
the Issuer.
Section 2.2. Representations and Covenants of the Borrower.
The Borrower represents and covenants that:
(a) Borrower is a corporation organized and existing
under the laws of the State of Delaware and is duly qualified
to conduct business in the State of South Carolina.
(b) The Borrower has full power and authority to
execute, deliver and perform this Agreement, the Reimbursement
Agreement, the Remarketing Agreement, the Bond Pledge
Agreement and the Note and to enter into and carry out the
transactions contemplated by those documents; and that the
execution, delivery and performance of those documents do not,
and will not, violate any provision of law applicable to it,
and do not, and will not, conflict with or result in a default
under any agreement or instrument to which it is a party or by
which it is bound, a violation of which would cause a material
adverse effect to the Borrower. This Agreement, the
Reimbursement Agreement, the Remarketing Agreement, the Bond
Pledge Agreement and the Note have, by proper action, been
duly authorized, executed and delivered by the Borrower and
all steps necessary have been taken to constitute this
Agreement, the Reimbursement Agreement, the Remarketing
Agreement, the Bond Pledge Agreement, and the Note valid and
binding obligations of the Borrower.
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(c) The acquisition and construction of the Project
were not commenced (within the meaning of Section 144(a) of
the Code) prior to the date that is 60 days prior to the date
of adoption of statements of "official intent" to issue the
Bonds by the Issuer toward issuance of the Bonds.
(d) The provision of financial assistance to be made
available to it under this Agreement from the proceeds of the
Bonds and the commitments therefor made by the Issuer have
induced the Borrower to expand within the boundaries of the
Issuer that business of the Borrower to be conducted by use of
the Project and such business has and will preserve and create
additional jobs and employment opportunities within the
boundaries of the Issuer.
(e) The Project will be completed in accordance with
the Plans and Specifications and the Project will be operated
and maintained in such manner as to conform with all
applicable zoning, planning, building, environmental and other
applicable governmental regulations and as to be consistent
with the Act.
(f) The Borrower shall not use or operate the Project
in any way which would affect the qualification of the Project
under the Act or impair the exclusion from gross income for
federal income tax purposes of the interest on the Bonds.
(g) The Borrower intends to use or operate the
Project in a manner consistent with the Project Purposes until
the date on which the Bonds have been fully paid and know of
no reason why the Project will not be so used or operated. If,
in the future, there is a cessation of that use or operation,
it will use its best efforts to resume that use or operation
or accomplish an alternate use or operation by the Borrower or
others which will be consistent with the Act and this
Agreement. If the Borrower voluntarily moves all or
substantially all of the equipment which is included in the
Project from within the boundaries of the Issuer, the Borrower
will promptly prepay the Loan and cause the Bonds to be
redeemed.
(h) Ninety-five percent (95%) or more of the net
proceeds of the Bonds (as defined in Section 150 of the Code)
will be used to provide manufacturing facilities (within the
meaning of Section 144(a)(12)(C) of the Code).
The Borrower will not request or authorize any
disbursement pursuant to Section 3.4 hereof, which, if paid,
would result in less than 95% of the net proceeds of the Bonds
not being used as described in the preceding paragraph. The
amount of the proceeds of the Bonds used to finance issuance
costs of the Bonds will not exceed 2% of the proceeds of the
Bonds (within the meaning of Section 147(g) of the Code) and
the Borrower will not request or authorize any disbursement
pursuant to Section 3.4 hereof, which, if paid, would result
in more
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than 2% of the proceeds of the Bonds being used to finance
issuance costs of the Bonds. None of the proceeds of the Bonds
will be used to provide working capital.
(i) The Project will be located entirely within
Cherokee County, South Carolina.
(j) There are no outstanding bonds with respect to
"facilities", as defined in Section 144(a)(4)(B) of the Code,
(i) which are to be or have been used by the Borrower or any
other "principal user" of the Project or any "related person"
to the Borrower or such other "principal user", as those terms
are used and defined in Sections 144(a)(2) and 144(a)(3) of
the Code, respectively, and which are located within Cherokee
County, South Carolina, and (ii) which bonds would have to be
taken into account in determining the aggregate face amount of
the Bonds as provided in Section 144(a)(4)(A)(ii) of the Code.
(k) For each "test-period beneficiary" (as defined in
Section 144(a)(10)(D) of the Code) of the Project, the sum of
(i) the aggregate authorized face amount of the Bonds
allocated in accordance with Section 144(a)(10)(C) of the Code
to such beneficiary and (ii) the aggregate outstanding
principal amount of any other tax-exempt obligation described
in Section 144(a)(10)(B)(ii) of the Code, wherever and
whenever issued, allocated to such beneficiary in accordance
with Section 144(a)(10)(C) of the Code, does not and will not
exceed $40,000,000.
(l) In accordance with Section 147(b) of the Code,
the weighted average maturity of the Bonds does not exceed
120% of the weighted average reasonably expected economic life
of the Project on the date of issuance of the Bonds.
(m) None of the proceeds of the Bonds will be used to
provide any private or commercial golf course, country club,
massage parlor, tennis club, skating facilities (including
roller skating, skateboard and ice skating), racquet sports
facility (including handball or racquetball court), hot tub
facility, suntan facility, racetrack, airplane, skybox or
other private luxury box, or health club facility; any
facility primarily used for gambling; or any store the
principal business of which is the sale of alcoholic beverages
for consumption off premises.
(n) None of the proceeds of the Bonds will be used to
provide facilities for retail food and beverage services
(except grocery stores), automobile sales or service, or the
provision of recreation or entertainment.
(o) Not more than 25% of the net proceeds of the
Bonds will be used, directly or indirectly to acquire land or
any interest therein, and any such land will not be used for
farming purposes.
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(p) None of the proceeds of the Bonds will be used,
to acquire existing property or any interest therein unless
the first use of such property was or is pursuant to such
acquisition or unless such acquisition met or meets the
requirements of Section 147(d)(2) of the Code.
(q) The information furnished by the Borrower and
used by the Issuer in preparing the certification pursuant to
Section 148 of the Code and information statement pursuant to
Section 149(e) of the Code, both referred to in the Bond
Resolution, as well as the federal tax election referred to in
the Bond Resolution, is accurate and complete as of the date
of the issuance of the Bonds.
(r) In connection with any lease or grant by the
Borrower of the use of the Project, the Borrower shall require
that the lessee or user of any portion of the Project shall
not (i) violate the covenant set forth in subsection (j) above
and (ii) use that portion of the Project in any manner which
would violate the covenants set forth in subsections (m) and
(n) above.
(s) The Bonds are not being issued to finance
facilities which are within or part of "a single building, an
enclosed shopping mall, or a strip of offices, stores or
warehouses using substantial common facilities" (within the
meaning of Section 144(a)(9) of the Code) which have
heretofore been financed with obligations issued and still
outstanding under Section 144(a) of the Code or the
corresponding provision of prior law.
(t) After the expiration of any applicable temporary
period under Section 148(d)(3) of the Code, at no time during
any Bond Year will the aggregate amount of gross proceeds of
the Bonds invested in nonpurpose investments with a yield
higher than the yield on the Bonds exceed 150 percent of the
debt service on the Bonds for such Bond Year and the aggregate
amount of gross proceeds of the Bonds invested in nonpurpose
investments with a yield higher than the yield on the Bonds,
if any, will be promptly and appropriately reduced as the
amount of outstanding Bonds are reduced, provided however that
the foregoing shall not require the sale or disposition of any
investments in nonpurpose investments if such sale or
disposition would result in a loss which exceeds the amount
which would be paid to the United States pursuant to Section
5.05 of the Indenture (but for such sale or disposition) at
the time of such sale or disposition if a payment under
Section 5.05 of the Indenture were due at such time.
At no time will any funds constituting gross proceeds
of the Bonds be used in a manner as to constitute a prohibited
payment under the applicable Regulations pertaining to, or in
any other fashion as would constitute failure of compliance
with, Section 148 of the Code.
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The terms "bond year", "proceeds", "gross proceeds",
"nonpurpose investments", "yield", "higher yielding
investments" and "debt service" have the meanings assigned to
them for purposes of Section 148 of the Code.
(u) In no event will the Borrower provide collateral
to the Bank which bears a yield higher than the yield on the
Bonds within the meaning of Section 148 of the Code and any
lawful regulations promulgated thereunder, except upon receipt
by the Borrower of an opinion of nationally recognized bond
counsel to the effect that the pledge of such collateral shall
not cause the interest on the Bonds to be included in gross
income for federal income tax purposes; provided, however,
that no such yield restriction or opinion is required with
respect to the pledge of any collateral that consists of
"tax-exempt bonds" within the meaning of Section 150(a)(6) of
the Code.
(v) No litigation at law or in equity nor any
proceeding before any governmental agency or other tribunal
involving the Borrower is pending or, to the knowledge of the
Borrower threatened, in which any liability of the Borrower is
not adequately covered by insurance and in which any judgment
or order would have a material and adverse effect upon the
business or assets of the Borrower or would materially and
adversely affect the Project, the validity of this Agreement,
the Bond Pledge Agreement, the Reimbursement Agreement, the
Remarketing Agreement and the Note or the performance of the
Borrower's obligations thereunder or the transactions
contemplated hereby.
Section 2.3. Actions under Section 144(a)(4) of the Code. The
Issuer is issuing the Bonds pursuant to an election made by it, at the
Borrower's request, under Section 144(a)(4) of the Code. In connection with that
election, the Borrower represents and covenants that:
(a) The sum of (i) the principal amount of the Bonds,
(ii) the outstanding face amount of prior issues, if any,
described in Section 144(a)(2) of the Code and (iii) the
amount of capital expenditures with respect to "facilities" as
defined in Section 144(a)(4)(B) of the Code, other than those
financed or to be financed out of proceeds of the Bonds or any
such prior issues or those mentioned in Section 144(a)(4)(C)
of the Code ("Capital Expenditures"), made during the
three-year period preceding the date of delivery of the Bonds
to the Placement Agent (the "Issue Date"), did not exceed
$10,000,000.
(b) During the three-year period following the Issue
Date, the Borrower does not intend to make or cause or permit
to be made any Capital Expenditures in an amount which would
cause the interest on the Bonds to be included in the gross
income of the Holders for federal income tax purposes.
(c) It will maintain adequate records regarding the
dates and amounts of all Capital Expenditures made from the
Issue Date through and including the
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third anniversary of the Issue Date and will furnish those
records to the Trustee upon request.
(d) In the event, on account of a lease, sublease,
management contract or other agreement relating to the
Project, or any portion thereof, permitted by the terms
hereof, any person other than the Borrower becomes a
"principal user" of the Project (as referred to in Section
2.2(j) hereof), the Borrower shall promptly advise the Trustee
of the identity of such person and furnish to the Trustee a
copy of such lease, sublease, management contract or other
agreement. In connection with any such lease, sublease,
management contract or other agreement, the Borrower will
require by covenant that any lessee, sublessee, manager or
user who is a "principal user" of the Project and any "related
person" thereto also shall comply with the covenants set forth
in subsection (b) of this Section as if those covenants were
made herein by such lessee, sublessee, manager, user or
"related person" thereto.
(End of Article II)
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ARTICLE III
COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction, Installation,
Equipment and Improvement. The Borrower shall acquire, construct, furnish, equip
and improve the Project Facilities on the Project Site with all reasonable
dispatch and in accordance with the Plans and Specifications, (b) shall pay when
due all fees, costs and expenses incurred in connection with that acquisition,
construction, installation, equipment and improvement from funds made available
therefor in accordance with this Agreement or otherwise, and (c) shall ask,
demand, sue for, levy, recover and receive all those sums of money, debts and
other demands whatsoever which may be due, owing and payable under the terms of
any contract, order, receipt, writing and instruction in connection with the
acquisition, construction, furnishing, equipment and improvement of the Project,
and shall enforce the provisions of any contract, agreement, obligation, bond or
other performance security with respect thereto. It is understood that the
Project is that of the Borrower and any contracts made by the Borrower with
respect thereto, whether construction contracts or otherwise, or any work to be
done by the Borrower on the Project are made or done by the Borrower in its own
behalf and not as agent or contractor for the Issuer.
Section 3.2. Plans and Specifications. The Borrower may revise
the Plans and Specifications from time to time, provided that no revision shall
be made which would change the Project Purposes, without the approval of the
Issuer, and no revision shall be made which would change the Project Purposes to
other than purposes permitted by the Act and the Code.
Section 3.3. Issuance of the Bonds; Application of Proceeds.
To provide funds to make the Loan for the purposes of paying the Project Costs,
the Issuer shall issue, sell and deliver the Bonds to the Original Purchaser.
The Bonds will be issued pursuant to the Indenture in the aggregate principal
amount, will bear interest, will mature and will be subject to redemption as set
forth therein. The Borrower hereby approves the terms and conditions of the
Indenture and the Bonds, and of the terms and conditions under which the Bonds
will be issued, sold and delivered.
The proceeds from the sale of the Bonds shall be loaned to the
Borrower and paid as follows: (a) a sum equal to any accrued interest, if any,
paid by the Original Purchaser shall be deposited with the Trustee and deposited
in the Bond Fund, and (b) the balance of the proceeds from the sale of the Bonds
shall be deposited in Project Fund. Pending disbursement pursuant to Section 3.4
hereof, the proceeds deposited in the Project Fund, together with any investment
earnings thereon, shall constitute a part of the Revenues assigned by the Issuer
to the payment of Bond Service Charges as provided in the Indenture.
Neither the Issuer nor the Borrower have or shall have any
interest in the Credit Facility, the Credit Facility Account, the Defeasance
Account, the Redemption Premium
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Account or the Remarketing Proceeds Account created under Section 5.01 of the
Indenture or the proceeds of the remarketing of the Bonds from whatever source
and wherever deposited.
Section 3.4. Disbursements from the Project Fund. Subject to
the provisions below, disbursements from the Project Fund shall be made only to
reimburse or pay the Borrower, or any person designated by the Borrower, for the
following Project Costs:
(a) Costs incurred directly or indirectly for or in
connection with the acquisition, construction, furnishing,
equipment or improvement of the Project, including costs
incurred in respect of the Project for preliminary planning
and studies; architectural, legal, engineering, accounting,
consulting, supervisory and other services; labor, services
and materials; and recording of documents and title work.
(b) Premiums attributable to any surety bonds and
insurance required to be taken out and maintained during the
Construction Period with respect to the Project Site and the
Project Facilities.
(c) Taxes, assessments and other governmental charges
in respect of the Project that may become due and payable
during the Construction Period.
(d) Costs incurred directly or indirectly in seeking
to enforce any remedy against any contractor or subcontractor
in respect of any actual or claimed default under any contract
relating to the Project Facilities.
(e) Financial, legal, accounting, printing and
engraving fees, charges and expenses, and all other such fees,
charges and expenses incurred in connection with the
authorization, sale, issuance and delivery of the Bonds,
including, without limitation, the fees and expenses of the
Trustee and any paying agent properly incurred under the
Indenture that may become due and payable during the
Construction Period; provided that the amount of the proceeds
of the Bonds used to finance issuance costs shall not exceed
2% of the aggregate face amount of the Bonds within the
meaning of Section 147(g) of the Code.
(f) Any other costs, expenses, fees and charges
properly chargeable to the cost of construction, furnishing,
equipment or improvement of the Project.
(g) Payment of interest on the Bonds or fees for
credit enhancement devices applicable to the Bonds, to the
extent such fees constitute a reasonable charge for the
transfer of credit risk, during the Construction Period.
(h) Payments made to the Rebate Fund.
Any disbursements from the Project Fund for the payment of the
Project Costs shall be made by the Trustee only upon the written order of the
Designated Representative with
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written approval of the Bank. Each such written order shall be in substantially
the form of the disbursement request attached hereto as Exhibit D and shall be
consecutively numbered and accompanied by certification by the Borrower that the
payments or reimbursements as requested are authorized by this Agreement and the
Reimbursement Agreement. Any disbursement for any item not described in, or the
cost for which item is other than as described in, the information statement
filed by the Issuer in connection with the issuance of the Bonds as required by
Section 149(e) of the Code and referred to in Section 2.2 hereof, shall be
accompanied by evidence satisfactory to the Trustee that the average reasonably
expected economic life of the facilities being financed by the Bonds is not less
than 5/6ths of the average maturity of the Bonds or, if such evidence is not
presented with the disbursement or at the request of the Trustee, by an opinion
of nationally recognized bond counsel to the effect that such disbursement will
not result in the interest on the Bonds becoming included in the gross income of
the Holders for federal income tax purposes. In case any contract provides for
the retention by the Borrower of a portion of the contract price, there shall be
paid from the Project Fund only the net amount remaining after deduction of any
such portion, and only when that retained amount is due and payable, may it be
paid from the Project Fund.
Any moneys in the Project Fund remaining after the Completion
Date and payment, or provision for payment, in full of the Project Costs, at the
direction of the Designated Representative, promptly shall be
(i) used for the purchase of Bonds in the open market
for the purpose of cancellation at prices not exceeding the
full market value thereof plus accrued interest thereon to the
date of payment therefor;
(ii) paid into the Bond Fund to be applied to the
redemption of the Bonds; or
(iii) used for a combination of the foregoing as is
provided in that direction.
In all such cases, any payments made pursuant to the immediately preceding
paragraph shall be made only to the extent that such use or application will
not, in the opinion of nationally recognized bond counsel or under ruling of the
Internal Revenue Service, result in the interest on the Bonds becoming included
in the gross income of the Holders for federal income tax purposes.
Notwithstanding the foregoing, upon the occurrence and
continuance of an "Event of Default" as defined in Section 10.01 of the
Indenture because of which acceleration of the principal amount of the Bonds has
been declared pursuant to Section 10.02 of the Indenture, any moneys remaining
in the Project Fund shall be promptly transferred by the Trustee to the Bond
Fund.
Section 3.5. Borrower Required to Pay Costs in Event Project
Fund Insufficient. If moneys in the Project Fund are not sufficient to pay all
Project Costs, the Borrower
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nonetheless will complete the Project in accordance with the Plans and
Specifications and shall pay all such additional Project Costs from their own
funds. The Borrower shall not be entitled to any reimbursement for any such
additional Project Costs from the Issuer, the Trustee, the Bank or any Holder;
nor shall they be entitled to any abatement, diminution or postponement of the
Loan Payments. This Section shall not be operative if and to the extent that
compliance with it would, or reasonably might be anticipated by the Borrower to,
involve a violation of any provision of the Agreement including, without
limitation, Sections 2.2 and 5.4 of the Agreement.
Section 3.6. Completion Date. The Borrower shall notify the
Issuer, the Trustee and the Bank of the Completion Date by a certificate signed
by the Designated Representative stating:
(a) the date on which the Project Facilities were
substantially completed,
(b) that all other facilities necessary in connection
with the Project have been acquired, constructed, furnished,
equipped and improved,
(c) that the acquisition, construction, furnishing,
equipment and improvement of the Project Facilities and those
other facilities have been accomplished in such a manner as to
conform with all applicable zoning, planning, building,
environmental and other similar governmental regulations,
(d) that except as provided in subsection (e) of this
Section, all costs of that acquisition, construction,
furnishing, equipment and improvement then or theretofore due
and payable have been paid, and
(e) the amounts which the Trustee shall retain in the
Project Fund for the payment of Project Costs not yet due or
for liabilities which the Borrower is contesting or which
otherwise should be retained and the reasons such amounts
should be retained.
That certificate may state that it is given without prejudice to any rights
against third parties which then exist or subsequently may come into being. The
Designated Representative shall include with that certificate a statement
specifically describing all items of personal property comprising a part of the
Project Facilities. The certificate shall be delivered as promptly as
practicable after the occurrence of the events and conditions referred to in
subsections (a) through (d) of this Section.
Section 3.7. Investment of Fund Moneys. At the oral (promptly
confirmed in writing) or written request of the Designated Representative, any
moneys held as part of the Bond Fund (except moneys in the Credit Facility
Account, Defeasance Account, Remarketing Proceeds Account, but including the
Redemption Premium Account created under Section 5.01 of the Indenture), the
Project Fund or the Rebate Fund shall be invested or reinvested by the
20
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Trustee in Eligible Investments. The Issuer and the Borrower each hereby
covenant that they will restrict that investment and reinvestment and the use of
the proceeds of the Bonds in such manner and to such extent, if any, as may be
necessary, after taking into account reasonable expectations at the time of
delivery of and payment for the Bonds, so that the Bonds will not constitute
arbitrage bonds under Section 148 of the Code.
Any officer of the Issuer having responsibility for issuing
the Bonds is authorized and directed, alone or in conjunction with any of the
foregoing or with any other officer, employee or agent of or consultant to the
Issuer, or with the Borrower or any officer, employee or agent of or consultant
to the Borrower, to give an appropriate certificate of the Issuer pursuant to
said Section 148, for inclusion in the transcript of proceedings for the Bonds,
setting forth the reasonable expectations of the Issuer regarding the amount and
use of the proceeds of the Bonds and the facts, estimates and circumstances on
which those expectations are based, that certificate to be premised on the
reasonable expectations and the facts, estimates and circumstances on which
those expectations are based, as provided by the Borrower, all as of the date of
delivery of and payment for the Bonds. The Borrower shall provide the Issuer
with, and the Issuer's certificate may be based on, a certificate of an
appropriate officer, employee or agent of or consultant to the Borrower setting
forth the reasonable expectations of the Borrower on the date of delivery of and
payment for the Bonds regarding the amount and use of the proceeds of the Bonds
and the facts, estimates and circumstances on which they are based.
In particular, the Issuer and the Borrower represent that
their present expectations are as follows:
(a) substantial binding obligations have been,
or within six (6) months of the date hereof
will be, entered into requiring payment of
an amount equal to not less than $100,000 or
2-1/2% of that portion of the costs of the
Project to be financed by the Bonds,
whichever is less, which substantial binding
obligations are comprised of contracts for
the acquisition, construction, furnishing,
improvement and equipping of the Project;
(b) thereafter, acquisition, construction,
furnishing, improvement and equipping of the
Project will proceed with due diligence to
completion;
(c) moneys received as accrued interest, if any,
upon the sale of the Bonds will be credited
to the Bond Fund and used in their entirety
for the first payment of interest on the
Bonds;
(d) an amount equal to not less than 85% of the
spendable proceeds of the Bonds will be
expended on the Project within 3 years of
the date of issuance of the Bonds;
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(e) any income derived from the investment of
any proceeds of the Bonds and from
investment of such investment income (except
to the extent any such income constitutes
Excess Earnings, as defined in the
Indenture) will, at the direction of the
Designated Representative, be, to the extent
allowed by State law, (i) used to acquire,
construct, install, equip and improve
additional real and personal property in
connection with the Project, (ii) used to
purchase Bonds in the open market, (iii)
paid into the Bond Fund, or (iv) paid or
used in any combination of the foregoing,
within 3 years from the date of issuance of
the Bonds, or within one year after receipt
of such investment income, whichever is
later;
(f) all moneys paid as Loan Payments pursuant to
this Agreement will be deposited in the Bond
Fund and used to pay principal of, premium,
if any, and interest on the Bonds and there
will be no debt service fund other than the
Bond Fund that will be so used; any
additional amounts paid pursuant to this
Agreement as reimbursement for costs or
expenses of the Issuer or the Trustee will
be applied upon receipt of those costs and
expenses requiring such amounts to be so
paid; any money deposited in the Bond Fund
will be spent within a 13 month period
beginning on the date of deposit, and any
amount received from investment of money
held in the Bond Fund will be spent within a
one year period beginning on the date of
receipt;
(g) neither the Project nor any part thereof
will not be sold or otherwise disposed of
prior to the maturity date of the Bonds,
other than as a result of normal
obsolescence and wear and tear;
(h) the original proceeds of the Bonds will not
exceed by more than 5% the amount necessary
for the purpose of the issuance of the
Bonds;
(i) no artifice or device will be used to
exploit the difference between tax-exempt
and taxable interest rates in order to gain
any material financial advantage and no
artifice or device will be used to increase
the burden on the market for tax-exempt
obligations, including increasing such
burden by selling obligations that would not
otherwise be sold, by selling more
obligations that would otherwise be
necessary or by issuing obligations sooner
or allowing obligations to remain
outstanding longer than would otherwise be
necessary.
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Section 3.8. Rebate Fund. The Borrower agrees to make such
payments to the Trustee as are required of it under Section 5.05 of the
Indenture and to pay the costs and expenses of the independent certified public
accounting firm or firm of attorneys engaged in accordance with Section 5.05 of
the Indenture. The obligation of the Borrower to make such payments shall remain
in effect and be binding upon the Borrower notwithstanding the release and
discharge of the Indenture.
(End of Article III)
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<PAGE> 27
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
Section 4.1. Loan Repayment; Delivery of Note and Credit
Facility. Upon the terms and conditions of this Agreement, the Issuer will make
the Loan to the Borrower. In consideration of and in repayment of the Loan, the
Borrower shall make, as Loan Payments, payments sufficient in amount to pay when
due the Bond Service Charges payable on the Bonds. All such Loan Payments shall
be paid to the Trustee in accordance with the terms of the Note for the account
of the Issuer on the Loan Payment Dates and shall be held and disbursed in
accordance with the provisions of the Indenture and this Agreement for
application to the payment of Bond Service Charges. Notwithstanding the
foregoing, while the Credit Facility is in effect, the Borrower shall deposit
all such Loan Payments directly with the Credit Facility Issuer to reimburse the
Credit Facility Issuer for draws on the Credit Facility, and the Credit Facility
Issuer shall apply such amounts to the reimbursement obligation of the Borrower.
The obligations of the Borrower to make any payment referred to in this Section
4.1 shall be deemed satisfied and discharged to the extent of the corresponding
payment made by the Credit Facility Issuer to the Trustee under the Credit
Facility. It is understood, however, that such payment by the Credit Facility
Issuer shall not relieve the Borrower of any of its obligations under the
Reimbursement Agreement, including the obligation to reimburse the Credit
Facility Issuer for any draw on the Credit Facility.
The Borrower shall be entitled to a credit against the Loan
Payments next required to be made to the extent that the balance of the Bond
Fund (other than any balance in the Credit Facility Account, Defeasance Account,
Redemption Premium Account or Remarketing Proceeds Account) is then in excess of
amounts required (a) for payment of Bonds theretofore matured or theretofore
called for redemption, (b) for payment of interest for which checks or drafts
have been drawn and mailed by the Trustee, and (c) for deposit in the Bond Fund
for use other than for the payment of Bond Service Charges on the Interest
Payment Date next following the applicable Loan Payment Date. In any event,
however, if on any Interest Payment Date, the balance in the Bond Fund is
insufficient to make required payments of Bond Service Charges, the Borrower
forthwith will pay to the Trustee, for the account of the Issuer and for deposit
into the Bond Fund, any deficiency.
To secure the Borrower's performance of their obligation under
this Agreement, the Borrower shall execute and deliver to the Trustee,
concurrently with the issuance and delivery of the Bonds, the Note.
The Note shall secure equally and ratably all outstanding
Bonds.
Upon payment in full, in accordance with the Indenture, of the
Bond Service Charges on any or all Bonds, whether at maturity or by redemption
or otherwise, or upon provision for the payment thereof having been made in
accordance with the provisions of the
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Indenture, an appropriate notation shall be endorsed thereon evidencing the date
and amount of the principal payment or prepayment equal to the Bonds so paid, or
with respect to which provision for payment has been made, and that Note shall
be surrendered by the Trustee to the Borrower for cancellation if all Bonds
shall have been paid (or provision made therefor) and cancelled as aforesaid.
Unless the Borrower is entitled to a credit under express terms of this
Agreement or the Note, all payments on the Note shall be in the full amount
required thereunder.
Except for such interest of the Borrower as may hereafter
arise pursuant to Section 8.2 hereof or Section 5.06 of the Indenture, the
Borrower and the Issuer each acknowledge that neither the Borrower nor the
Issuer have any interest in the Credit Facility Account, the Redemption Premium
Account, the Remarketing Proceeds Account and the Defeasance Account of the Bond
Fund and any moneys deposited therein shall be in the custody of and held by the
Trustee in trust for the benefit of the Holders and, to the extent of draws
under the Credit Facility, the Bank.
Section 4.2. Additional Payments. The Borrower shall pay to
the Issuer, as Additional Payments hereunder, within five (5) days after request
therefor made in writing, any and all costs and expenses, including fees of
Issuer's Counsel, incurred or to be paid by the Issuer in connection with the
issuance and delivery of the Bonds, the remarketing of the Bonds and the
Conversion of the Bonds or otherwise related to actions taken by the Issuer
under this Agreement or the Indenture.
The Borrower shall pay to the Trustee, the Registrar and any
Paying Agent or Authenticating Agent, their reasonable fees, charges and
expenses for acting as such under the Indenture.
The Borrower shall pay the Remarketing Agent and Tender Agent,
as Additional Payments hereunder, the fees and expenses of the Remarketing Agent
and Tender Agent under the Indenture for services rendered in connection with
the Bonds.
The Borrower shall pay to the Tender Agent in federal or other
immediately available funds not later than 3:00 p.m., Cleveland, Ohio time, an
amount equal to the amount the Tender Agent requires in order to purchase on
behalf of the Borrower Bonds pursuant to Article III of the Indenture on the
date payment is to be made; provided, however, that the amount required to be
paid under this paragraph shall be reduced by an amount equal to the sum of the
amounts made available to the Tender Agent for such purpose from the proceeds of
the remarketing of such Bonds by the Remarketing Agent or proceeds of a draw
under the Credit Facility. The Borrower hereby authorizes the Trustee to draw
such moneys under the Credit Facility, as are necessary for the purchase of
Bonds pursuant to said Article III.
Section 4.3. Place of Payments. Except as provided in Section
4.1, the Borrower shall make all Loan Payments directly to the Trustee at its
corporate trust office. Additional Payments shall be made directly to the person
or entity to whom or to which they are due.
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Section 4.4. Obligations Unconditional. The obligations of the
Borrower to make Loan Payments, Additional Payments and any payments required of
the Borrower under Section 5.05 of the Indenture shall be absolute and
unconditional, and the Borrower shall make such payments without abatement,
diminution or deduction regardless of any cause or circumstances whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
which the Borrower may have or assert against the Issuer, the Trustee, the
Remarketing Agent, the Tender Agent, the Bank or any other Person.
Section 4.5. Assignment of Agreement and Revenues. To secure,
first, the payment of Bond Service Charges on, and the purchase of, the Bonds,
and, second, the payment to the Bank and performance by the Borrower under the
Reimbursement Agreement, the Issuer shall assign to the Trustee, by the
Indenture, any of its rights, title and interest in this Agreement (except for
the Unassigned Issuer's Rights), and the Credit Facility Account, Redemption
Premium Account, Remarketing Proceeds Account and Defeasance Account of the Bond
Fund and all moneys and investments therein (including without limitation the
proceeds of the Credit Facility) and shall grant to the Trustee, by the
Indenture, a security interest in its rights under and interest in (i) the
Project Fund and all moneys and investments therein, and (ii) the Revenues
(other than such accounts of the Bond Fund, all investments therein and the
proceeds of the Credit Facility). The Borrower hereby agrees and consent to that
assignment and grant.
Section 4.6. Credit Facility. Prior to the initial delivery of
the Bonds to the Original Purchaser pursuant to Section 2.01 of the Indenture,
the Borrower shall obtain and deliver, to the Trustee, the Credit Facility. The
Credit Facility shall be issued initially by the Bank pursuant to the
Reimbursement Agreement; shall be dated the date of delivery of the Bonds; shall
obligate the Bank to pay (a) an amount equal to the principal amount of the
Bonds (i) to pay the principal of the Bonds when due whether at stated maturity,
upon redemption or acceleration or (ii) to enable the Tender Agent to pay the
purchase price or portion of the purchase price equal to the principal amount of
Bonds purchased pursuant to Section 3.01 of the Indenture to the extent
remarketing proceeds are not available for such purpose, plus (b) an amount
equal to 110 days' interest accrued on the Bonds at a rate of ten percent (10%)
per annum (i) to pay interest on the Bonds when due or (ii) to enable the Tender
Agent to pay the portion of the purchase price of the Bonds purchased pursuant
to Section 3.01 of the Indenture equal to the interest accrued, if any, on such
Bonds to the extent remarketing proceeds are not available for such purpose; and
shall be in substantially the same form as the exhibit attached to the
Reimbursement Agreement and made a part thereof.
The Borrower shall take whatever action may be reasonably
necessary to maintain the Credit Facility in full force and effect during the
period required by the Indenture, including the payment of any reasonable and
documented transfer fees required by the Bank upon any transfer of the Credit
Facility to any successor Trustee pursuant to Section 11.12 of the Indenture.
(End of Article IV)
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ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1. Right of Inspection. Subject to reasonable
security and safety regulations and upon reasonable notice, the Issuer and the
Trustee, and their respective agents, shall have the right during normal
business hours to inspect the Project.
Section 5.2. Lease, Sale or Grant of Use by Borrower. Subject
to the provisions of the Reimbursement Agreement and with the written consent of
the Bank, the Borrower may lease, sell or grant the right to occupy and use the
Project, in whole or in part, to others, provided that no such grant, sale or
lease shall relieve the Borrower from its obligations under this Agreement or
the Note or adversely affect the exclusion from gross income of interest on the
Bonds.
Section 5.3. Indemnification. The Borrower releases the Issuer
from, agrees that the Issuer shall not be liable for, and indemnifies the Issuer
against, all liabilities, claims, costs and expenses, including attorneys fees
and expenses, imposed upon, incurred or asserted against the Issuer, on account
of: (a) any loss or damage to property or injury to or death of or loss by any
person that may be occasioned by any cause whatsoever pertaining to the
construction, maintenance, operation and use of the Project; (b) any breach or
default on the part of the Borrower in the performance of any covenant or
agreement of the Borrower under this Agreement, the Reimbursement Agreement, the
Note or any related document, or arising from any act or failure to act by the
Borrower, or any of its agents, contractors, servants, employees or licensees;
(c) the authorization, issuance, sale, trading, redemption or servicing of the
Bonds, and the provision of any information or certification furnished in
connection therewith concerning, the Bonds, the Project, or the Borrower
including, without limitation, the Private Placement Memorandum, any information
furnished by the Borrower for, and included in, or used as a basis for
preparation of, any certifications, information statements or reports furnished
by the Issuer, and any other information or certification obtained from the
Borrower to assure the exclusion of the interest on the Bonds from gross income
for federal income tax purposes; (d) the Borrower's failure to comply with any
requirement of this Agreement or the Code pertaining to such exclusion of that
interest including the covenants in Section 5.4 hereof; and (e) any claim,
action or proceeding brought with respect to the matters set forth in (a), (b),
(c), and (d) above.
The Borrower agrees to indemnify the Trustee and the Tender
Agent for, and to hold them harmless against, all liabilities, claims, costs and
expenses incurred without negligence or bad faith on the part of the Trustee and
the Tender Agent on account of any action taken or omitted to be taken by the
Trustee and the Tender Agent in accordance with the terms of this Agreement, the
Bonds, the Reimbursement Agreement, the Credit Facility, the Note or the
Indenture or any action taken at the request of or with the consent of the
Borrower, including the reasonable and documented costs and expenses of the
Trustee and the Tender Agent in defending themselves against any such claim,
action or proceeding brought in connection with
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the exercise or performance of any of their powers or duties under this
Agreement, the Bonds, the Indenture, the Reimbursement Agreement, the Credit
Facility or the Note.
In case any action or proceeding is brought against the
Issuer, the Tender Agent or the Trustee in respect of which indemnity may be
sought hereunder, the party seeking indemnity promptly shall give notice of that
action or proceeding to the Borrower, and the Borrower upon receipt of that
notice shall have the obligation and the right to assume the defense of the
action or proceeding; provided, that failure of a party to give that notice
shall not relieve the Borrower from any of their obligations under this Section
unless that failure prejudices the defense of the action or proceeding by the
Borrower. At its own expense, an indemnified party may employ separate counsel
and participate in the defense. The Borrower shall not be liable for any
settlement made without their consent.
The indemnification set forth above is intended to and shall
include the indemnification of all affected officials, directors, officers and
employees, including Counsel, of the Issuer, the Tender Agent and the Trustee,
respectively. That indemnification is intended to and shall be enforceable by
the Issuer, the Tender Agent and the Trustee, respectively, to the full extent
permitted by law.
Section 5.4. Borrower Not to Adversely Affect Exclusion from
Gross Income of Interest on Bonds. The Borrower hereby represents that it has
taken and caused to be taken, and covenant that they will take and cause to be
taken, all actions that may be required of them, alone or in conjunction with
the Issuer, for the interest on the Bonds to be and remain excluded from gross
income for federal income tax purposes, and represents that they have not taken
or permitted to be taken on their behalf, and covenant that they will not take
or permit to be taken on their behalf, any actions that would adversely affect
such exclusion under the provisions of the Code.
Section 5.5. Borrower to Maintain Their Existence. The
Borrower shall do all things necessary to preserve and keep in full force and
effect their existence, rights and franchises, except as otherwise permitted by
the Reimbursement Agreement and as would not adversely affect the exclusion from
gross income of interest on the Bonds.
Section 5.6. Undertaking to Provide Continuing Disclosure. The
Issuer, at the cost of the Borrower, covenants to comply with Section 11-1-85 of
the Code of Laws of South Carolina 1976, as amended. The Borrower covenants to
furnish all information in a timely fashion requested by the Issuer to comply
with such Section. The Borrower further covenants to furnish a Continuing
Disclosure Certificate, if required, for purposes of SEC Rule 15c2-12, as it may
be amended or supplemented from time to time.
(End of Article V)
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ARTICLE VI
REDEMPTION AND PURCHASE OF BONDS
Section 6.1. Optional Redemption. Provided no Event of Default
shall have occurred and be subsisting, at any time and from time to time, the
Borrower may deliver moneys to the Trustee in addition to Loan Payments or
Additional Payments required to be made and direct the Trustee to use the moneys
so delivered for the purpose of purchasing Bonds or of calling Bonds for
optional redemption in accordance with the applicable provisions of the Bond
Resolution and Indenture providing for optional redemption at the redemption
price stated in the Indenture; provided, however, that any moneys so used for
optional redemption shall be from the sources set forth in paragraphs (i) and
(ii) of Section 5.01(c) of the Indenture. Pending application for those
purposes, any moneys so delivered shall be held by the Trustee in a special
account in the Bond Fund and delivery of those moneys shall not operate to abate
or postpone Loan Payments or Additional Payments otherwise becoming due or to
alter or suspend any other obligations of the Borrower under this Agreement.
Section 6.2. Extraordinary Optional Redemption. The Borrower
shall have, subject to the conditions hereinafter imposed, the option to direct
the redemption of the entire unpaid principal balance of the Bonds in accordance
with the applicable provisions of the Indenture upon the occurrence of any of
the following events:
(a) The Project shall have been damaged or destroyed
to such an extent that (1) they cannot reasonably be expected
to be restored, within a period of 6 months, to the condition
thereof immediately preceding such damage or destruction or
(2) their normal use and operation is reasonably expected to
be prevented for a period of 6 consecutive months.
(b) Title to, or the temporary use of, all or a
significant part of the Project shall have been taken under
the exercise of the power of eminent domain (1) to such extent
that the Project cannot reasonably be expected to be restored
within a period of 6 months to a condition of usefulness
comparable to that existing prior to the taking or (2) as a
result of the taking, normal use and operation of the Project
is reasonably expected to be prevented for a period of 6
consecutive months.
(c) As a result of any changes in the Constitution of
the State, the Constitution of the United States of America,
or state or federal laws or as a result of legislative or
administrative action (whether state or federal) or by final
decree, judgment or order of any court or administrative body
(whether state or federal) entered after the contest thereof
by the Issuer or the Borrower in good faith, this Agreement
shall have become void or unenforceable or impossible of
performance in accordance with the intent and purpose of the
parties as expressed in this Agreement, or if unreasonable
burdens or excessive liabilities shall have
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been imposed with respect to the Project or the operation
thereof, including, without limitation, federal, state or
other ad valorem, property, income or other taxes not being
imposed on the date of this Agreement other than ad valorem
taxes presently levied upon privately owned property used for
the same general purpose as the Project.
(d) Changes in the economic availability of raw
materials, operating supplies, energy sources or supplies, or
facilities (including, but not limited to, facilities in
connection with the disposal of industrial wastes) necessary
for the operation of the Project for the Project Purposes
shall have occurred or technological or other changes shall
have occurred which the Borrower cannot reasonably overcome or
control and which in the Borrower's reasonable judgment render
the Project uneconomic for the Project Purposes.
To exercise that option, the Borrower shall, within 90 days following the event
authorizing the exercise of that option, or at any time during the continuation
of the condition referred to in clause (d) above, give notice to the Issuer and
to the Trustee specifying the date on which the Borrower will deliver the funds
required for that redemption, which date shall be not more than 90 days from the
date that notice is mailed and shall make arrangements satisfactory to the
Trustee for the giving of the required notice of redemption.
The amount payable by the Borrower in the event of their
exercise of the option granted in this Section shall be the sum of the
following:
(i) An amount of money which, when added to the
moneys and investments held to the credit of the Bond Fund,
will be sufficient pursuant to the provisions of the Indenture
to pay, at par, and discharge all then outstanding Bonds on
the earliest applicable redemption date, that amount to be
paid to the Trustee, plus
(ii) An amount of money equal to the Additional
Payments relating to the Bonds accrued and to accrue until
actual final payment and redemption of the Bonds, that amount
or applicable portions thereof to be paid to the Trustee or to
the Persons to whom those Additional Payments are or will be
due.
The requirement of (ii) above with respect to Additional Payments to accrue may
be met if provisions satisfactory to the Trustee and the Issuer are made for
paying those amounts as they accrue.
The Borrower also shall have the option, in the event that
title to or the temporary use of a portion of the Project shall be taken under
the exercise of the power of eminent domain, even if the taking is not of such
nature as to permit the exercise of the redemption option upon an event
specified in (b) above, to direct the redemption, at a redemption price of 100%
of the principal amount thereof prepaid, plus accrued interest to the redemption
date, of that part of the outstanding principal balance of the Bonds as may be
payable from the proceeds received
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by the Borrower (after the payment of costs and expenses incurred in the
collection thereof) received in the eminent domain proceeding, provided, that,
the Borrower shall furnish to the Issuer and the Trustee a certificate of an
Engineer stating that (1) the property comprising the part of the Project taken
is not essential to continued operations of the Project in the manner existing
prior to that taking, (2) the Project has been restored to a condition
substantially equivalent to that existing prior to the taking, or (3) other
improvements have been acquired or made which are suitable for the continued
operation of the Project.
The rights and options granted to the Borrower in this Section
may be exercised whether or not the Borrower is in default hereunder; provided,
that such default will not relieve the Borrower from performing those actions
which are necessary to exercise any such right or option granted hereunder.
Section 6.3. Mandatory Redemption in Event of Inclusion in
Gross Income of Interest on Bonds. If, as provided in the Bonds and the
Indenture, the Bonds become subject to mandatory redemption because interest on
any of the Bonds is determined to be included for federal income tax purposes in
the gross income of the Holder of any Bonds (other than because a Holder is a
"substantial user" of the Project or a "related person", as those terms are used
in Section 147(a) of the Code), the Borrower shall deliver to the Trustee, upon
the date requested by the Trustee, the moneys needed to pay in full the Bonds in
accordance with the mandatory redemption provisions relating thereto set forth
in the Bonds and the Indenture.
Section 6.4. Mandatory Redemption. The Borrower shall deliver
to the Trustee the moneys needed to redeem the Bonds in accordance with any
mandatory redemption provisions relating thereto as may be set forth in the
Indenture.
Section 6.5. Actions by Issuer. At the request of the Borrower
or the Trustee, the Issuer shall take all steps required of it under the
applicable provisions of the Indenture or the Bonds to effect the redemption of
all or a portion of the Bonds pursuant to this Article VI.
(End of Article VI)
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Each of the following shall be
an Event of Default:
(a) The Borrower shall fail to pay any Loan Payment
on or prior to the Loan Payment Date on which that Loan
Payment is due and payable;
(b) The Borrower shall fail to deliver to the
Trustee, or cause to be delivered on their behalf, the moneys
needed (i) to redeem any outstanding Bonds in the manner and
upon the date requested in writing by the Trustee as provided
in Section 6.1, 6.2, 6.3 or 6.4 of this Agreement or (ii) to
purchase any Bonds in the manner and upon the date as provided
in Section 4.2 of this Agreement;
(c) The Borrower shall fail to observe and perform
any other agreement, term or condition contained in this
Agreement (other than with respect to Section 5.4 hereof), and
the continuation of such failure for a period of 30 days after
notice thereof shall have been given to the Borrower by the
Issuer or the Trustee, or for such longer period as the Issuer
and the Trustee may agree to in writing; provided, that if the
failure is other than the payment of money and is of such
nature that it can be corrected but not within the applicable
period, that failure shall not constitute an Event of Default
so long as the Borrower institute curative action within the
applicable period and diligently pursues that action to
completion;
(d) The Borrower shall: (i) admit in writing its
inability to pay its debts generally as they become due; (ii)
have an order for relief entered in any case commenced by or
against them under the federal bankruptcy laws, as now or
hereafter in effect; (iii) commence a proceeding under any
other federal or state bankruptcy, insolvency, reorganization
or similar law, or have such a proceeding commenced against it
and either have an order of insolvency or reorganization
entered against it or have the proceeding remain undismissed
and unstayed for ninety days; (iv) make an assignment for the
benefit of creditors; or (v) have a receiver or trustee
appointed for them or for the whole or any substantial part of
their property;
(e) There shall occur an "Event of Default" as
defined in Section 10.01 of the Indenture.
Notwithstanding the foregoing, if, by reason of Force Majeure,
the Borrower is unable to perform or observe any agreement, term or condition
hereof which would give rise to an Event of Default under subsection (c) hereof,
the Borrower shall not be deemed in default
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<PAGE> 36
during the continuance of such inability. However, the Borrower shall promptly
give notice to the Trustee and the Issuer of the existence of an event of Force
Majeure and shall use their best efforts to remove the effects thereof; provided
that the settlement of strikes or other industrial disturbances shall be
entirely within their discretion.
The term Force Majeure shall mean, without limitation, the
following:
(i) acts of God; strikes, lockouts or other
industrial disturbances; acts of public enemies; orders or
restraints of any kind of the government of the United States
of America or of the State or any of their departments,
agencies, political subdivisions or officials, or any civil or
military authority; insurrections; civil disturbances; riots;
epidemics; landslides; lightning; earthquakes; fires;
hurricanes; tornadoes; storms; droughts; floods; arrests;
restraint of government and people; explosions; breakage,
malfunction or accident to facilities, machinery, transmission
pipes or canals; partial or entire failure of utilities;
shortages of labor, materials, supplies or transportation; or
(ii) any cause, circumstance or event not reasonably
within the control of the Borrower.
The declaration of an Event of Default under subsection (d)
above, and the exercise of remedies upon any such declaration, shall be subject
to any applicable limitations of federal bankruptcy law affecting or precluding
that declaration or exercise during the pendency of or immediately following any
bankruptcy, liquidation or reorganization proceedings.
Section 7.2. Remedies on Default. Whenever an Event of Default
shall have happened and be subsisting, any one or more of the following remedial
steps may be taken:
(a) If acceleration of the principal amount of the
Bonds has been declared pursuant to Section 10.02 of the
Indenture, the Trustee shall declare all Loan Payments to be
immediately due and payable, whereupon the same shall become
immediately due and payable;
(b) The Issuer, the Bank or the Trustee may have
access to, inspect, examine and make copies of the books,
records, accounts and financial data of the Borrower
pertaining to the Project; or
(c) The Issuer or the Trustee may pursue all remedies
now or hereafter existing at law or in equity to collect all
amounts then due and thereafter to become due under this
Agreement, the Credit Facility or the Note or to enforce the
performance and observance of any other obligation or
agreement of the Borrower under those instruments.
Notwithstanding the foregoing, the Issuer shall not be obligated to take any
step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and
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<PAGE> 37
until a satisfactory indemnity bond has been furnished to the Issuer at no cost
or expense to the Issuer. Any amounts collected as Loan Payments or applicable
to Loan Payments and any other amounts which would be applicable to the payment
of Bond Service Charges collected pursuant to action taken under this Section
shall be paid into the Bond Fund and applied in accordance with the provisions
of the Indenture or, if the outstanding Bonds have been paid and discharged in
accordance with the provisions of the Indenture, shall be paid as provided in
Section 5.06 of the Indenture for transfers of remaining amounts in the Bond
Fund.
The provisions of this Section are subject to the further
limitation that the rescission by the Trustee of its declaration that all of the
Bonds are immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to paragraph (a) of this Section and a
waiver and rescission of the consequences of that declaration and of the Event
of Default with respect to which that declaration has been made, provided that
no such waiver or rescission shall extend to or affect any subsequent or other
default or impair any right consequent thereon.
Section 7.3. No Remedy Exclusive. No remedy conferred upon or
reserved to the Issuer or the Trustee by this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement, the Credit Facility or the Note, or now or hereafter
existing at law, in equity or by statute. No delay or omission to exercise any
right or power accruing upon any default shall impair that right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than any notice
required by law or for which express provision is made herein.
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. If
an Event of Default should occur and the Issuer or the Trustee should incur
expenses, including attorneys' fees, in connection with the enforcement of this
Agreement, the Credit Facility or the Note or the collection of sums due
thereunder, the Borrower shall reimburse the Issuer and the Trustee, as
applicable, for the reasonable expenses so incurred upon demand.
Section 7.5. No Waiver. No failure by the Issuer or the
Trustee to insist upon the strict performance by the Borrower of any provision
hereof shall constitute a waiver of their right to strict performance and no
express waiver shall be deemed to apply to any other existing or subsequent
right to remedy the failure by the Borrower to observe or comply with any
provision hereof.
The Issuer and the Trustee may waive any Event of Default
hereunder only with the prior written consent of the Bank.
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Section 7.6. Notice of Default. The Borrower or the Issuer
shall notify the Trustee and the Bank immediately if they become aware of the
occurrence of any Event of Default hereunder or of any fact, condition or event
which, with the giving of notice or passage of time or both, would become an
Event of Default.
(End of Article VII)
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Term of Agreement. This Agreement shall be and
remain in full force and effect from the date of delivery of the Bonds to the
Placement Agent until such time as all of the Bonds shall have been fully paid
(or provision made for such payment) pursuant to the Indenture and all other
sums payable by the Borrower under this Agreement and the Note shall have been
paid, except for obligations of the Borrower under Sections 4.2 and 5.3 hereof,
which shall survive any termination of this Agreement.
Section 8.2. Amounts Remaining in Funds. Any amounts in the
Bond Fund remaining unclaimed by the Holders of Bonds for 2 years after the due
date thereof (whether at stated maturity, by redemption or pursuant to any
mandatory sinking fund requirements or otherwise), shall be paid to the
Borrower; provided that if the Trustee shall have drawn on the Credit Facility,
and the Bank has not been reimbursed by the Borrower pursuant to the
Reimbursement Agreement, such amounts remaining in the Bond Fund shall belong
and be paid first to the Bank to the extent it has not been so reimbursed. With
respect to that principal of and any premium and interest on the Bonds to be
paid from moneys paid to the Borrower or the Bank pursuant to the preceding
sentence, the Holders of the Bonds entitled to those moneys shall look solely to
the Borrower for the payment of those moneys.
Further, any other amounts remaining in the Bond Fund (other
than in the Credit Facility Account, the Remarketing Proceeds Account, the
Redemption Premium Account and the Defeasance Account) and any amounts remaining
in any other special funds or accounts (other than the Project Fund and the
Rebate Fund) created under this Agreement or the Indenture after all of the
outstanding Bonds shall be deemed to have been paid and discharged under the
provisions of the Indenture and all other amounts required to be paid under this
Agreement, the Note and the Indenture have been paid, shall be paid to the
Borrower to the extent that those moneys are in excess of the amounts necessary
to effect the payment and discharge of the outstanding Bonds; provided that if
the Trustee shall have drawn on the Credit Facility, and the Bank has not been
reimbursed by the Borrower pursuant to the Reimbursement Agreement, such amounts
shall belong and be paid first to the Bank to the extent it has not been so
reimbursed.
Section 8.3. Notices. All notices, certificates, requests or
other communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage prepaid,
and addressed to the appropriate Notice Address. A duplicate copy of each
notice, certificate, request or other communication given hereunder to the
Issuer, the Borrower, the Bank, the Remarketing Agent, the Tender Agent or the
Trustee shall also be given to the others. The Borrower, the Issuer, the Bank,
the Remarketing Agent, the Tender Agent and the Trustee, by notice given
hereunder, may designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be sent.
36
<PAGE> 40
Section 8.4. Extent of Covenants of the Issuer; No Personal
Liability. All covenants, obligations and agreements of the Issuer contained in
this Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
member, officer, agent or employee of the Issuer, and neither the members of the
Board of Directors of the Issuer nor any official executing the Bonds shall be
liable personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof or by reason of the covenants,
obligations or agreements of the Issuer contained in this Agreement or in the
Indenture.
Section 8.5. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding in accordance with its terms upon the Issuer,
the Borrower and their respective permitted successors and assigns provided that
this Agreement may not be assigned by the Borrower (except in connection with a
lease, sale or grant of use pursuant to Section 5.2 hereof or sale or transfer
of assets pursuant to the Reimbursement Agreement) and may not be assigned by
the Issuer except to the Trustee pursuant to the Indenture or as otherwise may
be necessary to enforce or secure payment of Bond Service Charges. This
Agreement may be enforced only by the parties, their assignees and others who
may, by law, stand in their respective places.
Section 8.6. Amendments and Supplements. Except as otherwise
expressly provided in this Agreement or the Indenture, subsequent to the
issuance of the Bonds and prior to all conditions provided for in the Indenture
for release of the Indenture having been met, this Agreement may not be
effectively amended, changed, modified, altered or terminated except in
accordance with the provisions of Article XIV of the Indenture, as applicable.
Section 8.7. Execution Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be regarded as an
original and all of which shall constitute but one and the same instrument.
Section 8.8. Severability. If any provision of this Agreement,
or any covenant, obligation or agreement contained herein is determined by a
court to be invalid or unenforceable, that determination shall not affect any
other provision, covenant, obligation or agreement, each of which shall be
construed and enforced as if the invalid or unenforceable portion were not
contained herein. That invalidity or unenforceability shall not affect any valid
and enforceable application thereof, and each such provision, covenant,
obligation or agreement shall be deemed to be effective, operative, made,
entered into or taken in the manner and to the full extent permitted by law.
Section 8.9. Governing Law. This Agreement shall be deemed to
be a contract made under the laws of the State and for all purposes shall be
governed by and construed in accordance with the laws of the State.
(End of Article VIII)
37
<PAGE> 41
IN WITNESS WHEREOF, the Issuer and the Borrower have caused
this Agreement to be executed in their respective corporate names and their
respective corporate seals to be hereunto affixed and attested by their duly
authorized officers, all as of the date first above written.
(SEAL) SOUTH CAROLINA JOBS-ECONOMIC
DEVELOPMENT AUTHORITY
Attest: By: /s/ ??????????????????
-----------------------------
Title: Vice Chairman, Board of
Directors
By: /s/ ELLIOTT FRANKS, III
--------------------------
Title: Executive Director
(SEAL) CORE MATERIALS CORPORATION
Attest: By: /s/ KEVIN L. BARNETT
------------------------------
Title: Vice President, Treasurer & CFO
38
<PAGE> 42
EXHIBIT A
NOTE
Core Materials Corporation, a Delaware corporation (the
"Borrower"), for value received, promises to pay to The Huntington National
Bank, as Trustee (the "Trustee") under the Indenture hereinafter referred to,
the principal sum of
SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($7,500,000)
and to pay interest on the unpaid balance of such principal sum from and after
May 7, 1998 (the date of delivery of this Note) at the Applicable Rate until the
payment of such principal sum has been made or provided for. As used herein,
"Applicable Rate" means the interest rates specified in Appendix I to this Note.
This Note has been executed and delivered by the Borrower to
the Trustee pursuant to a certain Loan Agreement (the "Agreement"), dated as of
April 1, 1998, between the South Carolina Jobs-Economic Development Authority
(the "Issuer") and the Borrower. Under the Agreement, the Issuer has loaned the
Borrower the principal proceeds received from the sale of the Issuer's
$7,500,000 aggregate principal amount of South Carolina Jobs-Economic
Development Authority Multi-Mode Variable Rate Industrial Development Revenue
Bonds, Series 1998 (Core Materials Corporation Project), dated the date of their
initial delivery to the original purchasers thereof (the "Bonds"), to assist in
the financing of the Project (as defined in the Agreement), and the Borrower
have agreed to repay such loan by making payments (the "Loan Payments") at the
times and in the amounts set forth in this Note for application to the payment
of the principal of and redemption premium, if any, and interest on the Bonds as
and when due. The Bonds have been issued, concurrently with the execution and
delivery of this Note, pursuant to, and are secured by, the Trust Indenture (the
"Indenture"), dated as of April 1, 1998, between the Issuer and the Trustee. The
Bonds also bear interest from their date at the Applicable Rate payable as
specified below and in Appendix I to this Note and mature on April 1, 2013.
To provide funds to pay the principal of and redemption
premium, if any, and interest on the Bonds (the "Bond Service Charges") as and
when due as above-specified, the Borrower hereby agrees to and shall make Loan
Payments on each Loan Payment Date as follows: (i) while the Bonds bear interest
at the Weekly Rate, the total interest due on the Bonds on such Loan Payment
Date and (b) on the Loan Payment Date on April 1, 2013 (i.e. the maturity date
of the Bonds) all principal of the Bonds then outstanding, and (ii) while the
Bonds bear interest at the Semi-Annual Rate or Long-Term Rate, in an amount
equal to (a) prior to the first Interest Payment Date in such Interest Rate
Mode, that portion of the total interest due on the Bonds on such first Interest
Payment Date multiplied by a fraction, the numerator of which shall be one and
the denominator of which shall be the number of Loan Payment Dates prior to
A-1
<PAGE> 43
such Interest Payment Date, (b) from and after the first Interest Payment Date
in such Interest Rate Mode, 1/2 of the total interest due on the Bonds on the
next succeeding Interest Payment Date, and (c) on the Loan Payment Date on April
1, 2013 (i.e., the maturity date of the Bonds) all principal of the Bonds then
outstanding. In addition, to provide funds sufficient to pay the principal of
and premium, if any, and interest on the Bonds as and when due at any other
time, whether by redemption or acceleration or otherwise, the Borrower hereby
agrees to and shall make Loan Payments in an amount sufficient to pay such
principal of and premium, if any, and interest when due and payable.
If payment or provision for payment in accordance with the
Indenture is made in respect of the principal of, and redemption premium, if
any, and interest on the Bonds from moneys other than Loan Payments, this Note
shall be deemed paid to the extent such payments or provision for payment of
Bonds has been made. To provide for payment of the Bond Service Charges, the
Borrower has arranged to deliver to the Trustee the Credit Facility. Drawings on
the Credit Facility shall not reduce in any manner Loan Payments due hereunder.
However, the Trustee shall apply such Loan Payments to the reimbursement
obligation of the Borrower to the Bank in accordance with Section 5.01 of the
Indenture. Subject to the foregoing, all Loan Payments shall be in the full
amount required hereunder.
All Loan Payments shall be payable in lawful money of the
United States of America and shall be made to the Trustee at its corporate trust
office for the account of the Issuer and deposited in the Bond Fund created by
the Indenture. Except as otherwise provided in the Indenture, such Loan Payments
shall be used by the Trustee to pay the principal of, redemption premium, if
any, and interest on the Bonds as and when due.
The obligation of the Borrower to make the payments required
hereunder shall be absolute and unconditional and the Borrower shall make such
payments without abatement, diminution or deduction regardless of any cause or
circumstances whatsoever including, without limitation, any defense, set-off,
recoupment or counterclaim which the Borrower may have or assert against the
Issuer, the Trustee, the Remarketing Agent (as defined in Appendix I) and the
Bank (as defined in Appendix I) or any other person.
This Note is subject to optional, extraordinary optional and
mandatory prepayment in whole or in part, at the prepayment price, in the
amounts and upon the conditions that the Bonds are subject to, respectively,
optional and extraordinary optional redemption. The Borrower will deliver or
cause to be delivered to the Trustee, for the account of the Issuer, such moneys
as are required to effect such prepayment under the applicable terms of the
Bonds.
Whenever an Event of Default under Section 10.01 of the
Indenture shall have occurred and, as a result thereof, the principal of and any
premium on all Bonds then outstanding, and interest accrued thereon, shall have
been declared to be immediately due and payable pursuant to Section 10.02 of the
Indenture, the unpaid principal amount of and any premium and accrued interest
on this Note shall also be due and payable on the date on which the principal of
and premium and interest on the Bonds shall have been declared due and
A-2
<PAGE> 44
payable; provided that the annulment of a declaration of acceleration with
respect to the Bonds shall also constitute an annulment of any corresponding
declaration with respect to this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed in its name by its duly authorized officers as of May __, 1998.
CORE MATERIALS CORPORATION
By: ___________________________
Its: ______________________
A-3
<PAGE> 45
APPENDIX I
A. Definitions
As used herein and in the Note, the following terms shall have
the following meanings:
"Applicable Rate" means, from the date hereof through and
including, May 12, 1998, 4.38% per annum, and thereafter, for each Weekly Rate
Period and so long as there is not a Semi-Annual Rate or Long-Term Rate, the
Weekly Rate established therefor, computed on the basis of a 365 or 366-day
year, as applicable, and, during a Semi-Annual Rate Period or Long-Term Rate
Period, the Semi-Annual Rate or the Long-Term Rate, respectively, computed on
the basis of a 360-day year, consisting of twelve-30 day months.
"Bank" means initially, KeyBank National Association, and its
successors and assigns in its capacity as issuer of a Credit Facility and in the
event an Alternate Credit Facility is outstanding, the issuer of the Alternate
Credit Facility.
"Business Day" means any day of the year other than (i) a
Saturday or Sunday, (ii) any day on which banks located in either Cleveland,
Ohio, or the principal corporate trust office of the Trustee is located are
required or authorized by law to remain closed, or (iii) any day on which the
New York Stock Exchange is closed.
"Conversion Date" means the first date any Conversion becomes
effective.
"Interest Payment Date" means (a) while the Bonds bear
interest at the Weekly Rate, the first Wednesday of each January, April, July
and October, and (b) while the Bonds bear interest at the Semi-Annual Rate or
the Long-Term Rate, April 1 and October 1 of each year. The first Interest
Payment Date shall be the Interest Payment Date in July, 1998. In any case, the
final Interest Payment Date shall be the maturity date of the Bonds.
"Interest Period" means for all Bonds the period from and
including each Interest Payment Date to and including the day next preceding the
next Interest Payment Date. The first Interest Period for the Bonds shall begin
on (and include) the date of the initial delivery of the Bonds. The final
Interest Period shall end on the maturity (or redemption) date for each Bond.
"Interest Rate Mode" means the Weekly Rate, the Semi-Annual
Rate or the Long- Term Rate.
"Long-Term Rate" means the Interest Rate Mode for the Bonds in
which the interest rate on the Bonds is determined in accordance with Section
2.02(c)(iii) of the Indenture.
App. I-1
<PAGE> 46
Long-Term Rate Period" means any period beginning on, and
including, the Conversion Date to the Long-Term Rate and ending on, and
including, the day preceding the Interest Payment Date selected by the Borrower
and each period of the same duration (or as close as possible) ending on an
Interest Payment Date thereafter until the earliest of the day preceding the
change to a different Long-Term Rate Period, the Conversion to a different
Interest Rate Mode or the maturity of the Bonds.
"Purchase Date" means (a) if the Interest Rate Mode is the
Weekly Rate, any Business Day as set forth in Section 3.01(a)(i), Section
3.01(a)(iii) and Section 3.01(a)(iv) of the Indenture, respectively, (b) if the
Interest Rate Mode is the Semi-Annual Rate, any Interest Payment Date, (c) if
the Interest Rate Mode is the Long-Term Rate, the final Interest Payment Date
for each Long-Term Rate Period, and (d) each day that Bonds are subject to
mandatory purchase pursuant to Section 3.01(b) of the Indenture.
"Rate Period" means any period during which a single interest
rate is in effect for a Bond.
"Remarketing Agent" means Key Capital Markets, Inc. and its
successors as provided in Section 12.01 of the Indenture. "Principal Office" of
the Remarketing Agent means the office designated as such in writing to the
Borrower, the Trustee and the Tender Agent.
"Semi-Annual Rate" means the Interest Rate Mode for the Bonds
in which the interest rate on the Bonds is determined in accordance with Section
2.02(c)(ii) of the Indenture.
"Semi-Annual Rate Period" means any period beginning on, and
including, the Conversion Date to the Semi-Annual Rate and ending on, and
including, the day preceding the next Interest Payment Date thereafter and each
successive six (6) month period thereafter until the day preceding Conversion to
a different Interest Rate Mode or the maturity of the Bonds.
"Weekly Rate" means the Interest Rate for the Bonds in which
the interest rate on the Bonds is determined weekly in accordance with Section
2.02(c)(i) of the Indenture.
"Weekly Rate Period" means the period beginning on, and
including, the date of issuance of the Bonds, and ending on, and including, the
next Tuesday and thereafter the period beginning on, and including, any
Wednesday and ending on, and including, the next Tuesday.
B. Interest Rate Provisions
Words and terms used in this Part B as defined words and terms
and not otherwise defined in this Note or Appendix I thereto shall have the
meanings assigned to them in the Indenture.
(1) Interest Rates on the Bonds. The Bonds shall bear interest
at the Weekly Rate for the period from their original issuance date until
converted to a different Interest Rate Mode. The first Interest Payment Date
shall be the Interest Payment Date in July, 1998.
App. I-2
<PAGE> 47
During each Interest Period for each Interest Rate Mode, the interest rate for
the Bonds shall be determined in accordance with Section 2.02(c) of the
Indenture and shall be payable on the Interest Payment Date for such Interest
Period; provided that the interest rate borne by the Bonds shall not exceed the
lesser of (i) fifteen percent (15%) per annum or (ii) so long as the Bonds are
entitled to the benefits of a Credit Facility, the maximum interest rate with
respect to the Bonds specified in the Credit Facility. Interest on the Bonds at
the interest rate or rates for the Weekly Rate shall be computed upon the basis
of a 365 or 366-day year, as applicable, for the actual number of days elapsed.
Interest on the Bonds at the interest rate or rates for the SemiAnnual Rate and
the Long-Term Rate shall be computed upon the basis of a 360-day year,
consisting of twelve 30-day months. Each Bond shall bear interest on overdue
principal and, to the extent permitted by law, on overdue interest at the
Default Rate computed from the date of the Default or Event of Default.
(2) Interest Rate Modes. Interest Rates on the Bonds shall be
determined as follows:
(i) If the Interest Rate Mode for the Bonds is the
Weekly Rate, the interest rate on the Bonds for a particular Weekly
Rate Period shall be the rate established by the Remarketing Agent no
later than 3:00 p.m. (Cleveland, Ohio time) on the Tuesday preceding
the Weekly Rate Period (or the day preceding the Conversion of the
Interest Rate Mode to the Weekly Rate), or, if such day is not a
Business Day, on the next succeeding Business Day, as the minimum rate
of interest necessary, in the judgment of the Remarketing Agent, to
enable the Remarketing Agent to sell the Bonds on such Business Day at
a price equal to the principal amount thereof, plus accrued interest,
if any, thereon.
(ii) If the Interest Rate Mode for the Bonds is the
Semi-Annual Rate, the interest rate on the Bonds for a particular
Semi-Annual Rate Period shall be the rate established by the
Remarketing Agent no later than 3:00 p.m. (Cleveland, Ohio time) on the
10th Business Day next preceding the first day of such Semi-Annual Rate
Period as the minimum rate of interest necessary, in the judgment of
the Remarketing Agent, to enable the Remarketing Agent to sell the
Bonds on such first day at a price equal to the principal amount
thereof.
(iii) If the Interest Rate Mode for the Bonds is the
Long-Term Rate, the interest rate on the Bonds for a particular
Long-Term Rate Period shall be the rate established by the Remarketing
Agent not later than the 15th Business Day preceding the first day of
such Long-Term Rate Period as the minimum rate of interest necessary,
in the judgment of the Remarketing Agent, to enable the Remarketing
Agent to sell the Bonds on such first day at a price equal to the
principal amount thereof.
(iv) The Remarketing Agent shall provide the Trustee,
the Borrower and the Tender Agent with Immediate Notice of all interest
rates.
App. I-3
<PAGE> 48
(v) If for any reason the interest rate on a Bond is
not determined by the Remarketing Agent pursuant to (i), (ii) or (iii)
above, the interest rate for such Bond for the next succeeding Rate
Period shall be the interest rate in effect for such Bond for the
preceding Rate Period.
(3) Long-Term Rate Periods.
(i) Selection of Long-Term Rate Period. The Long-Term
Rate Period shall be established by the Borrower in the notice given
pursuant to Section 2.02(e) of the Indenture (the first such Long-Term
Rate Period commencing on the Conversion Date for the Bonds to a
Long-Term Rate) and thereafter each successive Long-Term Rate Period
shall be the same as that so established by the Borrower until a
different Long- Term Rate Period is specified by the Borrower in
accordance with Section 2.02 of the Indenture or until the occurrence
of a Conversion Date. Each Long-Term Rate Period shall be one year or
more in duration and shall end on the day next preceding an Interest
Payment Date; provided that if the first Long-Term Rate Period
commences on a Conversion Date other than a April 1 and October 1, such
first Long-Term Rate Period shall be of a duration as close as possible
to (but not in excess of) such Long-Term Rate Period and shall
terminate on a day preceding an Interest Payment Date; and further
provided that no Long-Term Rate Period shall extend beyond the maturity
date of the Bonds.
(ii) Change of Long-Term Rate Period. The Borrower
may change from one Long-Term Rate Period to another Long-Term Rate
Period on any Business Day on which the Bonds are subject to optional
redemption pursuant to Section 8.01(b) of the Indenture by notifying
the Trustee, the Issuer, the Credit Facility Issuer, the Tender Agent
and the Remarketing Agent at least 4 Business Days prior to the 30th
day prior to the proposed effective date of the change. Such notice
shall specify the last day of the next Long-Term Rate Period which
shall be the earlier of the day before the maturity date of the Bonds
or the day immediately preceding a April 1 or October 1 and which is
one year or more after the effective date and, if such change is
conditional, the interest rate limitations. Any such notice shall be
accompanied by an opinion of Counsel stating that such change is
authorized by the Indenture and, if the change is from a Long- Term
Rate Period of one year to a Long-Term Rate Period of more than one
year, an opinion of nationally recognized bond counsel that such change
will not affect the exclusion from gross income for federal income tax
purposes of the interest on the Bonds. Any change by the Borrower of
the Long-Term Rate Period may be made conditional on the interest rate
being within certain limits established by the Borrower. The
Remarketing Agent shall establish what would be the interest rate for
the proposed Long-Term Rate Period in accordance with Section 2.02(c)
of the Indenture. If the interest rate established by the Remarketing
Agent is not within the limits established, then the change in the
Long-Term Rate Period may be cancelled by the Borrower, in which case
the Borrower's notice of the proposed change shall be of no effect and
the Bonds shall not be subject to any mandatory purchase pursuant to
Section 3.01(b) of the Indenture. Notice of such cancellation shall be
promptly given to all Bondholders.
App. I-4
<PAGE> 49
(iii) Notice of Long-Term Rate Period. The Trustee
shall notify the Bondholders of any change in the Long-Term Rate Period
pursuant to Section 2.02(d)(ii) of the Indenture by first class mail,
postage prepaid, at least 30 but not more than 60 days before the
effective date of such change. The notice will state:
(A) whether the change in the Long-Term Rate
Period is conditional and, if conditional, the interest rate
limitations set by the Borrower,
(B) that the interest rate for the new
Long-Term Rate Period will be determined by the Remarketing
Agent not later than the 15th Business Day preceding the first
day of the new Long-Term Rate Period, and
(C) the effective date of and the end of the
new Long-Term Rate Period.
Any notice provided under Section 2.02(d)(iii) of the
Indenture shall be for informational purposes only and shall not waive or
otherwise affect the mandatory purchase of the Bonds at the end of any Long-Term
Rate Period as set forth in Section 3.01(b) of the Indenture.
App. I-5
<PAGE> 50
(4) Conversion of Interest Rate.
(i) Conversion Directed by the Borrower. The Interest
Rate Mode for the Bonds is subject to Conversion to a different
Interest Rate Mode from time to time in whole (and not in part) by the
Borrower, such right to be exercised by notifying the Trustee, the
Credit Facility Issuer, the Tender Agent and the Remarketing Agent at
least 4 Business Days prior to the 30th day prior to the effective date
of such proposed Conversion. Such notice shall specify (A) the
effective date, (B) the proposed Interest Rate Mode, (C) if the
Conversion is to the Long-Term Rate, the end of the Long-Term Rate
Period and (D) if such Conversion is conditional, the interest rate
limitations. The notice must be accompanied by (i) an opinion of
Counsel stating that the Conversion is authorized by the Indenture and,
if the Conversion is from a Rate Period of one year or less to a Rate
Period of more than one year or from a Rate Period of more than one
year to a Rate Period of one year or less, an opinion of nationally
recognized bond counsel that such Conversion will not affect the
exclusion from gross income for federal income tax purposes of the
interest on the Bonds, and (ii) if the stated amount of the Credit
Facility, if any, to be held by the Trustee after such Conversion is
increased over that of the then current Credit Facility an opinion of
reputable bankruptcy counsel stating that payments of principal and
interest on the Bonds from funds drawn on such Credit Facility will not
constitute avoidable preferences with respect to the bankruptcy of the
Borrower under the Bankruptcy Code. Any Conversion by the Borrower of
the Interest Rate Mode to the Long-Term Rate may be made conditional on
the initial interest rate determined for such Interest Rate Mode being
within certain limits established by the Borrower. The Remarketing
Agent shall establish what would be the interest rate for the proposed
Interest Rate Mode in accordance with Section 2.02(c) of the Indenture.
If the interest rate established by the Remarketing Agent is not within
the limits established, then such Conversion may be cancelled by the
Borrower, in which case, the Borrower's notice of Conversion shall be
of no effect and the Bonds shall not be subject to any mandatory
purchase pursuant to Section 3.01(b) of the Indenture. Notice of such
cancellation shall be given promptly to all Bondholders.
(ii) Limitations. Any Conversion of the Interest Rate
Mode for the Bonds pursuant to paragraph (i) above must comply with the
following:
(A) the Conversion Date must be an Interest
Payment Date which is a date on which the Bonds are subject to
optional redemption pursuant to Section 8.01(a), (b) or (c) of
the Indenture;
(B) the Conversion Date must be a Business
Day; and
(C) the Credit Facility, if any, to be held
by the Trustee must cover accrued interest for the Bonds for
110 days, if the Conversion is to the Weekly Rate, or for 195
days, if the Conversion is to the Semi-Annual Rate or the
Long-Term Rate. If a Credit Facility will not support the
Bonds after the Conversion Date, the Borrower may only convert
the Interest Rate Mode for the
App. I-6
<PAGE> 51
Bond to a Long-Term Rate Period which Long-Term Rate Period
shall expire on the maturity date of the Bonds.
(iii) Notice to Bondholders of Conversion of Interest
Rate. The Trustee shall notify the Bondholders of each Conversion by
first class mail, postage prepaid, at least 15 days (30 days in the
case of Conversion from or to the Long-Term Rate) but not more than 60
days before the Conversion Date. The notice will state:
(A) that the Interest Rate Mode will be
converted and what the new Interest Rate Mode will be;
(B) the Conversion Date;
(C) if the Conversion is to the Long-Term
Rate, whether the conversion is conditional and, if
conditional, the interest rate limitations set by the
Borrower; and
(D) that the Bonds will be subject to
mandatory purchase on the Conversion Date in accordance with
Section 3.01(b).
If the Conversion is to the Long-Term Rate, the
notice will also state the information required by Section 2.02(d)(iii)
of the Indenture.
(iv) Cancellation of Conversion of Interest Rate
Mode. Notwithstanding any provision of Section 2.02 of the Indenture,
the Interest Rate Mode shall not be converted if (A) the Remarketing
Agent has not determined the initial interest rate for the new Interest
Rate Mode in accordance with Section 2.02 of the Indenture or (B) the
Trustee shall receive written notice prior to such Conversion that
either of the opinions required under Section 2.02(e)(i) of the
Indenture has been rescinded. If the Trustee shall have sent any notice
to the Bondholders regarding a Conversion of the Interest Rate Mode
under Section 2.02(e)(iii) of the Indenture, the Trustee shall promptly
notify all Bondholders of such rescission and the cancellation of any
mandatory purchase pursuant to Section 3.01(b) of the Indenture.
App. I-7
<PAGE> 52
EXHIBIT B
PROJECT FACILITIES
An approximately 110,900 square foot steel frame precast concrete
building together with certain of the machinery and equipment to be installed
therein including without limitation the following:
B-1
<PAGE> 53
EXHIBIT C
PROJECT SITE
LEGAL DESCRIPTION
ALL THAT CERTAIN PIECE, PARCEL OR TRACT OF LAND, LYING AND BEING IN THE CITY OF
GAFFNEY, COUNTY OF CHEROKEE, BEING SHOWN AND DELINEATED ON A PLAT OF 20.75 ACRES
PREPARED FOR CORE MATERIALS CORPORATION, BY PROFESSIONAL SURVEYING AND
ENGINEERING SERVICES, DATED SEPTEMBER 4, 1997, AND RECORDED IN THE OFFICE OF THE
CLERK OF COURT FOR CHEROKEE COUNTY IN PLAT BOOK B114 AT PAGE 1 (THE "REFERENCED
PLAT"), AND BEING MORE FULLY DESCRIBED AS FOLLOWS:
BEGINNING AT AN EXISTING IRON PIN ON THE EASTERN RIGHT-OF-WAY OF
COMMERCE DRIVE, SAID PIN BEING THE NORTHWESTERNMOST CORNER OF THE LANDS
OF THE PHOENIX FINISHING CORPORATION AS SHOWN ON DEED OF RECORD AT DEED
BOOK 12-W AT PAGE 52, AS RECORDED IN THE OFFICE OF THE CLERK OF COURT
FOR CHEROKEE COUNTY, SOUTH CAROLINA, AND SAID PIN ALSO BEING THE
SOUTHWESTERNMOST CORNER OF TRACT E AS SHOWN ON A PLAT OF MEADOWCREEK
INDUSTRIAL PARK RECORDED AT PLAT BOOK 13-B AT PAGE 106. RUNNING THENCE,
WITH THE EASTERN RIGHT-OF-WAY OF COMMERCE DRIVE, A CURVE TO THE LEFT
HAVING A RADIUS OF 584.54' AND AN ARC LENGTH OF 418.54' AND SUBTENDED
BY A CHORD OF N 25(DEGREE)28'06" W FOR A DISTANCE OF 409.66' TO A NEW
IRON; THENCE, WITH SAID RIGHT-OF-WAY, N 45(DEGREE)58'49" W FOR A
DISTANCE OF 148.68' TO A NEW IRON; THENCE, WITH THE RIGHT-OF-WAY, A
CURVE TO THE RIGHT HAVING A RADIUS OF 1363.42' AND AN ARC LENGTH OF
192.60', AND SUBTENDED BY A CHORD OF N 41(DEGREE)56'00" W FOR A
DISTANCE OF 192.44' TO A NEW IRON; THENCE, WITH SAID RIGHT-OF- WAY, N
37(DEGREE)53'11" W FOR A DISTANCE OF 75.09' TO A NEW IRON; THENCE,
LEAVING THE RIGHT- OF-WAY, N 79(DEGREE)55'32" E FOR A DISTANCE OF
703.44' TO AN EXISTING IRON; THENCE N 80(DEGREE)05'14" E FOR A DISTANCE
OF 596.84' TO AN EXISTING IRON; THENCE N 80(DEGREE)01'11" E FOR A
DISTANCE OF 227.06' TO AN EXISTING IRON; THENCE S 21(DEGREE)45'57" W
FOR A DISTANCE OF 64.10' TO AN EXISTING IRON; THENCE S 04(DEGREE)16'24"
W FOR A DISTANCE OF 225.65' TO AN EXISTING IRON; THENCE S
16(DEGREE)45'59" W FOR A DISTANCE OF 247.90' TO AN EXISTING IRON;
THENCE S 15(DEGREE)28'32" E FOR A DISTANCE OF 238.40' TO AN EXISTING
IRON; THENCE S 08(DEGREE)03'56" E FOR A DISTANCE OF 44.68' TO AN
EXISTING IRON, SAID IRON BEING THE NORTHEASTERN CORNER OF THE LANDS OF
THE PHOENIX FINISHING CORPORATION, S 81(DEGREE)47'34" W FOR A DISTANCE
OF 1014.54' TO THE POINT AND PLACE OF BEGINNING.
DERIVATION: DEED FROM GILBERT PROPERTIES, INC. TO CORE MATERIALS
CORPORATION, DATED SEPTEMBER 12, 1997 AND RECORDED SEPTEMBER 12, 1997
IN THE OFFICE OF THE CLERK OF COURT OF CHEROKEE COUNTY IN DEED BOOK
16-L AT PAGE 187.
ASSESSOR'S TAX MAP NO.: 116-00-00-049.005
C-1
<PAGE> 54
EXHIBIT D
FORM OF DISBURSEMENT REQUEST
STATEMENT NO. ______ REQUESTING DISBURSEMENT OF FUNDS
FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE
LOAN AGREEMENT DATED AS OF APRIL 1, 1998 BETWEEN
SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
AND CORE MATERIALS CORPORATION
---------------------------------
Pursuant to Section 3.4 of the Loan Agreement (the
"Agreement") between the South Carolina Jobs-Economic Development Authority (the
"Issuer"), and Core Materials Corporation (the "Borrower") dated as of April 1,
1998, the undersigned Designated Representative hereby requests and authorizes
The Huntington National Bank, as trustee (the "Trustee"), as depository of the
Project Fund created by the Indenture and defined in the Agreement, to pay to
the Borrower or to the person(s) listed on the Disbursement Schedule hereto out
of the moneys deposited in the Project Fund the aggregate sum of $___________ to
pay such person(s) or to reimburse the Borrower in full, as indicated in the
Disbursement Schedule, for the advances, payments and expenditures made by it in
connection with the items listed in the Disbursement Schedule.
In connection with the foregoing request and authorization,
the undersigned hereby certifies that:
(a) Each item for which disbursement is requested
hereunder is properly payable out of the Project Fund
in accordance with the terms and conditions of the
Agreement and the Reimbursement Agreement and none of
those items has formed the basis for any disbursement
heretofore made from said Project Fund.
(b) Each such item is or was necessary in connection with
the construction, furnishing, equipment or
improvement of the Project, as defined in the
Agreement.
(c) Each item for which disbursement is requested
hereunder, and the cost for each such item, is as
described in the information statement filed by the
Issuer in connection with the issuance of the Bonds
(as defined in the Agreement), as required by Section
149(e) of the Code; provided that if any such item is
not as described in that information statement,
attached hereto is a computation evidencing that the
average reasonably expected economic life of the
facilities which have been and will be paid for with
moneys in the Project Fund is not less than 5/6ths of
the average maturity of the Bonds.
D-1
<PAGE> 55
(d) This statement and all exhibits hereto, including the
Disbursement Schedule, shall be conclusive evidence
of the facts and statements set forth herein and
shall constitute full warrant, protection and
authority to the Trustee for its actions taken
pursuant hereto.
(e) This statement constitutes the approval of the
Borrower of each disbursement hereby requested and
authorized.
This _____ day of ________________, 19___.
Pursuant to Section 3.4 of the ___________________________________
Agreement the foregoing Designated Representative
disbursement request is hereby
approved:
KEYBANK NATIONAL ASSOCIATION, as issuer
of the Credit Facility
By: _____________________________
Title: __________________________
Dated: __________________________
D-2
<PAGE> 56
DISBURSEMENT SCHEDULE
TO STATEMENT NO. __________ REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS
FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF
APRIL 1, 1998 BETWEEN THE SOUTH CAROLINA JOBS- ECONOMIC DEVELOPMENT AUTHORITY
AND CORE MATERIALS CORPORATION
PAYEE AMOUNT PURPOSE
----- ------ -------
D-3
<PAGE> 1
Exhibit 10(a)(2)
================================================================================
REIMBURSEMENT AGREEMENT
by and between
CORE MATERIALS CORPORATION
and
KEYBANK NATIONAL ASSOCIATION
DATED AS OF APRIL 1, 1998
================================================================================
<PAGE> 2
REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT ("Agreement"), dated as of the 1st day of
April, 1998, is by and between CORE MATERIALS CORPORATION, a Delaware
corporation (the "Borrower"), and KEYBANK NATIONAL ASSOCIATION, a national
banking association (the "Bank").
WHEREAS, in order to provide financing for the costs of acquiring,
constructing, equipping and improving an industrial building, to be located at
24 Commerce Drive, Meadow Creek Industrial Part Tract "E", Gaffney, South
Carolina (the "South Carolina Premises") (the building located on the South
Carolina Premises and the improvements to such building and other portions of
the Premises to be constructed are herein referred to as the "Project"), the
South Carolina Jobs-Economic Development Authority (the "Issuer") proposes to
issue its Multi-Mode Variable Rate Industrial Development Revenue Bonds, Series
1998 (Core Materials Corporation Project), in the aggregate principal amount of
Seven Million Five Hundred Thousand Dollars ($7,500,000) (the "Bonds") under the
terms and conditions more fully set forth in the Trust Indenture dated as of
April 1, 1998 (the "Indenture"), by and between the Issuer and The Huntington
National Bank, Columbus, Ohio, as Trustee; and
WHEREAS, to enhance the marketability of the Bonds the Borrower has
applied to the Bank for the issuance of a letter of credit (the "Letter of
Credit") in favor of the Trustee in an amount not to exceed a maximum stated
amount of Seven Million Seven Hundred Twenty-Six Thousand Twenty-Eight Dollars
($7,726,028.00) to secure the payment of the principal of and accrued interest
on the Bonds; and
WHEREAS, it is the purpose of this Agreement to set forth the Bank's
commitment to issue the Letter of Credit and the Borrower's agreement to
reimburse the Bank for any and all payments made by the Bank pursuant to the
Letter of Credit.
NOW THEREFORE, in consideration of the mutual agreements made herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1
<PAGE> 3
SECTION ONE
DEFINITIONS
SECTION 1.1. TERMS DEFINED. As used in this Agreement, the following
terms have the following respective meanings. Any accounting term used but not
specifically defined herein shall be construed in accordance with GAAP. The
definition of each agreement, document, and instrument set forth in this Section
1.1 shall be deemed to mean and include such agreement, document, or instrument
as amended, restated, or modified from time to time:
"BANK OBLIGATION" shall mean an amount equal to the aggregate
outstanding liability of the Bank from time to time under the Letter of Credit.
"BANK" shall mean KeyBank National Association, its successors and
assigns.
"BOND DOCUMENTS" shall mean, collectively the Indenture, the Loan
Agreement and any other document executed by the Borrower in connection with the
issuance of the Bonds (other than the Credit Documents).
"BOND PLEDGE AGREEMENT" shall mean the Bond Pledge Agreement, dated as
of April 1, 1998, among the Borrower, the Bank, and the Trustee.
"BONDS" shall mean the Issuer's $7,500,000 Multi-Mode Variable Rate
Industrial Development Revenue Bonds, Series 1998 (Core Materials Corporation
Project) issued pursuant to the Indenture.
"BORROWER" shall mean, Core Materials Corporation, a Delaware
corporation.
"BUSINESS DAY" shall mean any day of the year other than (i) a Saturday
or Sunday, (ii) any day on which banks located in either Cleveland, Ohio, or the
principal corporate trust office of the Trustee is located are required or
authorized by law to remain closed, or (iii) any day on which the New York Stock
Exchange is closed.
"COMPLETION DATE" shall mean March 31, 1999.
"CREDIT DOCUMENTS" shall mean, collectively, this Reimbursement
Agreement, the Mortgages, the Security Agreement, the Bond Pledge Agreement and
the Letter of Credit Note.
"DATE OF ISSUANCE" shall mean the date of issuance of the Letter of
Credit.
"EBITDA" shall mean, for any period, (A) the sum of the amounts for
such period of (1) net income, (2) interest expense, (3) charges for federal,
state, local and foreign income taxes, (4) depreciation and amortization
expense, and (5) extraordinary losses (and any unusual losses arising outside
the ordinary course of business not included in extraordinary losses determined
in accordance with GAAP) minus (b) the sum of the amounts for such period of (1)
extraordinary gains (and any unusual gains arising outside the ordinary course
of business not included in extraordinary gains determined in accordance with
GAAP) and (2) to the extent not deducted
2
<PAGE> 4
from total interest expense, any net payments received during such period under
interest rate contracts and any interest income received in respect of cash
investments.
"ENVIRONMENTAL LAW" shall mean any federal, state, or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating to,
or imposing liability upon a Person in connection with the use, release or
disposal of any hazardous, toxic or dangerous substance, waste or material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended or supplemented, and all
regulations thereunder.
"EVENT OF DEFAULT" shall have the meaning assigned thereto in Section 8
hereof.
"EXPIRATION DATE" shall mean April 17, 2003, unless extended by the
Bank in writing pursuant to Section 2.5.
"FEE CALCULATION AMOUNT" shall have the meaning set forth in Section
2.2(b).
"FUNDED DEBT" shall mean, at a particular date, the Indebtedness of the
Borrower for money borrowed, whether secured or unsecured, having a final
maturity (or which by the term thereof is renewable or extendible at the option
of the obligor for a period ending) more than one year after the date of
creation thereof.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
"IMPROVEMENTS" shall mean the leasehold improvements to be constructed
in and to the Project and financed, in part, by the proceeds of the Bonds.
"INDEBTEDNESS" shall mean, at a particular date, the liabilities of
Borrower, as determined in accordance with GAAP, consistently applied,
including, without limitation, all indebtedness for money borrowed or for the
deferred purchase price of property and lease obligations of the Borrower which
have been, or which in accordance with Statement of Financial Accounting
Standards No. 13, as from time to time amended, should be, capitalized.
"INDENTURE" shall mean the Trust Indenture, dated as of April 1, 1998,
between the Issuer and the Trustee.
"INDENTURE DEFAULT" shall mean an Event of Default under and pursuant
to the Indenture.
"INTEREST COMMITMENT" shall have the meaning set forth in the Letter of
Credit.
"INTEREST DRAWING" shall have the meaning set forth in the Letter of
Credit.
"INTEREST PORTION" shall have the meaning set forth in the Letter of
Credit.
3
<PAGE> 5
"ISSUER" shall mean the South Carolina Jobs-Economic Development
Authority, a public body politic and corporate and an agency of the State of
South Carolina.
"LETTER OF CREDIT" shall mean the Letter of Credit to be issued by the
Bank on the Closing Date pursuant to this Agreement, such Letter of Credit to be
substantially in the form of Exhibit B attached hereto.
"LETTER OF CREDIT COMMITMENT" shall have the meaning set forth in the
Letter of Credit.
"LETTER OF CREDIT FEE" shall have the meaning set forth in Section
2.2(b) of this Agreement.
"LETTER OF CREDIT NOTE" shall mean the promissory note from the
Borrower to the Bank in the form attached hereto as Exhibit A evidencing the
Borrower's obligations to make payment to the Bank under this Agreement for
amounts drawn under the Letter of Credit.
"LOAN AGREEMENT" shall mean the Loan Agreement, dated as of April 1,
1998, between the Issuer and the Borrower.
"LOANS" shall mean any loans or other credit facilities by the Bank in
favor of the Borrower including but not limited to (a) loans or credit of any
type extended to the Borrower by the Bank, including the loan evidenced by the
Variable Rate Loan, the Sale/Leaseback, and the Operating Lease, and any other
loans of indebtedness of Borrower to the Bank as may now exist of hereafter
arise; (b) the creation of debt by the Bank's payment of or agreement to pay
money to Borrower or to a third party for the account of Borrower; (c) the
creation of a debt by a credit to an account with the Bank upon which Borrower
is entitled to draw immediately; (d) the forbearance of debt arising from a
loan; and (e) the creation of debt by execution of installment loans or lease
agreements for vehicles or equipment between Borrower and the Bank.
"MAXIMUM SENIOR FUNDED DEBT TO EBITDA RATIO" shall man the (A) sum of
the commitment amount of the Variable Rate Loan ($7,500,000 as of the date
hereof), the total Sale/Leaseback Obligations, the outstanding principal amount
of the Bonds and any other permitted debt (other than the Subordinated Debt)
divided by (B) EBITDA.
"MINIMUM FIXED CHARGE COVERAGE RATIO" shall mean the sum of EBITDA and
rent (lease) expense, including without limitation rent payments in connection
with the Sale/Leaseback and the Operating Lease, for a given period, divided by
the sum of (A) interest expense (which shall not include interest on the
Subordinated Debt which is deferred and not paid), (B) rent (lease) expense,
including without limitation rent payments in connection with the Sale/Leaseback
and Operating Lease, (C) principal payments on the Subordinated Debt, the Bonds
and any other permitted debt, and (D) Unfunded Capital Expenditures in the
amounts disclosed by Borrower in its financial statements, for such period.
"MINIMUM DEBT SERVICE COVERAGE RATIO" shall mean the sum of EBITDA and
rent (lease) expense, including without limitation rent payments in connection
with the Sale/Leaseback and the Operating Lease, for a given period, divided by
the sum of (A) interest expense (which
4
<PAGE> 6
shall not include interest on the Subordinated Debt which is deferred and not
paid, (B) rent (lease) expense, including without limitation rent payments in
connection with the Sale/Leaseback and Operating Lease, and (C) principal
payments on the Subordinated Debt, the Bonds and any other permitted debt, for
such period.
"MORTGAGES" shall mean, collectively, the Open-End Mortgage, Assignment
of Rents and Leases and Security Agreement, dated as of May 7, 1998, given by
the Borrower to the Bank, and filed for record with the County Recorder,
Franklin County, Ohio on May 7, 1998, and the Open-End Mortgage, Assignment of
Rents and Leases and Security Agreement dated, as of December 3, 1997, given by
the Borrower to the Bank, and filed for record with the Clerk of Court, Cherokee
County, South Carolina on December 19, 1997, at Volume 543, Page 303, as amended
and supplemented by the Supplemental Open-End Mortgage, Assignment of Rents and
Leases and Security Agreement, dated as of May 7, 1998.
"OBLIGATIONS" shall mean all liabilities and obligations of any kind,
direct or indirect, owing by the Borrower or any one of them, to the Bank,
whether arising under this Agreement or any other Credit Documents, whether
absolute or contingent, now existing or hereafter arising, including without
limitation, letter of credit reimbursement obligations, interest, fees, Related
Expenses and Guaranteed Obligations (as defined in Section 10.4 herein).
"OHIO PREMISES" shall mean the Borrower's building located at 800 Manor
Park Drive, Columbus, Ohio.
"OPERATING LEASE" shall mean the Equipment Lease, to be entered into by
and between the Bank and the Borrower, in an aggregate amount of $5,500,000.
"PERMITTED ENCUMBRANCES" shall mean, as of any particular time, (a)
liens for ad valorem taxes and special assessments not then delinquent, (b) this
Agreement, the Mortgages, Bond Pledge Agreement, the Security Agreement and any
security interest or other lien created thereby, (c) such minor defects,
irregularities, encumbrances and clouds on title as normally exist with respect
to property similar in character to the Pledged Collateral and as do not, in a
written certificate of an officer of the Borrower, interfere with or impair the
use or value of the property affected thereby, (d) any security interest granted
from time to time to the Bank, and (e) any items set forth on Exhibit C attached
hereto.
"PERSON" means any natural person, corporation (which shall be deemed
to include business trust), association, partnership, political entity, or
political subdivision thereof.
"PLAN" shall mean any plan defined in Section 4021(a) of ERISA in
respect of which Borrower is an "employer" or a "substantial employer" as
defined in Section 3(5) and 4001(a)(2) of ERISA, respectively.
"PLEDGED COLLATERAL" shall mean the collateral in which the Borrower
has given the Bank a security interest pursuant to the Mortgages, Security
Agreement and/or the Bond Pledge Agreement.
5
<PAGE> 7
"PREMISES" shall mean, collectively, the Ohio Premises and the South
Carolina Premises.
"PRIME RATE" shall mean that interest rate established from time to
time by the Bank as Bank's Prime Rate, whether or not such rate is publicly
announced. The Prime Rate may not be the lowest rate charged by the Bank for
commercial or other extensions of credit.
"PRINCIPAL COMMITMENT" shall have the meaning set forth in the Letter
of Credit.
"PRINCIPAL DRAWING" shall have the meaning set forth in the Letter of
Credit.
"PRINCIPAL PORTION" shall have the meaning set forth in the Letter of
Credit.
"PROHIBITED TRANSACTION" shall mean any prohibited transaction as that
term is defined for purposes of ERISA.
"PROJECT" shall mean the Project as defined in the recitals hereof.
"PURCHASER" shall mean the original purchaser or purchasers of the
Bonds.
"REMARKETING AGENT" shall mean, initially, Key Capital Markets, Inc.
"REMARKETING COMMITMENT" shall have the meaning set forth in the Letter
of Credit.
"REMARKETING DRAWING" shall have the meaning set forth in the Letter of
Credit.
"REMARKETING PORTION" shall have the meaning set forth in the Letter of
Credit.
"REPORTABLE EVENT" shall mean any reportable event as that term is
defined in ERISA.
"SALE/LEASEBACK" shall mean the Sale/Leaseback Equipment Financing
Facility, entered into as of December 3, 1997, by and between the Borrower and
the Bank in the aggregate amount of $12,000,000.
"SECURITY AGREEMENT" shall mean the Security Agreement dated as of
December 3, 1997 by the Borrower to the Bank.
"SOUTH CAROLINA PREMISES" shall mean the South Carolina Premises as
defined in the recitals hereto.
"STATED AMOUNT" shall have the meaning set forth in the Letter of
Credit.
"SUBORDINATED DEBT" shall mean the amount of outstanding principal and
interest owed by Borrower to Navistar International Transportation Corp., a
Delaware Corporation, at any given point in time.
"TRUSTEE" means The Huntington National Bank, Columbus, Ohio, or any
successor Trustee under the Indenture.
6
<PAGE> 8
"UNFUNDED CAPITAL EXPENDITURES" shall mean any capital expenditure made
for which no long-term funding source is specifically available.
"VARIABLE RATE LOAN" shall mean the $7,500,000 revolving loan from the
Bank in favor of the Borrower, as evidenced by the Variable Rate Promissory Note
and the Loan Agreement, each entered into as of December 3, 1997.
SECTION TWO
ISSUANCE OF LETTER OF CREDIT
SECTION 2.1. ISSUANCE OF LETTER OF CREDIT. Subject to the terms and
conditions hereof, the Bank agrees to execute and deliver the Letter of Credit.
The obligations of the Bank under the Letter of Credit shall be absolute and
irrevocable and shall be performed strictly in accordance with the terms of the
Letter of Credit and this Agreement. All payments made under the Letter of
Credit shall be made with the Bank's funds.
SECTION 2.2. FEES AND REIMBURSEMENT FOR LETTER OF CREDIT
(a) The Borrower hereby agrees to pay to the Bank:
(i) Before 2:00 p.m., Cleveland, Ohio time, on each date
that any amount is drawn under the Letter of Credit
pursuant to a Principal Drawing, an Interest Drawing
and/or a Remarketing Drawing, each as defined in the
Letter of Credit, a sum equal to the amount drawn
under the Letter of Credit, plus (x) interest
accrued, if any, on the amount so drawn under the
Letter of Credit as determined pursuant to clause
(iii) of this subsection (a) of this Section 2.2,
plus (y) any and all charges and expenses which the
Bank may pay or incur relative to such drawing under
the Letter of Credit, plus (z) a fee in the amount of
Two Hundred Dollars ($200) for each Principal
Drawing, Remarketing Drawing, or Interest Drawing
under the Letter of Credit; provided, however, that
in the event there is a Remarketing Drawing and the
Bonds purchased pursuant to such drawing are unable
to be remarketed by the Remarketing Agent for a
period of thirty (30) consecutive days, then such
Remarketing Drawing shall be paid on the Expiration
Date (unless the date of such payment is accelerated
pursuant to Section 8.2). Notwithstanding the
foregoing, in such event, the principal and interest
payments on such Bonds shall remain unaltered, and
the Borrower shall pay such amounts as and when due
and payable under such Bonds.
(ii) Upon each transfer of the Letter of Credit in
accordance with its terms and as a condition thereto,
a sum in such amount as shall be reasonably necessary
to cover the costs and expenses to the Bank incurred
in connection with such transfer;
7
<PAGE> 9
(iii) On demand interest on any and all amounts not paid by
the Borrower when due under any section of this
Agreement from the date such amounts become due until
payment in full, such interest at a rate per annum
equal to the Prime Rate;
(iv) On demand, reasonable costs, fees and expenses
incurred by the Bank in connection with the issuance
or sale of the Bonds or issuance of the Letter of
Credit or the preparation or execution of any
documents or opinions related thereto, which may
include but not be limited to legal, documentation,
search and recording fees;
(v) On demand, any and all reasonable expenses incurred
by the Bank in enforcing any of its rights under the
Credit Documents;
(vi) On or prior to the Closing Date, a one-time
origination fee in the amount of $20,000.
(b) The Borrower hereby agrees to pay to the Bank a commitment fee
(the "Letter of Credit Fee") equal to an amount calculated at
the rate (the "LOC Fee Rate") of one percent (1%) per annum
(using a 360-day year and 30-day month, but calculated on the
number of actual days elapsed) of the maximum "Fee Calculation
Amount" as hereinafter defined, available on each date of
payment of the Letter of Credit Fee. The Letter of Credit Fee
shall be payable in annual installments in advance on the
Closing Date and thereafter on each anniversary date of the
first day of the month in which the Closing Date occurred;
provided, however, that upon the Date of Issuance of the
Letter of Credit, the Borrower shall pay an installment of the
Letter of Credit Fee for the period from the Date of Issuance
to and including March 31, 1999. The "Fee Calculation Amount"
shall be the maximum amount then available to be drawn under
the Letter of Credit with respect to the Principal Commitment
plus, (ii) the maximum amount then available to be drawn under
the Letter of Credit with respect to the Interest Commitment.
If the Letter of Credit is terminated prior to the Expiration
Date, the Letter of Credit Fee shall be refunded to the
Borrower for any calendar quarter that the Letter of Credit
will not be outstanding provided that the Borrower returns or
causes to be returned the Letter of Credit to the Bank prior
to the start of such calendar quarter.
(c) If any change in any law or regulation or in the
interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof
shall impose, modify or deem applicable any reserve, special
deposit or similar requirement which would increase or
decrease the Bank's costs (i) generally upon the issuance or
maintenance of letters of credit by the Bank, (ii)
specifically in respect of this Agreement or the Letter of
Credit, or (iii) in respect of any capital adequacy
requirement (including, without limitation, a requirement
which affects the manner in which the Bank allocates capital
resources to its commitments), and the result of such an
increase or decrease in costs as described
8
<PAGE> 10
in clause (i), (ii), or (iii) above shall be to increase or
decrease the costs to the Bank of issuing or maintaining the
Letter of Credit (which increase or decrease in costs shall be
the result of the Bank's reasonable allocation, of the
aggregate of such cost increases or decreases resulting from
such events), then, (x) within thirty (30) days of the Bank's
obtaining knowledge of such change in law, regulations or
interpretation thereof, the Bank shall so notify the Borrower
and (y) immediately upon receipt of such notice from the Bank,
accompanied by a certificate as to such increased or decreased
cost, the Borrower shall pay or receive a refund as of the
effective date of such change or interpretation all additional
amounts which are necessary to compensate the Bank or the
Borrower for such increased or decreased cost incurred by the
Bank.
(d) The Borrower's obligations to make payments to the Bank under
this Section 2.2 shall be deemed satisfied to the extent of
payments made by the Trustee to the Bank from funds on deposit
with and held by the Trustee pursuant to the Indenture.
SECTION 2.3. BORROWER'S OBLIGATIONS UNCONDITIONAL. The payment
obligations of the Borrower under this Agreement shall be absolute,
unconditional and irrevocable and shall be satisfied strictly in accordance with
the terms of this Agreement, under all circumstances whatsoever, including,
without limitation, the following circumstances:
(a) Any lack of validity or enforceability of the Credit
Documents, the Bond Documents or any other agreement or
instrument relating thereto;
(b) Any amendment or waiver of or any consent to departure from
the terms of the Letter of Credit, the Credit Documents, the
Bond Documents or any other agreement or instrument relating
thereto;
(c) The existence of any claim, setoff, defense or right which the
Borrower may have at any time against any beneficiary or any
transferee of the Letter of Credit (or any persons or entities
for whom any such beneficiary or any such transferee may be
acting), the Bank, or any other person or entity, whether in
connection with this Agreement, the transactions contemplated
by the Credit Documents, the Bond Documents, or any unrelated
transaction;
(d) Any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever; or
(e) Payment by the Bank under the Letter of Credit against
presentation of a request which on its face appears to be in
accordance with the terms of the Letter of Credit.
9
<PAGE> 11
SECTION 2.4. PAYMENTS. All payments by the Borrower hereunder to the
Bank shall be made in lawful currency of the United States and in immediately
available funds to the main office of the Bank at 127 Public Square, Cleveland,
Ohio 44114.
SECTION 2.5. LETTER OF CREDIT EXTENSION. The Bank may in writing,
effective on each April 1, extend the Expiration Date of the Letter of Credit
for an additional one-year period; provided, however, that such extension shall
be, in each instance, made in the sole discretion of the Bank and the Bank may
at any time, upon written notice delivered to Borrower and Trustee, elect not to
extend the Expiration Date. The Bank shall notify Borrower and Trustee of its
decision of whether the Expiration Date shall be extended no later than thirty
(30) days prior to April 1 of each year, provided that the failure of Bank to
deliver such notice, or to deliver any notice, shall mean that Bank has elected
not to extend the Expiration Date. If the Bank extends the Expiration Date, it
shall do so in the form of an amendment to the Letter of Credit, which it shall
promptly deliver to Trustee.
SECTION THREE
REPRESENTATIONS AND WARRANTIES
The Borrower expressly represents and warrants that:
SECTION 3.1. EXISTENCE AND LEGAL AUTHORITY. The Borrower is a Delaware
corporation duly incorporated and validly existing and in good standing under
the laws of the State of Delaware and has all requisite power and authority to
own its property and to carry on its business as now being conducted, to enter
into the Credit Documents to which it is a party and the other agreements
referred to herein and transactions contemplated thereby, and to carry out the
provisions and conditions of such Credit Documents to which it is a party. The
Borrower is duly qualified to do business and is in full force and effect or is
in good standing in every jurisdiction where the failure to so qualify would
have a material adverse effect on the business of Borrower, including Ohio and
South Carolina.
SECTION 3.2. DUE EXECUTION AND DELIVERY. The Borrower has full power,
authority and legal right to incur the obligations provided for in, and to
execute and deliver and to perform and observe the terms and provisions of, the
Credit Documents to which it is a party, and each of them has been duly executed
and delivered by Borrower and authorized, by all required action, and Borrower
has obtained all requisite consents to the transactions contemplated thereby
under any instrument to which it is a party, and the Credit Documents constitute
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency or other similar
laws affecting creditors' rights generally.
SECTION 3.3. NO BREACH OF OTHER INSTRUMENTS. Neither the execution and
delivery of the Credit Documents, nor the compliance by the Borrower with the
terms and conditions of the Credit Documents, nor the consummation of the
transactions contemplated thereby, will conflict with or result in a breach of
the Certificate of Incorporation or Bylaws of the Borrower, or any
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charter or other corporate restriction, other restriction or law, regulation,
rule or order of any governmental body or agency to which the Borrower is now a
party or is subject.
SECTION 3.4. GOVERNMENT AUTHORIZATION. Except for Federal and state
securities laws with respect to the sale of the Bonds, no consent, approval,
authorization or order of any court or governmental agency or body is required
which if not obtained would have a material adverse effect on such transaction
for the consummation by the Borrower of the transactions contemplated by the
Credit Documents.
SECTION 3.5. PLEDGED COLLATERAL. The Borrower has good fee simple title
to the Premises, free and clear of all liens, pledges, mortgages, security
interests, charges, claims and other encumbrances, except the Permitted
Encumbrances. Upon proper filing with the appropriate authorities, the
Mortgages, the Security Agreement and the Bond Pledge Agreement have created or
will create, as appropriate, a valid and prior perfected security interest and
lien in favor of the Bank, subject to no other liens or encumbrances arising by,
through or under the Borrower or any other Person, except for Permitted
Encumbrances or as otherwise provided in the Bond Documents.
SECTION 3.6. ABSENCE OF DEFAULTS, ETC. The Borrower is not (i) in
default under any indenture or material contract or material agreement to which
it is a party or by which it is bound, (ii) in violation of its Certificate of
Incorporation or Bylaws, (iii) in default with respect to any order, writ,
injunction or decree of any court, or (iv) in default under any order or license
of any federal or state governmental department, which default or violation in
any of the aforesaid cases materially and adversely affects its business or
property. There exists no condition, event or act which constitutes, or after
notice or lapse of time or both would constitute, an Event of Default.
SECTION 3.7. INDEBTEDNESS OF BORROWER. The Borrower does not have
outstanding on the date hereof, any Indebtedness for borrowed money, except for
such Indebtedness reflected on the financial statements referred to in Section
3.8 hereof.
SECTION 3.8. FINANCIAL CONDITION. The Borrower has furnished to the
Bank true and correct financial statements reviewed by a certified public
accountant as of the end of the Borrower's fiscal year which ended December 31,
1997 which financial statements present fairly each Borrower's financial
condition at such date, and there has been no material adverse change in
Borrower's financial condition since that date.
SECTION 3.9. NO ADVERSE CHANGE. Subsequent to the date of the financial
statements referred to in Section 3.8 hereof, the Borrower has not incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business and there has not been any increase in the aggregate amount of Funded
Debt of the Borrower, or any change in the business, properties or condition,
financial or otherwise, of the Borrower, except for changes arising in the
ordinary course of business or in connection with the issuance and sale of the
Bonds or as may be otherwise disclosed in writing to the Bank prior to the date
hereof.
SECTION 3.10. TAXES. The Borrower has filed all tax returns which are
to be filed and has paid, or has made adequate provision for the payment of, all
taxes which have or may become due
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pursuant to said returns or to assessments received by them. The provisions for
taxes reflected in the most recent balance sheet referred to in Section 3.8 are
believed adequate to cover any and all accrued and unpaid taxes for which the
Borrower is liable for the period ended on the date of such balance sheet and
all prior periods. The Borrower does not know of any material deficiency
assessment or proposed material deficiency assessment of taxes against the
Borrower, except as may be otherwise disclosed in writing to the Bank prior to
the date hereof.
SECTION 3.11. LITIGATION. Prior to the date hereof, there are no
actions, suits or proceedings pending, or to the actual knowledge of the
Borrower, threatened against or affecting the Borrower or property of the
Borrower in any court, or before or by any federal, state or municipal or other
governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, which could result in any materially
adverse change in the business, property or assets, or in the condition,
financial or otherwise, of Borrower, except for actions, suits or proceedings of
a character normally incident to the kind of business conducted by Borrower,
none of which, either individually or in the aggregate, if adversely determined,
would materially impair Borrower's right or ability to carry on its business
substantially as now conducted or materially adversely affect the financial
position or operations of Borrower.
SECTION 3.12. OWNERSHIP OF PROPERTY. Except for Permitted Encumbrances
or as otherwise permitted in the Mortgages, the Security Agreement or this
Agreement, the Borrower has good and marketable fee title to its real properties
in accordance with the laws of the jurisdiction where located, and good and
marketable title to substantially all its other property and assets, subject,
however, in the case of real property, to title defects and restrictions which
do not materially interfere with the operations conducted thereon by Borrower;
provided, further, however, that the parties acknowledge that in connection with
a fee in lieu of taxes arrangement with Cherokee County, South Carolina, the
Borrower may, at some future date, transfer its title to the South Carolina
Premises, subject to the Mortgage related thereto, and its other property and
assets located therein. Except for Permitted Encumbrances, the real property and
all other property and assets of the Borrower are free from any liens or
encumbrance securing Indebtedness and from any other liens, encumbrances,
charges or security interests of any kind. Each lease, if any, to which the
Borrower is a party is in full force and effect, and no material default on the
part of the Borrower to its knowledge, any other party thereto exists.
SECTION 3.13. ENVIRONMENTAL MATTERS. The Borrower is in compliance with
all Environmental Laws and all applicable federal, state and local health and
safety laws, regulations, ordinances or rules, except to the extent that any
non-compliance will not, in the aggregate, have a materially adverse effect on
the Borrower or the ability of the Borrower to fulfill its obligations under
this Agreement, the Mortgages or the Letter of Credit Note.
SECTION 3.14. MORTGAGES AND SECURITY AGREEMENT. The Borrower hereby
acknowledges that the Obligations owing by the Borrower to the Bank hereunder
are "other indebtedness" to the Bank as contemplated by Section 2(d) of the
Security Agreement and Section iv of each of the Mortgages.
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SECTION FOUR
CLOSING CONDITIONS
The obligation of the Bank to issue the Letter of Credit on the Closing
Date shall be subject to the following conditions precedent:
SECTION 4.1. EXECUTION AND DELIVERY OF THE CREDIT DOCUMENTS AND THE
BOND DOCUMENTS. With respect to issuance of the Letter of Credit, the Borrower
shall have delivered to the Bank fully executed copies of each of the Credit
Documents, and the Trustee and the Borrower shall have duly executed and
delivered the Bond Documents.
SECTION 4.2. ISSUANCE AND SALE OF THE BONDS. The Bonds shall have been
duly issued and sold to the Purchaser pursuant to the Bond Documents.
SECTION 4.3. REPRESENTATIONS AND WARRANTIES TRUE AS OF CLOSING AND NO
EVENT OF DEFAULT. The representations and warranties contained in this Agreement
and the other Credit Documents shall be true in all material respects on the
Closing Date with the same effect as though made on and as of that date and no
condition, event or act shall have occurred which constitutes an Event of
Default or, with notice or lapse of time, or both, would constitute an Event of
Default.
SECTION 4.4. OPINION OF BORROWER'S COUNSEL. The Bank shall have
received from counsel to the Borrower, on behalf of the Bank, an opinion with
respect to (i) the matters described in Sections 3.1, 3.2, and 3.4 of this
Agreement, (ii) the matters described in Sections 3.3, 3.6 and 3.11 of this
Agreement, to such counsel's knowledge and belief after inquiry and (iii) such
other matters incident to the transactions contemplated hereby as the Bank may
reasonably request.
SECTION 4.5. OPINION OF COUNSEL. Bank shall have received from Bond
Counsel, an opinion with regard to the tax-exempt status of the Bonds and the
absence of any securities registration requirements with respect to the Bonds
under the Securities Act of 1933, as amended. Bank shall have received from its
counsel, an opinion with regard to the absence of any securities registration
requirements with respect to the Letter of Credit under the Securities Act of
1933, as amended.
SECTION 4.6. PROCEEDINGS SATISFACTORY. All proceedings taken in
connection with the execution and delivery of this Reimbursement Agreement and
the other Credit Documents shall be reasonably satisfactory to the Bank and the
Bank shall have received copies of such certificates, documents and papers as
reasonably requested in connection therewith, all in form and substance
satisfactory to the Bank.
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SECTION FIVE
DISBURSEMENTS FROM PROJECT FUND
The Borrower shall not request or receive any disbursement of funds
from the Project Fund unless and until the Bank shall have approved such
disbursement in writing and all of the following conditions shall be true with
respect to each such disbursement:
SECTION 5.1. EXECUTION AND DELIVERY OF MISCELLANEOUS DOCUMENTS. The
Borrower shall have delivered to the Bank:
(a) Evidence that the Premises are not located in a special flood
hazard area as identified by HUD;
(b) Certificates of insurance and evidence of payment of premiums
therefor with respect to the insurance required by the Bank with respect to the
Premises as set forth in Section 6.2 below, including, but not limited to,
general liability insurance and hazard insurance, and flood insurance if
applicable;
(c) A current certified survey of the Premises prepared by a registered
surveyor satisfactory to the Bank, and containing on the face thereof the
completed certificate of the surveyor in the form of the surveyor's certificate
required by the Bank, dated a date satisfactory to the Bank, and in compliance
with the Minimum Standard Detail Requirements for ALTA/ASCM Class A land title
surveys, as adopted by the American Land Title Association and American Congress
on Surveying and Mapping in 1992;
(d) A current Phase I environmental audit of the Premises satisfactory
to the Bank in its sole discretion prepared by an environmental consultant
satisfactory to the Bank;
(e) A Commitment to issue an ALTA Loan Policy of Title Insurance issued
by the Title Company in the amount of the Letter of Credit (i) insuring that the
Mortgages, as of their respective time of filing for record, are liens upon the
Premises, and that the title to the Premises is free, clear and unencumbered,
subject only to the Permitted Encumbrances; (ii) insuring the priority of the
Mortgages over mechanics or materialmen's liens; (iii) obligating the Title
Company to affirmatively insure that access to Premises is by a dedicated and
accepted public right-of-way; and (iv) including such endorsements and
affirmative insurance as may be reasonably required by the Bank, including, but
not limited to, the so-called "Pending Disbursement Endorsement" and "Revolving
Credit Endorsement";
(f) Evidence satisfactory to the Bank that the Project, when completed,
and the Premises, and the proposed and actual use thereof, does and/or will
comply with all applicable laws, statutes, codes, ordinances, rules and
regulations, including, but not limited to, zoning and Environmental Laws, of
all governmental authorities having jurisdiction over the same, and that there
is no action or proceeding pending (or any time for an appeal of any decision
rendered) before any court, quasi-judicial body or administrative agency at the
Date of Issuance relating to the validity of this Reimbursement Agreement on the
transactions contemplated hereby or the proposed or actual use or operation of
the Premises; and
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(g) A written appraisal (the "Appraisal") satisfactory to the Bank in
all respects, prepared by an appraiser selected and directly engaged by the Bank
pursuant to an engagement letter issued by the Bank, the cost of which Appraisal
will be charged to the Borrower, and which Appraisal shall be prepared in
accordance with the Uniform Standards of Professional Appraisal Practice
applicable to Federally Related Transactions as set out in Appendix A to the
real estate appraisal regulations adopted by the Office of the Comptroller of
the Currency pursuant to the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") (Sub-part C of 12 C.F.R. 34) and which
Appraisal shall be updated, at the reasonable cost of the Borrower, upon the
occurrence of an Event of Default under any of the Credit Documents.
SECTION 5.2. BANK'S INSPECTOR'S CERTIFICATE. Prior to each disbursement
an inspector selected by the Bank shall inspect the property to verify that the
request for disbursement accurately indicates the amount of construction
completed to said date. The Bank shall have received a certificate from such
inspector certifying (i) that the construction of the Project theretofore
completed, if any, has been performed substantially in accordance with the Plans
and Specifications; (ii) that the quality of construction of the Project
theretofore completed is in accordance with generally accepted standards in the
construction industry for the cost of the construction of the Project; (iii)
that the undisbursed portion of the Project Fund together with other monies to
be provided by Borrower are adequate to complete the construction and equipping
of the Project pursuant to the Plans and Specifications by the Completion Date;
and (iv) that it is reasonable to expect that the completion of the Project will
occur on or before the Completion Date. It is understood and agreed that the
Bank shall not be liable for any reason as a result of such inspections, the
parties hereby agreeing that the inspections are solely for the benefit of the
Bank.
SECTION 5.3. NO LIENS. The Bank shall have received evidence
satisfactory to the Bank that since the last preceding disbursement from the
Project Fund there has been no change in the state of title to the Premises,
together with an endorsement to the Title Policy insuring the priority of the
Mortgages against mechanic's and materialmen's liens arising by reason of unpaid
labor and materials supplied in connection with the construction and development
of the Project. The Borrower shall pay the cost of each title update required by
the Bank from the Title Company in connection with each request for approval of
disbursement and each endorsement to the Title Policy.
SECTION 5.4. REQUEST FOR APPROVAL OF DISBURSEMENT. Not later than ten
(10) business days before the date on which the Borrower desires a disbursement
from the Project Fund, the Borrower shall submit to the Bank (i) a written
request for approval of the disbursement from the Project Fund; (ii) a
certification of the Borrower that, among other things, the Borrower has paid or
actually incurred the costs for which the request is being made; (iii) a revised
Project Budget showing the balance of each category of Project costs; and (iv) a
requisition using AIA Form G702 and/or G703 if the draw is used for construction
or such other form as the Bank may request, accompanied by a cost breakdown, the
accuracy of which shall be verified by the Bank's Inspector.
SECTION 5.5. TIMING. The Borrower will submit draw requests not more
often than once a month. Each disbursement shall not be more than 95% of the
value of work-in-place and
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the balance will be paid upon completion based on requirements set forth below.
Retainage will be held on a subcontract by subcontract basis, and released in
connection with a particular subcontract provided all work thereunder has been
completed to the satisfaction of the Bank and its inspector and a mechanic's
lien waiver has been received from the subcontractor for all their work done on
the property. There are no retainage requirements for "soft costs" on the
project. "Soft costs" are defined as expenses which have no mechanic's lien
rights on the subject security (this does not include the contingency line item
under the general contractor's agreement).
SECTION 5.6. SUPPORTING DOCUMENTATION. The Borrower shall furnish the
Title Company with all evidence, lien waivers, or affidavits required at the
time of each disbursement to insure that all bills then due and payable for
labor and materials used in constructing the Improvements and all bills due and
payable to contractors, subcontractors, laborers, and materialmen have been paid
in full, except those bills to be paid with the proceeds of such disbursement,
and except for retainages.
SECTION 5.7. MATERIAL DAMAGE. Notwithstanding any provision of this
Reimbursement Agreement to the contrary, if the Project shall have suffered any
material damage or destruction prior to any disbursement from the Project Fund,
such damaged or destroyed portion shall be restored or replaced in a manner
acceptable to the Bank without cost to the Bank prior to the approval by the
Bank of any further disbursement from the Project Fund; provided that if such
damage or destruction shall occur during the construction period for the
Improvements, the Borrower may use any insurance proceeds to rebuild or repair
the Project.
SECTION 5.8. OTHER DISBURSEMENT APPROVAL CONDITIONS. The Bank shall not
be obligated to approve any disbursement from the Project Fund if, at the time
of a proposed disbursement, (i) an Event of Default or an event which, with the
passage of time or service of notice, or both, would be an Event of Default
under any of the Credit Documents has occurred, or (ii) any representation or
warranty made by the Borrower in any of the Credit Documents proves to be untrue
in any material respect, or (iii) the Bank determines, at any time, that the
Project will not be approved by the appropriate governmental regulatory
authorities.
SECTION 5.9. PERMITS. The Borrower shall have delivered to the Bank
building, zoning, and other required permits covering construction of the
Project together with evidence satisfactory to the Bank that all approvals
required with respect to the South Carolina Premises from third parties or any
governmental or quasi-governmental authorities have been obtained or, in the
case of approvals relating to the operation of the Project which cannot be
obtained until completion of construction, evidence satisfactory to the Bank
that such approvals are obtainable. Such evidence shall include copies of all
letters of grant or approval of all zoning changes and other site plan approvals
and subdivision approvals, all variances of zoning regulations affecting the
height, bulk, location or configuration of the Project and the South Carolina
Premises (or satisfactory opinion of counsel that the same are not required),
and all approvals or variances relating to parking or loading areas (both
on-street and off-street) and all appurtenant easements required by governmental
authorities with respect to the South Carolina Premises;
SECTION 5.10. UTILITIES. The Borrower shall have delivered to the Bank
evidence satisfactory to the Bank that (i) the South Carolina Premises has
available to it adequate water,
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gas and electrical supply, storm and sanitary sewage facilities, other required
public utilities, and means of access between the South Carolina Premises and
public highways; and (ii) that all such facilities comply with all applicable
laws, rules and regulations, and all necessary easements to provide such utility
service to the South Carolina Premises have been obtained;
SECTION 5.11. BORROWER'S AFFIDAVIT. The Borrower shall have delivered
to the Bank the affidavit of the Borrower affirming (among other things) as of
the date of each draw, (i) that all costs for labor and material for the
construction and equipping of all improvements comprising any part of the
Project furnished to the date of Borrower's affidavit have been paid in full (in
accordance with Section 5.6 above), and (ii) that no bankruptcy or other
insolvency proceedings have been instituted by or against the Borrower.
SECTION SIX
COVENANTS
The Borrower covenants and agrees that, from the date of this Agreement
and until the obligations of the Borrower to the Bank hereunder are satisfied in
full, it will comply with the following provisions:
SECTION 6.1. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION.
The Borrower will maintain, a standard system of accounting, established and
administered in accordance with GAAP consistently followed throughout the
periods involved, and will set aside on its books, for each fiscal year, the
proper amounts for depreciation, obsolescence, amortization, bad debts, current
and deferred taxes, and other purposes as shall be required by GAAP. The
Borrower will deliver to the Bank or cause to be delivered to the Bank:
(a) Monthly internally prepared financial statements for Borrower
certified as being true, accurate and complete by an officer
of the Borrower, not later than fifty (50) days after the
expiration of each month;
(b) As soon as practicable after the end of each fiscal year, and
in any event within ninety-five (95) days thereafter, the
audited annual financial statements of Borrower, including the
balance sheets, as at the end of such fiscal year, together
with related statements of income and retained earnings (or
accumulated deficit) and statement of cash flows for such
fiscal year, setting forth in comparative form the
corresponding figures as at the end of or for the previous
fiscal year, all in reasonable detail and in accordance with
GAAP, prepared by a certified public accountant reflected by
the Borrower and acceptable to Bank;
(c) quarterly and annual covenant compliance certificates for
Borrower certified as being true, accurate, and complete by of
officer of the Borrower, relating to those covenants describe
in Section 6.10, below, not later than fifty (50) days after
the expiration of each fiscal quarter and ninety-five (95)
days after expiration of each fiscal year, as applicable, of
the Borrower;
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(d) With reasonable promptness, such other data and information as
from time to time may be reasonably requested by the Bank.
SECTION 6.2. INSURANCE AND MAINTENANCE OF PROPERTIES AND BUSINESS. The
Borrower will maintain, with financially sound and reputable insurers, insurance
to protect its properties and business against losses or damages of the kind
customarily insured against by corporations of established favorable reputation
engaged in the same or a similar business and similarly situated, including, but
not limited to, (a) adequate fire and extended coverage insurance in amounts and
issued by insurers acceptable to the Bank, (b) necessary workers' compensation
insurance, (c) adequate public liability and professional liability insurance,
and (d) such other insurance as may be required by law or as may be reasonably
required in writing by the Bank. The Borrower will, upon request, furnish to the
Bank a schedule of all insurance carried by it, setting forth in detail the
amount and type of such insurance. The Borrower will maintain, in good repair,
working order and condition, all properties used or useful in the businesses of
the Borrower.
SECTION 6.3. PAYMENT OF INDEBTEDNESS AND TAXES. The Borrower will pay
(a) all of its Indebtedness (not required to be subordinated hereunder) and
other obligations in accordance with normal terms or any applicable grace
periods and (b) all taxes, assessments, and other governmental charges levied
upon any of its respective properties or assets or in respect of its respective
franchises, business, income, or profits before the same become delinquent,
provided, that, (unless any material item or property would be lost, forfeited,
or materially damaged as a result thereof) Borrower's failure to pay any such
tax, assessment or charge shall not be a default if Borrower pays the same
within thirty (30) days after Borrower becomes aware that the same is overdue or
if it is being diligently contested in good faith by Borrower and, if such
contested charges, together with all interest and penalties thereon, exceeds
$250,000, if Bank is notified in advance of such contest and receives adequate
reserve or other appropriate security (including without limitation demonstrated
financial capacity of borrower to pay same) reasonably accept to the Bank to
protect the Bank against any loss therefrom.
SECTION 6.4. LITIGATION; ADVERSE CHANGES. The Borrower will promptly
notify the Bank in writing of (a) any event which, if existing at the date
hereof, would require a material qualification of the representations and
warranties set forth in Section 3.11 and (b) any material adverse change in the
condition, business, or prospects, financial or otherwise, of the Borrower.
SECTION 6.5. NOTICE OF DEFAULT. The Borrower will promptly notify the
Bank of (a) any Event of Default or event which with the passage of time or
service of notice or both would constitute an Event of Default hereunder and (b)
any demands made upon the Borrower by any Person for the acceleration and
immediate payment of any material Indebtedness owed to such Person.
SECTION 6.6. INSPECTION. The Borrower will make available for
inspection by duly authorized representatives of the Bank, its books, records,
and properties, and will furnish the Bank such information regarding its
respective business affairs and financial condition within a reasonable time
after written request therefor.
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SECTION 6.7. ENVIRONMENTAL MATTERS. The Borrower:
(a) Shall comply in all material respects with all Environmental
Laws.
(b) Shall deliver promptly to the Bank (i) immediately upon
receipt, copies of any correspondence, notice, pleading,
citation, indictment, complaint, order, decree, or other
documents from any source asserting or alleging a circumstance
or condition which requires or may require a cleanup, removal,
remedial action, or other response by or on the part of the
Borrower under Environmental Laws or which seeks criminal or
punitive penalties from the Borrower for an alleged violation
of Environmental Law, and (ii) copies of any documents
submitted by such Borrower in response to any items listed in
(i) above.
SECTION 6.8. PAYMENT SCHEDULE OF BONDS. The Borrower shall cause the
principal amount of the Bonds to be repaid not later than the scheduled
quarterly payments as indicated on Exhibit D attached hereto and made a part
hereof.
SECTION 6.9. EXISTENCE; BUSINESS. The Borrower will cause to be done
all things reasonably necessary to preserve and keep in full force and effect
its existence and rights, to conduct its business in a prudent manner, to
maintain in full force and effect, and renew from time to time, its franchises,
permits, licenses, patents, and trademarks that are necessary to operate its
business. The Borrower will comply in all material respects with all valid laws
and regulations now in effect or hereafter promulgated by any properly
constituted governmental authority having jurisdiction; provided, however,
Borrower shall not be required to comply with any law or regulation which it is
contesting in good faith by appropriate proceedings as long as either the effect
of such law or regulation is stayed pending the resolution of such proceedings
or the effect of not complying with such law or regulation is not to jeopardize
any franchise, license, permit, patent, or trademark necessary to conduct such
Borrower's business.
SECTION 6.10. FINANCIAL COVENANTS.
(a) Maximum Senior Funded Debt to EBITDA Ratio. The Borrower shall
not permit the Maximum Senior Funded Debt to EBITDA Ratio to
exceed 4.0:1.0 as determined at the end of each fiscal
quarter, commencing December 31, 1998, calculated for the four
quarters then ended.
(b) Minimum Fixed Charge Coverage Ratio. The Borrower shall not
permit the Minimum Fixed Charge Coverage Ratio to be less than
1.1:1.0 as determined at the end of each fiscal quarter,
commencing December 31, 1999, calculated for the four quarters
then ended.
(c) Minimum Debt Service Coverage Ratio. The Borrower shall not
permit the Minimum Debt Service Coverage Ratio to be less than
1.5:1.0 as determined at the end of each fiscal quarter,
commencing June 30, 1998, for two fiscal quarters then ended;
September 30, 1998, for the three fiscal quarters then ended;
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December 31, 1998, and each fiscal quarter thereafter, for the
four fiscal quarters then ended.
(d) Unfunded Capital Expenditures. The Borrower shall not incur
Unfunded Capital Expenditures in excess of $5,500,000 during
the fiscal year ending December 31, 1998.
SECTION 6.11. PLEDGE OF CASH OR INVESTMENT SECURITIES. Notwithstanding
anything to the contrary herein or in any Credit Document or any other document,
instrument or agreement, the Borrower's obligations hereunder and under the
Letter of Credit Note to reimburse the Bank for draws made under the Letter of
Credit with respect to the Bonds (the "Reimbursement Obligations") shall not be
secured by the FNMA Security (as defined in the Security Agreement), nor shall
the Bank require, as security for the Reimbursement Obligations, any pledge of
cash or investment type securities, coupled with covenants or arrangements which
would restrict the transfer of such cash or investment type securities in the
ordinary course of business, unless, prior to pledging such cash or securities
to the Bank coupled with such restrictive covenants or arrangements, the
Borrower delivers to the Trustee an opinion of nationally recognized bond
counsel to the effect that such pledge will not adversely affect the exclusion
of the interest on the Bonds from gross income for federal income tax purposes.
SECTION 6.12. NAVISTAR SUBORDINATION. The Borrower shall obtain a
written instrument wherein Navistar International Transportation Corp.
("Navistar") subordinates the debt owed to Navistar by the Borrower to the
Borrower's obligations to the Bank hereunder and under the Letter of Credit
Note. Such subordination instrument shall be in form and substance satisfactory
to the Bank.
SECTION SEVEN
NEGATIVE COVENANTS
The Borrower further covenants and agrees that, from the date of this
Agreement and until the obligations of the Borrower to the Bank hereunder are
satisfied in full, the Borrower will, unless the Bank shall otherwise consent or
agree, comply with the following provisions:
SECTION 7.1. USE OF COLLATERAL.
(a) Except for Cherokee County, South Carolina, which will possibly
hold title to the Premises solely for the purposes of providing the Borrower
with the benefits of a fee in lieu of tax program, the Borrower covenants that
it will not sell, assign, convey, hypothecate, lease, or sublease, or attempt to
sell, assign, convey, hypothecate, lease or sublease, all or any part of the
Premises, or any legal or equitable interest therein or cease using all or any
part of the Premises without the prior written consent of the Bank. If the Bank
consents to a change of ownership of all or any part of the Premises, the Bank
may, without notice to the Borrower, deal with such successor or successors in
interest of the Borrower with reference to the Mortgages and the Loans in the
same manner as with the Borrower, may forbear to sue, or may extend time for
payment under or the performance of any of the Loans without discharging or in
any way affecting the liability of the Borrower under the Mortgages or the
Loans, or may make such other arrangements with such successor or successors in
interest regarding the performance of the
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Loans as the Bank in its judgment shall consider necessary or advisable without
releasing or discharging the Borrower from any obligations or liabilities which
the Borrower may have relating to the Loans.
(b) Except in connection with the ordinary and usual course of its
business, the Borrower shall not sell, assign, pledge or otherwise transfer or
encumber any Collateral (as defined in the Security Agreement).
SECTION 7.2. MORTGAGES, SECURITY INTERESTS, AND LIENS. The Borrower
hereby covenants that it will not:
(a) allow the entry of any material judgment or lien against the
Borrower which is not satisfied, discharged or bonded-off, or
any collection action relating to such judgment or lien is not
stayed so as to prevent the issuance of a certificate of
judgment against the Borrower, within ten (10) days after the
date of entry of such judgment or lien;
(b) cause or permit any liens or encumbrances to effect or attach
to any of its properties and assets, whether now owned or
hereafter acquired, without the prior written consent of the
Bank, except for purchase money liens for assets purchased by
the Borrower after the Closing.
SECTION 7.3. MERGERS; CONSOLIDATION. The Borrower will not dissolve,
reorganize or undergo any change in its corporate structure without the prior
written consent of the Bank.
SECTION 7.4. BOND DOCUMENTS. The Borrower will not enter into an
amendment of the Bond Documents, without the prior written consent of the Bank.
SECTION EIGHT
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an Event of Default under this Agreement:
(a) Subject to any applicable notice, right to cure, and grace
period provisions, the Borrower fails to make or cause to be
made any payment to the Bank required to be made pursuant to
the terms of the Credit Documents or any Loan, or
(b) If any representation or warranty made herein by the Borrower,
in any other written statement, certificate, report, or
financial statement at any time furnished by or for the
Borrower in connection herewith or any Loan, proves to be
incorrect in any material respect when made, or
(c) If the Borrower fails to perform or observe any other
provision, covenant, or agreement contained in this Agreement
or in any other of the Credit Documents or
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in any of the Loans, and such failure remains unremedied for
fifteen (15) calendar days after the Bank shall have given
written notice thereof to the Borrower, or
(d) An Indenture Default shall have occurred under the Indenture,
or
(e) Any change in the financial condition of the Borrower which,
in the reasonable opinion of the Bank, materially and
adversely affects the Bank's security position with respect to
the Collateral;
(f) If the Borrower (i) is adjudicated a debtor or insolvent, or
ceases, is unable, or admits in writing its inability to pay
its debts as they mature, or makes an assignment for the
benefit of creditors, (ii) applies for, or consents to, the
appointment of any receiver, trustee, or similar officer for
it or for all or any substantial part of its property, or any
such receiver, trustee, or similar officer is appointed
without the application or consent of the Borrower, (iii)
institutes, or consents to the institution of, by petition,
application, or otherwise, any bankruptcy reorganization,
arrangement, readjustment of debt, dissolution, liquidation,
or similar proceeding relating to it under the laws of any
jurisdiction, (iv) has any such proceeding described in clause
(iii) instituted against it which remains thereafter
undismissed for a period of twenty-five (25) days or (v) has
any judgment, writ, warrant of attachment or execution or
similar process is issued or levied against a substantial part
of its property and such judgment, writ, or similar process is
not released, vacated, or fully bonded within ninety (90) days
after its issue or levy.
(i) If an event of default occurs under either of the Mortgages or
the Loans.
SECTION 8.2. NO WAIVER; REMEDIES. If an Event of Default occurs, the
Bank may exercise any and all remedies, legal or equitable on behalf of the
Bank, to collect the amounts due from the Borrower pursuant to this Agreement,
and, in its sole discretion, may instruct the Trustee to redeem the Bonds. Upon
receipt by the Trustee of such instructions from the Bank, the Bonds shall be
redeemed pursuant to the Indenture. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right or remedy. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law or equity.
SECTION NINE
TRANSFER, REDUCTION OR TERMINATION OF LETTER OF CREDIT
SECTION 9.1. TRANSFER OF LETTER OF CREDIT; REDUCTION OF STATED AMOUNT
AND TERMINATION OF LETTER OF CREDIT AND RELATED MATTERS.
(a) The Letter of Credit may be transferred in accordance with the
provisions set forth therein.
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(b) If the Borrower shall be entitled to a credit against the
principal amount of the Bonds prior to maturity (the "Credit")
pursuant to an optional redemption of a portion of the Bonds
or to the purchase of Bonds in the open market and
cancellation of such Bonds in accordance with the provisions
of the Indenture, and such amounts have been paid by or on
behalf of the Borrower other than by the Bank, the Borrower
shall have the right at any time thereafter to reduce
permanently, without penalty or premium, the Stated Amount in
the manner set forth below. The Stated Amount and the
Remarketing Portion will be reduced by an amount equal to the
sum of the following corresponding reductions in the Principal
Portion, the Remarketing Portion, and the Interest Portion:
(a) the Principal Portion and the Remarketing Portion will be
reduced by an amount equal to the amount of such Credit; and
(b) the Interest Portion will be reduced by an amount equal to
one hundred ten (110) days' interest on the amount of such
Credit at the rate of ten percent (10%) per annum (calculated
on the basis of a 365-day year; 366 days in a leap year). The
aforementioned reduction will occur not less than three (3)
Business Days' after written notice to the Bank, accompanied
by the original Letter of Credit and the written certificate
of the Trustee and the Borrower stating that the Borrower is
entitled to such Credit and designating the amount of such
Credit and the date upon which such credit shall become
effective (which shall be a Business Day).
(c) If the Stated Amount shall be reduced pursuant to paragraph
(b) hereof, and the Bank shall have received from the Trustee
the outstanding Letter of Credit then, in substitution for the
then outstanding Letter of Credit, a substitute irrevocable
letter of credit, shall be issued dated such date, for an
amount equal to the amount to which the Stated Amount shall
have been so reduced (also less the amount of any drawings
upon the Letter of Credit which have not been reinstated under
paragraph (d) hereof) but otherwise having terms identical to
the then outstanding Letter of Credit.
(d) The obligation of the Bank to honor Interest Drawings, under
the Letter of Credit, up to the amount of the Interest
Portion, (as same may have been reduced pursuant to subsection
(b) of this Section 9.1), will be automatically reinstated
unless, before the end of five (5) days after the date of an
Interest Drawing, the Bank shall deliver to the Trustee and
the Borrower a certificate in the form of Schedule 4 to the
Letter of Credit, appropriately completed, stating that the
Bank is not reinstating the amount paid pursuant to such
Interest Drawing. Failure to deliver such certificate within
the time stated shall be deemed to mean the amounts drawn have
been reinstated in full, but shall not be deemed an admission
that the Bank has in fact been reimbursed by the Borrower.
Notwithstanding the Bank's delivery of a certificate providing
that the automatic reinstatement has not occurred, the Bank
may thereafter present a new certificate reinstating the
amount of such drawing as a part of the available Stated
Amount Letter of Credit Commitment.
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<PAGE> 25
(e) The Bank shall reinstate amounts drawn under the Letter of
Credit pursuant to a Remarketing Drawing upon receipt by the
Bank of money (other than draws under the Letter of Credit)
then held by the Trustee and designed to reimburse the Bank
for all or a portion of the amounts drawn pertaining to said
Remarketing Drawing with respect to the Principal Portion for
Bonds tendered for purchase to and remarketed by the
Remarketing Agent.
The Letter of Credit shall terminate automatically on the earliest of
(i) the payment by the Bank to the Trustee of the final drawing available to be
made under the Letter of Credit; (ii) receipt by the Bank of the Letter of
Credit and a certificate in the form of Schedule 7 signed by an officer of the
Trustee and an authorized representative of Borrower stating that no Bonds
remain outstanding; (iii) receipt by the Bank of the Letter of Credit and a
certificate in the form of Schedule 8 to the Letter of Credit signed by an
officer of the Trustee and an authorized representative of Borrower; or (iv) the
stated Expiration Date. Notwithstanding the foregoing, the Expiration Date may
be extended as of April 1 of each year at the Bank's option pursuant to Section
2.5 hereof.
SECTION TEN
MISCELLANEOUS
SECTION 10.1. LIABILITY OF THE BANK. Between the Borrower and the Bank,
the Borrower assumes all risks of the acts or omissions of the Trustee and any
transferee of the Letter of Credit with respect to its use of the Letter of
Credit or its proceeds. Neither the Bank nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of the Letter
of Credit or any of the proceeds thereof, or for any acts or omissions of the
Trustee and any transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, inaccuracy of any of the statements or
representations contained therein or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (c) payment by the Bank against presentation
of documents which do not strictly comply with the terms of the Letter of
Credit, including any failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under the Letter of Credit, except the
Borrower shall have a claim against the Bank, and the Bank shall be liable to
the Borrower, to the extent, but only to the extent of any direct, as opposed to
consequential, damages suffered by the Borrower which the Borrower proves were
caused by (i) the Bank's willful misconduct or gross negligence in honoring a
draft under the Letter of Credit, or (ii) the Bank's willful failure to pay
under the Letter of Credit after presentation to it by the Trustee (or a
successor trustee under the Indenture to whom the Letter of Credit has been
transferred in accordance with its terms) of a sight draft and certificate
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, and may assume the
genuineness and rightfulness of any signature thereon, without responsibility
for further investigation, regardless of any notice or information to the
contrary unless actually received by the Bank; provided, that if the Bank shall
receive written notification from both the Trustee and the Borrower that
documents conforming to the terms of the Letter of Credit to be presented to the
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<PAGE> 26
Bank are not to be honored, the Bank agrees that it will not honor such
documents and the Borrower shall indemnify and hold the Bank harmless from such
failure to honor.
SECTION 10.2. RIGHT TO SET-OFF. Upon the occurrence of any Event of
Default hereunder, the Bank shall have the right to setoff against all
obligations of the Borrower to the Bank hereunder, whether matured or unmatured,
all amounts owed to the Borrower by the Bank, whether or not then due and
payable, and all other funds or property of the Borrower on deposit with or
otherwise held in the custody of the Bank or any of its affiliates, all without
notice to or demand on the Borrower, such notice and demand being hereby waived.
SECTION 10.3. ADDITIONAL COLLATERAL. As additional security for this
Agreement, the Borrower agrees that in the event that the Trustee shall, after
the occurrence of a continuing Event of Default hereunder and acceleration of
the indebtedness evidenced hereby, draw upon the Letter of Credit, the Bank
shall be and become the assignee of all rights and interests of the Borrower and
the Trustee. The Borrower does hereby consent to such assignment, and does agree
to execute any and all such documents, instruments and certificates in
connection therewith as the Bank shall deem appropriate.
SECTION 10.4. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered, or mailed first-class postage prepaid, or sent by wire,
telex, telecopier or similar electronic means of communication or delivered to a
telegraph office for transmission, addressed to the appropriate address set
forth below,
if to the Bank, at:
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114
Attention: International Department
Fax Number: 216/689-3683
and a copy to:
Roger D. Campbell
KeyBank National Association
Commercial Banking Division
88 East Broad Street
Columbus, Ohio 43215
Telecopy No: (614) 460-3469
or at such other address as may have been furnished for such purpose to the
Borrower by the Bank in writing; or
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<PAGE> 27
if to the Borrower, at:
Core Materials Corporation
800 Manor Park Drive
P.O. Box 28183
Columbus, Ohio 43228
Attention: Mr. Kevin L. Barnett
Telecopy No: (614) 870-4028
with a copy to:
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43216-1008
Attention: Phil Johnston, Esq.
Telecopy No: (614) 464-6350
or at such other address as may have been furnished for such purpose to the Bank
by the Borrower in writing.
SECTION 10.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
agreements, representations and warranties contained in the Credit Documents
shall survive the execution and delivery of this Agreement, any investigation at
any time made by or on behalf of the Bank and the issuance and acceptance of the
Letter of Credit. All statements contained in any certificates or other
instruments delivered by the Borrower pursuant hereto shall constitute
representations and warranties by the Borrower under this Agreement.
SECTION 10.6. PAYMENTS ON HOLIDAYS. Whenever any payment to be made
pursuant to this Agreement shall be stated to be due on a public holiday in the
State of Ohio, Saturday or Sunday, such payment may be made on the next
succeeding business day and such extension of time shall in such case be
included in computing interest, if any, in connection with such payment.
SECTION 10.7. COMPUTATION OF INTEREST. Except as otherwise provided,
all computations of interest with respect to the Letter of Credit or the Letter
of Credit Note hereunder shall be made on the basis of a three hundred
sixty-five (365) day year.
SECTION 10.8. ENTIRE AGREEMENT. The Credit Documents and the Letter of
Credit embody the entire agreement and understanding among the parties hereto
and supersede all prior agreements and understandings relating to the subject
matter hereof.
SECTION 10.9. PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto and, in
particular, shall inure to the benefit of and be enforceable by the holder or
holders at any time of the Letter of Credit Note.
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<PAGE> 28
SECTION 10.10. EXPENSES. The Borrower agrees, regardless of whether or
not the Bonds are eventually issued and sold and regardless of whether or not
the transactions contemplated hereby shall be consummated, to pay all reasonable
expenses (accompanied by a detailed itemization) incurred by the Bank incident
to such transactions in the preparation of documentation relating thereto,
including all reasonable fees and disbursement of the counsel (whether special
outside counsel or attorneys in its Law Group) of the Bank, for services to the
Bank. The Borrower further agrees to pay all like expenses (accompanied by a
detailed itemization) incurred by the Bank in connection with any amendments of
or waivers or consents requested by the Borrower under or with respect to the
Credit Documents.
SECTION 10.11. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
SECTION 10.12. OHIO CONTRACT. This Agreement shall be construed and
enforced in accordance with and be governed by the laws of the State of Ohio.
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<PAGE> 29
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
CORE MATERIALS CORPORATION
By: /s/ KEVIN T. B??????????
--------------------------------
Its: Vice President, Secretary,
Treasurer and Chief Financial Officer
KEYBANK NATIONAL ASSOCIATION
By: /s/ ROGER T. CAMPBELL
----------------------------
Its: Senior Vice President
28
<PAGE> 30
EXHIBIT A
LETTER OF CREDIT
NOTE
$7,726,028.00 Dated: May 7, 1998
FOR VALUE RECEIVED, on the Expiration Date (as defined in the Agreement
hereinafter described), or sooner as hereinafter provided, the undersigned, CORE
MATERIALS CORPORATION, a Delaware corporation (the "Borrower"), promises to pay
to the order of KEYBANK NATIONAL ASSOCIATION (herein called the "Bank"), the
lesser of (a) the face amount of a certain Letter of Credit No. S98/95374 issued
by the Bank on May 7, 1998, in the amount of Seven Million Seven Hundred
Twenty-Six Thousand Twenty-Eight Dollars ($7,726,028.00) (the "Letter of
Credit"), or (b) the unpaid balance of all draws theretofore made under the
Letter of Credit, as shown on the ledger or other record of the Bank.
Prior to maturity, the Borrower shall repay the principal amount of
this Note when and as provided in Section 2.2(a)(i) of the Agreement (hereafter
described).
The Borrower agrees to pay to the Bank interest on the unpaid principal
balance hereof at a rate per annum equal to the Prime Rate. The interest rate
hereon will change immediately upon a change in the Prime Rate. Interest hereon
shall be payable monthly on the first day of each calendar month in each year,
commencing on the first such day after the date hereof, and at maturity, or on
demand, if earlier. For any payment of principal and/or interest not paid when
due (taking into account any grace periods), except a Remarketing Drawing (as
defined in the Agreement), the Borrower shall pay a late charge of an amount
equal to the greater of twenty-five dollars ($25) or two percent (2%) of the
amount of the payment. In addition, if this Note is not fully paid as to
principal and interest at maturity (by acceleration or otherwise) the entire
unpaid balance shall thereafter bear interest at a rate per annum equal to the
Prime Rate, which rate shall be immediately and correspondingly adjusted with
each change in the Prime Rate. Interest and late fees shall be calculated using
a 365-day year. The Prime Rate is defined as that interest rate established from
time to time by the Bank as the Bank's Prime Rate, whether or not such rate is
publicly announced. The Prime Rate may not be the lowest interest rate charged
by the Bank for commercial or other extensions of credit. At no time shall the
interest rate hereon exceed the maximum permitted by law.
This Note is executed and delivered to the Bank pursuant to the terms
and conditions of a Reimbursement Agreement of even date herewith (the
"Agreement") by and between the Borrower and the Bank to which reference is made
for a statement of the rights, duties and obligations of the parties and the
security for this Note, but neither this reference to the Agreement or any
provision thereof shall affect or impair the absolute and unconditional
obligation of the Borrower to pay the principal of, and interest and late fees,
if any, on this Note when due. This Note is the Letter of Credit Note described
in the Agreement.
A-1
<PAGE> 31
Payment of the principal of, and interest on, this Note shall be made
in lawful money of the United States of America, at any office of the Bank, or
at such other place as the Bank or any subsequent holder hereof shall have
designed to the Borrower in writing. The term "the Bank" as used in this Note
shall include in its meaning any subsequent holder of this Note.
The Borrower waives demand, presentment for payment, notice of
dishonor, protest and notice of protest, and diligence in the collection and
bringing suit and agrees to the application of any bank balance as payment or
part payment of this Note, or as an offset thereto, and that the Bank may extend
the time for payment, accept partial payment, take security therefor, or
exchange or release any collateral, without discharging or releasing the
Borrower.
This Note is executed at __________________.
Borrower, to the extent permitted by law, waives any right to have a
jury participate in resolving any dispute, whether sounding in contract, tort,
or otherwise, between Bank and Borrower arising out of, in connection with,
related to, or incidental to the relationship established between the Borrower
and the Bank in connection with this Note or any other agreement, instrument or
document executed or delivered in connection therewith or the transactions
related thereto.
CORE MATERIALS CORPORATION
BY:______________________________
ITS: VICE PRESIDENT, SECRETARY,
TREASURER AND CHIEF
FINANCIAL OFFICER
A-2
<PAGE> 32
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
EXHIBIT "B"
KEYBANK NATIONAL ASSOCIATION
127 Public Square
Cleveland, Ohio 44114-1306
Date: May 7, 1998
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT NO. S98/95374
<TABLE>
<S> <C>
Beneficiary: Applicant:
The Huntington National Bank, Trustee Core Materials Corporation
41 South High Street, HC 1112 800 Manor Park Drive
Columbus, Ohio 43215 Columbus, Ohio 43228
Attention: Corporate Trust Department
AMOUNT: USD $7,726,028.00
EXPIRATION DATE: April 17, 2003
</TABLE>
Dear Sirs:
You, as Trustee under the Trust Indenture, dated as of April 1, 1998
(the "Indenture"), between you and the South Carolina Jobs-Economic Development
Authority (the "Issuer") pursuant to which Seven Million Five Hundred Thousand
Dollars ($7,500,000) in aggregate principal amount of South Carolina
Jobs-Economic Development Authority Multi-Mode Variable Rate Industrial
Development Revenue Bonds, Series 1998 (Core Materials Corporation Project) (the
"Bonds") are being issued by the Issuer, are hereby irrevocably authorized to
draw on KeyBank National Association pursuant to this Irrevocable Letter of
Credit, for the account of Core Materials Corporation, a Delaware corporation
(the "Borrower"), available by one or more of your drafts at sight, upon the
terms and conditions hereinafter set forth, an amount (subject to reinstatement
as hereinafter set forth) not exceeding Seven Million Seven Hundred Twenty-Six
Thousand Twenty-Eight Dollars ($7,726,028.00) (the "Letter of Credit
Commitment") of which (a) an amount not exceeding Seven Million Five Hundred
Thousand Dollars ($7,500,000.00) may be drawn to pay the principal amount of the
Bonds as and when the same become due at maturity or by acceleration or by
redemption (the "Principal Commitment"); or (b) an amount not exceeding Two
Hundred Twenty Six Thousand Twenty-Eight Dollars ($226,028.00) (the "Interest
Commitment") may be drawn with respect to the payment of up to 110 days'
interest at a rate per annum of ten percent (10%) (using a 365 day divisor) (the
"Maximum Rate") to pay interest on the Bonds when due; or (c) an amount not
exceeding Seven Million Seven Hundred Twenty-Six Thousand Twenty-Eight Dollars
($7,726,028.00) may be drawn to pay (i) the purchase price or a portion of the
purchase price equal to the principal amount of any Bonds tendered for purchase
by the Holders thereof, to the extent remarketing proceeds are not available for
such purpose to pay the portion of the purchase price of any Bonds tendered for
purchase by the Holders thereof and (ii) up to 110 days' interest at a rate per
annum equal to the Maximum Rate for interest accrued, if any, on such Bonds to
the extent remarketing proceeds are not available for such purpose (together,
the "Remarketing Commitment"), in each instance effective immediately and
expiring at the close of business on April 17, 2003, as such date may be
extended pursuant to the terms of the Reimbursement Agreement (the "Expiration
Date").
Funds under this Letter of Credit are available to you against your
executed sight draft(s) drawn on us, stating on their face: "Drawn under KeyBank
National Association Irrevocable Transferable Letter of Credit No. S98/95374 and
accompanied by: (A) if the drawing is being made with respect to the payment of
principal on the Bonds, whether due at maturity, upon mandatory or optional
redemption or upon acceleration (a "Principal Drawing"), a certificate signed by
you in the form of Schedule 1 attached hereto appropriately completed, (B) if
the drawing is being made with respect to a payment of interest on the Bonds
when due (an "Interest Drawing"), a certificate signed by you in the form of
Schedule 2 hereto appropriately completed and (c) if a drawing is being made
- ----------------------------------- ---------------------------------------
Authorized Signature Authorized Signature
Page 1 of 1
<PAGE> 33
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
to pay the principal amount of and accrued interest on any Bonds tendered for
purchase by the Holders thereof, to the extent remarketing proceeds are not
available for such purpose (a "Remarketing Drawing") a certificate signed by you
in the form of Schedule 3 hereto appropriately completed. Presentation of such
draft(s) and certificate(s) shall be made at our Main Office, 127 Public Square,
Cleveland, Ohio 44114-1306, Attention: Manager, International Department, or at
any other office of ours in the City of Cleveland, Ohio which may be designated
by us by written notice delivered to you. We hereby agree that all drafts drawn
under and in compliance with the terms of this Letter of Credit and presented
before 11:00 a.m. (Cleveland, Ohio time) on a Business Day will be duly honored
by us within one Business Day after delivery of the draft(s) and certificate(s);
provided, however, if a drawing is presented to pay the purchase price of Bonds
which have not been remarketed by the Remarketing Agent and if conforming
drawing documentation is presented at or prior to 11:00 a.m. (Cleveland, Ohio
time) on a Business Day, payments shall be made to you on such Business Day. If
requested by you, payment under this Letter of Credit may be made by wire
transfer of federal funds to your account at the Federal Reserve Bank of
Cleveland, or by deposit of immediately available funds into a designated
account that you maintain with us. As used herein, "Business Day" shall mean any
day of the year other than (i) a Saturday or Sunday, (ii) a day on which
commercial banks located in New York, New York, or the city or cities in which
are located the corporate trust offices of the Trustee and the Tender Agent and
our office at which demands for payment under this Letter of Credit are to be
presented are authorized by law to close or (iii) any day on which the New York
Stock Exchange is closed.
Drawings hereunder shall not exceed the Letter of Credit Commitment, as
the Letter of Credit Commitment may be reduced or reinstated pursuant hereto,
and, except as hereinafter provided, each drawing honored by us shall pro tanto
reduce the amount available under this Letter of Credit.
We will reinstate amounts drawn hereunder pursuant to a Remarketing
Drawing hereunder, as to the Principal Commitment and the Interest Commitment,
upon receipt by us of money (other than drawn under this Letter of Credit) then
held by the Trustee and designated to reimburse us for all or a portion of the
amounts drawn hereunder pertaining to such Remarketing Drawing with respect to
the Principal Commitment and the Interest Commitment for the principal portion
of and accrued interest on Bonds tendered for purchase to and remarketed by the
Remarketing Agent.
In connection with any Interest Drawing if you shall not have received
from us within five (5) days from the date of any demand for payment a written
notice from us in the form of the certificate attached hereto as Schedule 4
appropriately completed indicating we are not reinstating amounts paid under
such Interest Drawing or the full amount as existed prior to such drawing of the
Interest Commitment then the full amount of the Interest Commitment will be
automatically reinstated. Failure to deliver to you such certificate within the
time stated shall be deemed to mean the interest amount drawn has been
reinstated in full to the amount as existed prior to such drawing, but shall not
be deemed to be an admission that the Bank has in fact been reimbursed by the
Borrower. Upon presentation by you of any Principal Drawing, the amount of this
Letter of Credit and the amounts available to be drawn by you by any subsequent
Principal Drawing, shall be automatically decreased by an amount equal to the
amount of such Principal Drawing. If the Borrower shall be entitled to a credit
against the principal amount of the Bonds prior to maturity (the "Credit")
pursuant to an optional redemption of a portion of the Bonds or to the purchase
of Bonds in the open market and cancellation thereof in accordance with the
provisions of the Indenture or the Loan Agreement, and such amounts have been
paid by or on behalf of the Borrower other than by us, the Borrower shall have
the right at any time thereafter to reduce permanently, without penalty or
premium, the Letter of Credit Commitment in the manner set forth below. The
Letter of Credit Commitment will be reduced by an amount equal to the sum of the
following corresponding reductions in the Principal Commitment and the Interest
Commitment: (i) the Principal Commitment will be reduced to an amount equal to
the amount of such Credit, and (ii) the Interest Commitment will be reduced to
an amount equal to one hundred ten (110) days' interest at the Maximum Rate
(using a 365-day divisor) on the Bonds remaining outstanding. The reduction in
the Letter of Credit Commitment pursuant to such Credit will occur not less than
three (3) Business Days after written notice to us, accompanied by this Letter
of Credit and your written certificate in the form of Schedule 5 attached hereto
stating that the Borrower are entitled to such reduction and designating the
amount of such Credit and the date of
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 2 of 1
<PAGE> 34
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
the Business Day upon which such reduction shall become effective. Upon such
presentation we will either reissue this Letter of Credit in the maximum amount
available hereunder or otherwise amend this Letter of Credit to reflect such
maximum amount then available.
Only you, as Trustee, may make a drawing under this Letter of Credit.
Upon the payment to you or your account of the amount specified in a sight draft
drawn hereunder, we shall be fully discharged on our obligation under this
Letter of Credit with respect to such sight draft, and we shall not thereafter
be obligated to make any further payments under this Letter of Credit in respect
of such sight draft to you or to any other person who may have made to you or
who makes to you a demand for payment of principal of or interest on any of the
Bonds.
This Letter of Credit shall be governed by the International Chamber of
Commerce Uniform Customs and Practice for Documentary Credits, Publication No.
500 (1993 Revision), (and including any amendments, modifications, or revisions
thereof) and the laws of the State of Ohio. Communications with respect to this
Letter of Credit shall be in writing and shall be addressed to KeyBank National
Association, 127 Public Square, Cleveland, Ohio 44114-1306, Attention:
International Department specifically referring thereon to KeyBank National
Association Irrevocable Transferable Letter of Credit No. S98/95374.
This Letter of Credit is transferable in its entirety (but not in part)
to any transferee who has succeeded you as Trustee under the Indenture and such
transferred Letter of Credit may be successively transferred to any Successor
Trustee or Co-Trustee thereunder, but may not be assigned, transferred or
conveyed under any other circumstance. Transfer of the amount available under
this Letter of Credit to such transferee shall be effected by the presentation
to us of this Letter of Credit accompanied by the transfer fee in the amount of
$500.00 and the transfer form in the form attached hereto as Schedule 6 and,
unless this Letter of Credit is so presented to us, we shall have no obligation
hereunder to any transferee. Upon such transfer, we will either reissue this
Letter of Credit in the maximum amount then available hereunder or otherwise
amend this Letter of Credit to reflect such maximum amount then available.
Upon the earliest of (i) the honoring by us of the final drawing
available to be made hereunder, (ii) our receipt of this outstanding Letter of
Credit and a written certificate signed by your officer and an authorized
representative of the Borrower in the form of Schedule 7 hereto appropriately
completed, stating that: (a) no Bonds are Outstanding within the meaning of the
Indenture; and (b) such officer and representative are duly authorized to sign
such certificate on behalf of you and the Borrower, (iii) our receipt of this
Letter of Credit and a written certificate signed by your officer and an
authorized representative of the Borrower in the form of Schedule 8 hereto
appropriately completed, stating that: (a) an Alternate Credit Facility has been
accepted by you and is in effect; and (b) such officer and representative are
duly authorized to sign such certificate on behalf of you and the Borrower, or
(iv) the Expiration Date, this Letter of Credit shall automatically terminate
and be delivered to us for cancellation.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds or the Reimbursement Agreement),
except only the certificates and the sight draft(s) referred to herein; and any
such reference shall not be deemed to incorporate herein by reference any
document, instrument or agreement except for such certificate(s) and such sight
draft(s).
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 3 of 1
<PAGE> 35
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 1
CERTIFICATE FOR THE PAYMENT OF PRINCIPAL
OF SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
MULTI-MODE VARIABLE RATE INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1998
(CORE MATERIALS CORPORATION PROJECT)
(THE "BONDS")
The undersigned, a duly authorized signer of The Huntington National
Bank, as Trustee (the "Trustee"), hereby certifies to KeyBank National
Association (the "Bank"), with reference to Irrevocable Transferable Letter of
Credit No. S98/95374 (the "Letter of Credit" and other capitalized terms used
herein and not defined shall have their respective meanings as set forth in the
Letter of Credit) issued by the Bank in favor of the Trustee, that:
1. The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
2. The Trustee is making a drawing under the Letter of Credit with
respect to the payment of principal of the Bonds.
3. The amount of principal of the Bonds which will be due and payable
on _______________________, is $_____________________.
4. The amount of the sight draft accompanying this Certificate
($___________________), together with the aggregate of all prior payments made
pursuant to Principal Drawings under this Letter of Credit for the payment of
the Bonds, does not exceed $__________________
5. The amount of the sight draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Letter of Credit,
the Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of _________________________, _____.
THE HUNTINGTON NATIONAL BANK,
AS TRUSTEE
By:_________________________________________
(Name and Title)
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 4 of 1
<PAGE> 36
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 2
CERTIFICATE FOR THE PAYMENT OF INTEREST
OF SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
MULTI-MODE VARIABLE RATE INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1998
(CORE MATERIALS CORPORATION PROJECT)
(THE "BONDS")
---------------------------------
The undersigned, a duly authorized signer of The Huntington National
Bank, Trustee (the "Trustee"), hereby certifies to KeyBank National Association
(the "Bank"), with reference to Irrevocable Transferable Letter of Credit No.
S98/95374 (the "Letter of Credit" and other capitalized terms used herein and
not defined shall have their respective meanings as set forth in the Letter of
Credit) issued by the Bank in favor of the Trustee, that:
1. The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
2. The Trustee is making a drawing under the Letter of Credit with
respect to a payment of interest accrued on the Bonds on or prior to their
stated maturity date.
3. The amount of interest on the Bonds which will be due and payable on
__________________, 19___ is $___________________________.
4. The amount of the sight draft accompanying this Certificate
($________________) does not exceed the amount available on the date hereof to
be drawn under the Letter of Credit in respect of the payment of interest
accrued on the Bonds on or prior to their stated maturity date.
5. The amount of the sight draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Letter of Credit,
the Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of ________________________, ______.
THE HUNTINGTON NATIONAL BANK,
AS TRUSTEE
By:_________________________________________
(Name and Title)
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 5 of 1
<PAGE> 37
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 3
CERTIFICATE FOR THE PAYMENT OF PURCHASE PRICE IN REMARKETING
OF SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
MULTI-MODE VARIABLE RATE INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1998
(CORE MATERIALS CORPORATION PROJECT)
(THE "BONDS")
The undersigned, a duly authorized signer of The Huntington National
Bank, as Trustee (the "Trustee"), hereby certifies to KeyBank National
Association (the "Bank") with reference to KeyBank National Association
Irrevocable Transferable Letter of Credit No. S98/95374 (the "Letter of Credit"
and other capitalized terms used herein and not defined shall have their
respective meanings as set forth in the Letter of Credit) issued by the Bank in
favor of the Trustee that:
The Trustee is the Trustee under the Indenture for the holders of the
Bonds. The total amount of Bonds outstanding (as defined in the Indenture) is
$___________________.
The Trustee is making a drawing under the Letter of Credit at the
written request of the Remarketing Agent (as defined in the Indenture), to pay,
pursuant to the terms of the Indenture, the purchase price equal to the
principal amount of those Bonds which the Remarketing Agent has been unable to
remarket following this tender pursuant to the Indenture.
The Trustee: (a) is delivering or causing to be delivered to the Bank,
or its designated agent, a principal amount of the Bonds, registered in the name
of the Borrower as pledgor and the Bank as pledgee, equal to the amount of the
draft accompanying this Certificate; (b) acknowledges the pledge by the Borrower
to the Bank of the Bonds delivered pursuant to subparagraph (a) and; (c) agrees
that all payments of principal, premium, if any, and interest made on such Bonds
shall be made to the Bank, so long as the Bank is the pledgee of such Bonds.
The principal amount of the Bonds delivered to the Remarketing Agent
which the Remarketing Agent has been unable to remarket is $_________________.
The amount of interest upon such Bonds which has accrued but is unpaid is
$___________________. The amount of the draft accompanying this Certificate does
not exceed such amount due as the purchase price of the Bonds and interest
accrued thereon.
Upon receipt by the Trustee of the amount demanded hereby, (a) the
Trustee will deliver it to Bond holders only for the purpose of payment of the
purchase price of the Bonds referenced in the second paragraph hereof, (b) no
portion of it shall be applied by the Trustee for any other purpose, and (c) no
portion of it shall be commingled with other funds held by the Trustee. This
drawing is made in accordance with the provisions of the Indenture and the
Letter of Credit.
The amount of the draw accompanying this Certificate was computed in
accordance with the terms and conditions of the Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
certificate as of the _______ day of _______________________, ________.
THE HUNTINGTON NATIONAL BANK,
AS TRUSTEE
By:________________________________________
(Name and Title)
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 6 of 1
<PAGE> 38
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 4
CERTIFICATE OF NONREINSTATEMENT
KEYBANK NATIONAL ASSOCIATION
127 Public Square
Cleveland, Ohio 44114-1306
Date:___________________
KeyBank National Association Irrevocable
Transferable Letter of Credit No. S98/95374
The Huntington National Bank
41 South High Street, HC 1112
Columbus, Ohio 43215
Attention: Corporate Trust Department
Gentlemen:
With regard to the above mentioned Letter of Credit, be advised that in
accordance with the terms of the Letter of Credit, the amount of
$_______________ which was the subject of the __________________, ____ Interest
Drawing by you under the Letter of Credit is not being reinstated under the
Letter of Credit.
Except as herein expressly set forth, all other terms and conditions of
the Letter of Credit remain unchanged.
Very truly yours,
KEYBANK NATIONAL ASSOCIATION
By:_______________________________________
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 7 of 1
<PAGE> 39
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 5
CERTIFICATE AS TO REDUCTION
OF LETTER OF CREDIT COMMITMENT
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-1306
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Letter of Credit
No. S98/95374
Gentlemen:
The undersigned, a duly authorized signer of The Huntington National
Bank, as Trustee (the "Trustee"), and a duly authorized representative of CORE
MATERIALS CORPORATION (the "Borrower"), hereby certify to KeyBank National
Association with reference to KeyBank National Association Irrevocable
Transferable Letter of Credit No. S98/95374 (the "Letter of Credit" and other
capitalized terms used herein and not defined shall have their respective
meanings as set forth in the Letter of Credit) issued by KeyBank National
Association in favor of the Trustee that:
A. The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
B. The Borrower is entitled to a reduction in the Letter of
Credit Commitment. The Letter of Credit Commitment shall be
reduced, effective as of ______________________, as follows:
1. The Principal Commitment shall be reduced to
$___________________.
2. The Interest Commitment shall be reduced to
$____________________.
3. The Remarketing Commitment shall be reduced to
$________________.
C. The undersigned officer and representative are duly authorized
to sign this certificate on behalf of the Trustee and on
behalf of the Borrower respectively.
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 8 of 1
<PAGE> 40
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
IN WITNESS WHEREOF, the Trustee and the Borrower have executed and
delivered this Certificate as of the ______ day of ________________________,
_________.
TRUSTEE: THE HUNTINGTON NATIONAL BANK,
as Trustee
By:______________________________________
Title:___________________________________
BORROWER: CORE MATERIALS CORPORATION
By:______________________________________
Title: Authorized Representative
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 9 of 1
<PAGE> 41
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 6
CERTIFICATE OF TRANSFER
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-1306
Attention: International Department
Date:_________________, 1998
RE: KeyBank National Association
Irrevocable Transferable Letter of Credit No. S98/95374
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to the following (the "Transferee"):
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in the
Letter of Credit are transferred to the Transferee and the Transferee shall have
the sole rights as beneficiary thereof, including sole rights relating to any
amendments of the Letter of Credit, whether increases in the amount to be drawn
thereunder, extensions of the Expiration Date thereof, or other amendments, and
whether such amendments now exist or are made after the date hereof. All
amendments of the Letter of Credit are to be advised direct to the Transferee
without necessity of any consent of or notice to the undersigned beneficiary.
The undersigned hereby certifies that the Transferee has become successor
Trustee under the Trust Indenture dated as of April 1, 1998, between the
undersigned and the South Carolina Jobs-Economic Development Authority (the
"Issuer") relating to the Issuer's $7,500,000 Multi-Mode Variable Rate
Industrial Development Revenue Bonds, Series 1998 (Core Materials Corporation
Project) and has accepted such appointment in writing.
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 10 of 1
<PAGE> 42
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
The original of such Letter of Credit is returned herewith, and in
accordance therewith we ask you to endorse the within transfer on the reverse
thereof, and forward it directly to the Transferee with your customary notice of
transfer, or issue a replacement Letter of Credit to the Transferee as provided
therein.
We enclose our check for $500.00 representing your transfer fee.
Very truly yours,
SIGNATURE AUTHENTICATED THE HUNTINGTON NATIONAL BANK, Trustee
___________________________________ By:____________________________________
(Authorized Officer) (Bank)
___________________________________
(Authorized Signature)
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 11 of 1
<PAGE> 43
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 7
CERTIFICATE THAT NO BONDS ARE OUTSTANDING
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-1306
Attention: International Department
RE: KeyBank National Association
Irrevocable Transferable Letter of Credit No. S98/95374
Gentlemen:
The undersigned, a duly authorized signer of The Huntington National
Bank, as Trustee (the "Trustee"), and _________________, duly authorized
representative of Core Materials Corporation (the "Borrower"), hereby certify to
KeyBank National Association with reference to KeyBank National Association
Irrevocable Transferable Letter of Credit No. S98/95374 (the "Letter of Credit"
and other capitalized terms used herein and not defined shall have their
respective meanings as set forth in the Letter of Credit) issued by KeyBank
National Association in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
2. No Bonds are Outstanding within the meaning of the Indenture.
3. The undersigned officers and representatives are duly
authorized to sign this certificate on behalf of the Trustee
and on behalf of the Borrower respectively.
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 12 of 1
<PAGE> 44
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
IN WITNESS WHEREOF, the Trustee and the Borrower have executed and
delivered this Certificate as of the ______ day of ________________________,
_______.
THE HUNTINGTON NATIONAL BANK, TRUSTEE
By:__________________________________________
(Name and Title)
CORE MATERIALS CORPORATION
By:__________________________________________
Title: Authorized Representative
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 13 of 1
<PAGE> 45
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
SCHEDULE 8
CERTIFICATE OF ACCEPTANCE OF ALTERNATE
LETTER OF CREDIT
KeyBank National Association
127 Public Square
Cleveland, Ohio 44114-1306
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Letter of Credit
No. S98/95374
Gentlemen:
The undersigned, a duly authorized signer of The Huntington National
Bank, Trustee (the "Trustee"), and _____________________, a duly authorized
representative of Core Materials Corporation (the "Borrower"), hereby certify to
KeyBank National Association with reference to KeyBank National Association
Irrevocable Transferable Letter of Credit No. S98/95374 (the "Letter of Credit"
and other capitalized terms used herein and not defined shall have their
respective meanings as set forth in the Letter of Credit) issued by KeyBank
National Association in favor of the Trustee that:
1. The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
2. An alternate Letter of Credit in substitution for the Letter
of Credit has been accepted by the Trustee.
3. The undersigned officer and representative are duly authorized
to sign this certificate on behalf of the Trustee and on
behalf of the Borrower, respectively.
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 14 of 1
<PAGE> 46
KEYBANK Irrevocable Transferable Letter of Credit No. S98/95374
IN WITNESS WHEREOF, the Trustee and the Borrower have executed and
delivered this certificate as of the ______ day of _____________________,
______.
THE HUNTINGTON NATIONAL BANK, TRUSTEE
By:_________________________________________
(Name and Title)
CORE MATERIALS CORPORATION
By:_________________________________________
Title: Authorized Representative
- ---------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Page 15 of 1
<PAGE> 47
EXHIBIT C -- PERMITTED ENCUMBRANCES
Permitted Encumbrances for South Carolina Premises
1. Taxes and assessment for the year 1998, and subsequent years, which are
a lien not yet due and payable.
2. Any taxes assessed under the rollback provision of ss. 12-43-220 (D-4)
South Carolina Code of Laws 1976, as amended.
3. Right-of-way to Board of Public Works of Gaffney, South Carolina, dated
June 30, 1951 and recorded in the Office of the Clerk of Court for
Cherokee County in Deed Book 3U at page 375.
4. Right-of-way Agreement from W. B. Camp & Sons, Inc. to Board of Public
Works of Gaffney, South Carolina, dated August 16, 1951 and recorded
September 4, 1951 in the Office of the Clerk of Court for Cherokee
County in Deed Book 3Y at page 212.
5. Right-of-way for oil and natural gas pipeline from W. B. Camp & Sons,
Inc. to Gaffney Pipeline Company, dated August 15, 1951 and recorded
October 17, 1951 in the Office of the Clerk of Court for Cherokee
County in Deed Book 3U at page 420.
6. Easement and right-of-way for transmission line from W. B. Camp & Sons,
Inc. to Duke Power Company, dated March 6, 1950 and recorded April 15,
1950 in the Office of the Clerk of Court for Cherokee County in Deed
Book 3S at page 260.
7. Power line easement from J. Victor Cole to Duke Power Company, dated
June 24, 1958 and recorded in the Office of the Clerk of Court for
Cherokee County in Deed Book 4W at page 10.
8. Power line easement from J. Victor Cole to Duke Power Company dated
February 21, 1950 and recorded April 15, 1950 in the Office of the
Clerk of Court for Cherokee County in Deed Book 3S at page 262.
9. Right-of-way from Gilbert Properties, Inc. to the Board of Public Works
of the City of Gaffney, S.C., dated June 23, 1988 and recorded June 27,
1988 in the Office of the Clerk of Court for Cherokee County in Deed
Book 12V at page 867.
10. Right-of-way from Gilbert Properties, Inc. to the Board of Public Works
of the City of Gaffney, S.C., dated June 23, 1988 and recorded June 27,
1988 in the Office of the Clerk of Court for Cherokee County in Deed
Book 12V at 870.
11. Covenants, conditions, easements and restrictions contained in
Declaration of Restrictive Covenants, Conditions and Easements upon
Meadowcreek Industrial Community recorded on October 14, 1987 in the
Office of the Clerk of Court for Cherokee County in Deed Book 12R at
page 384; and amended by Amendment to Declaration of Restrictive
<PAGE> 48
Covenants, Conditions and Easements upon Meadowcreek Industrial
Community recorded on February 10, 1988 in the aforesaid office in Deed
Book 12T at page 683.
12. Matters of survey as shown on the Referenced Plat, specifically, the
following:
a. Reserved 10' utility easement;
b. gas line;
c. temporary power lines
d. power poles
Permitted Encumbrances for Ohio Premises
1. The premises are subject to building setback lines, platted
easements and restrictions as shown on the recorded Dedication of Manor Park
Drive of record in Plat Book 48, page 49, Recorder's office, Franklin County,
Ohio.
2. The premises are subject to restrictions contained in the deed from
Manor Real Estate Company to Realty International Inc., dated March 5, 1973,
filed April 19, 1973, and recorded in Deed Book 3326, page 384, Recorder's
Office, Franklin County, Ohio.
3. The premises are subject to an easement from International Harvester
Company to Columbus Southern Power Company dated July 27, 1992, filed August 19,
1992, and recorded in Official Record Volume 20134, page 5-03, Recorder's
Office, Franklin County, Ohio.
4. The premises are subject to a Deed easement from Navistar
International Transportation Corporation to the City of Columbus, Ohio dated May
31, 1988, filed June 10, 1988, and recorded in Official Record Volume 11731,
page B-03, Recorder's Office, Franklin County, Ohio.
5. The premises are subject to an easement from Realty International,
Inc. to Columbus and Southern Ohio Electric Company dated November 12, 1973,
filed November 20, 1973, and recorded in Deed Book 3382, page 241, Recorder's
Office, Franklin County, Ohio.
6. The premises are subject to an easement from Rockwell International
Corporation to Columbus and Southern Ohio Electric Company dated May 29, 1974,
filed June 18, 1974 and recorded in Deed Book 3417, page 276, Recorder's Office,
Franklin County, Ohio.
7 The premises are subject to an encroachment of a chain link fence
encroaching onto the adjoining parcel to the north a maximum distance of 2.8
feet, and asphalt pavement encroaching onto the adjoining parcel to the north a
maximum distance of 1.2 feet as reflected on the survey prepared by Robert A.
Darner of Bock & Clark, dated November 8, 1996.
8. Real estate taxes not yet due and payable.
9. Zoning and building laws and ordinances.
<PAGE> 49
10. Lease with GE Capital; Term Commencement Date: October 1, 1991;
Basic Term 113 months; Property: Wemhoner Press SN #20079, GMF Robotic Unloader
SN #91403132.
11. Lease with GE Capital (formerly New England Merchants Leasing
Corporation -- NEMLC); Term Commencement Date: January 1, 1989; Lease Term 10
years; Property: 2,500 ton Williams-White Molding Press, SN #4594, 3,000 ton
Williams-White Molding Press, SN#4595.
<PAGE> 50
EXHIBIT D
PAYMENT SCHEDULE OF BONDS
<TABLE>
<CAPTION>
=====================================================================================================================
PAYMENT DUE DATE PAYMENT DUE DATE
INTEREST PAYMENT DATE IN PRINCIPAL AMOUNT INTEREST PAYMENT DATE IN PRINCIPAL AMOUNT
=====================================================================================================================
<S> <C> <C> <C>
July 1998 $ 65,000 January 2006 120,000
- ---------------------------------------------------------------------------------------------------------------------
October 1998 65,000 April 2006 120,000
- ---------------------------------------------------------------------------------------------------------------------
January 1999 70,000 July 2006 125,000
- ---------------------------------------------------------------------------------------------------------------------
April 1999 70,000 October 2006 125,000
- ---------------------------------------------------------------------------------------------------------------------
July 1999 70,000 January 2007 130,000
- ---------------------------------------------------------------------------------------------------------------------
October 1999 75,000 April 2007 130,000
- ---------------------------------------------------------------------------------------------------------------------
January 2000 75,000 July 2007 135,000
- ---------------------------------------------------------------------------------------------------------------------
April 2000 75,000 October 2007 135,000
- ---------------------------------------------------------------------------------------------------------------------
July 2000 75,000 January 2008 140,000
- ---------------------------------------------------------------------------------------------------------------------
October 2000 80,000 April 2008 145,000
- ---------------------------------------------------------------------------------------------------------------------
January 2001 80,000 July 2008 145,000
- ---------------------------------------------------------------------------------------------------------------------
April 2001 80,000 October 2008 150,000
- ---------------------------------------------------------------------------------------------------------------------
July 2001 85,000 January 2009 150,000
- ---------------------------------------------------------------------------------------------------------------------
October 2001 85,000 April 2009 155,000
- ---------------------------------------------------------------------------------------------------------------------
January 2002 85,000 July 2009 155,000
- ---------------------------------------------------------------------------------------------------------------------
April 2002 90,000 October 2009 160,000
- ---------------------------------------------------------------------------------------------------------------------
July 2002 90,000 January 2010 165,000
- ---------------------------------------------------------------------------------------------------------------------
October 2002 90,000 April 2010 165,000
- ---------------------------------------------------------------------------------------------------------------------
January 2003 95,000 July 2010 170,000
- ---------------------------------------------------------------------------------------------------------------------
April 2003 95,000 October 2010 175,000
- ---------------------------------------------------------------------------------------------------------------------
July 2003 100,000 January 2011 175,000
- ---------------------------------------------------------------------------------------------------------------------
October 2003 100,000 April 2011 180,000
- ---------------------------------------------------------------------------------------------------------------------
January 2004 100,000 July 2011 185,000
- ---------------------------------------------------------------------------------------------------------------------
April 2004 105,000 October 2011 190,000
- ---------------------------------------------------------------------------------------------------------------------
July 2004 105,000 January 2012 190,000
- ---------------------------------------------------------------------------------------------------------------------
October 2004 110,000 April 2012 195,000
- ---------------------------------------------------------------------------------------------------------------------
January 2005 110,000 July 2012 200,000
- ---------------------------------------------------------------------------------------------------------------------
April 2005 110,000 October 2012 205,000
- ---------------------------------------------------------------------------------------------------------------------
July 2005 115,000 January 2013 210,000
- ---------------------------------------------------------------------------------------------------------------------
October 2005 115,000 April 2013 210,000
=====================================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AND STATEMENT OF INCOME FOR THE PERIOD ENDED JUNE 30,
1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,136,006
<SECURITIES> 2,961,657
<RECEIVABLES> 15,362,280
<ALLOWANCES> 105,000
<INVENTORY> 3,379,386
<CURRENT-ASSETS> 23,809,859
<PP&E> 39,998,612
<DEPRECIATION> 11,179,719
<TOTAL-ASSETS> 62,919,537
<CURRENT-LIABILITIES> 15,857,459
<BONDS> 23,051,841
0
0
<COMMON> 97,797
<OTHER-SE> 18,319,024
<TOTAL-LIABILITY-AND-EQUITY> 62,919,537
<SALES> 39,738,562
<TOTAL-REVENUES> 39,738,562
<CGS> 31,398,582
<TOTAL-COSTS> 31,398,582
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 804,191
<INCOME-PRETAX> 3,633,068
<INCOME-TAX> 1,489,359
<INCOME-CONTINUING> 2,143,709
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</TABLE>
